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Given Dick Cheney's ties to Halliburton, a company he ran before becoming vice president, the Bush administration should have been especially careful in giving the firm no-bid contracts in Iraq. Halliburton's contracts have expanded in scope and increased in price, often without much public accounting for tens of millions of dollars in taxpayer funds. Pentagon auditors said in December that a Halliburton subsidiary may have overcharged the government $61-million to import fuel. The military said it rejected a separate bid for food services that was inflated by $67-million. The government needs to recover any overcharges, tighten control over spending and require contractors to account for the public money they receive.
The government sometimes has a need to expedite the delivery of essential goods and services. In Halliburton's case, the administration maintained the company was uniquely suited to rebuild Iraq's oil industry quickly. Restoring Iraq's production capacity and meeting its demand for fuel can help to foster reconstruction and improve the security situation. But the contracts given to a Halliburton subsidiary, Kellogg, Brown & Root, have expanded beyond oil services. They now exceed $2-billion, as add-on work, higher security costs and other factors significantly boost the price.
A Pentagon audit found Kellogg, Brown & Root overcharged as much as $61-million on gasoline deliveries to Iraq. Officials said the company may not have pocketed the profit, but overpaid a Kuwaiti supplier. Halliburton has denied overcharging. The company said it was directed by the U.S. Army Corps of Engineers to buy higher-priced fuel in Kuwait. It claims to have saved the government $164-million by finding cheaper fuel in Turkey.
Pentagon auditors have also questioned the company's performance under a separate contract for logistical help. Some critics in Congress and among the Democratic presidential field have called for a wide-ranging review of the contracts, to examine whether Halliburton has received excessive payments or political favoritism.
A comprehensive review would shed light on Halliburton and serve as an example for every private firm engaged in the reconstruction effort. Any company that gouges taxpayers should be barred from any future contract. The public also needs a fuller picture of the Pentagon's contract management process.
Without better spending controls, the problems we've seen with Halliburton could multiply in the coming years as the rebuilding of Iraq gathers steam. No-bid contracts, which invite abuse, should be rare and limited in scope. Contracts should be regularly audited and a company's record of disclosure should affect the competitive-bidding process. Americans are spending an enormous sum in Iraq and expect it to be used responsibly.