----- Original Message ----- From: "Gautam Mukunda" <[EMAIL PROTECTED]> To: "Killer Bs Discussion" <[EMAIL PROTECTED]> Sent: Monday, January 05, 2004 1:01 PM Subject: Re: Minimal Profits for Halliburton
> --- Dan Minette <[EMAIL PROTECTED]> wrote: > > If these folks were to tell me, for reasons X,Y,Z, > > Halliburton actually > > made a lot less than they expected to from the Iraq > > contracts, then I'd be > > inclined to believe them...since they've given me > > good information in the > > past. However, I will not accept reports that have > > often not reflected the > > true profitability of an operation as valid without > > evidence that standard > > operating procedures have not been followed. > > Particularly, when the buzz I > > get from people who are in the field and are > > thinking of doing business in > > Iraq is that the potential for profits there are > > enormous. > > > > Dan M. > > I've heard the same (that the profit potential is > enormous). Note that this is not a bad thing - it > _should be_ enormous. Working in Iraq is a risky > thing to do right now. We are also asking people > working in Iraq to work under extreme time pressure. > People in the CPA routinely work 100 hour weeks, as do > the contractors there. Both of those things are > expensive. The market is _supposed to_ reward outsize > risk with outsize profits, and doing things quickly is > always expensive. I understand how each of these can add to the expense. I have no problem with that. Further, If a small company's owner goes to Iraq, I would certainly expect him to be extremely well compensated for his efforts. I would not be shocked if workers in Iraq make a lot more than they would doing the same job here. In fact, I'd be shocked if they didn't. I see nothing unfair in that. But, few of the stockholders will be at personal risk. I'm guessing that we will not see the board of directors of Halliburton in Iraq for any prolonged period of time either. They will not be working longer hours for Iraq. So, the compensation in terms of larger profits should be for business risk only. The question is not - "Are > companies making outsize profits in Iraq?" No > responsible company would go into Iraq unless that > potential exists. Why not? If, there is a guaranteed modest but real profit available, after paying one's employees to compensate for the time, risk, being away from family, etc., why not take it? I think that only reason to consider very large profits expectable is if there is real financial risk involved. In makes sense that some projects do, indeed, involve financial risk. But, cost plus contracts have always been taken as gravy. The question is, "Are companies > getting deals at higher than the market price?" Of > that there is no evidence whatever, and considerable > evidence to the contrary. In fact I know of no one > who understands the government procurement system who > thinks that the contracts have been - or _could be_ - > awarded unfairly. OK, how are no-bid contracts awarded fairly...especially when the costs are uncertain? When things are done in a hurry, the normal procedures are not followed, and the paper trail is minimal or non-existent, how are things properly checked out? I realize that the normal procurement system is so cumbersome that the per order overhead for companies doing business with the government is enormous. A friend of mine knows the people who sold those $80 dollar hammers seats to the government and said they probably lost money on the deal, due to the enormous paperwork overhead for a few toilet seats. I would expect that most government procurements are competitive, including competing to hire retired military men to grease the skids for big deals. (yes, I know this is not unique to the military or even the government.) But, I do not see how no bid contracts can really be competitive, unless the real costs are very well known up front. Dan M. _______________________________________________ http://www.mccmedia.com/mailman/listinfo/brin-l
