Iraq delays hand Cheney firm $1bn · Key contract decisions postponed again · Blair drawn into row over lack of 'level playing fields'
Oliver Morgan, industrial editor Sunday December 7, 2003 The Observer Halliburton, the engineering group formerly run by US vice-president Dick Cheney, has been given $1 billion worth of reconstruction work in Iraq by the US government without having to compete for it, thanks to repeated delays in opening up a key contract to competition. The Houston-based company was controversially awarded a contract to repair Iraq's damaged oil infrastructure without competition in February. The cost-plus contract means the amount spent by the US Army Corps of Engineers (USACE), which is running the work, is open-ended, rather than being fixed at the outset, because the scope of the damage was unknown. The USACE described the contract as a 'bridge to competition', but original plans to award the work competitively in August have repeatedly slipped. So far, $1.7bn has been made available to Halliburton for the work. Figures obtained from the USACE by Democrat Congressman Henry Waxman indicate that on 21 August, around the time the contract should have been opened to competition, the amount made available to KBR, the Halliburton subsidiary involved, was $704m. Since then the total has risen by $1.011bn. Waxman said: 'Since August, when the follow-on contracts were supposed to be awarded, the administration has obligated more than $1bn to Halliburton under the oil infrastructure contract. These inexplicable delays may be good for Halliburton; they are costing taxpayers a bundle.' The figures have emerged as the UK Government and contractors reacted with dismay to news this week that competitive tendering had again been pushed back to between 15 December and 17 January. Previously it was delayed to mid-October, late October, then year-end. One leading UK contractor, which made strong representations in Whitehall this week, said: 'We are very disappointed that it has been put back again,' adding that the longer the delay, the more KBR benefited. Brian Wilson, the Prime Minister's special representa tive on reconstruction, wrote to Blair in advance of President Bush's recent visit, urging him to press for a level playing field in Iraq. Wilson said: 'These are very important contracts for the future of the Iraqi oil industry. We think keeping a level playing field is very important, and the further delay is regrettable.' USACE says that the August date was not a deadline for contract award, but for tenders to be submitted. However, in a letter dated 2 May to Waxman, a US army general states the 'best estimate for the award of the contract based on this schedule is approximately the end of August'. According to contract rules, Halliburton can make a margin of up to 7 per cent on the work.
