[stiksandstones]

Not one to pick a political side, but this just keeps boggling my small brain:


Army to Pay Halliburton Unit Most Costs Disputed by Audit
http://www.nytimes.com/2006/02/27/international/middleeast/27contract.html?ei=5088&en=075a4c9d410f6860&ex=1298696400&partner=rssnyt&emc=rss&pagewanted=print

Army to Pay Halliburton Unit Most Costs Disputed by Audit

By JAMES GLANZ
The Army has decided to reimburse a Halliburton subsidiary for nearly all of its disputed costs on a $2.41 billion no-bid contract to deliver fuel and repair oil equipment in Iraq, even though the Pentagon's own auditors had identified more than $250 million in charges as potentially excessive or unjustified.

The Army said in response to questions on Friday that questionable business practices by the subsidiary, Kellogg Brown & Root, had in some cases driven up the company's costs. But in the haste and peril of war, it had largely done as well as could be expected, the Army said, and aside from a few penalties, the government was compelled to reimburse the company for its costs.

Under the type of contract awarded to the company, "the contractor is not required to perform perfectly to be entitled to reimbursement," said Rhonda James, a spokeswoman for the southwestern division of the United States Army Corps of Engineers, based in Dallas, where the contract is administered.

The contract has been the subject of intense scrutiny after disclosures in 2003 that it had been awarded without competitive bidding. That produced criticism from Congressional Democrats and others that the company had benefited from its connection with Dick Cheney, who was Halliburton's chief executive before becoming vice president.

Later that year auditors began focusing on the fuel deliveries under the contract, finding that the fuel transportation costs that the company was charging the Army were in some cases nearly triple what others were charging to do the same job. But Kellogg Brown & Root, which has consistently maintained that its costs were justified, characterized the Army's decision as an official repudiation of those criticisms.

"Once all the facts were fully examined, it is clear, and now confirmed, that KBR performed this work appropriately per the client's direction and within the contract terms," said Cathy Mann, a company spokeswoman, in a written statement on the decision. The company's charges, she said, "were deemed properly incurred."

The Pentagon's Defense Contract Audit Agency had questioned $263 million in costs for fuel deliveries, pipeline repairs and other tasks that auditors said were potentially inflated or unsupported by documentation. But the Army decided to pay all but $10.1 million of those contested costs, which were mostly for trucking fuel from Kuwait and Turkey.

That means the Army is withholding payment on just 3.8 percent of the charges questioned by the Pentagon audit agency, which is far below the rate at which the agency's recommendation is usually followed or sustained by the military — the so-called "sustention rate."

Figures provided by the Pentagon audit agency on thousands of military contracts over the past three years show how far the Halliburton decision lies outside the norm.

In 2003, the agency's figures show, the military withheld an average of 66.4 percent of what the auditors had recommended, while in 2004 the figure was 75.2 percent and in 2005 it was 56.4 percent.

Rick Barton, co-director of the postconflict reconstruction project at the Center for Strategic and International Studies in Washington, said despite the difficulties of doing business in a war zone, the low rate of recovery on such huge and widely disputed charges was hard to understand. "To think that it's near zero is ridiculous when you're talking these kinds of numbers," he said.

The Halliburton contract is referred to as a "cost-plus" agreement, meaning that after the company recovers its costs, it also receives various markups and award fees. Although the markups and fees are difficult to calculate exactly using the Army figures, they appear to be about $100 million.

One of Halliburton's most persistent critics, Representative Henry A. Waxman, a California Democrat who is the ranking minority member of the House Committee on Government Reform, said in a written statement about the Army's decision, "Halliburton gouged the taxpayer, government auditors caught the company red-handed, yet the Pentagon ignored the auditors and paid Halliburton hundreds of millions of dollars and a huge bonus."

About $208 million of the disputed charges was mostly related to the cost of importing fuel, which was at the heart of the controversy surrounding the contract. Kellogg Brown & Root hired a little-known Kuwaiti company, Altanmia, to transport fuel in enormous truck convoys. The Pentagon auditors found that in part because of the transportation fees that Kellogg Brown & Root agreed to pay Altanmia, the cost for a gallon of gasoline was roughly 40 percent higher than what the American military paid when it did the job itself — under a separate contract it had negotiated with Altanmia.

The Army said in a written statement that it had largely accepted Kellogg Brown & Root's assertions that costs had been driven up by factors beyond its control — the exigencies of war and the hard-line negotiating stance of the state-owned Kuwait Petroleum Corporation. The Army said the Kuwaiti fuel company blocked attempts by Kellogg Brown & Root to renegotiate its transportation contract with Altanmia. In the end, the Army decided to pay the Halliburton subsidiary all but $3.81 million of the $208 million in fuel-related costs questioned by auditors.

The Kellogg Brown & Root contract, called Restore Iraqi Oil, or RIO, will be paid with about $900 million of American taxpayer money and $1.5 billion of Iraqi oil proceeds and money seized from Saddam Hussein's government. Official criticism of the work became so intense that in November, an auditing board sponsored by the United Nations recommended that the United States repay some or all of the $208 million related to the alleged fuel overcharges — an allegation Halliburton says has never been justified.

In fact, Ms. Mann said, the Army's decision clearly showed that "any claims that the figures contained in these audit reports are 'overcharges' are uninformed and flat wrong." She said that the fuel charges themselves had been 100 percent reimbursed and that the reductions all came from adjustments on administrative costs associated with that mission.

Still, the Army conceded that some of the criticisms of the company's business practices were legitimate. As a result, the Army said, it would exclude about half of the auditors' questioned charges from the amount used to derive the markups and fees, which are calculated as a sliding percentage of the costs. That decision could cost the company a maximum of about $7 million.

Ms. James, the Corps of Engineers spokeswoman, said that in addition to the other modest penalties that Kellogg Brown & Root had been assessed by the Army's contracting officers, the sliding percentages on some of the fees had been lowered by unspecified amounts to reflect shortcomings in the company's dealings in Iraq. "All fees were awarded in accordance with the award fee plan set out in the contract, which placed more emphasis on timely mission accomplishment than on cost control and paperwork," Ms. James said.

Mr. Barton, of the Center for Strategic and International Studies, said that with the relatively small penalties paid by the company for falling short in its performance in Iraq, it was hard to see what the Army's scrutiny of the company's practices had amounted to in the end.

"When they say, 'We questioned their business model or their business decisions' — well, yeah, so what?" Mr. Barton said. "You questioned it but there was no result."

In answer to written questions, a spokesman for the Defense Contract Audit Agency, Lt. Col. Brian Maka, said the settlement of the disputed charges was based on "broader business case considerations" beyond just Pentagon audits.

But when asked whether the Army's decision reflected on the quality of the audits, Colonel Maka said only that the agency "has no indication of problems with the audit process," and he referred questions on the settlement itself to the Army.

A former senior Defense Department manager knowledgeable about the audits and the related contracting issues said, "That's as close as D.C.A.A. can get to saying, 'We're not happy with it either.' "

Because of the size of the contract and the contention surrounding Halliburton's dealings with the government, the RIO audits were carried out by the agency's top personnel and were subjected to extraordinarily thorough reviews, the former manager said.

This is unlikely to be the last time the Army and Halliburton meet over negotiated costs. On a separate contract in Iraq, for logistics support to the United States military, more than $11 billion had been disbursed to Kellogg Brown & Root by mid-January, according to the Army Field Support Command, based in Rock Island, Ill. Pentagon auditors have begun scrutinizing that contract as well.

 

[chicodude]

PD forum in 3....2....1.....

 

[DaveW]

All I can say is thank f*ck it's not MY taxes at work.... Suckers!

 

[valve bouncer]

This site really needs a political debate forum where us blowhards can argue these things endlessly and not annoy people in the lounge who don't want to get into political things.

 

[DaveW]

But political debate is all about annoying others silly.

 

[MudGrrl]

We love annoying people who aren't used to thinking a lot....

 

[MMike]

It's all in the name of freedom, you commies!

 

[BurlyShirley]

So uh......Halliburton wasnt doing anything wrong.

 

[fluff]

So uh......Halliburton wasnt doing anything wrong.

Correction - they weren't doing anything illegal.

 

[Old Man G Funk]

So uh......Halliburton wasnt doing anything wrong.

So they say, and they can certainly use the Pentagon's actions as an argument in their favor now. Other gov. agencies do say that they did something wrong (or illegal.) The fact that the Pentagon was so willing to give them no-bid contracts in the first place is very troubling though, because it causes the appearance of impropriety, which is taboo for goverment.

 

[BurlyShirley]

So they say, and they can certainly use the Pentagon's actions as an argument in their favor now. Other gov. agencies do say that they did something wrong (or illegal.) The fact that the Pentagon was so willing to give them no-bid contracts in the first place is very troubling though, because it causes the appearance of impropriety, which is taboo for goverment.

I honestly do see cause for concern here. But I dont think any other company is really capable of what Halliburton does, so its not like open bidding does any good, no?

 

[particle bored]

Correction - they weren't doing anything illegal.

not quite.

cost overruns are fraudulent in many cases. the fact that the army reneged on the auditor's inquiry doesn't make them "legal" it merely makes them approved by the army, which undoubtedly comes down from the top at Rummy's desk. you really think Cheney would let those contracts go to any other entity? Cheney holds tons of stock and options in Halliburton. enough to retire well off for 2-3 generations of Cheneys. but that's not enough for the angry closeted homosexual Dick Cheney, is it? hey, I got a great idea: let's go hunting with the Dickster.

 

[particle bored]

I honestly do see cause for concern here. But I dont think any other company is really capable of what Halliburton does, so its not like open bidding does any good, no?

OMFG, how grossly ignorant you are!

well done Benito! the trains will run on time yet!

hint: take a gander at the world of engineering/construction contracting and you'll find that there are many more besides Halliburton... one of them being Bechtel, which usually has a Director in the White House Admin (George Shultz under Daddy Bush, for example). Stone & Webster is another. there are quite a few.

fair contracting protocol for US Govt contracting includes an open bidding process to save the US taxpayers' money.

maybe you don't care about money wasting, Burley Kuntwipe, but I sure do.

and maybe you don't care that you're being lied to, but I sure do.

 

[Old Man G Funk]

I honestly do see cause for concern here. But I dont think any other company is really capable of what Halliburton does, so its not like open bidding does any good, no?

If that's truly the case, then no, it doesn't do any good.

In the government rules, there are certain times when it is acceptable to do a sole source (no-bid) contract. I don't believe that those conditions were met in this case. If not met, then the government is obligated to open the contract up for solicitation. The lowest responsive bidder gets the contract. If Haliburton were the only bidder, the gov. could easily give them the contract with no fuss. I suspect that other companies are able to provide the same services, however. If Halliburton was the only capable company out there, it would be easy to justify a sole source clause.

 

[BurlyShirley]

If that's truly the case, then no, it doesn't do any good.

In the government rules, there are certain times when it is acceptable to do a sole source (no-bid) contract. I don't believe that those conditions were met in this case. If not met, then the government is obligated to open the contract up for solicitation. The lowest responsive bidder gets the contract. If Haliburton were the only bidder, the gov. could easily give them the contract with no fuss. I suspect that other companies are able to provide the same services, however. If Halliburton was the only capable company out there, it would be easy to justify a sole source clause.

I know that there are alot of smaller companies that handle oil refinery machinery and stuff, but to my knowledge, haliburtion is the only American company capable of handling a job Iraq size. Thats not to say that there isnt some foreign company who could do it, but remember all that fuss about contracts going NOT to countries who didnt help. I would assume this is something of a byproduct, or at least an excuse for it.

 

[particle bored]

If that's truly the case, then no, it doesn't do any good.

In the government rules, there are certain times when it is acceptable to do a sole source (no-bid) contract. I don't believe that those conditions were met in this case. If not met, then the government is obligated to open the contract up for solicitation. The lowest responsive bidder gets the contract. If Haliburton were the only bidder, the gov. could easily give them the contract with no fuss. I suspect that other companies are able to provide the same services, however. If Halliburton was the only capable company out there, it would be easy to justify a sole source clause.

given that "capable" is broad and susceptible of a lot of subjective spin from the person or people responsible for determining "capability" the "rules" you cite are little more than a bogus framework designed to give false comfort.

know what I mean?

 

[Old Man G Funk]

given that "capable" is broad and susceptible of a lot of subjective spin from the person or people responsible for determining "capability" the "rules" you cite are little more than a bogus framework designed to give false comfort.

know what I mean?

Given that the people who determine this stuff are non-partisan career contract evaluators, I don't think you have a leg to stand on. That the partisan administration might give out no-bid contracts in order to subvert this process would seem to undermine your premise here. Is that what happened, maybe, maybe not. But, if Halliburton were truly the only company capable as Burly thinks, then it shouldn't have been that hard to get sole-source funding. The fact that they didn't means they are either incompetent, Halliburton isn't the only capable company, they weren't sure if Halliburton was the only capable company, they were worried about how to legally bar foreign companies (which would also make them incompetent because they just had to make a certain type of contract to do that), or some combination of those things.

 

[MudGrrl]

hint: take a gander at the world of engineering/construction contracting and you'll find that there are many more besides Halliburton... one of them being Bechtel, which usually has a Director in the White House Admin

Bechtel Fails Reconstruction of Iraq's Schools

maybe you don't care about money wasting, Burley Kuntwipe, but I sure do.

ya know..... I'm all for debating intelligently, and the name calling (even if your target is Burley), just doesn't elevate you to higher ground.

 

[Old Man G Funk]

Bechtel Fails Reconstruction of Iraq's Schools





ya know..... I'm all for debating intelligently, and the name calling (even if your target is Burley), just doesn't elevate you to higher ground.

I'll second that. I've called Burly on it before. It's not right when he does it and it's similarly not right when you do it.

 

[N8 v2.0]

This reminds me... I need to check and see how my Haliburton stock is doing...

 

[particle bored]

Given that the people who determine this stuff are non-partisan career contract evaluators, I don't think you have a leg to stand on.

so you say.

you're ignoring how people make decisions. you're ignoring how contract proposals are drafted. how RFPs are drafted.

you're correct as far as your written statements go, but they are superficial info.

you can install a whole fleet of "detached and independent" K review folks. each still will bring his/her own prejudices to the process, and will decide based on those prejudices, regardless of what the Federal Register says about it.

and that does NOTHING AT ALL to vitiate what prompted the RFP or the way the RFP was crafted. such crafting may include drafting the RFP so that only one contractor seems the "best choice." and if you don't believe RFPs can be drafted that way, I'd suggest spending some time with some Govt Contract Admin lawyers.

 

[particle bored]

ya know..... I'm all for debating intelligently, and the name calling (even if your target is Burley), just doesn't elevate you to higher ground.

you assume I want "higher" ground. I don't.

FWIW, I don't think Burley would pay attention to my posts even if I called him/her/it by his/her/its "proper Christian name".

I'm just having a little fun while doing a little arguing. don't mind me if I choose the less-than-alpine route. the air's thin up there.

 

[particle bored]

This reminds me... I need to check and see how my Haliburton stock is doing...

ooh! another heroic jab! you sure are a king, Natey. a real king.:hot:

as long as Nate gets "rich" it doesn't matter if America gets phoqued. it's all about Nate.

 

[N8 v2.0]

so you say.

you're ignoring how people make decisions. you're ignoring how contract proposals are drafted. how RFPs are drafted.

you're correct as far as your written statements go, but they are superficial info.

Having sat on numerous federal government source selection and RFQ/RFP evaluation boards as a technical expert, I can vouch for the fact that you do not know anything about the process.

 

[particle bored]

Having sat on numerous federal government source selection and RFQ/RFP evaluation boards as a technical expert, I can vouch for the fact that you do not know anything about the process.

I'm sure you take comfort in your "expertise" on "the process"

I'm equally sure that what your "expertise" includes is not much in the way of creative lawyering, nor much in the way of background deals that are the reality of state, local and federal politics.

your naivete is quite amusing, Nate.

 

[N8 v2.0]

I'm sure you take comfort in your "expertise" on "the process"

I'm equally sure that what your "expertise" includes is not much in the way of creative lawyering, nor much in the way of background deals that are the reality of state, local and federal politics.

your naivete is quite amusing, Nate.

I do work with federal attorneys when either drafting RFP's and during the source selection process. 'Creative lawyering" doesn't much exist at the federal level. It does at the local and state level though.

 

[Transcend]

Having sat on numerous federal government source selection and RFQ/RFP evaluation boards as a technical expert, I can vouch for the fact that you do not know anything about the process.

What cracks me up most, is I'm sure this guy will respond that no matter what proof you provide, you are still wrong and he is right. This is due to you being owned by "the man", being a part of the problem and being naiive.

He has been the poster child for thick headed since his second or third post. No matter what anyone says, he is right, even when he is 100% wrong.

Awesome. His unwavering dedication to being a nutjob who spounts off random incorrect facts is astounding.

edit: BWAHAHAHA. I knew it.

 

[N8 v2.0]

I'm sure you take comfort in your "expertise" on "the process"

I'm equally sure that what your "expertise" includes is not much in the way of creative lawyering, nor much in the way of background deals that are the reality of state, local and federal politics.

your naivete is quite amusing, Nate.

Wait, wait... I've got one...

How many federal Source Selection Boards have you sat on or reviewed in say..... umm... the last 10 years?

Please answer, please answer....oh god please let him answer..

 

[particle bored]

I do work with federal attorneys when either drafting RFP's and during the source selection process. 'Creative lawyering" doesn't much exist at the federal level. It does at the local and state level though.

I think your estimates of what does and doesn't happen "at the federal level" are quite naive.

perhaps you can tell me about when you met with the POTUS in the Oval Office though, and let me know about how demands for RFPs come down the pipeline -- all that stuff that happens before you're even brought into the picture.

 

[Old Man G Funk]

so you say.

you're ignoring how people make decisions. you're ignoring how contract proposals are drafted. how RFPs are drafted.

you're correct as far as your written statements go, but they are superficial info.

you can install a whole fleet of "detached and independent" K review folks. each still will bring his/her own prejudices to the process, and will decide based on those prejudices, regardless of what the Federal Register says about it.

and that does NOTHING AT ALL to vitiate what prompted the RFP or the way the RFP was crafted. such crafting may include drafting the RFP so that only one contractor seems the "best choice." and if you don't believe RFPs can be drafted that way, I'd suggest spending some time with some Govt Contract Admin lawyers.

I'm not ignoring anything. The RFP process was circumvented, so your assertions of prejudice in those that decide the contracts is moot. Even so, that's why they have a panel of people, so that personal prejudices are eliminated. Does it necessarily mean that prejudices are eliminated? No, it doesn't. It does help mitigate the risk, however.

I know that RFPs can be drafted certain ways, but when that happens, it opens the government up to lawsuit. If a company can show that a certain clause in a contract was not needed, then the gov. loses the case and has to pay damages.

 

[Old Man G Funk]

I think your estimates of what does and doesn't happen "at the federal level" are quite naive.

perhaps you can tell me about when you met with the POTUS in the Oval Office though, and let me know about how demands for RFPs come down the pipeline -- all that stuff that happens before you're even brought into the picture.

Bush does not make all the RFP demands. In fact, many RFPs are written at much lower levels.

 

[particle bored]

Wait, wait... I've got one...

How many federal Source Selection Boards have you sat on or reviewed in say..... umm... the last 10 years?

Please answer, please answer....oh god please let him answer..

silly boy, sitting on those Boards means nothing other than that you sit on them.

I haven't ever sat on one. what's that mean? nothing other than I haven't sat on one.

you win! you're a hero! you know more about the law than any lawyer, don't you?

it's okay, Nate. really. it's okay. you can admit that the "process" you're involved in is your realm of expertise, while still admitting that there are other factors in the world.

really.

 

[particle bored]

Bush does not make all the RFP demands. In fact, many RFPs are written at much lower levels.

you and Nate seem to believe you know all about how Federal politics works.

process is the smokescreen that hides the realpolitik.

Bush doesn't have to make any demands. if he is the POTUS, his tone & tenor pervade the fed govt. it's the same as when Slick Willie was POTUS, or when Daddy Bush was POTUS, or when Jimmy Carter was POTUS. the POTUS sets the tenor for government, and those who wish to keep their jobs or better yet advance in the fed pay scale learn soon enough that independent thought and analysis are NOT prized by the bureaucratic process.

 

[Transcend]

Wait, wait... I've got one...

How many federal Source Selection Boards have you sat on or reviewed in say..... umm... the last 10 years?

Please answer, please answer....oh god please let him answer..

Answer will be:

None, but you are simply too naive to understand the process.

edit: see what I mean?

 

[N8 v2.0]

silly boy, sitting on those Boards means nothing other than that you sit on them.

I haven't ever sat on one. what's that mean? nothing other than I haven't sat on one.

you win! you're a hero! you know more about the law than any lawyer, don't you?

it's okay, Nate. really. it's okay. you can admit that the "process" you're involved in is your realm of expertise, while still admitting that there are other factors in the world.

really.

Ok, I've got it... you're a know-nothing on yet another subject... carry on then.

 

[Transcend]

Ok, I've got it... you're a know-nothing on yet another subject... carry on then.

Astounding isn't it?

I find it quite mesmerizing myself..sort of like watching a slow motion trainwreck in progress.

 

[Old Man G Funk]

you and Nate seem to believe you know all about how Federal politics works.

process is the smokescreen that hides the realpolitik.

Bush doesn't have to make any demands. if he is the POTUS, his tone & tenor pervade the fed govt. it's the same as when Slick Willie was POTUS, or when Daddy Bush was POTUS, or when Jimmy Carter was POTUS. the POTUS sets the tenor for government, and those who wish to keep their jobs or better yet advance in the fed pay scale learn soon enough that independent thought and analysis are NOT prized by the bureaucratic process.

This isn't about politics.

Where I work, we come up with the things that we need to carry on our jobs. Our jobs are not dictated by what Bush says/does. We write RFPs in order to contract things out from time to time. We determine what areas we need to focus in, not Bush. Do we have overarching goals? Yes, and those do come from higher up. Might those be influenced by Bush? Yes again. But, that said, what we do on a lower level is very much removed.

 

[particle bored]

(1) I'm not ignoring anything. The RFP process was circumvented, so your assertions of prejudice in those that decide the contracts is moot. Even so, that's why they have a panel of people, so that personal prejudices are eliminated. Does it necessarily mean that prejudices are eliminated? No, it doesn't. It does help mitigate the risk, however.

(2) I know that RFPs can be drafted certain ways, but when that happens, it opens the government up to lawsuit. If a company can show that a certain clause in a contract was not needed, then the gov. loses the case and has to pay damages.

(1) you've gone from the abstract to a specific case that I don't know about, perhaps you could tell me what specific case you reference.

(2) true, but ultimately relevant only in an academic setting. what matters is how the RFP is drafted and ultimately results in a K award, not the theoretical damage exposures. you again SEEM TO BE confusing what process has yielded with what realpolitik demands.

 

[N8 v2.0]

Astounding isn't it?

I find it quite mesmerizing myself..sort of like watching a slow motion trainwreck in progress.

..and this coming from someone who claims Panasonic doesn't know HDCP...



Just kidding... just messin' wid ya

 

[Old Man G Funk]

Astounding isn't it?

I find it quite mesmerizing myself..sort of like watching a slow motion trainwreck in progress.

Yeah, it's hard to look away, isn't it?