WASHINGTON – Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn., and Senator Frank Lautenberg, D-N.J., Tuesday sought Committee hearings on the limited or no bid contracts awarded for the reconstruction of Iraq.
In a letter to Committee Chairman Susan Collins, R-Me., Lieberman and Lautenberg noted that a secretive, non-competitive bidding process raises concerns about “favoritism and collusion” while an open process results in substantial cost savings for the taxpayer. In particular, the senators wrote, Kellogg, Brown & Root, a subsidiary of the Halliburton Corporation, formerly led by Vice President Cheney, has received more than $2 billion for its work in Iraq, much of that from an oil infrastructure repair contract awarded through a no bid process. The cost of that contract has been spiraling upwards over the last few months, increasing by $300 million in just one week, according to news accounts.
“With these hearings,” Lieberman and Lautenberg wrote, “we would hope to examine the details surrounding these secretive contracting procedures, and explore what additional safeguards are needed to restore the public’s confidence in the integrity of our procurement system.”
Following is the complete text of the letter:
September 23, 2003
The Honorable Susan M. Collins
The United States Senate
Washington, D.C. 20510
Dear Senator Collins:
Last May, we urged you to convene hearings in the Governmental Affairs Committee to investigate the Iraqi reconstruction contracts that were awarded through a closed or limited bidding process – including any contracts awarded to Kellogg, Brown & Root (KBR), a subsidiary of the Halliburton Corporation.
Since we last wrote to you, additional information regarding Iraqi reconstruction contracts have come to light. For instance, the Wall Street Journal recently reported that the initial value of a no-bid Iraqi contract awarded to Halliburton by the Army Corps of Engineers has ballooned to $1.25 billion, which is $500 million more than what was projected earlier this month. The total payments made to Halliburton for its work in Iraq are more than $2 billion, and counting – much higher than what was estimated in May. In addition, it has been reported that a contract awarded through secret procedures to the Bechtel Corporation by the United States Agency for International Development was recently expanded by $350 million – a more than 50% increase over the initial contract value.
Earlier this month, the President also asked for an additional $20 billion for Iraqi reconstruction as part of his larger supplemental appropriations request. Unfortunately, the President provided no assurances that the billions of dollars in new contracts will not be awarded through similarly secretive processes. However, the importance of a transparent and open bidding process for federal contracts cannot be overstated. An open process not only ensures that all contractors have the opportunity to offer their services to the government, but it also reduces opportunities for favoritism and collusion and results in substantial savings for the American taxpayer. This important principle was upheld by the Senate in May, when we voted in support of an amendment, cosponsored by Senator Lautenberg, which required the Department of Defense to fully comply with the Competition in Contracting Act (10 U.S.C. 2304 et seq) for all Iraqi reconstruction contracts – including the contract awarded to Halliburton. (Footnote 1) In addition, Senator Lieberman joined you in becoming an original cosponsor of legislation to require the administration to publicly disclose the details of any Iraqi reconstruction contracts that are awarded without an open and competitive bidding process. (Footnote 2) As you know, a modified version of this bill was included as part of the National Defense Authorization Act for Fiscal Year 2004. (Footnote 3)
While we share the administration’s desire to assist the Iraqi people in building a strong, prosperous and free nation, we are concerned about the secretive and non-competitive procedures used in awarding the reconstruction contracts. New revelations about the expanding cost of the Iraqi contracts only serve to underscore our concerns. That is why we are reiterating our request for hearings on all post-war Iraq contracts awarded by the Bush Administration through a closed or limited bidding process. With these hearings, we would hope to examine the details surrounding these secretive contracting procedures, and explore what additional safeguards are needed to restore the public’s confidence in the integrity of our procurement system.
Thank you for your consideration of this request. We look forward to continuing to work with you on this important issue.
Joseph I. Lieberman
United States Senator and Ranking Member
Frank R. Lautenberg
United States Senator
1. S.A. 826 to S. 1050 (The National Defense Authorization Act for Fiscal Year 2004), May 22, 2003, amendment adopted 99-0. Sponsored by Senator Warner, cosponsored by Senators Lautenberg and Boxer. Text of the amendment, as modified, appears on page S6919 of the Congressional Record.
2. S. 876, The Sunshine in Iraq Reconstruction Contracting Act of 2003. Introduced April 10, 2003. Sponsored by Senator Wyden, cosponsored by Senators Collins, Byrd, Cantwell, Clinton, and Lieberman.
3. S.A. 793 to S. 1050 (The National Defense Authorization Act for Fiscal Year 2004), May 21, 2003, amendment agreed to by unanimous consent. Sponsored by Senator Wyden, cosponsored by Senators Collins, Byrd, Clinton, and Lautenberg. Text of the amendment, as modified, appears on page S6886 of the Congressional Record.