U.S. Firms' Iraq Contracts Come Under Fire

"I think the whole political ties thing doesn't pan out," says Steve Schooner, a law professor and co-director of the government contracting program at George Washington University. "Anytime you operate in secret you set off the critics. You beg people to ask, 'What is the government hiding?' "

For their part, Bechtel officials say they're confident they were chosen on their merits, not their political contributions.

"We participated in an open and a competitive and an objective bid process that USAID asked us and all the other bidders to submit our qualifications," says Bechtel public affairs manager Howard Menaker. "We believe that this was a decision based on experience, on past performance and on qualifications."

Oil Fire Contract Spurs Controversy

Another controversial contract belongs to Halliburton's Kellogg, Brown & Root subsidiary, which was granted a contract put out oil fires in Iraq by the U.S. Army Corps of Engineers (USACE), without any competitive bidding. Vice President Dick Cheney is the former chief executive of Houston-based Halliburton.

With a total estimated cost of up to $7 billion, the two-year contract has prompted members of Congress such as Rep. Henry Waxman of California, the top Democrat on the House Government Reform committee, to call for more transparency in how the government awards such jobs.

The USACE said the contract was an extension of an existing contract that KBR had won via a competitive bid in 2001, and to invite other competitors that needed time-consuming security clearance would have been "a wasteful duplication of effort."

Further, KBR will only be involved in the initial phase of the contract taking place during the hostilities with subsequent oil field repair work open to competitive bidding, says USACE spokesman Lt. Col. Gene Pawlik. Having KBR start the initial phase of the work with the second phase open to competitive bids was always the plan, says Pawlik, and the final cost and duration of the contract would not hit anywhere near the $7 billion, two-year limit, one that was based on a maximum destruction scenario.

Still, Waxman wants the Corps to justify such as a high figure for a contract that was intended to be short-term in nature.

"It may be the case that the administration had valid reasons for granting a sole-source contract for emergency work during armed hostilities," Waxman wrote in a response to the USACE. "It is harder to understand, however, what the rationale would be for a sole-source contract that has a multi-year duration and a multibillion-dollar price tag."

A Halliburton spokeswoman says the company's contract was based on its experience in the field and had nothing to do with Cheney's past ties to the company.

Critics Lament Lack of Foreign Participation

Some smaller contracts have been awarded to companies that aren't big players politically. Washington, D.C.-based Creative Associates International was granted a $2 million one-year contract to address the educational needs of Iraq's primary and secondary schools. The company gave $2,000 in political donations to the Democratic party between 1999 and 2002, according to the Center for Responsive Politics. Likewise, Research Triangle Institute, a research firm located near Durham, N.C., which won a $7.9 million contract to promote Iraqi civil participation in the reconstruction process, gave $3,691 to Democrats during the same time period.

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