Cheney's Former Company Wins Afghanistan War Contracts

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  • Date: Thu, 16 May 2002 09:16:14 +0100

Queenstown, Vogaria, West Africa -- On July 16, 2000, United States Army
scrambled to deploy troops at the request of the embattled Vogarian
government in a top secret mission code named Operation Restore Order. 

Political and economic instability, factional fighting outside the
capital of Queenstown created large numbers of displaced civilians.
Large-scale famine and disease were feared. In five days the U.S. Army
teamed up with a private company in Texas to deploy and assemble a
military camp out of a pre-fabricated kit known as Force Provider to
assist the Vogarians. 

Vogaria, of course, is a fictional country but the military exercise --
which took place at Fort McPherson, Georgia and the Diamond Reserve
Center in Louisiana -- could not be more real. The Logistics Civil
Augmentation Program's War Fighter Exercise 2000 was the first ever
Department of Defense simulation of civilian contractors assisting the
army in rapid response assembly of military bases in a war situation. 

The U.S. military has always relied on private contractors to provide
some basic services such as construction, dating back as far as the
Civil War. But today as much as 10% of the emergency U.S. army
operations overseas are contracted out to private companies run by
former government and military officials. These private companies
operate with no public oversight despite the fact that these contractors
work just behind the battle lines. The companies are allowed to make up
to nine percent in profit out of these war support efforts. And
experience so far has shown that the companies are not above skimming
more profits off the top if they can. 

Brown & Root Joins the War on Terrorism 
Employees of Brown & Root, a subsidiary of Vice President Dick Cheney's
former company, Halliburton Corporation of Dallas, Texas, are set to
arrive at the Bagram airbase in southern Afghanistan in late April or
early May 2002 (the exact date is classified) to take over the support
services a Force Provider camp. They are also scheduled to arrive at the
Khanabad airbase in Uzbekistan, one of the main military support
stations for the war in Afghanistan, to run three Air Force Harvest
Eagle camps (an earlier version of Force Provider) for the 1,500 U.S
troops based there since October, according to Daniel McGinty, a
spokesman at the Defense Contract Management Agency. 

Brown and Root will take charge of support services including base camp
maintenance, laundry services, food services, airfield services, and
supply operations, among others. Gale L. Smith, a spokesperson for the
U.S. Army Operations Support Command in Alexandria, Virginia refuses to
confirm or deny whether Brown & Root would be working on similar bases
in Manas, Kyrgyzstan or other sites in Afghanistan and Pakistan to
support Operation Enduring Freedom. The new job is one of the first
examples of a lucrative, new ten-year contract that Brown & Root won
from the Pentagon on December 14, 2001 titled Logistics Civil
Augmentation Program (LOGCAP). The contract is what the Pentagon calls a
"cost-plus-award-fee, indefinite-delivery/indefinite-quantity service,"
which basically means that the federal government has an open-ended
mandate and budget to send Brown & Root anywhere in the world to run
humanitarian or military operations for profit. 

The Revolving Door 
Halliburton, Brown and Root's parent company, is a Fortune 500
construction corporation working primarily for the oil industry. In the
early 1990s the company was awarded the job to study and then implement
privatization of routine army functions under Dick Cheney, then
secretary of defense. 

When Cheney quit his job at the Pentagon, he landed the job as chief
executive of Halliburton, bringing with him, his trusted deputy David
Gribbin. The two substantially increased Halliburton's government
business until they quit in 2000 when Cheney was elected vice-president,
taking multi-million dollar golden parachutes with them. Since then,
another former military office and Cheney confidante, Admiral Joe Lopez,
former commander in chief for U.S. forces in southern Europe, took over
Gribbin's former job of go-between the government and the company,
according to Brown & Root's own press releases. Other close friends
include Richard Armitage, the assistant secretary of state, who worked
as a consultant to Halliburton before taking up his present job. 

Critics charge that this is a classic example of the revolving door
between government and big business. Bill Hartung, senior research
fellow at the World Policy Institute in New York, says: "Cheney gives
new meaning to the term revolving door. If he does not get elected
president next, I have no doubt he will return to Halliburton when he
leaves the White House." 

And Harvey Wasserman, author of The Last Energy War, says the Brown &
Root contracts are a scandal. "The Bush-Cheney team have turned the
United States into a family business. That's why we haven't seen Cheney
-- he's cutting deals with his old buddies who gave him a multi-million
dollar golden handshake," says Wasserman. "Have they no grace, no shame,
no common sense? Why don't just have Enron run America? Or have Zapata
Petroleum (George W. Bush's failed oil exploration venture) build a
pipeline across Afghanistan?" 

Jennifer Millerwise, a spokesperson for Cheney's office, denies that
there was any contact help from the White House. "The vice president did
not discuss this with anybody from Halliburton or any subsidiary of
Halliburton. Nor does he comment on Halliburton's policies since he
doesn't work there any more," she said. 

The Business of War 
Last year Brown & Root took in $13 billion in revenues, according to its
latest annual report. Currently Brown and Root estimates it has $740
million in existing United States government contracts, approximately
37% of their global business, most of which are in addition to the
LOGCAP deal. 

For example, in mid-November 2001 Brown & Root was paid $2 million to
reinforce the United States embassy in Tashkent, Uzbekistan, under
contract with the State department. More recently Brown & Root was paid
$16 million to go to Guantanamo Bay, Cuba, in March 2002 to build a
408-person prison for captured Taliban fighters under a contract with
the U.S. Navy, according to Pentagon press releases. 

That's by no means all -- Brown & Root employees can be found back home
running support operations for the U.S. Army in Fort Knox, Kentucky to
the U.S. Naval Base in El Centro, California. 

And it is snapping up contracts with American allies also -- in
September 2001, the company signed on to a $283 million project for
Russia's Defense Threat Reduction Agency to eliminate liquid-fueled
ICBMs missiles and their silos. In November 2001 Brown & Root won a $100
million order from the Philippines to convert the former ship repair
facilities of the U.S. Navy in Subic Bay into a modern commercial port
facility and in December it won a $420 million contract from the British
Army to support a fleet of new mammoth tank transporters, according to
company press releases. 

Brown & Root is no stranger to the business of war. From 1962 to 1972
the Pentagon paid the company tens of millions of dollars to go to South
Vietnam, where they built roads, landing strips, harbors, and military
bases from the demilitarized zone to the Mekong delta. The company was
one of the main contractors hired to construct the Diego Garcia airbase
in the Indian Ocean, according to Pentagon military histories. 

Running services at military camps is a relatively new chore for Brown &
Root that began in 1992 when the Pentagon, then under Cheney's
direction, paid the company $3.9 million to produce a classified report
detailing how private companies (like itself) could help provide
logistics for American troops in potential war zones around the world.
(see related article) Later in 1992, the Pentagon gave the company an
additional $5 million to update its report. 

That same year, Brown & Root won its first five-year logistical support
contract from the U.S. Army Corps of Engineers that would send them into
work alongside G.I.s in places like Somalia, Haiti, Kosovo, Bosnia, and
Saudi Arabia. The Balkan contract has been the most profitable for Brown
& Root -- the General Accounting Office (GAO) estimates that the company
made $2.2 billion in revenue during the U.S. military operations there
building sewage systems, kitchens, and showers and even washing
underwear for the 20,000 U.S. soldiers stationed there. 

Kudos from the Army, Criticism from Outside 
Army staff and their supporters have nothing but praise for Brown &
Root. The Logistics Management Institute, a military think-tank, claims
that LOGCAP contractors employed 24 percent fewer personnel and were 28
percent less expensive. 

But other government agencies are more skeptical. "It is convenient to
contract a lot of this work out. The problem is that the government
doesn't do the best job of oversight," says Neil Curtin, director of
operations and readiness issues at the defense capabilities and
management team at the GAO. 

Policy analysts say that it is simply a matter of time before something
goes wrong. "Suppose a local Afghani contractor gets kidnapped or used
for mischief? This has not been thought through at the policy level or
opened up for public debate," notes Thomas Donnelly, deputy executive
director of the Project for the New American Century in Washington DC. 

In fact some of the cost cutting is managed by hiring local workers at
lower wages than U.S. soldiers would be paid, a controversial practice
that has its drawbacks. In 1994 United Nations troops armed with batons
and tear gas had to be brought in to quell protests by workers that
Brown & Root dismissed at the end of its engagement in Somalia. In Saudi
Arabia, the army was alarmed when it discovered that locally contracted
drivers were firing up portable propane tanks to cook meals out in the
desert while transporting high explosive ordinance weapons, according to
a student report published by the Air University at Maxwell Air Force
base in Alabama. 

Independent agencies are still skeptical. For example a February 1997
study by the GAO showed that an operation that was estimated at $191.6
million when presented to Congress in 1996 had ballooned to $461 and a
half million a year later. Examples of overspending included flying in
plywood from the United States at a cost of $85.98 per sheet (the cost
in the United states was $14.06) and billing the Army to pay its
employees income taxes in Hungary. 

A subsequent GAO report, issued in September 2000, noted that army
commanders in the Balkans were unable to keep track of contracts as they
were typically rotated out after six months, erasing institutional
memory. For example the GAO pointed out that many of the Brown & Root
contract employees were idle most of the time despite the fact that
offices were being cleaned four times a day. The GAO also faulted Brown
& Root in its over-zealous purchase of power generators at great expense
and employing far more firefighters than necessary. 

Allegations of Fraud 
In February this year Brown & Root paid out $2 million to settle a
lawsuit with the Justice Department, which alleged that the company
defrauded the government during the closure of the Fort Ord military
base in Monterey, California in the mid-1990s. 

The allegations in the case first surfaced several years ago when Dammen
Gant Campbell, a former contracts manager for Brown & Root, turned
whistle-blower and charged that between 1994 and 1998 the company
fraudulently inflated project costs by misrepresenting the quantities,
quality and types of materials required for 224 projects. Campbell said
that the company submitted a detailed "contractors pricing proposal"
from an Army manual containing fixed prices for some 30,000 line items. 

Once the proposal was approved, the company submitted a more general
"statement of work" which did not contain a detailed breakdown of items
to be purchased. Then, according to Campbell, Brown & Root intentionally
did not deliver many items listed in the original proposal. The company
defends this practice by claiming that the "statement of work" was the
legally binding document, not the original "contractors pricing

"Whether you characterize it as fraud or sharp business practices, the
bottom line is the same, the government was not getting what it paid
for, " explained Michael Hirst, who litigated the case for United States
Attorney's office in Sacramento. "We alleged that they exploited the
contracting process and increased their profits at the government's
expense," Hirst added. 

Meanwhile, Campbell's attorney, Dan Schrader, was pleased with the
settlement but he wondered why the company was so eager to compromise.
"If the company was indicted, I suspect that it might have been far more
difficult for them to get new government contracts," he said. 

Indeed the recently issued 2001 annual report says precisely that, in
its notes on the settlement of the lawsuit: "Brown & Root's ability to
perform further work for the U.S. government has not been impaired."
Adds Hirst: "Brown & Root was very cooperative and eager to settle. They
said they wanted to maintain a good relationship with the government." 

Brown & Root will have a harder time milking the contract in Afghanistan
because the government is now dispatching auditors from the Defense
Contract Management Agency to monitor all purchases but it still stands
to make at least a profit on whatever it can bill. The contract allows
for the company to charge up to a 9% mark up on supplies. 

And if the "war on terrorism" expands to the size of the Balkan
operations that could add up to a few hundred million dollars in
profits. In addition to the bases in Uzbekistan and Afghanistan, the
Army recently started dispatching Force Provider units to the Manas
airbase in Kyrgzstan, as recently as January 2002, to support up to
3,500 soldiers. Whether or not Brown & Root will follow them there, the
Army has yet to tell the public. 

At the time of writing Brown & Root kept its mouth shut about potential
work in Afghanistan or Uzbekistan. "Brown & Root has not deployed nor
been tasked to provide support in either country," said Zelma Branch, a
spokesperson for the company, refusing to give any more details about
the current LOGCAP contract. When provided with evidence that the
company was indeed going to both countries, she emailed this response:
"We can not elaborate at this time. Recommend you contact the Army." 

The Pentagon, on the other hand, is considering considerably expanding
the role of the private sector to do a variety of services from
refueling fighter jets and bombers in mid-air to running the missile
tracking systems. 

Rumors are swirling that the Defense Security Cooperation Agency (DSCA)
is considering hiring private contractors to train the new Afghan police
and army, which it has done in the past in places like Croatia where it
hired a private company to train the military. 

David Des Roches, a DSCA spokesman, denied that the Pentagon had a
proposal on the table at the moment but did not rule out the future
possibility. "A lot of people have said, 'Ding ding ding, gravy train'.
But in point of fact, it makes sense. They're probably better at doing
these sorts of missions than anyone else I could think of," he said. 

Bill Hartung of the World Policy Institute disagrees. "This is a company
which has more experience with insider dealing and corruption than with
efficiency, " he explained. "During the Second World War, there was a
Senate committee on war profiteering. Personally I think we should set
it up again and investigate Brown & Root." 

Pratap Chatterjee is a freelance journalist based in Berkeley,
California. In 1994-1995 he reported on the World Bank and the
International Monetary Fund for Inter Press Service, a Third World News
Service, in Washington D.C. 

Source:  CorpWatch

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  • » Cheney's Former Company Wins Afghanistan War Contracts