Letter From Washington, DC
Soldier of Fortune
Did Vice President Dick Cheney steer $7 billion in Iraq war contracts to his old pals at Halliburton?
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Greenhouse ultimately agreed to accept the “compelling emergency” logic, which would permit awarding the contract to the contractor that had prepared the contingency plan. The compelling emergency was evident. Two days earlier, the United States, Spain, and Britain had submitted a resolution to the United Nations Security Council asking for authorization to use military force in Iraq. But Halliburton was being awarded a five-year sole-source contract worth $7 billion, and Greenhouse wasn’t buying into a five-year emergency with a guaranteed 2 to 5 percent profit margin. She insisted the contract be limited to one year, which would have allowed the government to evaluate Halliburton’s performance and possibly reopen the contract for competition at the end of the year.
As the lone dissenter in the room, Greenhouse (who is the sister of former University of Houston All-American Elvin Hayes) knew she couldn’t stop the contract. But the five-year term bothered her enough that she included this addendum to her signature: “I caution that extending this sole-source effort beyond a one-year period could convey an invalid perception that there is not strong intent for a limited competition.”
This one-line protest would ultimately, it is alleged, cost Greenhouse her management position. After she added that cautionary note to the KBR contract, Greenhouse received the first negative evaluation of her tenure at the Corps of Engineers, where she had climbed from a lowly intern position to the apex of the management pyramid. Following the poor evaluation, she was demoted, stripped of her oversight responsibilities, and moved into a smaller office. Rather than dismiss her for challenging the contract, her supervisors claimed Greenhouse was not doing her job.
Greenhouse had no idea that when she sat down in that Pentagon secure room on February 26, the Halliburton contract was already a done deal. An e-mail written by a Corps of Engineers official discloses that the process had been completed by February 5. The names of the correspondents have been redacted, though it was later established that one of them was Corps of Engineers regional director Browning. The language indicates that the contracting decisions had been run through Cheney’s staff, with the president standing in line to sign off: “Accompanied OHRA [Office of Reconstruction and Humanitarian Aid] leader to get release of declass and authority to execute RIO. DepSecDef sent us to UnderSecPolicy Feith and gave him authority to approve both. Declass-Feith approved, contingent on informing the WH [White House] tomorrow. We anticipate no issues, since action has been coordinated w[ith] VP’s office.”
The Corps of Engineers made one attempt to create a bidding process—or at least the illusion of a bidding process. Five months after the February meeting that allegedly cost Bunny Greenhouse her position, the Corps of Engineers reopened some of the Iraq oil contract work for competitive bidding, informing contractors that $2 billion in work would be made available. The bidders’ conference was held in Dallas on July 14, 2003, and 184 contractors signed in.
“It was a farce,” says Sheryl Elam Tappan, who prepared a proposal for Bechtel. “The Iraq work plan was posted on the Internet on July 7. I read it the next morning, and it was crystal clear to me that it was all signed by U.S. government and Iraqi Ministry of Oil people who had agreed to commit to Halliburton.”
Tappan, a consultant with twelve years of experience writing contract proposals for engineering, environmental, and construction companies, including five years with Bechtel, was so offended by the process that she wrote a self-published (and career-ending) book entitled Shock and Awe in Fort Worth. In her book, Tappan makes a good case that the game was over before it began. Her title itself poses an interesting question. Why was such a big contracting process run out of the Corps’ regional offices in Fort Worth instead of Washington?
As bidders gathered in Dallas, Halliburton was already on the ground in Iraq, and more work was in the pipeline as a result of the contract that Greenhouse had protested. Tappan ran the numbers on a ten-page spreadsheet and concluded that 82 percent of the $1.144 billion for which Bechtel executives believed they were competing was already assigned to Halliburton by default. The work in Iraq was scheduled to be completed by December 2004. The Corps of Engineers wouldn’t announce the “two winners” to emerge from the Dallas conference until October 15. In the end, it didn’t wrap up the process until January, by which point many of the projects that bidders believed they were bidding on were already under way or even completed.
“Nobody in that room believed the process was fair,” Tappan says. “But contractors are like a big dysfunctional family. They keep quiet and take the abuse. If they get a reputation for speaking out in public, they fear they will lose work later.”
Bechtel eventually retracted its bid, though it competed for other work in Iraq. The company’s withdrawal from a bidding process in which it already had a substantial investment amounts to an indictment of the system the Corps of Engineers was using. An executive at another company involved in the bidding agrees. “It was evident,” he says, “that we were competing for far less than what the Corps of Engineers said was available.”
In the three years since Bechtel and the others got shut out in Dallas, KBR has emerged as the biggest and perhaps the only winner in the disastrous war in Iraq. But the victory might be short-lived. Iraq has obviously been better for KBR than it has for the vice president, whose public support is somewhere under 20 percent, but because the war hasn’t gone quite as Cheney predicted it would, KBR’s revenue stream is drying up. American and Iraqi money intended for rebuilding projects has been siphoned off to provide security in a civil war precipitated by the American invasion.
Corporations face legal sanctions, fines, and civil liability for lying to prospective shareholders, so KBR has had little choice but to admit that things aren’t going so well in Iraq. After the company’s 2006 prospectus was released, the Pentagon announced that the next contract to provide logistical support for troops stationed in Iraq would be split into three parts. The Army has apparently decided that the old process of sole-source, long-term contracts discourages accountability, competitive pricing, and a broader range of services for the troops. This decision, if a little late, vindicates Bunny Greenhouse—and will certainly be included in the whistle-blower case her attorneys are preparing.
The vice president’s office did not respond to questions regarding his possible involvement in the Halliburton contract. Yet an answer to the question, Did the vice president personally steer business to the company he had left two years earlier?, is not unobtainable. The House Committee on Government Reform could subpoena Scooter Libby and ask him. Or use its subpoena power to bring in Halliburton executives and ask them. That, however, is not going to happen—unless the Democrats win a majority of House seats this month. The House Committee on Government Reform routinely overrules Henry Waxman’s subpoena motions—on a straight party-line vote. (Waxman’s enthusiasm for robust congressional oversight lies at the heart of Republican fears of a Democratic takeover of the House in 2006.)
So the story continues to evolve. Halliburton is at $16 billion and counting on its Iraq totals, even as profits decline. Greenhouse is awaiting her day in court, which might provide answers to some questions related to Halliburton. Michael Mobbs won’t be back to tell his story to a congressional committee hearing open to the press and public unless and until Democrats control Congress. And as the country looks toward the midterm elections, the vice president has had little to say about Halliburton. He brushes off reporters’ questions on the topic. He has largely ignored Waxman’s inquiries. When Vermont senator Patrick Leahy approached him on the Senate floor a few months before the 2004 elections and mentioned the sole-source contracting that Greenhouse had challenged, Cheney’s response was straightforward.
“Go f— yourself,” said the vice president of the United States.
From Vice, by Lou Dubose and Jake Bernstein. © 2006 by Jake Bernstein and Lou Dubose. Published by arrangement with Random House, an imprint of Random House Publishing Group, a division of Random House Inc.
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