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USA: Appointee's Role in Halliburton Pact Told


by T. Christian MillerLA Times
June 14th, 2004

WASHINGTON — Pentagon officials have acknowledged that a political appointee was behind the controversial decision to have Halliburton Inc. plan for the postwar recovery of Iraq's oil sector and had informed Vice President Dick Cheney's chief of staff before finalizing the deal, a Democratic lawmaker said Sunday.

The decision, overruling the advice of an Army lawyer, eventually resulted in the awarding of a $7-billion, no-bid contract to Halliburton, which Cheney ran for five years before he was nominated for vice president.

Rep. Henry A. Waxman (D-Los Angeles), who was briefed by Pentagon officials last week, issued a letter to the vice president Sunday demanding full disclosure of the secretive process that led to granting the contract to the Houston-based oil services giant.

"To help clarify these important matters, I urge you to disclose all contacts between your office and the Defense Department relating to the Halliburton contracts," Waxman wrote.

The congressman's account of the Pentagon briefing — along with recently released Pentagon memos obtained by the nonprofit group Judicial Watch and a draft General Accounting Office report obtained by the Los Angeles Times — offers the most complete picture to date of the unusual procedures behind the decision to award the contract without the competitive bidding usually required to protect taxpayer dollars.

The revelations follow a series of Democratic attacks against the Bush administration on the Halliburton issue.

Cheney repeatedly has denied having any influence over the decision to award the massive contract in March 2003. "As vice president, I have absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts let by the [Army] Corps of Engineers or anybody else in the federal government," he said on NBC's "Meet the Press" last fall.

Cheney's staff stood by that statement Sunday.

Pentagon officials also have said that Cheney did not influence the assigning of the contract. According to them, officials with Undersecretary of Defense for Policy Douglas J. Feith, who was responsible for overall postwar planning, spoke with Cheney's office as a courtesy to warn of a potentially controversial decision.

A Defense Department official contacted Sunday said that Feith's office, working with other agencies, "recommended" that Halliburton get the contract because of the company's "unique capability" to carry out oil field operations in a war zone. He also said that bidding on a subsequent contract was later opened up to other companies.

In an earlier interview, Lawrence Di Rita, the Pentagon's chief spokesman, said the process proceeded without bidding to ensure speed and discretion in the months leading up to the war. He said the final decision to award the reconstruction contract to Halliburton was made by the Army Corps of Engineers.

According to Waxman, the new disclosures were made Tuesday during a Pentagon briefing from Democratic and Republican staff of the Government Reform Committee, where Waxman is the ranking Democrat. Rep. Thomas M. Davis (R-Va.), the committee chairman, could not be reached.

At that meeting, Waxman said, political appointee Michael Mobbs — a special assistant to Feith — said that in the summer of 2002, he was put in charge of the Energy Infrastructure Planning Group, whose job was to create a plan for the reconstruction of Iraq's oil industry in case of war. Mobbs did not return calls for comment.

Mobbs told Waxman's staff that he soon realized that he needed outside experts to do the planning. He said he held "informal" discussions inside and outside the industry to determine who could draw up such plans.

By the fall of 2002, Mobbs had decided that three companies could do the planning: Halliburton, San Francisco-based Bechtel Group and Aliso Viejo-based Fluor Corp.

Contracting experts said that the determination of which companies are able to compete for a contract is usually made by career civil servants to avoid any appearance of political influence in the outcome. "The suggestion that political appointees would be directing that type of investigation does not seem consistent with maintaining the appearance of propriety," said Steven L. Schooner, a government contracting expert at George Washington University's Law School.

Mobbs reportedly told Waxman's staff that his group — not contracting officers — had chosen Halliburton to do the work since the company was already working with the military under a separate, multibillion-dollar contract to provide housing, food and logistical support.

Mobbs said an Army lawyer objected to using the logistics contract to conduct planning for the oil industry, saying that it was beyond its scope. A Defense Department lawyer working with Mobbs' task force, however, overruled the Army lawyer to allow Halliburton to conduct the planning.

The General Accounting Office, in a draft report expected to be released this week, concluded that the Defense Department lawyer had made a mistake.

Several experts described the pursuit of different legal opinions as out of the ordinary.

Defense Secretary Donald H. "Rumsfeld's political lawyers steamrollered the career guys to push through Halliburton's secret deal," said Charles Tiefer, a law professor at the University of Baltimore who recently wrote a book on government contracting. "It creates a disturbing appearance of influence when Cheney's lawyers are told several times Halliburton is getting special deals, and they never say, 'Make sure the career people agree this is being done right.' "

The next step in the process was taken in October 2002, when Mobbs reviewed his decision to use Halliburton with an executive committee of deputies from various government agencies. That panel included I. Lewis "Scooter" Libby, the vice president's chief of staff.

Mobbs told the panel that he never felt political pressure to award the contract. But he said he reviewed it with Libby and others to give them the chance to reverse his decision if they had political concerns.

Mobbs "confirmed that your office had a clear opportunity to exert influence over this proposal," Waxman said in his letter to Cheney. "He said that if anyone had raised an objection to selecting Halliburton without any competition, he would have gone back and reconsidered his approach."

On Nov. 8, the Army awarded Halliburton a $1.9-million order under the logistics contract to carry out the planning. Four months later, the Army gave Halliburton the no-bid job worth up to $7 billion to execute the plan that the company had developed, citing its role in drawing up the plan, according to documents obtained by Judicial Watch through a Freedom of Information Act request.

Democratic officials said that Mobbs knew all along that the lucrative contract would be given to the company that produced the plans in the first place.

"It was known it would lead to the… contract," said a senior Democratic staffer with knowledge of the briefing.
 
 


 





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