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| Iraq | |
| Bush: U.S. Expects Overcharge Money Back | |
| 2003-12-13 | |
| President Bush said Friday the United States will expect Vice President Dick Cheney’s former company to pay back money that it is suspected of overcharging the government on contract work in Iraq. "If there’s an overcharge, like we think there is, we expect that money be repaid," the president told reporters. A Pentagon audit found Cheney’s former company may have overcharged the Army by $1.09 per gallon for nearly 57 million gallons of gasoline delivered to citizens in Iraq, senior defense officials say. "I appreciate the Pentagon looking after the taxpayers’ money," the president said. "They felt like there was an overcharge issue." Bush said the Pentagon put the issue "right out there on the table for everybody to see and they’re doing good work. We’re going to make sure that as we spend money in Iraq, that it’s spent well, it’s spent wisely. "Their investigation will lay the facts out for everybody to see," Bush said. Fair enough, do this a few things and it’ll blunt the Dean claims about the snugness of the administration with Halliburton et al.
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| Posted by:Steve White |
| #23 Just because Gas cost $1 in Kuwait doesn't mean it cost $1 after you ship it to Baghdad With guaranteed delivery. In a combat zone. Using sub-contractors. Using sub-contractors who are Arab (speaking from experience). |
| Posted by: Pappy 2003-12-13 10:41:37 PM |
| #22 On the gas issue, it will be interesting to see how the Iraqis deal with their gas shortage. I would elliminate price controls on gas and electrical power and see whether the result would be construction of new refineries and power plants. That would be a tough sell. |
| Posted by: Super Hose 2003-12-13 9:36:34 PM |
| #21 "The power / cheating thing goes both ways" Warning! Very long sentence follows! Having been on both sides of this, $285 of the $290 margin on the $300 hammer probably got spent on something sine qua non after the fact the Gummint didn't want to rewrite the contract for. One place I worked we charged $50/pair for 25-cent 3AG spare fuses. We stopped doing that and started giving them away. Lost less money selling fuses that way. |
| Posted by: Glenn (not Reynolds) 2003-12-13 5:50:18 PM |
| #20 rkb, excellent posts. The depressing thing about Traveller is that his/her ignorance of federal contracting reality and the instinct to mindlessly assert "corruption" for every common bump in the road is shared by the major media, and is passed on to the general population. There was a too-weak op-ed in the WaPo a few weeks back timidly denouncing the sort of ignorant demagoguery at the root of Traveller's rant and similar "coverage" in the media -- but that's been about it. The administration's failure to educate and harshly attack the more egregious distortions concerning contracting is puzzling and disappointing. We are in a sorry state, comparable to the make-believe worlds inhabited by Third Worlders fed on state-run media, when a "news" service can (as pointed out above) refer to Halliburton as "Cheney's former company" as though it is a meaningful or comprehensible reference. Hmm, I guess not a big shocker there -- major media utterly failing to correctly inform their audience. I managed some foreign aid programs for a while, and am very familiar with the complexities and pitfalls of prime contractors and local sub-contractors, especially those in armed conflict situations. It was an eye-opening experience. The other eye-opener has been encountering the hysterical, ignorant misunderstanding of these matters by those who've not worked on them. There are errors and corruption, of course, as there will be until such programs are managed and performed by robots. But the threshhold for "appearance of corruption" is so low, due to the ignorance noted above, that the whole discussion ceases to be serious. I heard somewhere -- and it squares with the known facts -- that KBR might have been leaned on not to push the Kuwaiti supplier too low, as the Kuwaitis had provided a huge amount of fuel for free during the prep and major combat ops. A "get well" gesture to the Kuwaitis. Plausible, and exactly the sort of reasonable real-world mutualism that triggers all the auditors' alarms and falls on deaf ears in the contracting office ...... and conveniently provides fodder for hysterical airheads of the media and the Nine Dwarves. And of course the short-term, small-batch effect you described would easily explain at least some of the bad pricing. Let's see -- if I buy a 50-lb sack of Thai jasmine rice at the store, it's much cheaper than the 10-lb sack .... they must be "gouging" me on the smaller sack! This is the sort of infantile "reasoning" that underlies the ranting of Traveller, the media, and the Dwarves. |
| Posted by: IceCold 2003-12-13 4:51:02 PM |
| #19 little economic lesson here too. Just because Gas cost $1 in Kuwait doesn't mean it cost $1 after you ship it to Baghdad Indeedy, this is where Risk Theory comes in handy and of course as a professional I always advise the novices to play Turkey. |
| Posted by: Shipman 2003-12-13 2:14:22 PM |
| #18 WOW I can just see the fur fly! Traveler, IF HB overcharged us we will get if back. This GAO report is not complete so I think the jury is still out. I remember about six years ago Lockheed overcharged the Air Force and we got return then. In case you have forgotten Billy Bob was in the White House at the time. I think everyone needs a lesson on what, what, and where is Haliburton. They're are a specialized company that provides AMERICAN services and infrastruture to the U.S. Military for DECADES. They have provided services under Dems and Rep alike. A little economic lesson here too. Just because Gas cost $1 in Kuwait doesn't mean it cost $1 after you ship it to Baghdad. Also I doubt very much that President Bush had the time to measure every gallon of gas, dinner cooked, or killwatt produced in Iraq. That is why the GAO is checking things out. Gee, I think they call that "THE SYSTEM IS WORKING!" P.S. I DO NOT WORK FOR HB. |
| Posted by: Cyber Sarge 2003-12-13 1:24:53 PM |
| #17 And let's not forget when KBR and Halliburton won these no-bid contracts: During the Clinton administration. Kinda makes the question of who was playing corporate cronyism complicated, doesn't it? |
| Posted by: Robert Crawford 2003-12-13 10:37:34 AM |
| #16 To summarize rkb's excellent posts: This is the government version of that moment in the grocery when you look at the receipt, see something you don't understand, and say "Hey, wait a minute..." |
| Posted by: snellenr 2003-12-13 9:53:56 AM |
| #15 rkb - Kick-ass explanation! I've only submitted a bid for a govt contract gig once, back in 1982, with LTV near Dallas - and it was a nightmare. Whomever wrote the spec for this software was both insane and without a clue as to what software is. Didn't get it. Now I'm glad I didn't! Thx, rkb, for your knowledge and articulate description... I'll be borrowing from it, time to time, I'm sure! |
| Posted by: .com 2003-12-13 9:47:54 AM |
| #14 One last comment on this:
I could list the detailed stories here, but won't unless someone asks since it's Fred's bandwidth. But I will say this: it does happen and it can force companies to fire good people as a result, while the federal employee gets a great review for "cutting costs".
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| Posted by: rkb 2003-12-13 9:40:25 AM |
| #13 Congress' General Accounting Office found in 1997 and 2000 that KBR had billed the Army for questionable expenses on its support contracts for operations in the Balkans. Those reviews cited instances such as charging $85.98 per sheet of plywood that cost $14.06 and billing the Army for cleaning some offices up to four times per day." Can't comment on the office cleaning charges, but Traveller either hasn't thought at all about contracting or s/he is deliberately citing misleading numbers re: the plywood. Your local lumber yard might charge $14.95 for a sheet of plywood. But the cost to a contractor of providing that sheet on a job goes way beyond the direct cost of the material. In order to supply that sheet, the contractor has to have or rent a truck to pick it up and has to pay the driver. Or, it might negotiate a shipping charge from the supplier. The contractor has to have a purchasing agent to find the best overall price and book keepers to record the purchase. The contractor also has to have a program office that reports the detailed costs to the government every month in the exact format required by law. The contractor also has to have a manager who makes sure this all happens correctly. This stuff adds up, folks. Can companies try to pad these costs? Sure. But are they in general legitimately part of the cost the government must pay? Certainly. Consider this: if the government bought that plywood itself, it would have to pay shipping charges or hire truck drivers and buy trucks. It would have to pay its own purchasing agents to find the right supplier and have a government lawyer oversee the purchasing contract, and pay a government employee to keep the books correctly ..... which would all cost taxpayers a whole lot more than $14.95 a sheet for that plywood. Plus, we'd then be stuck with extra bureaucrats who are hard to downsize and who get guaranteed pensions 20 yrs later. |
| Posted by: rkb 2003-12-13 8:53:15 AM |
| #12 Beyond the inefficiencies of military contracting in general, it's quite likely that what was going on here was the direct result of attempts on the government's side to keep their options open and to not automatically be committed to Halliburton. Here's the gist of it: 1) DOD knows that repairing the oil infrastructure is key to Iraq's future and that that infrastructure will be a prime target in the war. So they dispatch special forces to protect key oil assets and, before going over the border, do an emergency contract with an existing contractor who is one of the best in the world at emergency and logistics services, both. This contract, while awarded without competition, mirrors the competitive logistics support bid that Halliburton won for all bases worldwide, under the Clinton administration. Since 1992 Halliburton has performed well on that original contract and successor contracts, so this looks like our best bet to get things moving. 2) One big advantage to giving this contract to Halliburton this way is that the government has a set of recently audited cost figures for Halliburton personnel, etc. Those would have been used to set prices for this contract too. More generally, they know the way that Halliburton's books are kept, because they are regularly audited as part of normal contract management. So the only real unknowns here are the costs of materials/services supplied by subcontractors. 3) In order to keep their options open, DOD insists that they will only order fuel from Halliburton in monthly batches. This forces Halliburton to subcontract for a month at a time rather than 3-6-12 month contracts where they might get a better volume discount. No matter what the price on this, however, Halliburton's profit margin is small and fixed by the terms of the original contract. 4) Democrats raise a huge fuss and demand that Halliburton disgorge "huge overcharges". Auditors decide that they have cost comparisons to warrant refusing the materials costs submitted (i.e. the subcontractor fuel charges). Note that this sort of issue comes up all the time in a variety of federal contracts and there is a normal negotiation process by which the company defends its charges. Sometimes the companies win that argument, often there is a compromise. So having this be up for discussion is a pretty routine step. I don't know -- and neither does anyone on this list -- whether Halliburton could indeed have negotiated tougher terms with the Kuwaitis who delivered the first months of fuel. (Realize that due to the time it takes to submit invoices and for the government to pay them, we are probably talking about the May-July time frame here.) But what I do know is that this issue has been enormously politicized from day 1. It is absurd IMO to criticize DOD for that sole-source contract to Halliburton, for several reasons: a) There was an immediate need for quick, reliable services. Halliburton has a proven track record and is one of the top emergency service providers in the world. It also holds the master logistics support contract for all US bases world wide - a contract awarded originally under Clinton and renewed multiple times since then based on excellent performance. This is no small issue. Planning and executing the complex tasks needed for work like this requires a company to have a lot of corporate systems and skills already in place. There really are very few companies who could have performed well under these circumstances and arguably none have shown themselves able to do so as much as, and to the degree that Halliburton has. b) Moreover, precisely because of that logistics master contract, the feds know Halliburton's books and costs very very well. This increased the government's ability to audit their books and ride herd on costing. c) The Iraq contract is a master contract that is organized into task orders. In other words, it did NOT automatically give Halliburton a huge amount of business. Instead, it gave the government a way to issue purchase orders for fuel and services, up to a huge total amount - but Halliburton was not guaranteed how much of that total would actually be awarded. Moreover, the nature of the work is that Halliburton is basically organizing and running work that is primarily being done by others, who get the bulk of that money, and must do so using local subcontractors whose own books etc. aren't open for easy audit and who can be expected to add a surcharge for danger and for the short-term nature of the purchases - which was imposed by DOD. Bottom line: DOD wanted it both ways. They wanted the stability and reliability that a prime like Halliburton can bring, but they only doled out the work in short-term contracts. Could Halliburton have negotiated a better price for fuel back in May-June? Maybe, don't know. Is most of the carping about this contract way off base. Yes, based on my own experiences with defense contracting, definitely so. |
| Posted by: rkb 2003-12-13 8:30:57 AM |
| #11 Val: Condemn the Report from Amnesty International? Of course, it was crap! You know it was crap, I know it was crap...What is there to talk about?...lol As to the Russian, German, and French pre-war debt? There may be something here I don't understand...I honestly don't know why we have not already declared it null and void...due and payable from the Hussein himself, if you like. Now go collect it. However, this may set a precedence that the United States does not want to become a part of, or habit, of the World Monetary System. I honestly don't know why we are hesitating in this regard...(But I do presume that President Bush knows something about this that I don't). It is the Corporate cronyism that I object to. I think that it has the potential to poision America's future for decades to come. I presume that you know that KBR was fined $2M in 1997 for just the same shit in the deactivation of Ft. Ord. Also...."Congress' General Accounting Office found in 1997 and 2000 that KBR had billed the Army for questionable expenses on its support contracts for operations in the Balkans. Those reviews cited instances such as charging $85.98 per sheet of plywood that cost $14.06 and billing the Army for cleaning some offices up to four times per day." This stinks, and I don't care where it comes from...I'm calling a spade a spade. As for the Ba'athist and assorted bad guys...kill them quickly but efficently. Bush should have listened to Gen Shinseki, (fired Army Chief of Staff for giving this opinion) we needed a much bigger military foot print in Iraq, and no amount of fantasy thinking can mask this fact. BTW, and because this is Rantburg, just to make you crazy...I believe that Hillary has been calling for more troops to be sent to Iraq for some time now. It is true that she said that she would prefer soldiers from other countries, but if not, then more troops from the US...in any event, more boots on the ground. You know, I don't care who gives this good and sage advice...it is still what is necessary and what should have been done long ago. |
| Posted by: Traveller 2003-12-13 8:04:29 AM |
| #10 Traveller - Much cleaner post, though your demands ring hollow. Calling Bush a chimp is a NaziMedia twit move. You want an honest debate? Save the *eye-roll* and posit facts. The fact is as Val stated it. If it weren't, the Beeb would've had a field day. They were, unlike you, but to my amazament, respectful of the fact that Halliburton was merely living by the contract specs and that Bush said we will keep 'em honest. Halliburton didn't profit from it - the problem is MilSpec, man. You must not have experience with the US Govt Military Procurement Procedures. Everything is over-speced to the nth degree to cover the asses of the procurement office. The result, quite often, is that you and I pay a higher price because only 1 out of 100 suppliers meets all of the specs -- or is willing to even try. That IS a worthy battle to fight, but in this case you've chosen the wrong enemy. Even if you don't respect the man, and you may be surprised to know I was a McCain supporter back in the Pubes Primary, respect the office. Dubya earned my personal respect when he became a true leader on and after 9/11. Prior to that he didn't have it, but the office did. He had been my Gov in Tx, didn't have it then, either. But I have no trouble in saying today that I will vote for him in 2004 because of his reaction to 9/11 and his intiatives in the WoT since. He grew into some very big shoes. And what he is doing is far more important that what you say he should be doing differently. Just passing along one man's viewpoint - no more gospel than yours. You can contribute here if you'll play the fact game, not the "Bush Lied!" BS game. At least some of what you've written since you came on-stream here is old debunked BS. Been there / done that. That's the reason for the rather uneven reception. So check your facts before typing, else you'll have your words shoved down your throat. It's not personal, it's about truth. To quote Twain (again), "We all do no end of feeling - and mistake it for thinking." C'mon on in, the water's fine. |
| Posted by: .com 2003-12-13 7:58:38 AM |
| #9 .com: Yes, we're there already: the Dems crossed over the line into outright sedition many months ago. Traveller: Believe me, my addle-brained little friend: you don't ever want to get close enough to me to whisper in my ear. I am NOT pleased that my son has to go off to war so that idiots like you won't have to live under sharia. General note: looking at Traveller's response to my earlier comment, it occurs to me that people like him actually think in strawman arguments. I've long been critical of idiotarians for their tendency to resort to strawman arguments as a debating tactic; but it never occurred to me that this is probably how their fuzzy little brains actually work. Poor, sick bastards. |
| Posted by: Dave D. 2003-12-13 7:51:30 AM |
| #8 DaveD - Good post, bro, and you sum up some of it in exceptional style. This bit brings up another question: "To me, the worst part of what the Democrats are doing is that they're actively encouraging the Islamic fanatics and Ba'athist holdouts to keep killing American soldiers in the hopes that we'll do what we did in Somalia: cut and run when the going gets too tough. Because of the Democratic Party's dishonesty and lust for power, and the image of weakness they are projecting, it is very likely that hundreds more American soldiers will get killed before the Islamofascists finally figure out that we're not leaving." Indeed. I've written den Beste on this topic to ask him to consider analyzing the point at which dissent becomes sedition. I think it's a fair question - and given the fact that their campaign isn't drawing like they hoped it would, they have fallen to new lows in directly calling for Americans to be killed by "insurgents" and that this is the price "we" must pay because Bush is Prez. The SF Banner calling on troops to kill their officers was the beginning of seditious activity to me - and these recent calls for more dead GIs to further their personal agendas is the end. So are we there yet? If not, what does it take? If we are then let's send these shitheads to meet Bubba. Bubba needs a new squeeze, methinks, and these cretins would do just fine. |
| Posted by: .com 2003-12-13 7:36:05 AM |
| #7 Traveller why don't you demand the same of Amnesty International's condemnations of "war crimes" and "violations" as in regard to the US? Why don't you demand the same of the French, Germand and Russian governments in regards to dealing with Iraq pre- and post war? And DEFINITELY why don't you demand the same kind of accountancy from the democratic candidates in what they say they want to do? Hmm? Is it probably because you're a hypocrite like so many on the left? |
| Posted by: Val 2003-12-13 7:36:02 AM |
| #6 Duh, Dave, where in the Rantburg Charter is the paragraph that says that Rantburg is a Criticize-Free-Zone for President Chimp? Does this really pass your smell test? Is all honest criticism unpatriotic and giving aide and comfort to the Enemy? I expect better from the President of the United States. No, that's not right, I demand better than the venal appearance of greedy self-dealing from our Commander in Chief. If the troops are groaning over this...they have the right. It is their blood on the line. Pisst, come 'ere, let me whisper in your ear...this stinks, doesn't it? Be honest now. Come 'on, you can do it...tell the truth, You're no happier about this than I. |
| Posted by: Traveller 2003-12-13 7:30:23 AM |
| #5 When I called my brother the other day to tell him that my youngest son's Guard unit had gotten called up for duty over in Iraq, his immediate reaction was to launch into a tirade about Cheney, Halliburton, Enron, and other imagined evils of the "corrupt" Bush administration. I didn't hang up on him, but I came damn close. This is a microcosm version of what's happening to our society overall: roughly two-thirds of us realize that we're at war, in a fight for our very existance against an evil even more threatening than was Soviet Communism, and that we've got to stand together in a united front if we are to have any chance of prevailing; but the remaining third have wandered off, duped by Democratic Party propaganda into resuming their jihad against Bush and the Republican Party, in a quest to get "revenge" for the 2000 Florida recount. To them, Bush is the "real" enemy. The Democratic Party presidential candidates have cynically chosen to exploit this struggle for political gain by sowing fear, pessimism and distrust of the administration's conduct of the war. They're also doing it with rank dishonesty: looking at their past public statements about Iraq, Saddam, WMD, etc., it's hard to believe that any of these people (with the possible exception of Dippy Dennis) actually believes so much as a single word of the bullshit they're now spewing out. To me, the worst part of what the Democrats are doing is that they're actively encouraging the Islamic fanatics and Ba'athist holdouts to keep killing American soldiers in the hopes that we'll do what we did in Somalia: cut and run when the going gets too tough. Because of the Democratic Party's dishonesty and lust for power, and the image of weakness they are projecting, it is very likely that hundreds more American soldiers will get killed before the Islamofascists finally figure out that we're not leaving. I was a Democrat for the first 31 years of my adult life, but no more. I can forgive being lied to incessantly about Medicare, taxes, social security, racism and the environment, but I cannot forgive their lying about a life-and-death matter like the war. Nor can I forgive ignorant, soft-headed jerks like "Traveller" their stupidity: there's no excuse for it. |
| Posted by: Dave D. 2003-12-13 6:54:02 AM |
| #4 Get a Clue? A Troll? To Be fair, I did go and read the BBC article: "They also said the firm had been planning to charge $67m too much for another contract to supply cafeteria services. The officials said KBR was not suspected of having profited improperly but may have failed to monitor the performance of its subcontractors." The reference is to the Pentagon saying KBR was not suspected...and who wants to bite the hand that will eventually feed you with a nice fat consulting gig? There are so many ways to for subsidaries to flow kick backs from subs that the mind boggles. Gentlemen this is your tax money being stolen with your explicit aproval. Have it your way. Corruption and cronyism are the bains of a truly free society. This would not happen under McCain. I can only rage that the political class in the United States leaves us no choice but between Bush, (a phony conservative running a 500B deficit & a crook) and what is coming to seem like on a bunch of clowns on the Dem side. This poverty of leadership choices may not distress you, but it does me. |
| Posted by: Traveller 2003-12-13 5:57:33 AM |
| #3 Even the Beeb reported it - exactly as Val said - and that had to hurt like hell! Traveller - you're a troll masquerading as a nice reasonable guy. You write oddly-spaced messages. You foam like an LLL NaziMedia ProTool. Piss off. |
| Posted by: .com 2003-12-13 5:02:30 AM |
| #2 Except Halliburton didn't profit by it Traveller. The local companies they outsourced to over there overcharged Halliburton/KBR for gasoline as well as other supplies, Halliburton/KBR documented those prices and submitted them. Get a clue. |
| Posted by: Val 2003-12-13 4:42:26 AM |
| #1 Fair Enough???????????? Lets see now...come on in and steal my money, and Oh, if you get caught...you'll have to pay it back? To me this sound like a rank and smelly invitation to come back and steal again...Hey, maybe you won't get caught this time....(snort!) This is War Profiteering on the worst order...just double charge on the gasoline our troops need to get around on...they are directly profiting on the blood and death of our soldiers. Everybody at Halliburton should be on the next bus to a Federal Prison. But Noooooooo...They are too close to Bush/Cheney to have any worry at all. This should be enought to make anyone here puke and realize that maybe not now, maybe not even in the '04 election, but this Bush Administration is going to go down in history as the most corrupt since Harding or even maybe Grant. Everyone should be so ashamed that our President isn't calling for the resignation and imprisonment of Everybody involved. Let us hang our heads! Rant over. |
| Posted by: Traveller 2003-12-13 2:46:42 AM |