Halliburton Iraq contract expands
Wednesday, May 7, 2003 Posted: 0640 GMT ( 2:40 PM HKT)
WASHINGTON (CNN) -- The Army Corps of Engineers says a contract awarded
without competition to a subsidiary of Halliburton included not only putting out oil well
fires in Iraq but also "operation of facilities and distribution of products."
Officials previously have said the multi-million dollar contract only dealt with putting out
oil well fires and performing emergency repairs as needed.
The awarding of the contract in March prompted some lawmakers, including Rep. Henry
Waxman, D-Calif., to question whether the administration's deep ties with Halliburton
helped secure the contract -- charges the White House has adamantly denied. Vice
President Dick Cheney formerly ran the company.
In a letter to Waxman dated May 2, Lt. Gen. Robert Flowers, the U.S. Army Chief of
Engineers, gave further details about what the contract entails: that the company would
put out oil well fires and assess the facilities; clean up oil spills or other environmental
dangers at the sites; repair or reconstruct damaged infrastructure; operate facilities and
Flowers did not elaborate on what he meant by "operation of facilities and distribution of
products." The White House has long said the oil of Iraq belongs to the Iraqi people.
Waxman had written Flowers seeking answers as to why the contract has "no set time
limit and no dollar limit and is apparently structured in such a way as to encourage the
contractor to increase its costs and, consequently, the costs to the taxpayer." Waxman has
said the contract to Kellogg Brown & Root (KBR) could be worth up to $7 billion over
In his response, Flowers said that sum was based on the "worst scenario" that a large
proportion of Iraq's 1,500 wells would be set ablaze, and that there would be "massive
intentional oil spills and pollution resulting from the fires." It turned out only a few oil
wells were set ablaze during the war.
Flowers said "task orders are placed only for work that is required in the near term."
"For each order, the government establishes the scope of work and estimated cost. The
scope of work is presented to the contractor, who prepares its technical and cost proposal
for accomplishing the work," wrote Flowers.
He did not give an overall dollar amount on the contract.
Halliburton has said accusations that it received preferential treatment were off-base. It
has said KBR is the only contractor that could implement the complex contingency plan.
In a March press release, Halliburton said once the oil well fires were put out, it would
"provide for the continuity of operations of the Iraqi oil infrastructure."