WASHINGTON – The U.S. ambassador to Kuwait demanded last year that Halliburton Co. (search) retain a Kuwaiti subcontractor favored by Kuwait's government, an apparent contradiction of Bush administration assurances of a hands-off policy toward the company.
Administration officials repeatedly have asserted that only career government contracting officers got involved in contracting matters involving the Houston-based company once run by Vice President Dick Cheney.
State Department records made public Wednesday showed that then-ambassador Richard Jones sent an e-mail last December saying Halliburton officials needed to "get off their butts and conclude deals" that would keep Altanmia (search) as the sole company supplying gasoline for Iraq. The Kuwaiti firm was a subcontractor to KBR (search), a Halliburton subsidiary.
A separate Army document showed that the career contracting official overseeing the fuel purchase-and-delivery contract was demanding competition for Altanmia's work.
The Army's contract with Halliburton and the Kuwaiti firm ended earlier this year when the Defense Department gave the gasoline contract to a Pentagon agency that supplies U.S. forces with fuel.
During the presidential campaign, Democrat John Kerry said the Bush administration showed favoritism in giving Halliburton noncompetitive contracts in Iraq and elsewhere. Cheney, who was chairman and CEO of Halliburton before he became Bush's running mate in 2000, has denied any involvement in the contract decisions.
With Iraq experiencing a gasoline shortage after the U.S.-led invasion last year, U.S. officials gave Halliburton the job of obtaining fuel in Kuwait and delivering it to Iraq. The work became part of Halliburton's existing $2.5 billion no-bid work to restore Iraq's oil industry.
On May 4, 2003, Halliburton asked three Kuwaiti companies to bid. The next day, Halliburton, through its KBR subsidiary, placed its first order with Altanmia.
Jones said in his e-mail that he wanted "a deal done with Altanmia within 24 hours and don't take any excuses." The document, turned over to Rep. Henry Waxman, D-Calif., by the State Department, did not disclose to whom Jones' message was directed.
Another memo, this one to Jones, said: "As KBR has been told repeatedly, Altanmia is the GOK's (Government of Kuwait's) sole source provider. The GOK has established Altanmia as a sop to the USG (United States Government) in order to allow sales from Altanmia to KBR."
State Department spokesman Kurtis Cooper said Jones' e-mail was sent in his capacity as deputy administrator of the Coalition Provisional Authority (search), the U.S. entity that ran Iraq after the invasion. Jones "reflected the growing frustration felt by CPA officials over the problem of insuring delivery of badly needed fuel for Iraqi civilians," Cooper said.
State Department officials never "participated in decision-making regarding the contracts," Cooper added. Jones is a career State Department employee.
In October 2003, State Department spokesman Richard Boucher said only career contracting officers making contracting decisions, adding there is "a separation, a wall" between them and other officials.
Halliburton spokeswoman Wendy Hall said KBR "delivered fuel to Iraq at the best value, the best price and the best terms and in ways completely consistent with government procurement policies. The original mission detailed by the Army Corps of Engineers (search) was to find a fuel source in the region. The first fuel source found was in Kuwait."
The embassy intervention to retain Altanmia drew a strong protest from Mary Robertson, the Army Corps of Engineers contracting officer overseeing the fuel contract.
"My ethics will not allow me to direct KBR to go sole source to a contractor when I know there are other potential sources that can provide the fuel to the people in Iraq," she wrote an official of KBR on Dec. 6, 2003.
Robertson said the lack of competition would result in higher fuel prices being paid by U.S. taxpayers.
Five days later, a draft report by the Pentagon's audit agency disclosed that Halliburton and the Kuwaiti subcontractor had overcharged taxpayers $61 million for gasoline imports to Iraq in the initial months of the contract.
Waxman, who released the Army and State Department documents, is the senior Democrat on the House Government Reform Committee. He asked Rep. Tom Davis, R-Va., the committee chairman, to hold hearings on "the new evidence that senior administration officials applied political pressure to stifle competition and steer the lucrative fuel subcontract" to Altanmia.
Davis' spokesman, David Marin, said: "This committee's oversight of Iraqi contracting issues has been exhaustive, and it is ongoing. The minority's focus is entirely partisan. We're continuing to look at the recent State Department documents, and based on that review the chairman will decide what if any next steps are required."