Military Contractors in Iraq Try to Play Straight Game

Democrats critical of the exclusive contracts going to private companies helping to rebuild Iraq (search) stepped up attacks last week following President Bush's request that Congress provide $87 billion for military and reconstruction projects there.

Led by Senate Minority Leader Tom Daschle (search), D-S.D., and House Minority Leader Nancy Pelosi (search), D-Calif., Democrats suggested in separate press briefings that the major corporations involved in the reconstruction – namely Halliburton Co. (search) and its Kellogg, Brown & Root construction division – were profiteering from the war.

They also complained that the Bush administration was pouring millions into Iraq while ignoring holes in the domestic budget.

“If we are going to spend billions and billions of dollars rebuilding the infrastructure and creating jobs in Iraq, we should be spending at least that much rebuilding the infrastructure and creating jobs in the United States,” Pelosi said.

Taking a swipe at the private companies now working in Iraq, Daschle demanded Bush offer “a plan to ensure that Halliburton and other corporations like Halliburton are not in a position to profiteer on whatever money goes into Iraq.”

Republicans countered that only so much "profiteering" can come from constructing base camps, providing food, showers and logistical support for troops, fighting oil fires, restoring pipelines, constructing buildings and working to replace power, phones and other infrastructure.

"One of the things we are concerned about is getting more American jobs,” said John Feehery, spokesman for House Speaker Dennis Hastert, R-Ill. “Right now, there are American companies helping to rebuild Iraq and there is nothing wrong with that."

Feehery added that energy services company Halliburton, as well as Bechtel National Inc., the second-largest corporation working in Iraq, employ thousands of American workers, both in the United States and abroad.

Democrats should not mix up obligations to Iraq with their criticism of Bush on domestic policy, warned Greg Crist, spokesman for the House Republican Conference. If anything, he said, Halliburton and Bechtel, both American firms, are helping the U.S. economy.

"If U.S. companies can help [Iraq] get back on its feet in a safe and stable way, why not assist them? If it creates U.S. jobs, that’s another asset," Crist said.

Houston-based Halliburton employs 96,000 employees worldwide, including more than 31,000 in the United States. It has a 10-year Logistics Civil Augmentation Program contract with the U.S. government that requires the contractor provide a range of combat-related support anywhere in the world within 72 hours of notice.

Under the current contract, Halliburton has sent company employees, often local subcontractors, into Kuwait, Turkey, Afghanistan and other countries fighting the war on terror. Contractors in Iraq currently provide civil engineering, logistics and support services to U.S. forces there.

The company, which won the LOGCAP contract through a competitive bidding process in 2001, bills the Pentagon for its services. The current contract so far has been valued at $1.4 billion, said Wendy Hall, Halliburton spokeswoman.

Halliburton has also billed the U.S. Army Corps of Engineers $950 million under its “Restore Iraqi Freedom” contract, which provides services for firefighting, oil spill clean-ups and other emergency repair work, Hall told

The company, which has been in the military contract business for 60 years, attributed a profitable second-quarter in part to its Iraq business. In July, it reported a profit of $26 million compared to a $498 million loss in the same quarter of the previous year.

But company officials bristle at Democrats’ suggestion they are profiting from war.

"To suggest that either Halliburton or any of the firms that support the Department of Defense advocate war in order to make money is an affront to all hard-working, honorable Halliburton employees who are dedicated to serving our customers and doing that is right," officials said in a recent statement.

Meanwhile, Bechtel has a $680 million contract with the U.S. government for infrastructure projects, and that number is expected to increase by $350 million, though it is not yet official, company officials told

Though it mostly subcontracts abroad, Bechtel has about 16,000 American employees stateside and 27,000 overseas, according to officials. Recently, it announced a $25 million deal with New Jersey-based Lucent Technologies to help rebuild the Iraqi phone network.

In the United States, Bechtel is working on the massive central artery tunnel project in Boston, which has a price tag of $14.6 billion, said company officials.

Critics complain that Halliburton and Bechtel received their Iraq contracts on a controversial "no bid" basis, and have suggested that in Halliburton's case, the company got special treatment because Vice President Dick Cheney was the corporate executive officer there before he quit to run for office in 2000.

"[It] raises some question that Halliburton had some inside track. I know the administration says they are the most qualified, and maybe they are, but why go about it in such a secretive manner?" asked Mary Boyle, spokeswoman for Common Cause, a grassroots public interest group in Washington, D.C.

"We want to see Iraq built and the country put back together again, our concern is not with the dollars, but with the way they are spent," Boyle said.

Cheney, who divested himself from all Halliburton holdings and severed ties with the company more than three years ago, addressed the criticisms Sunday, telling a morning newsmaker show that he had nothing to do with the current Halliburton contracts.

"As vice president, I have absolutely no influence of, involvement of, knowledge of -- in any way shape or form -- of contracts led by the [U.S. Army] Corps of Engineers or anybody else in the federal government," he said.

Cheney added that suggestions that the company had a short line to the administration were "nothing but innuendo and basically political cheap shots."

Jack Spencer, defense and security analyst for the Heritage Foundation, said nothing conspiratorial went into the hiring of these two companies. Rather, they are specialists capable of getting critical work done quickly.

"It has everything to do with their experience – that’s why the first wave of contracts are going to these companies – it has nothing to do with the Bush and Cheney contacts,” said Spencer. "They are naturally going to go to the companies that have these unique capabilities to do what needs to be done."

Crist said he didn't think the criticisms will successfully play themselves out.

"I think it’s a political argument and not one that Americans are responding to because they are anxious to see Iraq get back on its feet," he said. "That’s our exit strategy."