SPECIAL REPORT | July 31, 2008

Major Findings: DPC Oversight Hearings on Waste, Fraud, and Corruption in Iraq

Since December 2003, the Democratic Policy Committee (DPC) has held seventeen oversight hearings on waste, fraud, and corruption in Iraq. Over the course of these hearings, the DPC has heard from numerous witnesses, including former employees of the Army Corps of Engineers, the Coalition Provisional Authority, the State Department, and Halliburton. They have testified that the Bush Administration failed to follow long-established procedures for awarding contracts, mismanaged the performance of contracts it did award, and allowed contractors to engage in fraudulent and wasteful behavior. The DPC has also received reports on contracting abuses prepared by the Army Audit Agency, the Defense Contract Audit Agency, and the Special Inspector General for Iraq Reconstruction.


As the examples below demonstrate, these witnesses and reports reveal a disturbing pattern of abuse and mismanagement by the Department of Defense, the Department of Justice, the Department of State, Halliburton, Parsons, and the Coalition Provisional Authority. Although Administration officials pride themselves on their national security credentials, their inability to maintain proper oversight of military contractors has cost hundreds of millions of taxpayer dollars that could otherwise purchase necessary equipment for American troops. That figure will continue to rise unless the Secretary of Defense, Secretary of State, and other senior Administration officials take prompt and effective action to bring contracting abuse and mismanagement under control.


Abuses by the Pentagon


The Pentagon Failed to Properly Account for Costs of War and Reconstruction


"The information put out by the Department of Defense is at best confusing, and sometimes misleading and incomplete. The result is that it is very difficult for anyone to know what the wars in Iraq, Afghanistan, or the overall Global War on Terror actually cost..."


"In short, often the numbers just don't add up. For example, CRS reports that DOD does not count about $7 billion from its FY2003 regular appropriations act that was intended for GWOT but that it cannot track... DOD reports originally showed $38 billion in obligations for Iraq in FY2003, later revised to $42.4 billion. Most recently, DOD reports show $48 billion for Iraq in FY2003, which include not only obligations in later years but also $2 billion from an unknown source. All told this amounts to a $10 billion difference in the costs for Iraq in 2003 as reported by the DOD..."


"This puts the U.S. Congress in the position of not being able to maintain adequate oversight. The Congress does not have enough information to really know how much is enough, and whether the money is being properly spent and accounted for. The Congress also does not have adequate information to evaluate whether some of these funds might be better spent to achieve other specific purposes or goals." (Philip E. Coyle III, Senior Advisor, Center for Defense Information, DPC Hearing, 12/7/2007)


Halliburton Was Worst Contract Abuse Top Army Corps Civilian Had Ever Seen


"The abuse I observed called into question the independence of the [Army Corps of Engineers] contracting process. I can unequivocally state that the abuse related to contracts awarded to KBR represents the most blatant and improper contract abuse I have witnessed during the course of my professional career." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


The Office of the Secretary of Defense Controlled Halliburton's Oil Contract


"The independence of the USACE contracting process was unquestionably compromised with respect to the issuance of the Restore Iraqi Oil contract, known as RIO. I observed, firsthand, that essentially every aspect of the RIO contract remained under the control of the Office of the Secretary of Defense (OSD). This troubled me and was wrong. However, once the OSD delegated responsibility for the RIO contract to the Department of the Army, control over the contracting process by the OSD should have ceased. However, the OSD remained in control over the contracting process. In reality, the OSD ultimately controlled the award of the RIO contract to KBR and controlled the terms of the contract that was to be awarded even over my objection to specific terms that were ultimately included in the contract." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


The Pentagon Gave Halliburton Unfair Advantage


"In their conduct of the entire RIO [Restore Iraq Oil] program, I believe Pentagon officials, up and down the chain of command, ignored our federal laws and regulations and the procedures that normally ensure fair play. In 12 years, I never saw anything approaching the arrogant and egregious ways in which the [Army] Corps treated Halliburton's competitors and violated federal laws and regulations to ensure [Halliburton's] KBR kept its RIO work." (Sheryl Tappan, former Bechtel contract negotiator, 9/10/2004)


"That summer, I led Bechtel's proposal team in the Iraq oil competition conducted by the Corps of Engineers' Fort Worth District, the competition the Pentagon promised to give other contractors a chance at the billions of dollars of RIO work secretly awarded to Halliburton KBR that March. The irony is the 'Sons of RIO' competition turned out to be far more suspect than the sole-source award." (Sheryl Tappan, former Bechtel contract negotiator, 9/10/2004)


"I further raised a concern over which contract authorized payment for pre-positioning work KBR was doing in anticipation of being awarded the RIO contract. I was generally familiar with the scope of the LOGCAP contract and was under the impression that the LOGCAP contract was being used to fund the initial preposition work being done by KBR before the Iraq War commenced. I specifically questioned whether using LOGCAP funding was legal and insisted that a new contract be prepared. My concern over this issue ended when I was apparently provided misinformation that a new contract had been issued. This is the first time I can recall being overtly misled about something as fundamental as the existence of an underlying contract authorizing work to be done." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


"I learned that a specific basis to be used for the selection of the contractor was a requirement that the contractor have knowledge of the contingency plan KBR prepared for the restoration of Iraqi oil. The inclusion of this requirement meant that the RIO contract would have to be awarded to KBR because no other contractor participated in the drafting of the contingency plan and no other contractor had knowledge of the contingency plan itself after it had been prepared by KBR. What was particularly troubling about this arrangement was that contractors who are normally selected to prepare cost estimates and courses of action, such as the work KBR did when it prepared the contingency plan, are routinely excluded from being able to participate in the follow-on contract. (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


"The fact that [the RIO contract] was a no-bid, sole source contract meant that the government was placing KBR in the position of being able to define what the reasonable costs would be to execute the RIO contract and then charging the government what it defined as being reasonable. Given the enormity of the scope of work contemplated under the RIO contract, the exclusion of the contractor responsible for pricing out the scope of work to be done under the RIO contract should have been an imperative. Instead, it formed the basis of awarding the RIO contract to KBR." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)



The Army Corps Waived the Requirement that Halliburton Provide Cost Data


"[T]he Commander of the USACE, Lt. General Flowers, took the unusual step of issuing a waiver absolving KBR of its need, under the RIO contract, to provide "cost and pricing data." The Corps simply asserted that the price charged for the fuel was "fair and reasonable," thereby relieving KBR of the contract requirement that cost and pricing data be provided." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


The Pentagon Failed to Justify Halliburton Contract


"The Pentagon claimed Halliburton was best qualified because it extinguished 320 oil well fires in Kuwait, but, as pointed out, it was Bechtel, not Halliburton, who managed the entire 650 oil well firefighting efforts and the total oil field reconstruction program. And they did it in half the time experts said they would, which was widely reported. The Pentagon could have had Bechtel services just as quickly as KBR's, because Bechtel had at least two federal contracts that could have been used just as easily as LOGCAP." (Sheryl Tappan, former Bechtel contract negotiator, 9/10/2004)


The Pentagon Failed to Properly Supervise Halliburton's LOGCAP Work


"Contract management for LOGCAP needed improvement. Specifically:


  • Performance-based contract procedures weren't followed during the task order planning and statement of work preparation phases.
  • Recurring reports and support plans from the contractor sometimes weren't prepared.
  • Contract administrative authority wasn't properly delegated to the Defense Contract Management Agency.
  • Standing operating procedures for the LOGCAP Support Unit, which defined roles and responsibilities for contingency event contracting, weren't developed.


As a result, the Army had no assurance that contractor performance was meeting expectations. However, little was done to take meaningful corrective actions because the perceived performance shortfall was primarily caused by government actions or inactions." (U.S. Army Audit Agency Report, 11/24/2004)


"Although the government estimates and contractor's rough orders of magnitude had significant differences and lacked detail, the support unit wasn't advised of the need to revise, modify or correct its cost estimates by either management or the contracting office. These offices were willing to rely on the contractor's cost estimates with little or no question. Support unit personnel had limited contracting experience and didn't know how to prepare viable government cost estimates. Consequently, in the absence of any feedback, they didn't know their cost estimates couldn't be used to evaluate contractor's estimates." (U.S. Army Audit Agency Report, 11/24/2004)


The Army Corps of Engineers Was the Wrong Entity to Handle Oil Contracts


"When I did gain access to some of the high level planning meetings related to the implementation of the RIO contract I sensed that the entire contracting process had gone haywire. I immediately questioned whether the Corps had the legal authority to function as the Army's delegated contracting authority. The Corps had absolutely no competencies related to oil production. Restoration of oil production was simply outside of the scope of our congressionally mandated mission. How then, I asked, could executive agency authority for the RIO contract be delegated to the USACE? I openly raised this concern with high level officials of the Department of Defense, the Department of the Army and the U.S. Army Corps of Engineers. I specifically explained that the scope of the RIO contract was outside our mission competencies such that congressional authority had to be obtained before the Corps could properly be delegated contracting authority over the RIO contract. Exactly why USACE was selected remains a mystery to me. I note that no aspect of the contracting work related to restoring the oil fields following the 1991 Persian Gulf War was undertaken by the USACE, and there was no reason why USACE should take over that function for the prosecution of the Iraq War." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


The Pentagon Ignored Concerns of Top Army Corps Civilian


"Ultimately, I was most concerned over the continuing insistence that the RIO contract be awarded to KBR without competitive bidding for an unreasonable period of time -- two years plus the option to extend the contract an additional three years. I raised this concern with officials representing the Department of Defense, the Department of the Army and the Corps of Engineers. However, when the final Justification and Approval (J&A) of the RIO contract was forwarded to me for signature -- after the draft had been approved by representatives of the office of the Secretary of Defense -- the five year, no-compete clause remained in place. I could not sign the document in good faith knowing that this extended period was unreasonable. However, we were about to prosecute a war and the only option that remained opened to me was to raise an objection to this requirement. Therefore, next to my signature I hand-wrote the following comment:


'I caution that extending this sole source effort beyond a one year period could convey an invalid perception that there is not strong intent for a limited competition.'"


"I hand-wrote this comment directly onto the original document because experience had taught me that a separate memo outlining my concerns could inexplicably be lost. I wrote my comment on the original J&A to guarantee that my concern was not overlooked. Instead, it was just ignored." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)



The Pentagon Deliberately Circumvented Top Army Corps Civilian


"As the ramp-up to the Iraqi War escalated I was increasingly excluded from contracting activity related to the war effort. However, given my position, it was simply impossible to completely exclude me from the process."


"Significantly, it appears that a concerted effort was undertaken to ensure that I was kept in the dark about the [the request for a waiver of the requirement that Halliburton provide cost and pricing data under the RIO contract]. I have every reason to believe that the USACE knew I would object to the granting of the waiver if it had been presented to me for signature. So, I was specifically kept in the dark and did not learn of the existence of the waiver until I read about it in the press. Having reviewed the documentation used to justify the waiver, I can unequivocally state that I would not have approved it because the documentation relied upon to justify the fuel charges as 'fair and reasonable' was grossly insufficient." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


The Pentagon Attempted to Fire Top Army Corps Civilian for Expressing Concerns


"As a result of stating my concern in writing... and as a result of expressing other significant concerns over contracting matters related to KBR, I was eventually summoned to a meeting on October 6, 2004 at which time I was issued a memorandum notifying me that I was to be removed from the Senior Executive Service and from my position." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


The Pentagon Discouraged Top Army Corps Civilian from Testifying


"On June 24, 2005, I met with the acting General Counsel of the USACE. During the course of this meeting it was conveyed to me that my voluntary appearance would not be in my best interest. I was also specifically advised to clearly state that I do not appear as a representative of the Department of the Army or the United States Corps of Engineers." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 6/27/2005)


The Pentagon Showed No Interest in Oversight


Testimony of Barry Halley, former WWNS and CAPE Environmental employee, Linda Warren, former KBR employee, and Frank Cassaday, former KBR employee, 4/28/08:


"QUESTION: Thank you, Mr. Chairman. I join my colleagues in thanking you for your oversight in this area and for the numerous hearings that we've had and for the testimony today.


Thank you for coming forward. Much of your testimony is just shocking and surprising when you look at the details, Mr. Halley particularly. Everything from excessive billing to excessive workforce to fraudulent invoices to black market weapons to prostitution and it just seems to go on and on.


Your particular quote that 'it was clear to me that once you knew the right people in Iraq projects could just be created with little emphasis on contract performance,' that seems to permeate what the others have been saying. And, it makes me wonder, where was the department of defense in this whole equation? And, as more and more issues surface, where was the Department of Defense and where were the people in Washington, DC who were concerned about these kinds of activities?


My question is, on a scale of 1-10 of 0 being no interest and 10 being high interest, where was DOD in their oversight and involvement with these contracts, to your knowledge?


HALLEY: In my case, I never saw DOD officials actively investigating any of the cases or any of the contracts that I had been associated with.


QUESTION: So, on a scale of 0-10, 0 being no interest, what would have been their interest?


HALLEY: It would be a 0.


QUESTION: Ms. Warren?


WARREN: The same, I would say 0.


CASSADAY: I want to be perfectly fair about it, I'd have to say a 2. Some people cared, but not enough. As far as KBR went, they cared about themselves and they protected their own backs. That's about the way it was."


The Pentagon Allowed Still-Useable Equipment to Be Thrown into "Burn Pits"


"I observed burn pits throughout my time in Iraq, which resulted in millions of U.S. taxpayer dollars being wasted. Burn pits were used by the military and others to dispose of still-useable equipment and items that were no longer needed for a particular project, might need minor repair, or were difficult to transport and find storage."


"In Fallujah, I observed Iraqis scavenging in the burn pits for items that they could use. They would jump in the back of my truck and try to remove items I was not discarding."


"I saw flack vests, black and green jungle style combat boots, olive drab field jackets, ammunition crates, tires, inner tubes, and a large volume of food items. These items were going to waste in the burn pits." (Frank Cassaday, former KBR employee, 4/28/08)



The Pentagon Ignored Lessons Learned from Previous Conflicts


Testimony of Major General William Nash (Ret.), former U.S. Army commander in Bosnia-Herzegovina and former civilian administrator for the United Nations in Kosovo, 5/12/08:


"Throughout the 1990s, including my time in the Balkans, the U.S. government began to understand the complex nature of post-war operations and codified lessons learned, as well as improved planning for subsequent operations. In more recent times, this learning was disregarded, with devastating consequences in Iraq... Instead, the [Bush Administration's] plan was ad hoc and incomplete without clear responsibilities established. It was without vision or wisdom."


The Pentagon Ousted a Senior Auditor for Refusing to Approve Paying More than $1 Billion in Questionable Charges to KBR


"The years that I spent overseeing the LOGCAP III contract were initially the most fulfilling of my career, because I felt that the services provided under the contract were a key component to the well-being of U.S. troops during wartime. Were it not for the Army's decision to remove me from my position managing the LOGCAP III contract, I would still be serving the military. The Army's decision to remove me from supervision of the LOGCAP contract essentially ended my career with the Army, and made it impossible for me to be promoted to positions of greater responsibility. This was a bitter end to my 31-year career." (Charles M. Smith, Former Head of Field Support Contracting Division of the Army Field Support Command, 7/9/08)


Testimony of Charles M. Smith, Former Head of Field Support Contracting Division of the Army Field Support Command, 7/9/08:


"QUESTION: You indicated that you didn't know you were dismissed as the top contract officer of LOGCAP III until you showed up at a meeting and the person that replaced you was sitting at a meeting in your chair. Is that correct?


SMITH: He wasn't in my chair, but my recollection is it was after the phone conversation with General Johnson where I went off to work with my contracting officer, retrieve the 15 percent letter, draft up a new version, get that done. I returned to the overall conference we were having, with KBR and other government people, and I noticed in attendance was the chief of ammunition contracting office. I found that peculiar. And I asked Colonel Tim Considine, "Why is Mr. Laurel here when this isn't his business?" Colonel Considine said, "Well, yes it is. You're being replaced." And that's when I found out I was being replaced-when I walked into the room."




The Pentagon Paid $1 Billion in Questionable Charges to KBR Even After a Senior Auditor Refused to Authorize Payments


Testimony of Charles M. Smith, Former Head of Field Support Contracting Division of the Army Field Support Command, 7/9/08:


"SMITH: It was pretty clear that DCAA intended to issue a report that said the Army should declare these costs unreasonably incurred and not pay them. And so that report would have come into the contracting people and we would have then followed that report - there was no reason not to. And I would have requested that if those costs had already been paid that the government recoup those costs.


QUESTION: But that did not happen, and in fact the contract was changed so that there would not even be a future audit of the contract.


SMITH: That's correct."


The Pentagon Was Influenced By KBR's Threats To Cease Performance If Payments Were Withheld


"I am aware the Army has stated that these payments were necessary to keep KBR from failing to provide the correct support under LOGCAP. I do not believe this was the case. Certainly KBR on occasion told us that cash flow issues threatened performance. These statements were uniformly followed by a senior KBR leader assuring us that KBR would never cease performance under the contract. I believe such action would have done significant harm to KBR and threatened the existence of the company. Halliburton, the KBR parent, had provided the government with financial guarantees of performance during the solicitation phase, so they would have been involved in government litigation by such an action. Finally, there were many fine employees at KBR in leadership positions, often former military, who would not consider leaving our troops unsupported after accepting a contract to do so." (Charles M. Smith, Former Head of Field Support Contracting Division of the Army Field Support Command, 7/9/08)



The Pentagon Outsourced Auditing to Consulting Firm RCI


"General Johnson specifically asked that contractor RCI (now SERCO) be hired to do a pricing review of KBR proposals. RCI's pricing analysis replaced the DCAA audits as the basis for definitizing estimated costs on task orders. My understanding is that RCI performed regression analysis on incurred costs to provide estimates at completion. To do this would have required the auditable data which would have allowed DCAA to complete the audits in the first place." (Charles M. Smith, Former Head of Field Support Contracting Division of the Army Field Support Command, 7/9/08)


Testimony of Charles M. Smith, Former Head of Field Support Contracting Division of the Army Field Support Command, 7/9/08:


"QUESTION: And who is this RCI holding company that came in to replace you, I'd never heard of them before, it's not one of the major accounting firms, do you know who they are?


SMITH: I don't think they're an accounting firm at all, which was another one of my puzzlements, when they...


QUESTION: Who are they?


SMITH: They were a consulting firm, as much as I knew and I didn't know anything about them. We were directed by General Johnson to hire them initially to do some kind of back office work, for LOGCAP, and a lot of government is hiring, as we're starved for our own resources. Then it was his decision that he would use them to do this kind of cost analysis, heading towards these negotiations of definitizations and essentially displace DCAA in that process. Again by that time I had been moved out, and I found this extremely puzzling. I had never seen anything like that in 31 years--DCAA was our auditors, we had our own price analysts and technical people who could look at other parts of it. I've been involved in should-cost operations, I've been involved in pricing negotiations, and never have I seen that done. I did not know RCI at all, I noted when they were bought out by SERCO, and now SERCO has won an award as a planning contractor on the LOGCAP program, and so I assume it was mainly done by...the RCI part that they bought."



The Pentagon Failed to Provide Oversight for Contractor Electrical Work in Iraq


Testimony of Debbie Crawford, former KBR electrician, 7/11/08:


"QUESTION: So the Department of Defense had no oversight program to review the work. They had no process by which to see if the work was being done accurately and even after we had incidents of electrocution, they then implemented no process of oversight or investigation.

CRAWFORD: I'm not aware of any program or any organization. The DCMA, but they're evidently understaffed...


QUESTION: And so you would say DOD failed to have any oversight?

CRAWFORD: I think the U.S. government failed all across the board.

QUESTION: In not having oversight on this.

CRAWFORD: Yes. State Department, OBO [Overseas Buildings Operations], DOD, everyone."


Abuses by the State Department


The State Department Repeatedly Ignored Evidence of Corruption


Testimony of Judge Arthur Brennan, former Director of the Department of State's Office of Accountability and Transparency, 5/12/08:


"The Department of State has negligently, recklessly and sometimes intentionally misled the U.S. Congress, the American people, and the people of Iraq. In a sense, the Department of State has contributed to the killing and maiming of U.S. soldiers; the deaths of thousands of Iraqi civilians; the bolstering of illegal militias, insurgents and al Qaeda - and the enrichment and empowerment of the thieves controlling some of the Iraqi ministries... Billions of U.S. and Iraqi dollars have been lost, stolen and wasted. It is likely that some of that money is financing outlaws and insurgents such as the Mehdi Army."


State Department Officials Undermined Anti-Corruption Efforts


Testimony of James Mattil, former Chief of Staff at the Department of State's Office of Accountability and Transparency, 5/12/08:


"In the 11 months that I served in Iraq, the Office of Accountability and Transparency (OAT) was under-staffed for its mission and had NO operating budget. In fact, the proposed staffing of OAT was cut from 25 staff to 6 without knowledge or input from OAT staff, or any other known oversight. There was no transparency even within the office of transparency. Our job was to implement U.S. policy, but whenever we tried, our own officials blocked us."



Abuses by Halliburton


Halliburton Charged More Than $1 Billion in Unsupported Costs


"During my time as Chief of the Field Support Command Division, I personally saw KBR submit over $1 billion worth of unsupported charges to the government. The Defense Contract Auditing Agency (DCAA) documented as much as $1.8 billion in unsupported costs during that time." (Charles M. Smith, Former Head of Field Support Contracting Division of the Army Field Support Command, 7/9/08)


"[G]overnment auditors at the Defense Contract Audit Agency have identified more than $1 billion in 'questioned' Halliburton costs. DCAA challenged most of these costs as 'unreasonable in amount' after completing audit action because they 'exceed that which would be incurred by a prudent person.' The auditors found (1) $813 million in questioned costs under Halliburton's Logistics Civil Augmentation Program (LOGCAP) contract to provide support services to the troops and (2) $219 million in questioned costs under the company's Restore Iraqi Oil (RIO) contract to rebuild Iraq's oil infrastructure. The magnitude of these questioned costs significantly exceeds previously known estimates. The DCAA auditors have also found that an additional $442 million in Halliburton's charges are 'unsupported.' As a result, Halliburton's total

'questioned' and 'unsupported' costs exceed $1.4 billion." (Joint Report of Democratic Policy Committee and House Government Reform Committee Minority Staff, 6/27/2005)


Halliburton Failed to Test and Treat Water that Troops in Iraq Used to Shower and Bathe -- Which Instead Tested Positive for E. Coli and Coliform Bacteria


"In January I noticed the water in our showering facility was cloudy and had a foul odor. At the same time (over a two-week period) I had a sudden increase in soldiers with bacterial infections presenting to me for treatment. All of these soldiers live in the same living area (PAD 103) and use the same water to shower... During a discussion (on 1 Feb 2006) between [Lieutenant] Strating and a newly hired KBR water quality technician (Mr. Bill Gist) [Lieutenant] Strating mentioned the bacterial infections that I had been seeing in my clinic. Mr. Gist told [Lieutenant] Strating he had concerns that the [Reverse Osmosis Water Purification Unit (ROWPU)] concentrate reject was being used to fill the water tanks at the PADs. After hearing this [Lieutenant] Strating investigated. He went to the water treatment site and followed the lines from the ROWPU concentrate drain to water trucks filling up with this water. He then followed this truck and observed it pumping the water into the water storage tank at PAD 206. The PM team tested the water at the ROWPU concentrate distribution point. The results are as follows: ...Coliform Positive, E. coli Positive... After discovering that KBR was filling the water storage tanks with ROWPU concentrate, [Lieutenant] Strating gathered the base mayor ([Colonel] Grayson), the Q-West KBR site manager (Bernardo Torres), Rachel Vanhorn (KRB LNO), Mathew Wallace (KBR ROWPU Manager) and Bill Gist (water quality technician) to the ROWPU site and told them all at the same time that he had identified that KBR was filling the water storage tanks with ROWPU concentrate. Mr. Wallace stated that it has always been done this way and there is not a problem with it. [Lieutenant] Strating explained that it is against Army regulations (TB MED 577) to use ROWPU reject for personal hygiene." (E-mail from Captain A. Michelle Callahan, Brigade Surgeon, 101st Sustainment Brigade, 3/31/2006)


The Defense Contract Management Agency Has Confirmed that Halliburton Failed to Follow Proper Procedure


"[T]here was evidence suggesting that KBR was using outmoded and no-longer-valid procedures with regard to the obtainment and treatment of the water used for showering... DCMA Northern Iraq determined that it would be in the best interest of the Government for KBR to follow more stringent water-purification procedures. On February 7, 2006, DCMA Northern Iraq issued to KBR a Corrective Action Request (CAR), citing questionable water-supply practices for non-potable water and prohibiting the use of brine water for any activities involving human contact." ("Point Paper" provided by Defense Contract Management Agency, 4/7/2006)


Halliburton Failed to Chlorinate or Secure Water Used to Shower and Bathe at a Second Military Base in Iraq


"I had been told by the usual ROWPU lead that the water was chlorinated, and knew that such [a larva] could not survive in chlorinated water. I decided at that point to test the water in the employee's bathroom for chlorination. The test results indicated zero presence of chlorine. I then tested at several other locations in the KBR section of the base, and discovered no chlorine at those sites either. I then tested the nonpotable water storage tank and, to my shock, realized that the water in the tank tested negative for chlorine; that the access lid of the tank was not in place, let alone secure; and that the air vents to the tank were turned upward and left unscreened, leaving the water supply vulnerable to contamination from dust, insects, rodents, or even enemy attack. I was stunned. No trained water treatment specialist could claim that the water was fit for human use." (Ben Carter, former KBR Acting ROWPU Lead, Camp Ar Ramadi, 1/23/2006)


According to Its Own Theater Water Quality Manager, Halliburton Has Failed to Test Water at Locations Across Iraq


"I am also likely to believe that there is no documentation to support the 3x daily requirement for testing of shower/hygiene water (I apologize if I am wrong). This is in TB MED 577 8-10. This testing is required per our statement of work and I have yet to find an installation that does the required testing let alone has such documents to support their testing activities." (E-mail from Wil Granger, 7/15/2005)


In February 2006, Halliburton Admitted That It Lacked an Organizational Structure and Proper Standard Operating Procedures to Manage Its Water Contract


"KBR lacked an organizational structure to ensure that water was being treated in accordance with Army standards and its contractual requirements. KBR's then Standard Operating Procedure was unclear as to the proper treatment and handling of potable and non-potable water." (KBR "Final Report: Water Quality at Ar Ramadi" February 2006)





Halliburton Managers Instructed Employees Not to Notify the Military of Problems with the Water


"I then informed site management that we needed to notify the military that they should immediately chlorinate their water storage tanks, which drew from the same source. I was told by Suzanne Raku-Williams, the KBR site manager, that the military was none of my concern. I was ordered to concern myself only with the health and safety of KBR personnel." (Ben Carter, former KBR Acting ROWPU Lead, Camp Ar Ramadi, 1/23/2006)


Halliburton Knowingly Exposed U.S. Troops and Its Own Employees to the Deadly Chemical Sodium Dichromate


"Two [KBR] health, safety and environmental supervisors from Kuwait...told us that the plant was safe, that the plant had been checked out, and that it was OK for us to go back to work. When asked specifically about the chromium contamination, they said, and I quote, that it was 'at most a minor irritant' and that 'exposure to it would not pose any serious health risk'... I was also concerned about the Army personnel who were providing security for us. Those soldiers were from the Indiana National Guard and they were suffering from the same sort of symptoms that we suffered, as were the Iraqi workers whose exposure to the sodium dichromate was, if anything, worse than anyone else's." (Danny Langford, former KBR employee and technician, 6/20/08)


"...I know without question that [KBR was] keenly aware of the circumstances. They had had access to the United Nations post-conflict report...they had access to their own in-house industrial hygienist report -- they knew sir. Motivation was that, quite frankly, if I had not been on the site with my medical background...this would have been swept under the rug, that piece of the contract would have been done on time and under money -- they would have made money on the project." (Edward Blacke, former KBR health and safety coordinator, 6/20/08)


"Hexavalent Chromium is one of the most potent carcinogens known to man... I've never seen such high concentrations of Hexavalent Chromium... I would say they had a very severe exposure over the several months... It is my understanding that [an] inadequate and improper test was conducted on approximately 250 members of the Indiana National Guard who were exposed at the Qarmat Ali plant, not the proper test that measures the red blood cell level of chromium." (Dr. Max Costa, Chairman of the Department of Environmental Medicine at the New York University School of Medicine, 6/20/08)


Halliburton Served Spoiled and Expired Food to the Troops


"Food items were being brought into the base that were outdated or expired as much as a year. We were told by the KBR food service managers to use these items anyway. This food was fed to the troops. A lot of these were frozen foods: chicken, beef, fish, and ice cream. For trucks that were hit by convoy fire and bombings, we were told to go into the trucks and remove the food items and use them after removing the bullets and any shrapnel from the bad food that was hit. We were told to turn the removed bullets over to the managers for souvenirs. When I had the military check some of the food shipments, they would turn the food items away. But there wasn't any marking of the record, so KBR just sent the food to another base for use. The problem with expired food was actually worsened with the switch to PWC because it took longer for the food items to get to the base as they were shipped from the U.S. to a warehouse in Kuwait." (Rory Mayberry, former KBR Food Production Manager, 6/27/2005)


"KBR also paid for spoiled food. When Tamimi dropped off food, there was often no place to put it in to the freezers or refrigeration. Food would stay in the refrigeration and freezer trucks until they ran out of fuel. KBR wouldn't refuel the trucks so the food would spoil. This happened quite a bit." (Rory Mayberry, former KBR Food Production Manager, 6/27/2005)


Halliburton Charged for Meals Never Served


"KBR charged the government for meals it never served to the troops. Until late 2003, Anaconda was a transition site for army personnel. Because there could be large numbers of extra personnel passing through everyday, KBR would charge for a surge capacity of 5,000 troops per meal. However, KBR continued to charge for the extra headcount even after Anaconda was no longer a transition site. When I questioned these practices, the managers told me that this needed to be done because KBR lost money in prior months, when the government suspended some of the dining hall payments to the company. The managers said that they were adjusting the numbers to make up for the suspended payments." (Rory Mayberry, former KBR Food Production Manager, 6/27/2005)


"KBR was supposed to feed 600 Turkish and Filipino workers meals according to their custom. Although KBR charged the government for this service, it didn't prepare the meals. Instead, these workers were given leftover food in boxes and garbage bags after the troops ate. Sometimes there were no leftovers to give them." (Rory Mayberry, former KBR Food Production Manager, 6/27/2005)


Testimony of Barry Godfrey, former KBR Subcontracts Administrator, 12/7/2007:


"QUESTION: And the [sub] contractor was being paid as if they were serving 5,500 food - 5,500 troops?




QUESTION: And you found out they were serving only a thousand?


GODFREY: On the average."


Halliburton Punished Workers Who Raised Concerns


"Government auditors would have caught and fixed many of the problems. But [Halliburton subsidiary Kellogg, Brown & Root (KBR)] managers told us not to speak with auditors. The managers themselves would leave the base or hide from the auditors when they were on the base and not answer the radios when we called for them. We were told to follow instructions or get off the base. The threat of being sent to a camp under fire was their way of keeping us quiet. The employees that talked to the auditors were moved to the other bases that were under more fire than Anaconda. If they refused to move, they were fired and sent home. I personally was sent to Fallujah for 3 weeks. The manager told me I was being sent away until the auditors were gone because I had opened my mouth to the auditors. When I returned from Fallujah, the convoy was attacked. I was put in danger because the KBR managers didn't want me to talk with U.S. government auditors." (Rory Mayberry, former KBR Food Production Manager, 6/27/2005)


"I had repeatedly raised my concerns to my management through the vice president level within KBR. I was continually harassed and returned... I felt I was forced to resign..." (Barry Godfrey, former KBR Subcontracts Administrator, 12/7/2007)


"The laundry building where I worked was a metal, non-insulated, structure with no air-conditioning. I estimate that it was 120 degrees inside the building. The Iraqi employees of KBR had to drink from the potable water tank which was plumbed inside the building. But on this day the tanks were being rinsed out and the water which came from the tap was brown and seemed unhealthy to drink. My pregnant workers became ill from drinking the water, so I walked to the KBR offices to get cases of water to give to my workers who were all suffering from the heat. The KBR Chief of Services saw me take the water and distribute it to the workers, who were then able to drink clean water. He immediately demanded that I come to his office, which I did. He told me I was being written up for giving KBR property away to the Iraqis, to which I replied, 'You can take their gold and silver, and rip their tapestries off the wall, but I can't give them a drink of water?' He reminded me that I'd signed a confidentiality agreement when I was hired and then he said, 'You know something? A white woman wouldn't last very long on the streets of Baghdad!'" (Linda Warren, former KBR employee, 4/28/08)


Halliburton Put a Whistleblower Under Armed Guard


Testimony of Julie McBride, former KBR Morale, Welfare & Recreation Officer, 9/18/2006:


"MCBRIDE: When I went to Baghdad, I gave an administrator a three-sheet report where I stated some of the observations that I've told this committee today, in regard to the accounting that was being done in the [Morale, Welfare & Recreation] department. In fact, I called it 'cooking the books in true Enron style.'It was at that point that I was put under guard.


QUESTION: And you were kept under guard until they transported you out of the country?


MCBRIDE: Yes, sir."


Halliburton Manipulated Purchase Orders to Avoid Oversight


"For purchase orders under $2,500, buyers only needed to solicit one quote from one vendor. To avoid competitive bidding, requisitions were quoted individually and later combined into purchase orders under $2,500. About 70 to 75 percent of the requisitions processed ended up being under $2,500. Requisitions were split to avoid having to get two quotes. For purchase orders above $2,500, buyers were required to obtain two quotes. The buyer would select a high-quoting supplier and a more moderate preferred-quoting supplier. Thus, the buyer would be able to place the purchase order with a preferred supplier, as he or she knew that the quote submitted by the preferred supplier would be lower... We didn't worry about what it cost; we worried about whether it was available." (Henry Bunting, former Halliburton employee, 2/13/2004)


Halliburton Discouraged Full Disclosure to Auditors


"When I was there, I heard that we had the auditors in and that we were not supposed to talk to the auditors; that was the quickest way home." (Henry Bunting, former Halliburton employee, 2/13/2004)


Halliburton Overcharged for Oil and Oil Delivery


"During my tenure at DESC [Defense Energy Support Center] we were occasionally forced to pay sole-source prices in some locations, but not even in remote central Asia did we pay close to $2 a gallon for jet fuel -- and that's delivered. I believe that the most that we ever paid for delivered fuel was $1.40... When I got the first call about $2.65 gasoline in Iraq, it was a real head-scratcher..." (Jeffrey Jones, former Director, Defense Energy Support Center, 2/13/2004)


"[Overcharging for oil was] simply out of control. And there was nobody watching the store, and this is an area in which it didn't need to happen in. That's the other piece of it." (Jeffrey Jones, former Director, Defense Energy Support Center, 2/13/2004)


Testimony of Gary Butters, Chairman of Lloyd-Owen International, 6/27/2005:


"QUESTION: You testified, with your company's help, another company called Geotech was transporting Kuwaiti fuel to Iraq at a cost of 18 cents per gallon. Is that correct?


BUTTERS: That's correct.


QUESTION: Now, let's compare this to Halliburton's costs. Halliburton charged $1.30 per gallon to deliver gasoline from Kuwait. In other words, they charged over seven times more than you do. In your view, is there any way to justify such a large price difference?


BUTTERS: Frankly, there isn't. Our involvement has grown over the period of the year, so our costs have been commensurate with that growth. An existing transporter would have a larger infrastructure and would have greater overheads. And so, in all fairness, you could probably uplift our costs by 100 percent to, say, 36 around about there cents. I can't see how it can go further than that...


QUESTION: So you were doing the same thing that Halliburton was doing but you were doing it, the transportation of the fuel, at a fraction of the cost and you can see no other reason why they would have had such an inflated...


BUTTERS: None whatsoever. They were sourcing their trucks in the same Kuwaiti market that we were and all the difficulties we faced were the same that they faced. They just had a larger infrastructure and ability to deal with it."


Halliburton Interfered with Delivery of Oil for Iraqi Civilian Use


"As an example of the difficulties encountered, in 2004 KBR shut the border access to Lloyd-Owen citing that because Lloyd-Owen (nor Geotech) did not have a valid U.S. Military contract -- they denied us the privilege of using the Military crossing."


"Following hurried and emergency negotiations between various parties, a sense of reality was placed back into the situation, in that the fuel is Iraqi Government fuel on a Government-to-Government contract and the border should be immediately re-opened to Lloyd-Owen and Geotech. LOI are simply the facilitators of this project."


"Recently officials of the U.S. Embassy have inexplicably stated that the allowing of Lloyd-Owen to process the departure of Iraqi purchased fuel into Iraq via a strategic and secure route (the military crossing) is not valid and is possibly illegal and is only being allowed as a favor and in practical terms the fuel should pass through the civilian crossing."


"It will in fact be an absolute impossibility to get this many fuel tankers through the civilian Kuwait/Iraq border on a daily and continuing basis in order to maintain the fuel status quo inside Iraq. It would take approximately 30 minutes per truck to traverse the system or 60 hours per day -- it would not work -- with predictable and dire consequences for the situation and stability of Southern Iraq." (Alan Waller, CEO of Lloyd-Owen International, 6/27/2005)


Halliburton Failed to Complete Oil Infrastructure Work


"We have recently been approached to supply equipment to the Khor Zubayer oil terminal where we discovered, missing, broken, old or non-operational equipment apparently supplied by KBR. It is the claim of the Iraqi staff that this equipment, which was installed, was provided by KBR. Upon investigating the operational effectiveness of said equipment, we found at least three pumping and generating systems that were not operational due to old or incorrect requirements." (Alan Waller, CEO of Lloyd-Owen International, 6/27/2005)


Testimony of Alan Waller, CEO of Lloyd-Owen International, 6/27/2005:


"QUESTION: Let's turn to the fuel distribution infrastructure in Iraq. You work with this every day. And last year, Iraq's state-owned oil company, SOMO, asked your company to assess the fuel distribution infrastructure. Under Halliburton's oil contract, it was responsible for making sure Iraq had a functioning system for distributing fuel. What kind of job did Halliburton do? What was your assessment of the work Halliburton had done by May, 2004?


WALLER: I would have to say that with the fuel distribution program, that there was none. We were asked to initially assess our distribution points prior to delivery. We have not, to date, seen a functioning KBR piece of equipment to where we deliver, that is Mufriq, Shibar (ph), Nasariyah, Samawah, Diwaniyah, Amarah, Kut, Najaf, Karrada (ph) and Hillah. We have had to purchase equipment in order for us to download fuel such as generators, pumps, hoses, couplings. Otherwise, it would not happen.


QUESTION: In the past year, how many Halliburton employees have you seen working on the fuel distribution infrastructure?


WALLER: Initially, when we first began investigating the delivery of fuel, we held meetings with coalition forces and we met one KBR official at one of these meetings. Since that point, we have only come across one KBR person in Nasariyah and that was approximately one month ago. We visit these sites every single day and we have never come across a KBR official...


QUESTION: And you're also being then -- have witnessed, and you can't verify, but you've been told that the oil fields -- this is outside of Basra, the fields there that have been supplied equipment to rebuild them by KBR, that, that equipment is defective?


WALLER: Well, I can tell you firsthand experience that every installation that we deliver to does not have any equipment of a modern caliber that would even qualify as being recently placed there by KBR for the distribution of fuel throughout Iraq.


QUESTION: And that, again, directly impacts upon the ability, one, of the country to reconstitute itself economically, to generate revenues for its own economic recovery, but also on the supplies that are not available then, and the lines and the frustration of the Iraqi population?


WALLER: That's exactly correct."



Halliburton Failed to Follow Food Sanitation Guidelines


"The food service personnel were given sanitation rules from the Military Preventive Medicine information programs and rules to follow by the Armed Forces, but KBR managers informed us that the information was not to be followed, that they knew best, and to keep following their instructions. So our employees weren't following sanitation rules as set forth." (Rory Mayberry, former KBR Food Production Manager, 6/27/2005)


Halliburton Paid Too Much for Food


"KBR paid too much for the food itself. Initially, a company called Tamimi Catering was KBR's sub-contractor for the food. Tamimi paid local prices for the food products in the towns and cities around the base in addition to orders sent to their main office. Tamimi's pricing was fair for the condition of the country. Then, KBR switched to a new supplier, PWC. PWC's prices were almost triple what Tamimi's were. For example, tomatoes cost about $5 a box locally, but the PWC price was $13 to $15 per box. The local price for a 15-pound box of bacon was $12, compared to PWC's price of $80 per box. PWC charged a lot for transportation because they brought the food from Philadelphia. KBR switched from Tamimi to PWC because Tamimi complained about KBR's poor treatment of its staff; they were living in tents with sand floors and no beds." (Rory Mayberry, former KBR Food Production Manager, 6/27/2005)


Halliburton Overcharged and Double-Charged for Cases of Soda


"Soft drink (consumable soda) costs of about $617,000 on one task order for about 2,500 personnel were listed as a morale and welfare-related cost. Not only was the cost associated with individual drinks excessive, but it duplicated soft drinks included as part of food service costs." (U.S. Army Audit Agency Report, 11/24/2004)


Halliburton Overcharged for Vanity Towels


"There also was a requisition for 2,500 towels for a MWR facility in Baghdad. There were old quotes for ordinary towels. The MWR manager changed the requisition by requesting upgraded towels with an embroidered MWR Baghdad logo. He insisted on this embroidery, which you can see from this towel... The original purchase order for that, that I was discussing for these 2,500 towels, was for towels at a price of .38KD which was roughly $1.60 a towel. That towel [with the logo] would have cost around $4.50 and $5.50 per towel." (Henry Bunting, former Halliburton employee, 2/13/2004)


Halliburton Overcharged for Laundry, then Delivered Wet Clothes to Troops


"I put in several written requests for repair parts, and asked the camp manager to move two heavy duty washers and dryers that were stored in a warehouse to the laundry so that we could use them. No parts ever arrived, the equipment stayed in the warehouse, and the Marines suffered. The laundry was often wet when it was returned to the Marines because the equipment did not work properly. Even with these shoddy laundry facilities, I was told by the laundry supervisor that KBR charged the government $75 just to wash a bag of laundry which was normally less than 15 pounds." (Frank Cassaday, former KBR employee, 4/28/2008)


Halliburton Routinely Inflated Head Counts to Double-Bill the Government


"Each person who walked through the door signed the sheet. That was the actual count. The MWR facilities were broken down into different rooms, such as the gym, movie theatre, game room, video game room, and so on. Every time one of the troops went into another room where an activity was going on, he was counted again. On top of that, KBR did hourly counts. A KBR employee would walk through the building and count everyone present and add that to the daily count. It was possible for a soldier to be counted 8 times or more during his or her short stay in the building. The soldier might not have done anything but move from room to room to see what was going on, but KBR counted the solider at the moment the soldier walked through the door and every time the soldier stepped into a room where an activity was going on." (Linda Warren, former KBR employee, 4/28/2008)


Halliburton Overcharged on Transportation Contract


"A major transportation subcontract, which grew in value from $9.5 million to $134 million in one year's time, is an example of a contract where we not only paid 4 to 9 times the price for each service on the contract, but where each service had two or more layers of vendors below Halliburton. Halliburton hired staff to run the operation, but then inflated the price of running this transfer point and increased the security risk by turning the entire operation over to a subcontractor, who in turn, hired different vendors off the street to provide and operate trucks, the dining facility, the laundry operations, etc. Several efforts by prudent subcontract administrators to reduce the cost of each type of equipment or service such as tents and generators, and fuel tanker leases were rebuffed." (Marie deYoung, former Halliburton employee, 9/10/2004)


Halliburton Overcharged for Ice Factory Contract


Testimony of Marie deYoung, former Halliburton employee, 9/10/2004:


"QUESTION: So there was a competition for building these ice factories. Two bids were received. One was for $3.4 million and one was for $450,000. According to a memo from the subcontract administrator, these companies were equally qualified, except for the price difference. Is that correct?

DEYOUNG: That's correct.

QUESTION: And who was awarded the subcontract?

DEYOUNG: The subcontractor who charged the higher amount, $3.4 million. And if I may add, about $900,000 was tacked on for shipment. [And] it actually cost the taxpayers $4 million higher because of the shipment charge."


HalliburtonOvercharged on Ice Plant Project


"At Al-Asad, 15 Americans were staffed at a small portable ice plant on the back of a tractor trailer along with about 8 Third Country National (TCN) employees. In this case, just 4 American KBR employees and 6 TCNs would have been sufficient to cover the entire 24 hour work cycle. KBR was billing the U.S. taxpayers for 23 employees when 10 could have done the job." (Frank Cassaday, former KBR employee, 4/28/2008)


Halliburton Overcharged on Refrigerated Truck Contract


Testimony of Barry Godfrey, former KBR Subcontracts Administrator, 12/7/2007:


"QUESTION: Mr. Godfrey, I'm sorry to interrupt you, but I want to understand this. The first point you're talking about is an increase in the contract of $4 million for refrigerated trucks?



QUESTION: You went out and took a look at what that would normally cost, given bidding and so on, and you decided that was way overpriced.


GODFREY: Way overpriced."


HalliburtonEmployee Stole Ice Meant for Troops and Traded It to Iraqis


"I told the Marine that he should tell his superior officer because the ice foreman was cheating the troops out of ice at the same time that he was trading the ice for DVDs, CDs, food and other items at the Iraqi shops across the street." (Frank Cassaday, former KBR employee, 4/28/2008)


Halliburton Wasted 50,000 Pounds of Nails


Testimony of Henry Bunting, former Halliburton employee, 2/13/2004:


"QUESTION: And there's another element here that talks about an order for 50,000 lbs of nails... Wrong nails, wrong product?


BUNTING:They were nails that were too short. And the --


QUESTION: Fifty thousand pounds of nails that were too short?


BUNTING:Fifty thousand pounds.


QUESTION: Sitting in a warehouse --


BUNTING:No, not even sitting in a warehouse. Just sitting on the ground. They didn't even have warehousing facilities."


HalliburtonEmployees Stole Supplies Meant for Troops, Traded Supplies

with Iraqis


"KBR employees would break into a 'connex' box, which is a trailer full of supplies, and steal items, including lumber, air conditioners and tools meant for the troops. So instead of the troops using these items, KBR employees took them for their own use. Sometimes the KBR employees would trade these items with Iraqis." (Linda Warren, former KBR employee, 4/28/2008)


Halliburton Wasted Transportation Equipment


"[W]e...allow[ed] contractors to lease most of our trucks and equipment without appropriate maintenance plans. In the Halliburton contracts alone, more than 400 trucks were abandoned in Iraq, due to poor quality of equipment and nonexistent maintenance. Every truck that broke down on a convoy because of poor maintenance is a truck that put the lives of soldiers and other contractors in danger." (Marie deYoung, former Halliburton employee, 9/10/2004)


Testimony of Richard Murphy, Iraq War veteran, 4/7/2006:


"QUESTION: My understanding is that your tour was extended for three months in Iraq? And you were assigned to guard civilian truck convoys?...We had a hearing on contract waste, fraud and abuse not just about Halliburton, although admittedly Halliburton was a significant part of it, because the LOGCAP contracts that were given to Halliburton were no bid, sole source contracts, and there is massive waste and abuse. I think some fraud was involved, there were substantial investigations. But, one of the witnesses talked to us about brand new trucks 80-90 thousand dollar trucks having a flat tire and then being left by the side of the road to be torched. Did you experience or see any of that?


MURPHY: Yes sir.


QUESTION: Tell me about it just to amplify what we have heard in other hearings.


MURPHY: We were conducting convoys from the South, from a base called Taleel and moving up North to Baghdad on a road in the middle of the desert, just about as safe as you can get in Iraq. At one point, one of the trucks, one of the civilian trucks got a flat tire and they did not have the proper wrench to change the tire so the decision was made to torch the truck.


QUESTION: Was it a new truck?


MURPHY: Yes Sir.


QUESTION: So they did not have the proper wrench to change the tire so they made the decision to burn the truck?


MURPHY: Yes, that was the story.


QUESTION: I have heard that before but you actually saw the truck?


MURPHY: Yes Sir, I saw the truck."


Halliburton Charged for Services Never Provided


"At Camp Fallujah, I became concerned about several Halliburton practices. The first concerns procedures use to compile the head count for the [Morale, Welfare & Recreation] department... This fraudulent head count can then equate to millions of dollars in unnecessary funding. By inflating the number of users, Halliburton can rationalize a greater need for facilities, equipment, staffing and administrators than actually exists. The additional staffing does not benefit the troops, but it does benefit Halliburton. Under its contract, the more facilities, equipment, staff and administrators Halliburton can show a need for, the more profit Halliburton makes. As the mantra at Halliburton camps goes, 'It's cost plus, baby.'"(Julie McBride, former KBR Morale, Welfare & Recreation Officer, 9/18/2006)


Halliburton Employees Hoarded Supplies Intended for the Troops


"Halliburton employees also exploit requisitions to obtain luxuries that are not afforded to the troops. One example of this was a Super Bowl party for Halliburton employees only at taxpayer expense. Halliburton requisitioned a big-screen TV and lots of food for the private use of Halliburton employees. Halliburton made money on this too. Those same employees then arranged a live television connection for that big screen TV, so that they could watch football games... In my experience, many Halliburton employees, frankly, don't seem to care much about the military. They often ignored troop requests or treated them like an annoyance. Those same employees, however, indulged their own whims at taxpayer expense." (Julie McBride, former KBR Morale, Welfare & Recreation Officer, 9/18/2006)


Halliburton Failed to Account for Cost Discrepancies


"We reviewed four contractor rough orders of magnitude and identified about $40 million in questionable costs. Although we found indicators that customers and the program management office did some review of contractor rough orders of magnitude, the reviews were usually limited to technicalities and geared toward execution plans instead of cost estimates... We identified more than $40 million in proposed costs that exceeded requirements necessary for contractor performance." (U.S. Army Audit Agency Report, 11/24/2004)


Halliburton Failed to Assist Sub-Contractors Recovering from Insurgent Attack


"On arriving in the Habbaniyah region, our convoy was ambushed approximately 2 kilometers from the U.S. Base and we suffered serious casualties in a near four-hour fight. We lost 3 individuals to direct fire, 7 individuals were injured and on arrival at the U.S. Base, one U.S. Military person was also sadly injured in an attempt to assist... [I]t has now come to our attention while investigating the incident that KBR Management had taken an extraordinary decision to instruct their on site staff to offer no assistance to the Lloyd-Owen personnel in order to unload KBR goods or prepare for the return journey; as evidenced by this email exchange here. Certain KBR staff defied their Management directions and immediately rendered assistance to Lloyd-Owen in a very difficult situation." (Alan Waller, CEO of Lloyd-Owen International, 6/27/2005)


Halliburton Sent a Civilian Convoy into a Known Combat Zone


"Once inside the gate of [Baghdad International Airport], a soldier came up to me and said the words, to the effects, 'Who are you guys? What are you guys doing out here? The roads are closed. We have been fighting those guys for over 48 hours. They own that road out there.' Another Halliburton convoy commander, Mr. Rick Udell (sp.), told several of that he could not believe that we had been sent down the road since he had been attacked on the same road earlier that day after leaving Camp Anaconda. He told Halliburton not to send anyone else down that road due to hostilities." (Edward Sanchez, former KBR Truck Driver, 9/18/2006)


Halliburton Knew or Should Have Known Those Roads Were Closed


"As reflected in the testimony of Mr. Kenneth Waller, which you will also see, he worked at KBR's [Theater Transportation Mission] headquarters in Camp Anaconda and was told that day, before he went to work, that all the roads were designated as black or red, which meant they were supposed to be closed to civilian traffic. In fact, on April 8, 2004, KBR civilian convoys had been attacked already in the same location my clients and other convoys were again attacked on April 9." (T. Scott Allen, Attorney for former KBR Truck Drivers, 9/28/2006)


Halliburton Offered to Nominate Wounded Truck Drivers for a Defense Department Medal and Asked Them to Sign a Necessary Medical Records Release -- Which Also Contained a Full Liability Waiver


"In that letter, they actually -- that letter says it is a medical release form. They mislead the truck driver, tell him it's a medical release form and we're going to supply your records to the Pentagon so you can receive a government medal which was created on 9/11, the Defense of Freedom Medal. And then they have, to an uneducated person, a release of liability included with it." (T. Scott Allen, Attorney for former KBR Truck Drivers, 9/28/2006)


Halliburton Waste Demoralized U.S. Troops


"When soldiers work with off-the-shelf products like CAT generators and John Deere forklifts and commercial Internet satellites, they do their war-fighting mission with confidence, especially when the equipment is delivered to them with spare parts and maintenance manuals. When reservists and National Guard personnel from states like Michigan and Wisconsin watch companies like Halliburton lease poorly maintained forklifts and trucks from Middle East companies, they are demoralized. Especially when equipment is leased at four times the price that would have been paid if the equipment were purchased from their hometown factories." (Marie deYoung, former Halliburton employee, 9/10/2004)


HalliburtonEmployees Stole Weapons and Munitions and Stored Them in Company "Lay Down" Yards


"The Army provides KBR employees with security and KBR employees are not allowed to be employed in combat. My KBR foreman also brought back to the camp 10 to 12 fully functioning live detonators for 155 millimeter artillery rounds, over 800 rounds of live ammunition, two rocket launchers, and other military equipment. The equipment was hidden in the KBR 'lay down' yard." (Frank Cassaday, former KBR employee, 4/28/08)


Halliburton Had Flawed Accounting, Cost-Estimating and

Sub-Contracting Systems


"KBR's general cost accounting, cost estimating, and sub-contracting systems were so flawed that KBR had to do a mass reconciliation of its accounts. DCAA declared that KBR's projected costs were unacceptable, that they overstated costs, and used incorrect algorithms to estimate future costs. In addition, the work of subcontractors was inadequately documented and they failed to provide the government with a paper trail for work." (Charles M. Smith, Former Head of Field Support Contracting Division of the Army Field Support Command, 7/9/08)


Halliburton Failed to Correct Faulty Electrical Wiring on Military Bases, Resulting in the Electrocutions and Painful Shocks of U.S. Troops


"Kellogg Brown & Root knew of this very hazard since at least February 10, 2007 - 11 months before Ryan's death - when they conducted an inspection of the facilities where Ryan lived... It is my understanding that the prior occupant of Ryan's room was shocked four to five times between June and October 2007 in the exact shower where Ryan was killed." (Cheryl Harris, mother of Staff Sgt. Ryan Maseth, 7/11/08)



Testimony of Larraine McGee, mother of Staff Sgt. Christopher Everett, 7/11/08:


"QUESTION: Would either of you care to comment on your views and your satisfaction with the extent of KBR's accountability after the fact of the tragedies?

MCGEE: Well, I don't think there is any accountability, because if there had been after the very first electrocution, number one, then the problem would have been fixed. We wouldn't have had three more, with Chris being number four. We wouldn't have lost Ryan. They are undermining our soldiers' efforts over there by not taking care of them.

QUESTION: And as far as you're concerned, they're just getting away with it.

MCGEE: Exactly."

"The water heater would randomly shoot steaming hot water onto the sidewalk and into our back yard. I was told by the other women in my group to use the shower in the other female house when I arrived, because they had been shocked in the shower in our house from the time they had first moved in, when they tried to adjust the temperature of the water. They said that while the water was on, they were jolted by electricity..." (Rachel McNeill, U.S. Army Reserve, 983rdEngineer Battalion, 7/11/08)


"Throughout my time in Afghanistan, whenever I brought up safety concerns, I was often accused of "big dealing" things by the KBR supervision. I even tried to start a simple field training program, which was shot down quickly, as no one in KBR management or supervision seemed to care or want to put forth the effort to improve the conditions." (Jefferey Bliss, former KBR electrician, 7/11/08)



Testimony of Debbie Crawford, former KBR electrician, 7/11/08:


"QUESTION: You continue that, "KBR chose not to make these necessary repairs because the company claimed it was, quote, 'not part of the contract.'" Could you elaborate a little bit on those comments? That sounds pretty astonishing, just from a human point of view. If you built something and it's dangerous and then you say, "I'm not responsible for fixing it because it's not part of the contract to fix what I built."

CRAWFORD: I think what they were claiming, from the news articles that I read, was that they were claiming that electrical shock was a potential hazard and that it wasn't broken...So they weren't required to fix it. And the point I was trying to make is when electricity is going someplace that it's not supposed to be going, it's broken and it needs immediate attention."



Halliburton Hired Unqualified Individuals and Third Country Nationals to do Electrical Work on Military Bases


"The KBR employees supervising these electrical contractors often had no electrical experience at all. It was not uncommon for a labor foreman with no electrical experience to supervise Iraqi electrical subcontractors or third country nationals doing electrical work." (Debbie Crawford, former KBR electrician, 7/11/08)


Testimony of Jefferey Bliss, former KBR electrician, 7/11/08:


"QUESTION: Mr. Bliss, I understand that you knew of the hiring of third-country nationals, that is, much cheaper labor, less expensive labor, third-country nationals who were much less experienced, in some cases, not very experienced at all, by Kellogg, Brown and Root for electrical work and then billing them to the federal government at an identical rate as billing for U.S. electricians.

Is that the case?

BLISS: That was my understanding, sir. And it seemed, during the time I was there, initially, the electricians I met were from the root of what KBR had here in the states in Houston and as they started bringing more of us in from the different parts of the United States to fill these billets, we started to see, during my time, more TCNs and HCNs than ever taking our jobs."



Abuses by Blackwater


Blackwater Failed to Provide Protective Equipment for Employees


"Scotty and the others that died with him were promised so many things... not one of those promises were kept. For example, it is undisputed that they did not have armored vehicles. They did not have heavy machine guns. They did not have a team of six. They did not have three people in each vehicle. They did not have a rear gunner that would have allowed them to see people approaching from the rear. They were not able to conduct a risk assessment of the mission. They did not have a chance to learn the route before going on the mission. They were not even given a map. In fact, when Scotty asked for a map of the route, he was told: 'It's a little too late for a map now..."


"The only document that we have ever seen that shows what actually went on prior to Scotty's death ... is a March 30, 2004 e-mail from Blackwater's own Tom Powell in Baghdad to Blackwater's corporate office, sent the day before our loved ones' deaths. Mr. Powell complained that his men 'did not have the body armor, hard cars, weapons, and ammo that they needed.' He stated that: 'the guys are in the field with borrowed stuff and in harm's way,' that the decision to go with Suburbans instead of hard cars was a bad idea and that Blackwater was engaged in a 'smoke and mirrors show doing just enough to sustain the appearance of operational capability,' while at the same time making representations that were false and 'did not reflect the appalling truth on the ground.'" (Kathryn Helvenston-Wettengel, Mother of Former Blackwater USA Employee, DPC Hearing, 9/21/2007)


Blackwater Deceived Third-County Nationals into Serving in Iraq


"There was a gentleman from some country in central Africa that did his own interview with me and he said that Blackwater would come into their village and hire many, many young men and that they would maybe make thirty dollars a month and sent to join up with Blackwater. Their families where guaranteed a million dollars if anything would happen to their sons and not only did they never see that million dollars but they never saw their sons gain. They never heard from them again. They literally just disappeared." (Kathryn Helvenston-Wettengel, Mother of Former Blackwater USA Employee, DPC Hearing, 9/21/2007)


"[M]any of the companies realize that one of the ways they can drop the per day rates of those people is to not hire American, or South Africans, Australians or Brits, but to go to... so called TCNs, Third Country Nationals." (Nick Bicanic, Documentary Film Maker, DPC Hearing, 9/21/2007)


Blackwater Refuses to Release Any Information About Actions and Employees


"I tried many times to get Blackwater to send me a copy of the incident report and a copy of the contract Scotty signed. Eventually, I was told that I would have to sue them to get that information. So, in an effort to learn the cause, circumstances and reasons for the death of my son Scotty, as well as the brave men he served with, Wesley Batalona, Jerry Zovko and Michael Teague, the families filed a lawsuit against Blackwater in January of 2005. In the two and a half years since that lawsuit was filed, Blackwater has consistently asserted that it could not be held accountable for its actions in any state or federal court." (Kathryn Helvenston-Wettengel, Mother of Former Blackwater USA Employee, DPC Hearing, 9/21/2007)


"They replied that I would have to sue them to get that information. And then when I did sue them, they countersued me for 10 million dollars solely based on the fact that I had the audacity to sue them." (Kathryn Helvenston-Wettengel, Mother of Former Blackwater USA Employee, DPC Hearing, 9/21/2007)


Blackwater, in Violation of its Rules of Engagement, Often Resorts to Deadly Force


"They have acted like cowboys, running Iraqis off the road, firing indiscriminately at vehicles and, in some cases, private forces have appeared on tape seemingly using

Iraqis for target practice. They have shown little regard for Iraqi lives and have fueled the violence in that country, not just against the people of Iraq but also against the official soldiers of the United States military in the form of blowback and revenge attacks stemming from contractor misconduct. These private forces have operated in a climate where impunity and immunity have gone hand in hand..."


"This past May, Blackwater operatives engaged in a gun battle in Baghdad, lasting an hour, that drew in both U.S. military and Iraqi forces, in which at least four Iraqis are said to have died. The very next day in almost the same neighborhood, the company's operatives reportedly shot and killed an Iraqi driver near the Interior Ministry. In the ensuing chaos, the Blackwater guards reportedly refused to give their names or details of the incident to Iraqi officials, sparking a tense standoff between American and Iraqi forces, both of which were armed with assault rifles." (Jeremy Scahill, Investigative Reporter, DPC Hearing, 9/21/2007)


Blackwater Negatively Impacts the U.S. Mission in Iraq


"While the company's operatives are indeed soldiers of fortune, their salaries are

paid through hundreds of millions of dollars in U.S. taxpayer funds allocated to

Blackwater. What they do in Iraq is done in the name of the American people..."


"The actions of this one company, perhaps more than any other private actor in the occupation, have consistently resulted in escalated tension and more death and destruction in Iraq -- from the siege of Fallujah, sparked by the ambush of its men there in March of 2004, to Blackwater forces shooting at Iraqis in Najaf with one Blackwater operative filmed on tape saying it was like a 'turkey shoot' to the deadly events of the past week..."


"The conduct of these private forces sends a clear message to the Iraqi people:

American lives are worth infinitely more than theirs, even if their only crime is driving their vehicle in the wrong place at the wrong time. One could say that Blackwater has been very successful at fulfilling its mission -- to keep alive senior U.S. officials. But at what price?" (Jeremy Scahill, Investigative Reporter, DPC Hearing, 9/21/2007)


Abuses by Custer Battles


Custer Battles Submitted $10 Million Dollars in False Claims to the Government


"Custer Battles obtained a contract from the Coalition Provisional Authority at the Baghdad International Airport that allowed it to submit its cost to the government and get paid for all of those cost plus twenty-five percent profit and overhead. Then rather than bill for its real cost, this company billed for substantial higher fraudulent costs. They asked me three times to assist in preparing fake invoices and leases that they then could submit to the government. The first time I told them 'no.'The second time I told them 'hell no.'The third time after telling them 'no,'I told them they were all going to prison... I later learned that this company had handed ten million dollars in fake invoices for approximately three million dollars of work." (Robert Isakson, former CPA contractor, DPC Hearing, 9/21/2007)


Custer Battles Harassed Contractors that Refused to Participate in Fraud


"As a result of my continuing refusals to cooperate in their fraud, they pointed machine guns at us, stole our weapons, and seized our identification. While our brave men and women in uniform were fighting and dying for our safety and liberty in Iraq, these former U.S. Army Rangers and CIA officers were accosting witnesses to their proposed fraud, forcing them to be held at gun point, disarming them so they could be killed in Iraq by the insurgents. Custer Battles left us to fend for ourselves in the streets of Baghdad." (Robert Isakson, former CPA contractor, DPC Hearing, 9/21/2007)



Abuses by Parsons


Parson Failed to Build 122 of 142 Health Clinics, Despite Being Paid $200 Million of a $243 Million Contract


Testimony of Ali Fadhil, Iraqi doctor and Fulbright Scholar, 7/28/2006:


"QUESTION: [Y]ou took a look at the projects that Parsons had done and you say shoddy workmanship, bad products, bad materials? Is that a fair assessment?

FADHIL: Yes, in fact, our first approach is to find out what Parsons exactly... what was more interesting for us is the one hundred fifty clinics, the super clinics...


FADHIL: Which then turned into one hundred forty-two. But, in fact, when I went to the Ministry of Health, where I spent almost a month trying to find out where all these health clinics, simply the officials said: there are no clinics, they are imaginary clinics...


QUESTION: You're saying the other clinics don't exist?

FADHIL: The other clinics, there were only like... it's just a building, it's like a half-finished buildings: marble at the front, bricks at the side, you see inside it's just a ghost building, you can't find anything. It's just, as you said, it's just bricks and walls. That's, that's all that it is."


Parsons Failed to Properly Renovate and Equip Hospital in Diwaniya


"As we walk around [the pediatric and maternity hospital in Diwaniya], the problems are obvious. Outside we can see an open manhole and sewage in the garden. And in the kitchen more blocked sewage. Everywhere the standard of work is terrible. Things have melted. Pipes have not been connected. And in the operating changing room you can smell raw sewage. But there is one thing that to a doctor seems incredible, the flooring has been done so badly, it is now a potential killer...


"This is a maternity hospital. Yet the new natal care unit is desperately short of proper facilities. There are only 14 incubators, and they are old, made in the 70s. Most are broken, doors held in place by wires and tubes and even plasters. This is unhygienic. They should be sealed to keep out germs.

"Staff here feel angry, but they also feel betrayed. The coalition says it spent hundreds of millions of dollars on health, yet still babies suffer unnecessarily for lack of basic equipment." (Ali Fadhil, Iraqi doctor and Fulbright Scholar, 7/28/2006)


Abuses by WWNS


WWNS Charged Taxpayers 100% Markups on Equipment and Supplies


"A classic example of the type of overcharging that was common in Iraq was the provision of laptops to DynCorp by WWNS. On one occasion, around 300 laptops were ordered by WWNS to be delivered to DynCorp. WWNS bought the laptops from Dell for less than $1,400 but charged DynCorp over $2,800 for each laptop plus the additional shipping, support and maintenance of the laptops." (Barry Halley, former WWNS and CAPE Environmental employee, 4/28/2008)


Abuses by CAPE Environmental


Government Hired CAPE to Build Bridges Despite No Previous Experience


"While CAPE had experience doing environmental clean up work, the company was in Iraq trying to secure reconstruction contracts. Nevertheless, the company was able to secure a contract with the Air Force Center for Engineering and the Environment (AFCEE) to build bridges in Ramadi and Bubriz. CAPE had no experience at that time with bridges. To my knowledge, these bridges were not completed. Some of the cement was poured, but the specifications of the contract were not met. I know of three instances after I left when the military tried to cancel these bridge contracts because the work was not being completed. Somehow the contracts were not canceled." (Barry Halley, former WWNS and CAPE Environmental employee, 4/28/2008)


CAPE Charged $7 Million for Road that Was Never Built


"It was clear to me that once you knew the right people in Iraq, projects could be created with little emphasis on contract performance. For example, I knew of one road project that CAPE had been awarded for $7 million. However, no roads were built or modified. The contracting process that existed at the time was flawed from the beginning when the RFP was submitted to the performance of contract oversight. From my experience and from what I have read in the news, contracts would be paid in full by the government even though the required work was not complete." (Barry Halley, former WWNS and CAPE Environmental employee, 4/28/2008)


Lax Oversight and Poor Judgment by the Coalition Provisional Authority (CPA)


CPA Played Fast and Loose with U.S. and Iraqi Cash


"[I]nexperienced officials, fear of decision-making, lack of communications, minimal security, no banks, and lots of money to spread around. This chaos I have referred to as a 'Wild West.'... [W]as waste of taxpayer's and Iraqi DFI dollars what it had to be? Were inefficiencies at a high level inevitably mandated by the circumstances? I would give a firm 'No' to both questions...." (Franklin Willis, Former CPA Official, 2/14/2005)


Bush Administration Ignored CPA ContractorFraud


"I wish that I could tell you that the Bush Administration has done everything it could to detect and punish fraud in Iraq. If I said that to you, though, I would be lying. In our case, the Bush Administration has not lifted a finger to recover tens of millions of dollars that our whistleblowers allege was stolen from the government." (Alan Grayson, attorney for whistleblowers, DPC Hearing, 02/14/2005)


"In fact, in October 2004, in our False Claims Act case -- the very purpose of which is to recover this money on behalf of the U.S. Government -- the Bush Administration declined to participate in the case. When we asked why, the Assistant U.S. Attorney indicated that the Bush Administration had decided, as a matter of policy, that cheating the Coalition Provisional Authority was not the same as cheating the United States." (Alan Grayson, attorney for whistleblowers, 2/14/2005)


CPA-Funded Media Network Failed to Win Hearts and Minds of Iraqis


"[L]ike so many of the goals and hopes for the new Iraq, a credible media has not been realized. The failure to establish television 'accountable to the society' is strongly felt. Instead, IMN has become an irrelevant mouthpiece for Coalition Provisional Authority propaganda, managed news and mediocre programs." (Don North, former CPA contractor, 2/14/2005)


CPA Contractor Hired Al-Jazeera to Train Journalists


"Incredibly, the vital training of IMN reporters was turned over to Dubai satellite stations Al Arabiya and Al-Jazeera, which often produce slanted, biased and anti-American news." (Don North, former CPA contractor, 2/14/2005)


CPA Health Office Lacked Relevant Experience and Ignored Advice of International Health Professionals


"[T]he people who were put in charge of rebuilding the health sector didn't know what they were doing. What I mean by that is that the individual that was put in charge of the CPA and his entire staff, among them none of them had training in public health. None of them had lived overseas. And not one of them had participated in the reconstruction of a country following a disaster or a war. We have people with those sorts of expertise in the United States, and some of them in the U.S. government. But none of them were appointed to the CPA health office. So I think it was inevitable that some of the priorities and some of the programs would be inappropriate. And when interviewed for this video, that individual, Mr. Haveman, who was the health advisor to the CPA, when it was asked how he was put in charge of post-war reconstruction, his response... was, what is the difference between a post-war situation? What is the difference in a pre-war situation?"(Richard Garfield, former CPA Advisor, Columbia University, 7/28/2006)


CPA Failed to Develop Systems to Monitor Health Conditions in Iraq


"The saddest part of the situation to me is not the cost overruns, sad as that is, it's that since the time of the CPA and the PCO offices, the U.S. involvement has not strengthened any of the monitoring conditions to know what are the major diseases of the Iraqis. We actually knew better under Saddam what health conditions were than we do today. Because you need people who are experienced in international health to think forward about how to strengthen information systems in the hospitals and clinics and how to mount periodic monitoring efforts to see how we're doing in the field. In fact, we don't know how we're doing in the field, because the last effort was one run by UNDP in 2004. There has been none since then and none came out of CPA or the PCO and there are no plans from those groups today." (Richard Garfield, former CPA Advisor, Columbia University, 7/28/2006)





CPA Leadership Blocked Efforts to Re-Establish the Iraqi Health System


"Much of my time in Iraq was not focused on work with the Iraqis to improve the primary healthcare, but in discussions with Mr. Haveman on why the work needed to be done at all. In particular, we were unable to make a convincing case with him on why it was vitally important to re-engage with the administrators and providers in Iraq in order to understand professional values, ways of doing business, motivation, work environments and most importantly resource needs.

I would like to quote a remark Mr. Haveman made to one of my team leaders. He stated'We are done with the corrupt government of Saddam Hussein, why do we need to study what they had in the past?'"

"Given this attitude from the CPA, it was extraordinarily difficult for us to suggest reasonable and inexpensive solutions that would have immediately improved the situation. At one time we were asked for $16,000 to allow the primary health care clinics in Al Karkh to purchase renewable sterile supplies and other things that they had been unable to purchase because their bank accounts were frozen by the CPA. We were unable to approach the CPA effectively with that request." (Mary Paterson, former CPA Advisor, 7/28/2006)


Administration Officials Promoted Construction of a "Boondoggle" Hospital


"And the article that you mentioned this morning, on evaluating the Basra hospital is another aspect of this. It is true that there are tremendous cost over-runs, it is true that there has not been much building. But even if we had done a good job of building it, it was the inappropriate action at the time it was decided to build it. The supplemental appropriations which Senate and House voted on for funding for health in Iraq, the postwar period, involved I think it was $860 million, and neither the House nor the Senate had -- neither of them voted on the building of that hospital. That hospital was something of a boondoggle. It was a showy project which didn't respond in an effective fashion for the monies involved to the health needs of the situation." (Richard Garfield, former CPA Advisor, Columbia University, 7/28/2006)


Abusive Iraqi Reconstruction Financing Schemes


Abusive Schemes Inflated Contract Prices


"[M]edium and small Iraqi businesses are forced to turn to practically the only sources that are ready, willing and able to provide financing of subcontracts awarded by the American firms that hold the U.S. Government and Coalition Provisional Authority (CPA) prime contracts: the well-off and capital-sufficient business entities owned and operated by most of the 12 prominent and influential Iraqi families... For a $1 million contract performed over a period of three-to-six months, the borrowing business must increase the bid to provide the lending family entity with a return equal to one-half of the maximum profit that can be obtained on the project -- perhaps a net of 10% to the lending family. This becomes the baseline bid price to Bechtel, KBR and others for most bids by mid- and small-size Iraqi companies... This has the effect of substantially driving up the contract price paid for out of U.S. Funds or the Iraqi funds administered by the U.S. through the Development Fund for Iraq (for CPA subcontracts)." (Timothy Mills, Iraq contract specialist, 11/03/2003)


Abusive Schemes Doubled the Price of Cement in Iraq


"In July and August, the price of cement soared to almost $100 per ton in Iraq -- more than twice what it was on the world market. This was because Iraqi cement companies had not been capitalized to re-start operations, and, therefore were not producing for or operating in the domestic market. Of course, at that price, cement from outside Iraq flooded the market. The price of cement in Iraq dropped to about $60/ton -- still way above the world market price." (Timothy Mills, Iraq contract specialist, DPC Hearing, 11/03/2003)


Indifference Towards Claims of Abuse by the Department of Justice (DOJ) and the Bush Administration


DOJ Refuses to Pursue Contractors for Fraud


"Under the False Claims Act, the Attorney General is supposed to join with whistleblowers to prosecute and punish war profiteers. The sad truth is that the Bush administration has not even tried to do this, on the contrary, it's done all it could to prevent this." (Alan Grayson, attorney for whistleblowers, DPC Hearing, 09/21/2007)


"No one in the government rose up to help us or provided any protection for us in this endeavor. Not only did we have to spend our own funds and time to prosecute this case, we also had to endure the unrelenting attacks and slander from our opponents. We were sued repeatedly. We have been the subject of anonymous blogs and lies on the Internet and anonymous fraudulent e-mails and documents." (Robert Isakson, former CPA contractor, DPC Hearing, 9/21/2007)


The Administration Refuses to Regulate Private Security Contractors


"There are 67 separate government agencies doing contracting in Iraq. As it happens, the biggest are the Department of Defense and Department of State, but the simple fact that there are sixty-seven might indicate... was alluding to which was a libertine nature. If you have sixty-seven contracting agencies and subcontracts on top of that, you have a pretty big mess." (Nick Bicanic, Documentary Film Maker, DPC Hearing, 9/21/2007)


"It is commonly stated that PMCs [Private Military Contractors] in Iraq operate in an entirely lawless environment. Coalition Provisional Authority Order 17 prohibits any prosecution of security contractors in local Iraqi courts -- but there are laws that doapply-- even within Iraq. Many of you have heard of the Military Extraterritorial Jurisdiction Act (MEJA) and the Uniform Code of Military Justice (UCMJ) -- sadly neither of these adequately completes the loop of investigation, prosecution, and punishment for private contractors. Even if new laws were passed that did apply to security contractors there are important distinctions between the existence of a law and the political will to prosecute under that law." (Nick Bicanic, documentary filmmaker, DPC Hearing, 9/21/2007)


Whistleblowers Face Retaliation, Abuse, and Even Imprisonment for

Reporting Fraud


Testimony of Bunnatine Greenhouse, former top-ranking civilian contracting officer, U.S. Army Corps of Engineers, 9/21/2007:


"I was the United States Army Corp of Engineers top procurement executive. A career spanning over 23 years ended on August 27, 2005. I was removed after I raised concerns over the award of a seven billion dollar sole-source no-compete cost-plus contract to Halliburton subsidiary Kellogg, Brown, and Root, KBR, known as the Restore Iraqi Oil RIO contract. The award of this contract represents the worst contract abuse I witnessed during my professional career. Before the contract was awarded, I voiced great concern over the legality of the selection of KBR, the total lack of competition and the excessive duration of the RIO contract. I explained to representatives from the Department of Defense, the Department of the Army and the Army Corps that granting a contract for two base years with the potential to extend the contract for an additional three years was simply unconscionable." (Bunnatine Greenhouse, highest-ranking Army Corps civilian, 9/21/2007)


Testimony of Donald Vance, former private security contractor in Iraq, 9/21/2007:


"QUESTION: Mr. Vance, you presumably were imprisoned, you believe, because

you witnessed the sale of guns in Iraq...


VANCE: Yes, Sir.


QUESTION: ...illegal sale of guns. You were a whistleblower. You came forward

and reported that to your government and your government, for that purpose, took you,

and detained you, and imprisoned you for 97 days. When you were released after 97

days of interrogation with the things that you described: loud music, lights on 24 hours a

day and so on, when you were released, what did they tell you upon your release?


VANCE: Senator, I was given a $20 dollar bill and dumped at Baghdad International



QUESTION: By whom?


VANCE: By the United States military, Sir.


QUESTION: You don't know at this point why you were imprisoned?


VANCE: Sir, the only answer I was given was that we are detaining you because you are affiliated with Shield Group Security and of course, my immediate answer was,

"'Yes, I know of their illegal activities, I have been telling you for about seven or eight months...'"


VANCE: Literally, I had people in front of me with fists pounding on desks. Their more immediate concern was not about the weapons, but their logic was, 'Don, why didn't you come to us with this. Why did you have to go home and speak to people outside of the club?'"


Testimony of Barry Halley, former WWNS and CAPE Environmental Employee, 4/28/08:


"My numerous complaints to CAPE management about operations in Iraq finally came to a head in August 2004. As I tried to leave my room on a Friday night, I encountered an armed guard outside my door who told me that I had to remain in my room. I woke up on Saturday morning and saw OSG/Edinburgh Risk armed security personnel standing in my room pointing their weapons at me under the direction of CAPE's in-country manager. They told me that I was under guard. I was held until Monday morning, and given a letter from the Construction Manager at CAPE ordering me to return to the U.S. immediately. I asked to be taken to the U.S. Embassy because I did not want to leave the Green Zone with anyone from CAPE. The other three CAPE employees were ordered to leave and were driven away in spite of my request that they remain. I was led into the courtyard and forced to kneel in the dirt. A good friend of mine arrived as I was being attacked and beaten. He rescued me while I was being held at gunpoint."






  • Leslie Gross-Davis (224-3232)


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