Big defense contractors get no-bid Pentagon deals

Nonprofit group analyzes Defense Dept. business

September 30, 2004|By KNIGHT RIDDER/TRIBUNE

WASHINGTON - The Pentagon has spent at least $362 billion in no-bid contracts since 1998, with the 10 biggest defense contractors getting most noncompetitive deals, according to a new report released yesterday.

Moreover, the Pentagon awarded $255 billion in controversial "cost-plus" contracts that allow companies to spend as much as they want on a job, tack on an agreed-upon profit and pass the bill to taxpayers, concluded the Center for Public Integrity, a nonpartisan investigative nonprofit group in Washington.

The 10 biggest contractors, which earn 38 percent of all defense contracts, got more than half of all the no-bid and cost-plus contracts issued by the Defense Department.

And thanks to the war in Iraq, Vice President Dick Cheney's former firm, Halliburton, managed to go from an also-ran 37th on the contract list in 2001 and 2002 to No. 7 in 2003, the Pentagon's own procurement statistics show.

In 2003, Halliburton received more than $4.3 billion in defense contracts, according to the Center.

Taxpayers just aren't getting their money's worth, experts said.

"The system is not competitive enough," said Angela Styles, who from 2001 to 2003 was head of procurement for the Bush administration's Office of Management and Budget, and did not take part in the Center's report.

"There are people who make a lot of money off this. ... It does worry me when agencies hire the same contractors over and over, when they're not really competing."

The Center studied $900.8 billion in Defense Department spending, using the Pentagon's procurement online database, from fiscal years 1998 to 2003 and looked at companies that received more than $100 million in government money.

"This is a Keystone Kops situation," said Center executive director Charles Lewis.

"No one is watching these people."

That's not true, said Pentagon spokesman Glenn Flood: "We have control of the situation as far as the big picture of everything. With [about 10 million contract items] a year, there's bound to be some that fall through the cracks."

Turning over more jobs that aren't directly related to fighting wars to private contractors is the Pentagon's goal, Flood said, but "There is oversight."

The number of federal workers overseeing Defense Department contracts was cut about in half in the 1990s, while spending has soared in the past few years, Lewis said.

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