Army official protested, but Halliburton got contract

FBI seeking interview with her, marking an expansion of its probe

October 29, 2004|By LOS ANGELES TIMES

WASHINGTON - Army Corps of Engineers commanders awarded a lucrative contract extension to Halliburton Co. this month by circumventing the corps' top contracting officer, who had objected to the proposal, according to documents obtained by the Los Angeles Times.

Bunnatine Greenhouse, the organization's top contracting official, questioned a decision by Corps of Engineers commanders to award a contract extension to Halliburton, the oil-services company run by Dick Cheney until he became vice president, without the competitive bidding designed to protect U.S. taxpayers.

The FBI is seeking to question Greenhouse, her lawyer disclosed yesterday, marking an expansion of the bureau's investigation of other Halliburton contracts.

"I cannot approve this," wrote Greenhouse, the corps' chief contracting officer, on one version of the proposal that is filled with her handwritten scrawls such as "Incorrect!" "No! How!" and "Not a valid reason."

Demotion threat

Greenhouse, who was threatened with demotion after raising objections to the Halliburton contract, sent her complaints to Acting Army Secretary Les Brownlee. Portions of her letter to Brownlee were obtained by Time magazine last week.

The Times has obtained previously undisclosed documents describing the nature of her objections to the Halliburton contract and e-mail discussions among corps officials.

On Oct. 8., despite Greenhouse's objections, the corps awarded Halliburton the $165 million extension allowing Halliburton's subsidiary, KBR, to continue providing logistics services to troops stationed in the Balkans.

The final approval did not carry Greenhouse's signature, as is usually required by contracting regulations. Instead, it was signed by her assistant, Lt. Col. Norbert Doyle, according to the documents.

The FBI is seeking to question Greenhouse on her allegations that Corps of Engineers commanders deliberately sidestepped her contracting authority. The FBI's query expands an investigation into another Halliburton contract to supply fuel to Iraq, according to the documents and Greenhouse's lawyer, Michael Kohn.

Top corps commanders criticized by Greenhouse for ignoring federal contracting rules declined to be interviewed, citing the investigation.

The e-mails suggest that the commanders felt Greenhouse's objections were unnecessarily delaying vital services for U.S. troops.

"To ensure that a fair investigation can proceed, the Army corps will not provide further comment on the specifics of the matter," said Carol Sanders, a Corps of Engineers spokeswoman.

Halliburton officials blamed politics.

"On the overall issues, the old allegations have once again been recycled, this time one week before the election," Wendy Hall, a Halliburton spokeswoman, said in a statement.

Halliburton has become an election-year issue, with Democratic candidate John Kerry criticizing the billions of dollars' worth of work in Iraq awarded to Halliburton without competitive bidding.

Unusual treatment

The previously undisclosed documents are part of a growing body of evidence indicating unusual treatment was given to government contracts won by Houston-based Halliburton.

Career civil servants repeatedly raised objections to contracting decisions that benefited Halliburton, only to be overruled by higher-ups.

A no-bid contract worth up to $7 billion awarded in secret to Halliburton to protect Iraq's oil assets has been the subject of the most sustained criticism by government employees.

In the fall of 2002, a group of top Pentagon civilian officials began meeting to plan how best to prevent the destruction of oil wells and infrastructure in the days following an invasion.

They decided to give Halliburton a job worth $1.9 million as part of a contract to draw up a plan to protect the oil infrastructure. An Army lawyer objected to the decision, saying it was outside the scope of the contract.

The lawyer was overruled by a higher-up in the Pentagon's Office of General Counsel. But the Government Accountability Office, Congress' investigative arm, later determined the lawyer was correct, according to testimony given before Congress.

Once Halliburton had drawn up the plan, the Corps of Engineers decided in March last year to award Halliburton the contract to carry it out. Greenhouse objected, saying it was against usual contracting procedures to award a job to the company that had drawn up plans for it, Kohn said.

Greenhouse also objected to the presence of KBR officials at meetings where corps officials were discussing the award of the contract, according to the documents. Later, she objected when the government proposed making the "sole-source" contract - awarded without bidding - for five years instead of a more limited period.

Purpose shifted

Once Halliburton entered Iraq, it became clear that little damage had been done to the oil wells. Instead, the purpose of the contract shifted so that Halliburton was required to truck in gasoline, kerosene and other fuels for Iraqis to use in their daily lives.

Eventually, contracting officials grew concerned that Halliburton was paying too much for the gasoline, which was being supplied by a Kuwaiti company, Altanmia Commercial Marketing Co. Halliburton replied that Kuwait's oil company was preventing it from buying oil from other suppliers.

In December, a Corps of Engineers contracting official said she had found at least two other companies that could supply the fuel, potentially allowing for better prices. Halliburton, however, asked her to allow it to continue buying only from Altanmia.

The Los Angeles Times is a Tribune Publishing newspaper.

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