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Home Articles The Partisan Partisan Number 20 Halliburton has an $80,000 Lifeguard

Halliburton has an $80,000 Lifeguard

by Tom Condit

There are now somewhere around 15,000 private contractors in Iraq -- one for every 10 soldiers.

Some of them are security guards for government installations, important people, oil fields or other private contractors. Some of them are truck drivers, construction workers or even cooks at military bases.

One them is a young film maker from California. He's working a one-year temporary job for Halliburton to raise money for his next movie. He's a lifeguard for the swimming pool in one of Saddam Hussein's former presidential palaces. It's still a palace, but now it belongs to the giant defense contractor Halliburton.

"Cost Plus" Contracts

You'd think that Halliburton would make a bigger profit if they hired a low-wage Iraqi to do the job. You'd be wrong -- at least while you and I are paying the bill.

Halliburton and its subsidiary Kellogg Brown & Root (KBR) have what are called "cost plus" contracts. They get paid whatever it costs to do the job, plus a guaranteed profit. The idea is to get the job done without the contractor cutting corners. The reality is built-in waste. There's a guaranteed profit and no effective penalties for failure.

In KBR's case, their contract calls for costs plus a guaranteed 1% profit, plus up to 8% in "performance awards bonuses." That means if they hire someone in California, fly him to Iraq, and pay him $80,000 a year plus their part of social security, they might have costs of up to $150,000. That's a potential profit of $13,500.

On the other hand, if they hire an Iraqi and pay him $12,000 a year, their potential profit is only $1,080. That makes it a no-brainer that not many Iraqis are working on U.S. military contracts -- for "security reasons," of course.

LOGCAP

How did KBR get such a juicy contract? They wrote it. In 1992, Secretary of "Defense" Dick Cheney commissioned them to study how private contractors could help the military. $8.9 million later they produced a report (still classified) recommending a "sole source" contract. It proposed a model contract which only two or three companies in the world would be able to bid on. This contract is called the "Logistics Civil Augmentation Project" (LOGCAP for short). KBR got the contract on the first bid. KBR overstaffed 85% of its projects in the Balkans. The army was supposed to be overseeing them, but they didn't care. It didn't come out of their part of the military budget.

KRR lost the LOGCAP contract briefly during the 1990s.In 2001, with Dick Cheney now vice president, they got it back for ten years, until 2011. They've also managed to add a little gravy on the side, like Operation RIO ("Restore Iraqi Oil"). They wrote that contract, too, then won it with a $2 billion bid.

Conflict of Interest

All this is illegal, of course. As Dan Briody has pointed out in his book The Halliburton Agenda: The Politics of Oil and Money, the Code of Federal Regulations specifically forbids any federal contractor from writing a contract and then bidding on it. It's called an "organizational conflict of interest."

But KBR (owned by Halliburton since 1962) got to its present size by buying politicians to remake the law as necessary. They got their first big contract in 1936, to build a dam. They were then called Brown & Root. The problem was that the dam project was illegal under both state law and Texas law.

They bought a mid-term redistricting of Texas congressional seats to put the dam into the district of a congressman who was a good friend of President Franklin Delano Roosevelt.

Then their congressman died, so they put in a young politician named Lyndon Johnson. Johnson handled the congressional maneuvering, with lots of campaign contributions funneled to the right people. A lawyer named Abe Fortas (who Johnson later put on the Supreme Court) handled the legal fudging.

Later they bought Johnson a U.S. Senate seat. It was a reward for lining up the Democratic votes in Congress to override President Truman's veto of the anti-labor Taft-Hartley Act. When Johnson became president, Brown & Root built a lot of U.S. bases in Vietnam.

Millions for "Defense"

So that's where our tax dollars are going. Or maybe it's the Iraqi people's oil money. Whoever's in office, whatever country they're invading,Halliburton and KBR make money. And ordinary people pay.
 
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