Congress about Halliburton: Inside Track over Bechtel?

Rivals Say Halliburton Dominates Iraq Oil Work

NY Times -August 8, 2003 By NEELA BANERJEE

The Bechtel Group, one of the world's biggest engineering and construction companies, has dropped out of the running for a contract to rebuild the Iraqi oil industry, as other competitors have begun to conclude that the bidding process favors the one company already working in Iraq, Halliburton.

After the United States Army Corps of Engineers quietly selected Halliburton in the spring to perform early repairs of the Iraqi oil business in the aftermath of the war, other companies and members of Congress protested that the work should have been awarded through competitive bidding.

Halliburton's role in the rebuilding has been under political scrutiny because the company was formerly headed by Vice President Dick Cheney. But the Bush administration and the Corps of Engineers, which is overseeing the Iraqi oil reconstruction effort, have repeatedly said that Halliburton has no inside track.

Preliminary plans for a new contract, which industry executives had thought might total $1 billion, were announced late in June by the Corps of Engineers. The bidding was meant, in part, to introduce competition and a sense of fairness into the lucrative Iraqi reconstruction market, an executive with a major engineering concern said. Like many industry executives, he would speak only on condition of anonymity because his company does not want to jeopardize its chances for future government contracts.

But in the last month, the corps, which is overseeing the reconstruction efforts, has specified a timetable for the work that effectively means that the value of any contract companies other than Halliburton could win would be worth only about $176 million, according to Corps of Engineers documents and executives in the engineering and construction business.

Earlier this week, Bechtel cited the timetable as its reason for dropping out of the bidding. The company now plans to deal directly with the Iraqi oil ministry for future reconstruction work, a spokesman, Howard N. Menaker, said.

Although the oil ministry and the Army Corps of Engineers nominally cooperate, industry analysts say the Americans have the upper hand.

Officials of the Corps of Engineers did not return numerous phone calls yesterday seeking comment on the contract. But last month, in response to questions from other companies about Halliburton's role, the corps said on its Web site that all potential bidders had received the same information to "eliminate any competitive advantage" Halliburton might have from its involvement in the Iraqi reconstruction work so far.

A spokeswoman for Halliburton, Wendy Hall, would not discuss whether its engineering unit, Kellogg Brown & Root, would bid, saying only that "we will evaluate the opportunity."

Bechtel 'will not bid for Iraq oil contracts'

Financial Times -August 8 2003

Bechtel said on Friday that it would not compete for two new contacts to repair Iraq's oil industry in an announcement that raised questions about whether the bidding process favoured its rival Halliburton.

Bechtel, one of the largest US construction companies, said it had decided not to bid for up to $1bn (€879m, £618m) in contracts to be awarded this October by the Army Corps of Engineers because it planned to focus instead on future contracts to be granted by the Iraqi oil ministry.

Some critics claim that the timing of the contracts and their requirements would make it difficult for other companies to unseat Halliburton, which is already carrying out similar work in Iraq under a previously awarded contract.

Halliburton, which was headed by Dick Cheney, vice-president, from 1995 to 2000, has had a controversial role in Iraq since the Corps of Engineers awarded it a contract worth up to $7bn to extinguish oil-well fires and perform emergency repairs in the oil sector without competition.

Halliburton had an inside track on that deal because its Kellogg Brown & Root division had developed a plan for the Army to deal with oil-well fires in Iraq under a separate contract.

Amid heavy criticism from Congress that the process was opaque and uncompetitive, the Corps of Engineers said in April that the original deal was a short-term "bridge" and that it would solicit bids for two new contracts to replace it.

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