GOP Ignores Controversial Iraq Contracts, Dems Allege

By: Alexander Bolton

Democrats in Congress are accusing Republicans of turning a blind eye to contracts worth billions of dollars that the Bush administration has granted to companies with strong GOP ties as part of the effort to rebuild Iraq.

In the absence of any Republican investigations, the nonpartisan General Accounting Office, the investigative arm of Congress, is looking into the matter.

Two of the biggest contracts have gone to a subsidiary of Halliburton, which Vice President Dick Cheney served for five years as CEO, and the Bechtel Group, which counts a former Republican cabinet official and a member of President Bush's export council among its executives.

A number of the contracts, such as the one to Halliburton, have been awarded without competition, creating the appearance that the government may be granting special favors or not spending its reconstruction funds efficiently, Democrats say.

Republicans and Democrats stood together for the most part during the invasion of Iraq, but partisan conflict is beginning to brew over reconstruction.

The charges also signal growing Democratic frustration over the laissez-faire stance Republican investigators have adopted toward the Bush White House, a marked contrast to their activity during the Clinton administration.

Then, Republicans on the government oversight committees energetically scrutinized improprieties they suspected Democrats of committing.

"I think there is already the appearance of the administration using the Iraq War to reward some of the companies that have been close to them politically", said Rep. Henry Waxman (CA), ranking Democrat on the House Government Reform Committee.

"I don't think the Republicans are doing any oversight on what this administration is doing", he said. "We're failing to live up to the responsibilities of the legislative branch."

Waxman has sent letters to the Army Corps of Engineers and the U.S. Agency for International Development (USAID) requesting information on Iraqi contracts. However, Waxman said investigations by the minority party are substantially constrained by its inability to hold hearings or issue subpoenas.

In the meantime, under the initiative of Comptroller General David Walker, the GAO is examining the contracting process.

"We're looking at the number of contracts awarded and who've they been awarded to", said Bill Woods, a director in the GAO's acquisitions group.

And last week Sen. Richard Lugar (R-IN), chairman of the Senate Foreign Relations Committee, asked administration officials about the contracts when they appeared before his committee to testify about the reconstruction effort. That hearing did not delve into the contract issue as deeply as some Democrats would like.

"We need much more information about the contracts for the reconstruction of Iraq", said Sen. Byron Dorgan (ND), chairman of the Democratic Policy Committee, who added that Lugar's inquiries are insufficient. "These are potentially very large contracts, we need to understand the circumstances under which [they] were awarded. We're spending a very large amount of money here. I worry that it's being spent with very little oversight and not subject to an open bidding process."

Earlier this year, Kellogg Brown & Root, a subsidiary of Halliburton, announced it had signed a no-bid contract with the Army Corps of Engineers to repair oil wells in Iraq. Subsequent inquiries by Waxman revealed that the contract has a potential value of $7 billion and allows Halliburton's subsidiary to operate Iraqi oil facilities and distribute Iraqi oil - extremely lucrative options.

Waxman also discovered that Halliburton's subsidiary has received more than $425 million in another contract, to provide logistical support to the U.S. Army under the Logistics Civil Augmentation Program.

While the Army logistics contract was awarded in 2001 after a competitive bidding process, specific orders under the contract are generally awarded without competition from qualified contractors.

The Bechtel Group, which won a competitive contract to manage the bulk of construction activities in Iraq, has solid ties to the GOP. Former Reagan Secretary of State George Shultz is a director of the company and CEO Riley Bechtel serves on the President's Export Council.

Rep. Tom Davis (R-VA), chairman of the House Government Reform Committee, dismissed Democrats' preoccupation with the Iraq contracts as politically motivated.

"It's interesting they've requested information on the contracts that went to Halliburton but not the contracts that went to Feinstein's husband's firm", said Davis, referring to a contract worth as much as $600 million that the Army signed with URS Corp., a company partly owned by Blum Capital Partners LP. Richard Blum, the investment group's chairman, is married to Sen. Dianne Feinstein (D-CA).

"That talks about the motivation behind this", Davis said.

Davis said he wanted to give the reconstruction effort more time to progress before beginning to scrutinize it.

Sen. Joseph Lieberman (CT), the top Democrat on the Senate Governmental Affairs Committee, has called on panel Chairman Susan Collins (R-ME) to hold hearings on contracts awarded to help rebuild Iraq.

Collins has not yet responded to Lieberman's request. When asked whether she would hold hearings, Collins said she did not want to investigate the matter while GAO was looking into it.

Collins noted that along with four Democrats, she co-sponsored an amendment to the defense authorization bill that requires the Pentagon publicly to justify the award of any Iraqi reconstruction contract without a competitive bidding process.