Citing new damage to Iraq’s oil industry from saboteurs, the Bush administration Wednesday delayed its planned replacement of a lucrative no-bid contract that was awarded to Halliburton Co., Vice President Dick Cheney’s former company.
Halliburton, paid $1.59 billion so far, could stay on the job until early next year under the new schedule announced by the U.S. Army Corps of Engineers.
The Corps, which supervises the reconstruction, already has received competitive bids for replacement contracts, but needs revised proposals that reflect the additional work that will be needed.
The anticipated workload has increased because of “continued sabotage ... plus the need to provide additional security,” the Corps said.
The new schedule calls for selection of the winning bidders in either December or January, although the Corps said it hoped to award the contracts in December.
The Corps decided to divide Halliburton’s work among separate contractors for the northern and southern oil fields. Each contract will have a minimum value of $500,000. As amended, the maximum cost for the northern oil fields contract will be $800 million and for the southern fields, $1.2 billion.
Halliburton’s KBR subsidiary has been performing the restoration work under a contract that evolved from emergency firefighting at Iraq’s oil wells after Saddam Hussein was toppled, to restoration of Iraq’s damaged oil industry.
Democratic members of Congress have said the no-bid contract showed favoritism to the Houston company that Cheney led before he ran for vice president. They also accused Halliburton of gouging U.S. taxpayers by paying too much for emergency imports of oil from Iraq’s neighbors.
Cheney’s office has said the vice president has no current ties to Halliburton and had nothing to do with the contract. He still receives deferred payments for services performed while he was employed by the company.
Halliburton has said that its contracts were awarded by civil servants, adding the company performs dangerous support work for the military that allows U.S. forces to concentrate on their primary missions.
More recently, the company denied any price gouging for imported gasoline products.
“To allege that KBR is overcharging for this needed service insults the KBR employees who are performing this dangerous mission to help bring fuel to the people of Iraq. The drivers transporting the fuel face the real risk of being killed or wounded, and vehicles and contents being destroyed,” Halliburton said.