Emilio Horner is a political science senior and Mustang News liberal columnist. These views do not reflect the editorial coverage of Mustang News.
In 2005, the Defense Contract Audit Agency found that Halliburton, a private defense contractor, had more than $1.4 billion of questionable and unsupported costs stolen from the American people. An internal Pentagon audit later found that Halliburton failed to account for $4.2 billion that it received for its services. Additionally, many of the company’s finance employees have exposed that the company engaged in systematic accounting fraud. The extreme squandering of money, due to the bloated contracts of privatized military defense contractors, should upset those on both the left and the right in the era of corporate warfare.
For the left, this is a classic case of the military industrial complex run amok.
Revolving door policies, blatant corruption and corporate consolidation of defense contractors have caused the supposed “free market” bidding process to lead to cronyism.
On the right, this is a classic case of wasteful government spending. Former Halliburton employees have revealed that the company charged $45 for cases of soda and $100 for bags of laundry. If you just replace “military industrial complex” with “welfare queen” this could basically be a story Bill O’Reilly uses to drum up the dog-whistle crowd every night.
Each year, the government spends more than $200 billion on goods and services. The Department of Defense alone accounts for more than $120 billion in contracts. This accounts for more than 60 percent of federal procurement dollars. In fact, government contracts account for approximately one-fifth of the federal budget. During the 2000 election, George W. Bush pledged to improve government services through the mechanism of competition, but government audits continue to show that there has been less competition among companies for contracts, and instead more collusion.
The role of investigating the information exchange between government officers who manage weapons programs and the private contractors who design and build them is to beg the question: How can a strong sense of ethics in government be implemented? Additionally, what are the obligations to the armed forces, American taxpayers and the nation in general, of defense contractors? Finally, it’s important to ask: Does regulation and enforcement on federal acquisition, defense acquisition and federal procurement procedures need to be tougher?
The Defense Department has three methods that it uses to procure goods or services. One is competitive bidding in which contract decisions should be made with price only and price related factors at play. The procurement process should promote competition and hypothetically, drive price down.
If a company is non-responsive, meaning it cannot assure the government of the quality of its serves being provided within the time period, or if there is a conflict of interest between the low bidder and the government official, the government can reject the lowest bid. More commonly, the ways that a contract officer would either reject or accept a bid comes from bribery. Bribes come in many ways: flat payments in exchange for the contract, kickbacks, the offering of the difference between the amount the bid was and the unsuccessful low bid, gifts or even country club memberships.
The second form of contract comes from competitive proposals in which the government works with companies to draw up the best proposal. A problem with this is that many senior executives with the Pentagon come from industry, which is where they return after their government jobs are up. Finally, the third type is sole source, in which the government only looks at one company, not having competition at all and ruining the purpose of a privatized military.
Though contracting systems are supposed to be open and competitive, the government has recently been awarding contracts with little to no competitive bidding. Additionally, the government has assumed more of the risk and has not been efficient in watching and overseeing defense contractors. In the Iraq War, a large number of the contracts were sole source. Of the 24 contracts, worth about $122.5 million, 13 of them were sole source based, prized at $111 million. Of these, contract requirements were not established, supply schedules were not met, personal service contracts were wrongly awarded and there was little to no government surveillance. For example, a contractor was paid even though he was on vacation, and vehicles were airlifted into Iraq at a cost of hundreds of thousands of dollars without prior approval.
Halliburton was the largest contractor operating during the Iraq War, representing 52 percent of the total contract value. The company initially had a couple multi-billion dollar contracts for providing logistical support and oil infrastructure. Known as the Logistics Civil Augmentation Program (LOGCAP), Halliburton was issued $8.6 billion. At the same time, the Restore Iraqi Oil (RIO) contract, given as a sole source contract, gave Halliburton approximately $2.5 billion. All these contracts are given as “cost plus award fee” contracts, meaning that Halliburton is reimbursed for costs it acquired while under contract. Then profit is looked at as a percentage of those costs. This directly incentivizes Halliburton and other private defense contractors to jack up prices.
For example, Halliburton insisted housing its executives in five-star hotels in Kuwait. They torched brand new trucks rather than perform relatively minor repairs and maintenance. They dramatically overcharged for importing fuel from Kuwait into Iraq. They constantly billed for equipment that wasn’t necessary and then submitted millions of dollars in duplicate costs. During the cost estimates for LOGCAP, Halliburton charged $12.8 million after the government’s estimation was $1.9 million. Similarly, they charged the government $10.8 million for a base in Kuwait that was estimated at $2.8 million. Lastly, they charged for fictional employees. The auditors stated Halliburton charged $1.4 million for 146 personnel when they only had 62 personnel on hand.
As if profiteering of war was not immoral enough, they had to steal from American taxpayers while doing it. First off, this matters because the next time someone tells you that the United States does not have enough money to fund some liberal program designed to protect the environment, educate the population or keep the poorest among us clothed and fed, know that money has been and continues to be funneled directly into private military corporations.
Know the dangers of the revolving door in which Dick Cheney was able to go from being chairman and CEO of Halliburton to giving them contracts worth billions in Iraq and Afghanistan. Lastly, know that whenever politicians speak of going to war for idealistic reasons like “spreading democracy” and “promoting freedom,” it’s important to note who will profit off that decision.
Because in a Post-Citizens United Era of commodified free speech, the same people who profit are more than likely funding the nationalist political rhetoric.