The Army Corps of Engineers’ top contracting official delivered explosive testimonty today with claims that the controversial, no-bid $7-billion contract to restore Iraq’s oil infrastructure was under control of the Office of the Secretary of Defense.
We’re talking about “every aspect” of the contract awarded to Houston-based Halliburton subsidiary KBR, Bunny Greenhouse said at a Capitol Hill hearing sponsored by Democrats. Halliburton was once headed by Vice President Dick Cheney.
“I observed, first hand, that essentially every aspect of the RIO (Restore Iraqi Oil) contract remained under the control of the Office of the Secretary of Defense,” said Greenhouse, who has worked in military contracting for more than two decades. “This troubled me and was wrong.”
KBR’s contracts worth well over $14 billion have been the constant target of audits finding a lack of documentation and possible padding valued at hundreds of millions of dollars. The RIO contract has been especially controversial because of the astronomically expensive costs the company charged for trucking oil and fuel from Kuwait into Iraq.
KBR racked up $2.5 billion in billings under the secretly awarded oil contract before it was replaced with a new $1.2 billion contract following an outcry of criticism over the original award.
Much of the original contract was paid for with seized Iraqi assets and oil revenues. That may make it a sticky issue in recovering any overcharges and could be clarified in a case now pending in Federal Court against another contractor, Custer Battles, which was also paid with Iraqi assets.
“I can unequivocally state that the abuse related to contracts awarded to KBR (Kellogg Brown and Root) represents the most blatant and improper contract abuse I have witnessed during the course of my professional career,” Greenhouse said.
Reuters aptly outlines just how Greenhouse believes the original RIO was railroaded by Pentagon officials:

What concerned Greenhouse most was that the oil contract, which had a top value of $7 billion, was given to KBR without competitive bidding.
She irked her bosses by handwriting her concerns in official documents for the oil deal but said these were overlooked, she said.
In one instance, she said Army Corps officials bypassed getting her signature to grant a waiver for KBR to be relieved of its obligation to provide cost and pricing data for bringing fuel into Iraq.
That waiver was granted after a draft Army audit said KBR may have overcharged the military by at least $61 million to bring in fuel to Iraq to ease a shortage of refined oil.
Greenhouse agreed she had become a thorn in the side of the Army Corps and said she had been advised not to attend the hearing because of its partisan nature.

Interestingly enough, Sheryl Tappan, a former contract proposal writer and consultant for Bechtel, found that the follow-on RIO contract was just as fishy and “rigged from the beginning.”
Democrats said they were holding the hearing because the Republican-led Congress has been unresponsive to the claims of Greenhouse and others about the billions of dollars spent in Iraq on contracts to support military and reconstruction efforts.
“This testimony doesn’t just call for Congressional oversight — it screams for it,” said Sen. Byron Dorgan, a Democrat from North Dakota.