Posted on 10-10-2003
Spending On Iraq
Sets Off Gold Rush
By Jonathan Weisman and Anitha Reddy, Washington Post,
09 October 2003
As the House today takes up President Bush's
$87 billion spending request for Iraq and Afghanistan, the debate over
the bill is increasingly focused not just on the amount of money but also
on who will get it.
Of the $4 billion a month already being spent in Iraq,
as much as a third is going to the private contractors who have flooded
into the country, said Deborah D. Avant, a political scientist at George
Washington University and an expert in the new breed of private military
companies. The flow of money will increase greatly if Congress approves
Bush's request.
Many of the services being sought -- including police
training, crimes-against-humanity investigations and prison-construction
expertise -- are highly specialized. Conditions are dangerous. Experts
say American taxpayers can expect to pay a hefty premium to contractors
in a classic seller's market.
Among the dozens of projects in the proposal is a
State Department plan to spend $800 million to build a large training
facility for a new Iraqi police force. Management fees alone would run
$26 million a month, while 1,500 police trainers would cost $240,000 each
per year, or $20,000 each per month. DynCorp of Reston is likely to get
the contract.
"All I can say is it's mind-boggling," James
Lyons, a former military subcontractor in Bosnia, said of the
opportunities for private contractors. "People must be
drooling."
Avant said that as many as 1 in 10 Americans deployed
in Iraq and Kuwait -- perhaps 20,000 -- are contractors, a group larger
than any of the military forces fielded there by Britain or other U.S.
allies. Kellogg, Brown & Root, a subsidiary of Vice President
Cheney's former firm, Houston-based Halliburton Corp., has an exclusive
contract to rebuild Iraq's oil infrastructure. San Francisco-based
Bechtel Corp. is the prime contractor for much of the infrastructure
reconstruction.
The Iraqi gold rush has raised concerns on Capitol
Hill that the administration may be losing control of the taxpayers'
money. As the task of rebuilding shifts from government employees to
for-profit contractors, members of Congress are worried that their
oversight will diminish, cost controls will weaken and decisions about
security, training and the shape of the new Iraqi government will be in
the hands of people with financial stakes in the outcome. Avant calls it
"the commercialization of foreign policy."
The Coalition Provisional Authority is bolstering its
contracting operations to keep up with the flow of money from Washington,
congressional aides said, but lawmakers still complain that the process
of bidding out and awarding contracts and subcontracts needs to be far
more transparent and organized.
"What we're seeing is waste and gold-plating
that's enriching Halliburton and Bechtel while costing taxpayers billions
of dollars and actually holding back the pace of reconstruction in
Iraq," said Rep. Henry A. Waxman (D-Calif.), a leading critic of the
administration's handling of Iraq. "We need greater
transparency."
Driven by those concerns, the Senate last week added
provisions to its version of the president's request that would increase
penalties for war profiteering and demand a more open and competitive
bidding system.
House Appropriations Committee Chairman C.W. Bill
Young (R-Fla.) included a provision to limit noncompetitive bidding in
the House version of the war-spending bill.
Dan Senor, a senior adviser to Coalition Provisional
Authority administrator L. Paul Bremer, said such concerns are misplaced.
He said competition among contractors would keep costs down.
"We are confident that there will be an enormous
supply of contractors and subcontractors interested in these
projects," he said. "That's what our experience has
shown."
But Senor also emphasized that the authority's primary
contracting concerns right now are speed and reducing the pressure on
U.S. troops by replacing them with contractors wherever possible.
For example, Fairfax-based Vinnell Corp., a subsidiary
of Northrop Grumman Corp., won a $48 million contract in July to begin
training a new Iraqi army, a sum that would be dwarfed by the $164
million for military contract training contained in Bush's $87 billion
request. Vinnell, in turn, subcontracted with Alexandria-based Military
Professional Resources Inc. and several other companies.
Erinys, a British company with offices in the Middle
East and South Africa, is guarding oil fields and pipelines that are in
danger from saboteurs.
Custer Battles LLC, another Fairfax company, is
providing security for Baghdad International Airport, guarding ground
convoys and protecting other contractors with 250 employees who served in
the U.S., Nepalese, British, French and Australian military, joined by
300 to 400 Iraqis, said Scott Custer, a principal of the firm. Those
numbers, he said, are "expanding exponentially."
"Iraqi operations are now the majority of our
business," Custer said yesterday.
Those contracts are only the beginning. Edwin E.
Brockway, a manager in the defense and federal products division of the
construction-equipment company Caterpillar Inc., said 500 to 600 of his
company's machines are already in Iraq. He said he expects Caterpillar to
receive many more orders for bulldozers and pipe layers as private
companies win contracts to rebuild Iraq's sewer systems,
water-purification plants and roads. The bulldozers used by soldiers in
Iraq range in price from $100,000 to nearly $1 million, and the Army
hires service companies to repair and maintain the equipment.
Engineered Support Systems Inc. estimated that the
military is using 4,000 of its gigantic portable air conditioners and
heaters in tents and portable shelters in Iraq. Each unit costs $11,000
and can heat or cool a few thousand square feet.
"The Army and Air Force have said, 'How many more
can you build? How quickly can you build them?'" said Bruce Gibbens,
director of field marketing for the St. Louis company.
Congressional aides from both parties point to the
police-training program to illustrate their concerns. DynCorp, a
subsidiary of California-based Computer Sciences Corp., landed the
initial police-training contract this summer, a contract that is likely
to expand greatly if all $800 million is approved. The State Department
envisions establishing a training camp capable of handling 3,000 recruits
and 1,000 trainers and support staff at any given time. The camp would
turn out 35,000 Iraqi police officers in just two years.
DynCorp has begun recruiting 1,000 "police
advisors" with at least 10 years of experience in law enforcement or
corrections, an "unblemished background" and "excellent
health." The draw? DynCorp plans to pay salaries as high as
$153,600, with minimum pay of $75,076.92.
DynCorp declined to comment on the contract, referring
calls to the State Department.
"The money is pretty good," said Doug
Brooks, president of the International Peace Operations Association, an
Alexandria-based trade group of private military companies. "But the
risk is there, too."
Brooks said fears of price gouging are overblown.
Erinys, the British firm guarding oil facilities, won its $30 million
security contract by underbidding its competition by $10 million, he
said.
"Yes, there are a lot of security companies
there," he said. "But I know quite a few that are still waiting
for contracts. If one company asks a gouging price, there's going to be
another in line."
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