'While You Were Sleeping'

by Mark Fiore:

http://lnk.nu/sfgate.com/6nx.cgi

(Sound UP)

Enjoy,

EOTS

http://lnk.nu/news.yahoo.com/6nq

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Congress Researchers Fault EPA Studies

By JOHN HEILPRIN,
Associated Press Writer
Fri Dec 2, 5:08 PM ET

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Researchers who work for Congress say the Environmental Protection Agency skewed its analysis of air pollution legislation to favor President Bush's plan.

EPA's analysis "works in favor of" Bush's plan by overstating some costs of competing bills, said a report Friday by the Congressional Research Service. The 2002 Bush plan, dubbed "Clear Skies," remains stalled in Congress.

"Although it represents a step toward understanding the impacts of the legislative options, EPA's analysis is not as useful as one could hope," the report concludes.

It took three years for EPA to provide comparisons of Bush's plan with competing versions by Sens. Tom Carper, D-Del., and James Jeffords, I-Vt.

When it did in October, the EPA said its analysis showed the superiority of the Bush proposal, which relies on market forces to cut pollution from the nation's 600 coal-burning power plants but does not address global warming.

EPA officials dismissed any notion of playing favorites.

"It does a real disservice to this discussion to have an analysis that makes unfounded and inaccurate conclusions," agency spokeswoman Eryn Witcher said.

She said Bush's plan builds on new EPA rules "which is why we have been urging Congress to pass a permanent, nationwide solution and have gone the extra mile to provide the most detailed, thorough, comprehensive legislative analysis of air ever prepared by the agency."

The EPA also had projected a broad range of potential costs if the United States were to regulate carbon dioxide, a gas produced by the burning of fossil fuels that many scientists blame for global warming.

But along with aiming to reduce carbon dioxide, the competing bills would force industry to install more high-tech pollution controls to cut emissions of three main pollutants from power plants: nitrogen oxides, which form smog; sulfur dioxide, which causes acid rain; and mercury, a neurotoxin that accumulates in fish and works its way up the food chain.

But the agency overestimated costs of installing the high-tech controls for mercury and assumes natural gas will more plentiful and available at cheaper prices than the Energy Department estimates, according to congressional researchers James McCarthy and Larry Parker.

Proponents of Bush's approach have repeatedly argued that stricter controls like those sought by Carper and Jeffords could harm coal-producing states in the Midwest and East by forcing more power plants to switch from coal to natural gas.

EPA estimated that Bush's plan would cost utilities up to $6 billion a year, compared with up to $10 billion under Carper's bill and as much as $51 billion in Jeffords'. Bush's bill provides $143 billion a year in health benefits, EPA said, compared with $161 billion under the Carper bill and $211 billion in the Jeffords bill.
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On the Net:

EPA: http://www.epa.gov

Copyright © 2005 The Associated Press.

Copyright © 2005 Yahoo! Inc.

"...It is not difficult to imagine why, given the cacophony of “opposing scientific views” on 20th century temperature trends, the public could conclude, erroneously, that scientific consensus on global warming is still lacking..."

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http://dissidentvoice.org/Dec05/Adams1202.htm

(Supporting Links at Source URL)

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Hurricanes, Global Warming and the Right-Wing

Distortion Campaign: The Battle Over Public Awareness

by David K. Adams

www.dissidentvoice.org

December 2, 2005

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A series of recent polls conducted by the Program on International Policy Attitudes (PIPA 2005) has demonstrated that public opinion in the United States has become more informed over the years with regard to the “scientific consensus” on global warming. The scientific consensus is in short:  Human-induced global warming is occurring and it is presently necessary to take action to curtail production of greenhouse gases. It is referred to as the scientific consensus because it represents the view of the overwhelming majority of climate scientists. The increase in public awareness of the scientific consensus should be considered major progress. This is especially true when one considers the concerted effort from the 1980s to the present by global warming “skeptics” and their corporate sponsors to muddy the issue. The global warming skeptics are a tiny but vocal group of scientists who argue that absolutely no conclusive evidence exists for global warming. Their views have been disseminated very effectively by right-wing think tanks and through Internet websites (e.g., www.junkscience.com and www.techcentralstation.com). A series of articles in the May/June 2005 issue of Mother Jones magazine details the financial ties between the energy industry, conservative think tanks and the skeptics. 

What the above and other polls have also shown is that if the public believes scientific consensus exists, it is willing to take appropriate action to curb the emission of greenhouse gases. The polls indicate this is true even in the case where taking action implies significant economic costs for the U.S. It would therefore appear necessary to limit public awareness of the scientific consensus to ensure that little action is taken to curb greenhouse gas emissions. Over the last two decades, the fossil fuel industry, employing a team of global warming skeptics, has managed to do just this. The energy industry seems well aware that a confused public vacillates, leading to the “business as usual” scenario whereby little political pressure is exerted to take steps on global warming. 

Despite gains over the last few years in public awareness of the scientific consensus, recent controversies over hurricanes and global warming threaten to setback these gains. Right-wing think tanks and the skeptics are presently on the attack, claiming that global warming “alarmists” are using the hurricane Katrina disaster to promote their radical environmentalist agenda. Given media amplification of the skeptical voices, in all probability, the American public may become more confused with regard to the scientific consensus thereby reversing the trend toward greater awareness over the last decade. In this article, two previous distortion campaigns are examined to provide insight for the evolution of the current assault. In studying these campaigns, a clear pattern of the distortion techniques employed by the skeptics is revealed. Given the effectiveness of the skeptic’s previous attacks in confusing the public, one can speculate that the level of public awareness of the scientific consensus may stagnate or even regress with time. And, as the polls have indicated, as long as the public believes there is no scientific consensus, inaction on anthropogenic climate change is guaranteed. 

American public opinion and global warming: Trends 

By the early 1990s, a scientific consensus on global warming began to emerge. Previously, climate studies, given the lack of good long-term data records, were more speculative and, therefore, strong scientific consensus was not possible. Nevertheless, public concern about global warming grew and it even became part of public/national discourse (e.g., the Clinton-Gore campaign of 1992).  By 1995, with the release of the second Intergovernmental Panel on Climate Change (IPCC), a scientific consensus had already emerged -- anthropogenic global warming was occurring and mitigating efforts were required to reduce greenhouse gas emissions.  Given the robustness of the scientific consensus, most of the world’s nations met in 1997 in Kyoto, Japan to put forth a plan for reduction of greenhouse gas emissions: The Kyoto Protocol. 

In spite of the scientific consensus and the public’s generally favorable view of the Kyoto Protocol, no progress in the U.S. was made toward compliance. In fact, the Senate in 1997 passed a resolution that essentially negated any possibility of treaty ratification. Once President Bush arrived in the White House, the Kyoto Protocol was dead in the water. Furthermore, it appears that in the mid-to-late 1990s the public remained somewhat confused with regard to the occurrence of global warming, the scientific consensus, and Bush’s position on Kyoto. Actually, a shockingly large percentage (43%) still thinks Bush favors implementation of the treaty (PIPA 2005). 

Within the last several years, public awareness of the scientific consensus has increased, compared to the mid 1990s (only 28% polled, in 1994, believed scientific consensus existed). However, the percentage of Americans who believes a scientific consensus exists is still disturbingly small, around 50% (PIPA 2005). This is a remarkably small percentage considering an unassailable scientific consensus has existed for well over a decade. That progress in understanding has been extremely slow is due, in no small part, to the efforts of the energy industry to misinform the public. 

Global warming skeptics running interference for the fossil fuel industry 

In their in-depth study of the defeat of the Kyoto Protocol, McCright and Dunlap (2003) discussed the concerted effort by the energy industry to utilize right-wing think tanks as sounding boards for the tiny minority of skeptical scientists.  The confusion about global warming sown by this very vocal minority was part and parcel of the energy industry’s scheme to impede efforts to reduce greenhouse gas emissions.  According to the authors, the skeptics achieved “non-problematicity” of anthropogenic climate change by striking directly at the “legitimacy of global warming as a social problem.” That is, the public would not see global warming as a threat as long as they felt that scientists were unclear about the occurrence and possible consequences of global warming. The authors demonstrated the pivotal role the media played in elevating and legitimizing the skeptic’s views. Their study showed that the media, specifically the print media, gave the climate skeptics equal access for expounding their unsubstantiated claims. As a result, given the disproportionate media exposure of the skeptics, the political climate (Republicans took both Houses of Congress in 1994) and the poorly informed public, inaction on the Kyoto Protocol was assured. 

The defeat of Kyoto, however, has not lessened the skeptic’s assault.  A more recent case exposing how the global warming skeptics operate involves the paleoclimate study of Wille Soon and Sallie Baliunas (2003). Climate scientists Michael Mann, Ray Bradbury and Malcolm Hughes (1998, 1999) released studies in prestigious scientific journals that revealed a sharp upward trend in northern hemisphere air temperatures in the latter half of the 20th century. The sharp rise in temperature over the last 50 years, preceded by 1000 years of relatively small temperature changes gave the graph a unique shape, something akin to a “hockey stick.” This recent warming trend, unprecedented over the last millennium, could not, according to the authors, be explained solely by natural climate variability. Soon and Baliunas, both astrophysicists with fossil fuel funding, assailed this conclusion. The Soon and Baliunas study, published in the second tier climate journal, Climate Research, claims that 20th century warming is not unusual relative to the last 1000 years and, therefore, cannot be attributed to anthropogenic causes. Within the mainstream climate science community, the Soon and Baliunas paper was roundly criticized as wrought with errors and untenable conclusions.  In fact, several Climate Research editors offered their resignation in protest over the unusual review process that resulted in the paper’s publication. The Bush administration, on the other hand, quickly cited the Soon and Baliunas article as evidence that global warming research is inconclusive. Soon was invited to testify before a Senate committee on climate change where he criticized the “hockey stick” of Mann, Bradbury, and Hughes. The press lapped up the “controversy.” In addition, there was a chorus of condemnation of the Mann, Bradbury and Hughes work in commentaries, position papers and press releases by right-wing think tanks and on the skeptic’s websites.  All this commotion even recently lead Senator Barton (R-Tx) to call for reexamination of the data and techniques used to derive the “hockey stick.”  Regardless of the correctness of the Mann, Bradbury and Hughes studies, the scientific consensus, based on hundreds of climate studies, had already been well established. Nevertheless, the damage had been done. It is not difficult to imagine why, given the cacophony of “opposing scientific views” on 20th century temperature trends, the public could conclude, erroneously, that scientific consensus on global warming is still lacking. 

Hurricane Katrina and the right-wing attack 

The controversy over global warming and hurricane intensity had already been heating up prior to Katrina. Although previous IPCC reports have been inconclusive with regard to trends in hurricane frequency or intensity with global warming, theoretical and modeling studies have indicated global warming could entail hurricanes of greater intensity. The rather active 2004 hurricane season in the North Atlantic Ocean caught the attention of climate scientists. It was pointed out that this activity was consistent with the decadal trend towards warming tropical sea surface temperature. The skeptics began to stir, questioning these reports. However, a study by Kerry Emanuel (Nature 2005) on the increased intensity of hurricanes over the globe has really created an uproar. 

The basic contention of the Emanuel paper (Kerry Emanuel is a Professor of Meteorology at M.I.T.) is that warmer tropical ocean temperature will, according to his theory, increase the intensity, not necessarily the frequency, of hurricanes. In recent decades, his paper shows, a warmer tropical sea surface has been observed particularly in the North Atlantic Ocean. Likewise, his study indicates a trend towards increasing hurricane intensity. He states that this decadal increase in intensity “probably reflects the effect of global warming.” This study immediately drew the wrath of the skeptics and, in fact, several mainstream hurricane scientist as well. Then, only a few weeks later, Katrina struck. 

Almost overnight the topic of global warming returned to the headlines. An enormous amount of press has been given to the possible relationship between global warming and the destruction wreaked by hurricane Katrina. Many press reports and commentaries have even claimed that Katrina was certainly an indication of global warming and what we may expect in the future. This linking of hurricane Katrina directly to global warming has actually given the skeptics a powerful weapon with which to strike at those they call global warming “alarmists.” The skeptics can now claim, disingenuously perhaps, that the “alarmists” are acting unscientifically by drawing conclusions not supported by the data. Unlike the battle over the Kyoto Protocol and the Mann, Bradbury, Hughes studies, several mainstream hurricane scientists have also criticized the reports tying global warming and hurricane Katrina together. They argue that the global warming “signal” in the data on hurricane intensity is probably too weak to make any kind of definitive statement linking the two. Likewise, all climate scientists, including Emanuel himself, have noted the absurdity of attributing a single weather event (hurricane Katrina) to global warming.  Nevertheless, the skeptics, consistent with their past distortions, have failed to acknowledge that the hurricane experts they cite are not necessarily rejecting global warming.   These climate scientists are simply stressing that the hurricane data is presently inconclusive, which is not at all the same as denying the existence of global warming. The point is subtle, but critical to understand. Nevertheless, if past behavior is any indication, the skeptics will muddy the waters by insinuating that the controversy over linking hurricanes and global warming is indicative of the lack of scientific understanding of global warming in general. 

The fossil fuels industry’s well “oiled” disinformation machinery 

The energy industry’s disinformation campaign over the long haul has benefited enormously from the confusion created by its platoon of global warming skeptics. In fact, it would be difficult to imagine any successful campaign on the part of the fossil fuel industry and associates without scientists who lend their name and credentials to an effort to maintain a possibly very harmful status quo. With this brief overview of the distortion campaigns against Kyoto, Mann and coauthors, and the hurricane-global warming link, one gains insight into the skeptic’s modus operandi. Firstly, the skeptics typically single out a particular global warming study (e.g., Mann, Bradbury, Hughes). The data or methodology employed by the scientist is attacked (e.g., the “hockey stick”) and/or minor or trivial errors in the study are overemphasized relative to their importance. This has the effect of devaluing the study’s conclusions. With the skeptics’ ability to project the attacks into the public forum, the smearing of the study is used to denigrate, by extension, all global warming research. Secondly, the skeptics eschew the scientifically rigorous “peer-review” process for their own studies. Peer review of research is common to all scientific fields. Instead, skeptics most often present their research or critiques on websites, through position papers published by right-wing think tanks, or directly through the mass media. When they do manage to publish in peer-reviewed journals, they tend to be second tier as in the case of the Soon and Baliunas article. However, and most importantly, the skeptics are extremely capable of getting their position into the mass media. And the media has been more than obliging in giving the skeptics equal time. In fact, the coverage skeptics receive is vastly disproportionate to their numbers. In some sense, the fact that the fossil fuel industry can depend on the media to give equal access to global warming skeptics has been the backbone of their disinformation campaigns. When the media juxtaposes the views of skeptics and climate scientists, it gives a false impression as to the scientific weight of each argument, creating the illusion that debate is raging within the climate science community. The rational conclusion the public would draw is that the global warming issue is entirely unresolved. 

What can we expect in the near future?  The debate over hurricanes and global warming will continue long after this hurricane season ends. More studies linking hurricanes to global warming are presently coming out. Given the necessarily tentative conclusions of these studies, the global warming skeptics can be expected to have a field day. Their distortions will greatly influence public misperceptions about the strength of the scientific consensus. When Americans finally become more informed about the scientific consensus, they will be willing to act to counter global warming, even to their own economic detriment. This is what the PIPA (2005) and other polls suggest. Until this happens, further confusion on anthropogenic climate change will lead to inaction on the political front and business as usual. 

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*  This article is based on a presentation entitled “Calentamiento Global: Consenso y Controversias” (Global Warming: Consensus and Controversies) given at the Universidad Nacional Agraria, Managua, Nicaragua in September 2005. 

David Adams received his Ph.D. in Atmospheric Sciences from the Institute of Atmospheric Physics, University of Arizona.  He is a research meteorologist with additional interests in Latin America and Spanish language/linguistics. He can be reached at: dadams@fiji.ucsd.edu. 

REFERENCES

Emanuel, K. A., 2005: Increasing destructiveness of tropical cyclones over the past 30 years. Nature, 436, 686-688. 

Mann M. E., Bradley R. S. and Hughes M. K., 1998: Global-scale temperature patterns and climate forcing over the past six centuries.  Nature, 392, 779-787. 

Mann M. E., Bradley R. S. and Hughes M. K., 1999: Northern Hemisphere temperatures during the past millennium: inferences, uncertainties, and limitations. Geophysical Research Letters, 26, 759–762. 

McCright, A. and R. Dunlap, 2003:  Defeating Kyoto:  The Conservative Movement’s Impact on the U.S. Climate Change Policy, Social Problems, Vol. 50, No. 3, pp 348-373. 

Program on International Policy Attitudes (2005) report on climate change can be found here.

Soon, W. and Baliunas, S., 2003: Proxy climatic and environmental changes of the past 1000 years. Climate Research, 23, 89-110. 

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"It is horrifying that we have to fight our own government to save the environment." - Ansel Adams

"Most of the workers are deemed unskilled and work seven days a week for 12 hours a day, according to their contracts ... There is no provision for sick leave. Any employee who threatens a strike or attempts to organize is subject to immediate dismissal and the employee required to pay for his return plane ticket. For this they are paid $150 a month, roughly 45 cents an hour."

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KBR workers in Iraq paid 50 cents an hour

By PAMELA HESS

UPI Pentagon Correspondent

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WASHINGTON, Dec. 1 (UPI) -- While the United States spends billions on troop support in Iraq, the people serving the meals, scooping the ice cream, and washing the dishes make as little as 50 cents an hour.

The U.S. military has paid Halliburton subsidiary KBR about $12 billion so far for so-called logistics support to U.S. military personnel in Iraq, the largest contract of its kind ever. Around 80,000 troops are served meals at dining facilities every day under the contract -- the other 60,000 or so fend for themselves in field kitchens or by eating military issue "Meals Ready to Eat."

KBR in turn hires that work out entirely to subcontractors whose job it is to recruit, transport, house, feed and pay "third-country" nationals to stock, prepare, serve and clean up at the dining facilities at 43 bases across Iraq.

Those workers are recruited from countries with already low wages, where jobs are scarce. And as pressure to keep the logistics contract cost down has increased, subcontractors have moved from country to country in search of cheaper labor markets.

That is what brought around 770 workers from Sierra Leone, Africa, to Iraq in July to work for ESS Support Services Worldwide, A British-based food service company specializing, according to its Web site, in "remote site, defense and off-shore locations."

Most of the workers are deemed unskilled and work seven days a week for 12 hours a day, according to their contracts, one of which was obtained by United Press International. In practice, workers said in interviews, most only work six days a week.

There is no provision for sick leave. Any employee who threatens a strike or attempts to organize is subject to immediate dismissal and the employee required to pay for his return plane ticket.

For this they are paid $150 a month, roughly 45 cents an hour.

Salaries are deposited in bank accounts in Africa so the money is available to the workers' families.

The workers also get a $40 a month cash allowance on top of that, but the contract states the money is a gift, and the amount discretionary and may be eliminated. Their housing -- three to a standard size trailer -- laundry, food and uniforms are provided free.

Employees are prohibited from discussing the contract and "ESS internal issues or complaints" with anyone outside the company, including the military and media. A copy of the contract was provided to UPI by an ESS employee via e-mail, with the assistance of a U.S. military officer. The worker quit Iraq and has now returned to Sierra Leone.

Neither the U.S. military nor prime contractor KBR sets a minimum wage standard for workers employed by any sub-contractor under the Logistics Civilian Augmentation Program -- known as LOGCAP. Jana Weston, the deputy program director of LOGCAP, told UPI in September she was unaware that some workers were being paid $150 a month.

"KBR's subcontractors are required to comply with all applicable labor laws and provisions in the country in which they work. KBR's non-U.S. subcontractors operate within industries and geographic regions that are highly competitive in regard to recruiting and retaining employees. As such, the subcontractors are driven to pay market wages and benefits," said Melissa Norcross, a spokeswoman for Halliburton in Houston, Texas.

The dining services subcontracts, like LOGCAP overall, are cost-plus arrangements, meaning the contractor is reimbursed for its costs and then paid a percentage on top of that for profit.

As a result, the sub-contractors' costs are closely guarded propriety information and no details of wages and contract arrangements for other LOGCAP sub-contractors could be obtained to compare them to those paid by ESS.

Previous to the Sierra Leone contract, ESS employed workers from Sri Lanka who were paid about $400 a month for the same work, according to a U.S. military officer who oversees the logistics contract at one of the bases where ESS provides dining services.

Paul Kelly, ESS group corporate affairs director, acknowledged previous workers were paid more in an interview in October with UPI. He tagged the higher wages to less competition for the LOGCAP subcontract. When more companies entered the fray, ESS found cheaper labor to improve its pricing to the government.

"Initially wage rates were higher because there were fewer companies bidding (on the subcontract)," said Kelly, declining to confirm the old wage. "As more companies competed for contracts -- labor is one of those areas companies have been targeting" to drive down the bids.

The switch to cheaper labor came as Gen. George Casey, the commander of U.S. forces in Iraq, launched an effort to drive down the costs of LOGCAP.

"Increasing expenditures in theater ... jeopardize our ability to maintain public support as the costs associated with our operations continue to rise," he wrote in a memo issued to commanders this summer, and exclusively reported by UPI. "Our spending in theater not only affects us directly, it has a ripple effect throughout all of the services."

"When we started there were a handful of companies competing. Now there are probably 20 or 30, which does drive price down, and of course that's what LOGCAP wants," said Kelly.

Kelly said the monthly wage offered to the Sierra Leoneans is far higher than what they would earn at home. According to the Sierra Leone worker, some 7,000 candidates showed up to apply for the 750 jobs ESS offered in June 2005.

"The important thing to bear in mind here is that it is a little bit too simplistic to compare pay scales as we might look at them from a U.S. or U.K. perspective," Kelly said. "You have to look at job type and how does this compare with what an employee would earn it in its own country."

"What we don't do is pay them less than what they earn in their own country," Kelly said. "We take employee welfare very seriously."

Sierra Leone is an extremely poor country, with a market-based economy and a per capita income of less than $100 per year. For the last decade a violent insurgency has destroyed the local economy. The government approved a minimum wage of about $4 a week for a 40-hour work week, according to the State Department's 2004 human rights report.

Kelly added that even mid-level government officials in the country earn only about $40 a month, although that would be a for a 40 hour week.

Kelly said, however, that ESS' recruiting of workers in Sierra Leone does not only have to do with competition under LOGCAP and low labor costs. Geo-politics has played a role as well.

"The catalyst for having to go to Sierra Leone to recruit in the first was that the respective governments of India, Pakistan, Sri Lanka, Thailand and the Philippines have all put an official ban on their nationals working or traveling in Iraq," states an e-mail sent to Kelly from the Sierra Leone recruiter.

According to Kelly, the Iraq LOGCAP subcontract is not profitable enough to warrant the risk and difficulty of fulfilling it, especially given the fact the company must insure its workers in a very hazardous war zone.

"We've already flagged that we are very heavily scaling down our presence in the Middle East simply because the margin we can earn does not justify the logistical complexities and the risk," Kelly said. "The question is do you want to put employees into a position where it's still very dangerous out there and logistically very complicated?"

Acknowledging the Sierra Leonean workers agreed to work for the advertised pay, military personnel interviewed in Iraq still expressed surprise and discomfort at the wages paid to those feeding and cleaning up after them every day, with whom many say they are quite friendly. Two Army officers alerted UPI to the issue and arranged the first meeting with the Sierra Leone worker.

Workers' living conditions on bases with dining facilities in Iraq are inherently hazardous, owing to the violent insurgency, but materially good -- most have hot showers, electricity and air-conditioned sleeping quarters.

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  © Copyright 2005 United Press International, Inc.

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"...Iraq possesses huge reserves of oil and gas, reserves I'd love Chevron to have access to..." - Kenneth Derr, Halliburton Director and retired CEO of Chevron, November 5, 1998 http://www.halliburtonwatch.org

http://lnk.nu/rawstory.com/6n4.html

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Congressman says Pentagon auditors found Halliburton paid $130 million for 'unsupported' charges

RAW STORY

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Congressman Henry Waxman (D-CA), the ranking Democrat on the House Government Reform Committee has disclosed that Halliburton received $130 million for charges that the Pentagon's own auditors had found to be "unsupported," RAW STORY has learned.

Waxman disclosed the information in a letter to Rep. Tom Davis (R-VA), the Republican chairman of the Government Reform Committee, in which he called on Rep. Davis to convene hearings.

Waxman's letter follows, slightly abbreviated.

#

The Honorable Tom Davis
Chairman
Committee on Government Reform
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

I am writing to request a hearing on the decision by the Army Corps of Engineers to pay Halliburton $130 million in cost reimbursements, profits, and bonuses for billings that Defense Department auditors determined to be unreasonable and unsupported. The Committee should also insist that the Corps of Engineers provide the award fee documentation for Halliburton's contract that we requested in April.

The payments in question were made under the no-bid Restore Iraqi Oil (RIO) contract, which Halliburton was awarded in March 2003. Under the contract, the Defense Department issued ten task orders to Halliburton for oil-related work in Iraq, including the importation of fuel and the repair of oil facilities. Halliburton charged over $2.5 billion for this work, which is now complete. Because RIO is a cost-plus contract, Halliburton is reimbursed for its costs and then receives additional profits and bonuses. The profits are based on a negotiated estimate of the contract costs, known as a "definitization." Under the RIO contract, Halliburton receives 2% of the definitized costs as an automatic base fee and up to 5% of the definitized costs as an additional award fee bonus. Based on considerations such as cost control and performance, a government award fee board or official determines what percentage bonus, if any, Halliburton should receive under each task order.

Recently, without any announcement, the Corps of Engineers posted on its website the definitized value of six RIO task orders and the amount of Halliburton's fees and bonuses under each of these task orders. The posted information reveals that the Corps of Engineers appears to have ignored auditor findings in three ways: by reimbursing Halliburton for costs determined to be unreasonable or unsupported, by permitting Halliburton to collect profits on these challenged costs, and by giving Halliburton unwarranted bonuses.

Pentagon auditors identified $169 million in excessive and unsubstantiated costs under the six task orders. The auditors found Halliburton's fuel importation and other costs to be unreasonably high and determined that Halliburton's cost proposals were "not acceptable for negotiation of a fair and reasonable price." As a result, the auditors recommended that Halliburton not be reimbursed for these costs and not receive profits on them.

It now appears, however, that the Corps rejected the auditor findings and paid Halliburton for $124 million of the challenged costs. Although between 60% and 70% of costs challenged by Pentagon auditors are typically sustained, the Corps sustained only 27% of the challenged costs in this case. The Administration has offered no explanation for this decision to pay three-quarters of Halliburton's challenged costs.

Moreover, because RIO is a cost-plus contract, the decision to pay Halliburton for these challenged costs increased the company's profits by millions of dollars. Under the RIO contract, Halliburton received a larger base fee because the pool of definitized costs is larger. In this case, Halliburton was paid $2.5 million in base fee profits for billings that Pentagon auditors challenged.

Compounding these egregious payments, it appears that the Corps also gave Halliburton million-dollar bonuses for overbilling the taxpayers. Two factors determine the size of Halliburton's award-fee bonus: the percentage of the award fee provided to Halliburton and the value of the definitized task orders. In this case, both appear to be inflated, with Halliburton receiving bonus awards of up to 3.4% on the challenged costs being reimbursed. In fact, given Halliburton's track record of overcharging the government, the entire $38 million in bonuses awarded to Halliburton under the six task orders is questionable.

The decisions by the Corps of Engineers seem inexplicable. For many months, Pentagon auditors have criticized Halliburton's cost estimation systems as "inadequate" and its fuel charges as "unreasonable." Our Committee should require the Corps to explain why it decided to reimburse Halliburton for challenged costs, to permit Halliburton to collect profits on challenged costs, and to give Halliburton large bonuses as a reward. With reimbursement and fee decisions still pending on four other RIO task orders, it is important that we receive prompt answers.

Background

On March 8, 2003, the U.S. Army Corps of Engineers awarded Halliburton subsidiary KBR a no-bid monopoly contract to restore and operate Iraq's oil infrastructure. The contract was awarded in secret, and other qualified companies, like Bechtel, which did most of the oilfield work after the first Gulf War, were precluded from bidding.[1] Halliburton received the contract because it had previously been awarded a task order to prepare a contingency plan for Iraq's oil sector. The Government Accountability Office later investigated the award of the contingency contract and concluded that it was not "in accordance with legal requirements" because "preparation of the contingency support plan for this mission was beyond the scope of the contract."[2] GAO added that the work "should have been awarded using competitive procedures."[3]

Halliburton charged approximately $2.5 billion under the RIO contract, which had a potential value of $7 billion.[4] The Corps of Engineers issued ten different task orders under the RIO contract. Work has now concluded on all ten task orders.

Halliburton's work was split generally between oil infrastructure projects and fuel importation tasks: Task Orders 1, 2, 3, 4, and 6 related to various oil infrastructure projects, while Task Orders 5, 7, 8, 9, and 10 involved the importation of fuel from Kuwait, Turkey, and Jordan. The majority of Halliburton's charges under this contract were for fuel importation and distribution. Halliburton charged approximately $1.5 billion for fuel work and $1 billion for infrastructure work.[5] There were two sources of funding for this work: approximately $875 million came from U.S. taxpayer funds and $1.64 billion came from Iraqi oil proceeds and other funds in the U.S.-controlled Development Fund for Iraq.[6]

RIO is a "cost-plus" contract, meaning that Halliburton is reimbursed for its costs and then receives additional profits and bonuses. The profits are based on a negotiated estimate of the contract costs. The process by which the government and Halliburton agree on a cost estimate for each task order is called "definitization." Under the RIO contract, Halliburton receives 2% of the definitized costs as an automatic base fee and up to an additional 5% of the definitized costs as an optional award fee bonus. A government award fee board or award fee determination official considers factors such as cost control and performance to determine what bonus percentage between 0% and 5% Halliburton should receive under each task order.[7]

Audit Findings

Rep. John Dingell and I began to raise questions about Halliburton's RIO contract immediately after the contract was awarded in March 2003.[8] In a series of letters, we expressed concern about the exorbitant prices of Halliburton's fuel imports from Kuwait. We reported that Halliburton appeared to be charging twice as much as it should have for fuel imports,[9] and we cited independent experts who characterized Halliburton's charges as "highway robbery" and "outrageously high."[10]

Our concerns about Halliburton's inflated costs were validated by Pentagon auditors. In December 2003, the Defense Contract Audit Agency (DCAA) announced at a press conference that it had completed a preliminary draft audit of Halliburton's fuel importation work. DCAA auditors found that Halliburton had overcharged the U.S. government by as much as $61 million for gasoline imported from Kuwait into Iraq.[11] This audit was preliminary, however, and covered only the period until September 30, 2003.

In 2004 and 2005, DCAA completed final audits of each of the ten task orders. In this series of audits, DCAA identified $219 million in "questioned" costs under the entire RIO contract.[12] DCAA determined that all of these costs were unreasonably high. DCAA also identified $60 million in "unsupported" charges under the RIO contract.[13]

DCAA auditors found unreasonable costs for Kuwaiti fuel under all of Halliburton's fuel importation task orders. The auditors criticized Halliburton for failing to negotiate better pricing for the fuel and transportation costs, concluding that Halliburton failed to provide "adequate documentation to demonstrate the reasonableness of the Kuwait fuel prices over the life of the purchase orders."[14]

The auditors also repeatedly criticized Halliburton for making unnecessary retroactive payments to its Turkish fuel subcontractors. DCAA noted that Halliburton had negotiated "fixed-unit-rate" and "firm-fixed-price" subcontracts with various Turkish subcontractors to import fuel into Iraq. During the term of these subcontracts, the market price of the fuel increased. DCAA reported that the Turkish companies asked Halliburton "to increase the unit price of the fuel to compensate for losses due to market increases."[15] According to DCAA, Halliburton "agreed to pay the higher prices retroactively."[16] DCAA concluded: "We do not believe it was appropriate to retroactively adjust the fuel unit prices of KBR's fixed-unit-rate and firm-fixed-price subcontracts when there are no provisions in the subcontracts to do so."[17]

All the DCAA audits reported that Halliburton's proposals were "not acceptable for negotiation of a fair and reasonable price."[18] DCAA found that Halliburton's cost and pricing submissions were "not adequate" because "proposed" costs "exceed recorded costs," because Halliburton's proposals "did not contain data to support the reasonableness of the negotiated purchase orders," and because they were not prepared "in accordance with applicable Cost Accounting Standards and appropriate provisions of FAR," the Federal Acquisition Regulation.[19]

Moreover, DCAA criticized Halliburton for producing inadequate cost estimates for definitization. On December 31, 2003, DCAA issued a "Flash Report," alerting various Defense Department agencies about "significant deficiencies" in Halliburton's cost estimating system.[20] According to the auditors, these deficiencies "could adversely affect the organization's ability to propose subcontract costs in a manner consistent with applicable government contract laws and regulations."[21] On August 4, 2004, DCAA found Halliburton's "estimating system to be inadequate for providing verifiable, supportable, and documented cost estimates that are acceptable for negotiating a fair and reasonable price."[22]

I released a report in July 2004 with additional information about Halliburton's inflated gasoline charges. This report compared the price charged by Halliburton to import gasoline from Kuwait to Iraq with the costs incurred by the Pentagon's fuel importation office, the Defense Energy Support Center (DESC), to perform the same task. Because DESC assumed Halliburton's fuel importation responsibilities on April 1, 2004, a direct "apples-to-apples" price comparison could be made. The report found that Halliburton charged more to purchase fuel than DESC, three times as much to transport the fuel into Iraq, and 40 times as much to cover its fees and markups.[23]

On April 15, 2005, the Committee requested award fee determinations and related documents for a number of Iraq contracts.[24] After meeting with Committee staff, the Defense Department provided the requested information for 20 contracts.[25] However, the Department still has not provided the requested compensation documentation for the RIO contract.

Halliburton's Reimbursements, Profits, and Bonuses

On November 3, 2005, without any announcement, the Corps of Engineers posted on its website the definitized value of six RIO task orders and the amount of Halliburton's base and award fees under each of these task orders.[26] Information was posted for Task Orders 1, 2, 4, 5, 6, and 7. Together, these task orders are worth over $1.5 billion, or about 60% of the total value of the RIO contract.[27] Information for Task Orders 3, 8, 9, and 10 was not posted.

For these six task orders, DCAA had identified $169 million in questioned and unsupported costs.[28] The auditors recommended that Halliburton not be reimbursed for or receive profits on these costs.

The posted information reveals that the Corps of Engineers appears to have ignored the findings of the Defense Department's own auditors. According to the information from the Corps, the agency reimbursed Halliburton for unreasonably high costs challenged by auditors, allowed Halliburton to collect profits on these challenged costs, and even gave Halliburton a substantial bonus.

Instead of disallowing the costs challenged by DCAA, the Corps largely ignored the Pentagon auditors and reimbursed Halliburton for $124 million in questioned or unsupported costs.[29] This represents 73% of the $169 million in costs challenged by the auditors under these task orders. These figures are shown in Table A.

Historically, between 60% and 70% of DCAA's challenged costs have been sustained. But in this case, the Corps sustained only 27% of the challenged costs. On Task Order 7, one of the large fuel importation task orders, the Corps upheld just 8% of the costs challenged by auditors.

In addition to reimbursing Halliburton for challenged costs, the Corps also allowed Halliburton to profit from the challenged costs. Because Halliburton's pool of definitized costs includes $124 million in challenged costs, Halliburton's 2% base fee is larger than it should be. The company will automatically receive $2.5 million in profits for costs Pentagon auditors found to be unreasonably high or unsubstantiated.

Finally, the Corps gave Halliburton a large bonus for the costs challenged by the Department's auditors. For each task order, Halliburton's award fee bonus depends on two determinations: the percentage bonus awarded to Halliburton and the definitized value of each task order. Under the RIO contract, the Halliburton can receive a bonus fee of up to 5% of the definitized value of a task order. The bonus percentage selected by the award fee board or determination official is multiplied by the definitized value to produce the final bonus award.

Ironically, Halliburton received some of its highest bonuses for projects with the most inflated costs. On the two fuel importation task orders, Task Orders 5 and 7, the company was given an award fee of 3% despite repeated auditor findings of unreasonable charges for Kuwaiti fuel and improper overpayments to Turkish subcontractors. In fact, although Halliburton's fuel costs were deemed unreasonable by DCAA and have been the subject of widespread criticism, over $36 million of the $38 million bonus awarded to Halliburton are for these fuel task orders.

In total, Halliburton received reimbursements worth $124 million, base-fee profits worth $2.5 million, and bonuses worth $3.4 million for the specific charges challenged by DCAA. Given that Halliburton's entitlement to any bonuses could be called into question by its pattern of unreasonable billings, the company's entire bonus of $38 million for the six task orders is also suspect.

Conclusion

The Administration has consistently asserted that cost-plus contracts protect the taxpayer because the government can use the prospect of raising or lowering award fees to encourage "effective control of costs" by the contractor.[30] Clearly this has not occurred with the RIO contract. Rather than relying on the findings of its own auditors, the Pentagon reimbursed Halliburton for $124 million in costs that the auditors determined to be excessive or unsupported. And rather than holding Halliburton accountable for squandering taxpayer and Iraqi funds, the Administration rewarded Halliburton with large bonuses and special treatment.

The Committee on Government Reform has held no full Committee hearings on Iraq this Congress. In light of the mounting reconstruction problems in Iraq and the questions raised in this letter, the Committee should initiate a series of hearings into contracting in Iraq, starting with a hearing to investigate the federal payments to Halliburton. In order to adequately prepare for these hearings, we should also insist that the Pentagon produce the detailed RIO compensation determination documents previously requested by the Committee. We cannot allow the Administration to waste additional taxpayer dollars paying Halliburton's inflated costs and undeserved profits on the remaining four RIO task orders.

Sincerely,

Henry A. Waxman

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"That there are men in all countries who get their living by war, and by keeping up the quarrels of Nations is as shocking as it is true..." ~Thomas Paine