WASHINGTON – Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn., Friday appealed to President Bush to ensure fair and open bidding on new contracts for Iraqi reconstruction, as part of Lieberman’s ongoing effort to promote a transparent bidding process, to reduce the risk of favoritism or improper influence, and to save the taxpayers money. In a letter dated September 12, 2003, Lieberman asked the President to implement procedures for open competition whenever possible, to disclose details of contracts before they are awarded when full and open competition is not possible, and to disclose the details of contracts that will be paid for with Iraqi assets.
“It is important to the public’s support for the reconstruction effort that the Administration be forthright and open with the American people about the details of all of the rebuilding contracts in Iraq,” Lieberman said in the letter. Approximately $20 billion of the President’s recent $87 billion request for the Iraqi war effort will be spent on reconstruction. The Administration also intends to set aside at least $750 million in Iraqi assets for that purpose. Beginning in April, Lieberman expressed reservations about the secrecy with which Iraqi reconstruction contracts had already been awarded to well-connected firms such as Bechtel and Kellogg, Brown & Root, a subsidiary of Vice President Cheney’s former firm, the Halliburton Corporation. Lieberman asked the Inspector General of the U.S. Agency for International Development to scrutinize several contracts awarded through a closed or limited bidding process. The IG has uncovered serious flaws in a number of those contracts and reported as recently as Wednesday that a firm may have been awarded a sum “in excess of need” for a $168 million contract regarding support for local governance because the agency never conducted an analysis of need. “By not awarding these contracts in a transparent manner, your administration created a cloud of uncertainty and suspicion that called into question the propriety of these important contracts and the reconstruction effort in general,” Lieberman wrote. “Clearly, this is not a time when we can afford to be distracted by such concerns.” Following is a copy of the letter: September 12, 2003 The Honorable George W. Bush President of the United States The White House 1600 Pennsylvania Ave., NW Washington, DC 20500 Dear Mr. President: Like all Americans, I watched with great interest your speech to the nation on Sunday night announcing your request for additional funds to support our on-going efforts in Iraq. While I intend to do whatever is necessary to support and defend our troops in Iraq, I nevertheless have concerns about the lack of detail regarding how you intend to spend these additional funds. Prominent among these concerns is how the Administration intends to award the $20 billion you have proposed be appropriated for Iraqi reconstruction, to be spent over 2003 and 2004. As Ranking Member on the Senate’s Committee on Governmental Affairs, which has oversight responsibility over government contracting, I have a particular interest in this area. Federal procurement laws generally require that a full and open bidding process be used when awarding government contracts. This open process ensures that all contractors can offer their services to the government, reducing opportunities for favoritism and corruption and resulting in substantial savings for the taxpayer. There are some rare instances when an urgent and compelling need would require that this open process be truncated or restricted. In light of the pressing needs in Iraq and the importance of protecting our troops serving in the region, it is possible that such a limited process is warranted for some reconstruction contracts that will be awarded with the new funds that you are requesting. However, it is important to the public’s support for the reconstruction effort that the Administration be forthright and open with the American people about the details of all of the rebuilding contracts in Iraq. I also believe that you should inform Congress and the American people about how your administration intends to use Iraqi funds in the relief and reconstruction effort. A recent report from the Office of Management and Budget indicates that nearly $750 million in seized and vested Iraqi assets have already been allocated for Iraqi relief and reconstruction. However, it is unclear what portion of those funds will be used to pay American contractors, and whether the Coalition Provisional Authority (CPA) or Federal agencies intend to follow federal procurement laws when they enter into contracts with American companies using Iraqi funds. Without full and proper oversight and disclosure, the American public will have no confidence that Iraqi funds are not being diverted to well-connected American contractors. Earlier this year, I expressed deep reservations about the secretive nature in which your administration awarded billions of dollars in reconstruction contracts to such companies as Bechtel and Kellogg, Brown & Root (KBR), a subsidiary of the Halliburton Corporation. By not awarding these contracts in a transparent manner, your administration created a cloud of uncertainty and suspicion that called into question the propriety of these important contracts and the reconstruction effort in general. Clearly, this is not a time when we can afford to be distracted by such concerns. It is imperative that you and your administration avoid any appearance of favoritism in how future contracts are awarded – or we will risk losing the support and confidence of the American people. Accordingly, I urge you to implement the following safeguards, and incorporate them into the Administration’s appropriations request; the safeguards would ensure greater transparency with respect to future Iraqi reconstruction contracts using both appropriated funds and Iraqi assets: · Use full and open competition whenever possible. When entering into contracts using appropriated funds, Federal agencies should make every effort to use full and open competitive bidding procedures as described in federal procurement regulations. It is not acceptable for an agency to wait for months to begin its solicitation, and then use the impending crisis it has created as a pretext justifying expedited and secretive processes. · Disclose contract details when full and open competition is not used. When, as a result of a true emergency, a Federal agency is unable to use full and open competition for any contract it awards for Iraqi reconstruction, I request that the agency first publicly disclose information on the contract before it can be awarded. The publicly disclosed information should include the amount of the contract and a brief description of its scope; a discussion of how the agency identified, and solicited offers from, contractors, together with a list of the contractors solicited; and the justification for using procedures other than those that provide for full and open competition. This publication requirement is derived from bi-partisan legislation, the “Sunshine in Iraq Reconstruction Contracting Act of 2003” (S. 876), that I cosponsored with Senators Wyden, Collins, Clinton, and Byrd. · Disclose how Iraqi assets are being used in reconstruction. The administration should disclose what laws and procedures govern the Coalition Provisional Authority or other U.S. government entity when it enters into contracts with non-Iraqi companies using Iraqi funds, and describe their compliance with those laws and procedures. The administration should disclose all such contracts, including the amount of the contract and a brief description of its scope, and a discussion of how the CPA or agency identified, and solicited offers from, contractors, together with a list of the contractors solicited. Thank you for your attention to this important matter. I hope that you will share my concern that the American people are fully informed about how your administration intends to rebuild Iraq. With tens of billions of dollars of taxpayer funds at stake, they deserve nothing less. Sincerely, Joseph I. Lieberman Ranking Member