WASHINGTON – On the heels of disclosures that Halliburton Corp. has been overcharging the American taxpayer for its contract work in Iraq, Governmental Affairs Committee Ranking Member Joe Lieberman, D-Conn., is asking for a review of whether or not the multinational corporation should be barred from bidding on future contracts. In a letter to Defense Secretary Donald Rumsfeld, Lieberman asked the Defense Department to “evaluate whether Halliburton should be considered for suspension or debarment proceedings, which could prevent the company from bidding on any federal contracts for a number of years.” Federal law requires that federal contractors “[h]ave a satisfactory record of integrity and business ethics.”
“Based on current and past allegations against Halliburton, there needs to be a careful review of whether the company has complied with this important requirement,” Lieberman wrote. Since April, Lieberman has worked to hold the Bush Administration accountable for how it has conducted the post-war rebuilding in Iraq. He criticized the no-bid and limited-bid contracts the Administration awarded and called for hearings in the Governmental Affairs committee to investigate these contracts. He wrote the President urging him to use competitive procedures for awarding new contracts and he cosponsored legislation – enacted as part of the Iraqi supplemental appropriations bill – to require public disclosure of contracts not awarded through a fully competitive process. Last month, Lieberman called on Halliburton to reimburse the taxpayers for its overcharges and he joined Reps. Waxman and Dingell in requesting a Department of Defense Inspector General investigation of the inflated fees that Halliburton has charged for importing fuel into Iraq. Following is the letter to Rumsfeld: December 14, 2003 The Honorable Donald H. Rumsfeld Department of Defense The Pentagon Washington, D.C. 20301 Dear Secretary Rumsfeld: Recent news articles indicate that an internal Department of Defense audit has uncovered evidence that a subsidiary of the Halliburton Corporation – Kellogg Brown & Root – overcharged the federal government for work it completed in postwar Iraq as part of a no-bid contract awarded to the company in March. These new allegations, when coupled with past concerns about Halliburton, raise serious questions about whether the company is fit to serve as a government contractor. According to news reports, a draft audit by the Defense Contract Audit Agency has concluded that Halliburton overcharged the federal government $61 million for importing fuel into Iraq. It was also alleged that the company submitted a proposal, later rejected by the Pentagon, to provide cafeteria services in Iraq that appeared to overcharge the government by $67 million. Allegations of price gouging by Halliburton began to surface in recent weeks after it was disclosed that the company was charging – on average – $2.64 per gallon to import gasoline into Iraq from Kuwait – more than double what the Iraqi state oil company and others have paid to import gasoline. If proven to be true, Halliburton’s overcharges are extremely troublesome, especially when considered with the company’s past history. In 2002, Halliburton agreed to pay $2 million in fines to settle fraud charges alleging that it inflated prices when performing repair and maintenance work for the U.S. military at Fort Ord, California. The General Accounting Office also found evidence in 1997 and 2000 that Halliburton engaged in questionable billing practices for work that it performed for the U.S. Army in the Balkans. In addition, the Securities and Exchange Commission is conducting a formal investigation into Halliburton’s accounting practices. Federal Acquisition Regulations outline a series of general standards that prospective federal contractors must adhere to. Among these standards is a requirement that contractors “[h]ave a satisfactory record of integrity and business ethics.” (FAR 9.104-1(d)) Based on current and past allegations against Halliburton, there needs to be a careful review of whether the company has complied with this important requirement. I therefore ask that you evaluate The Honorable Donald H. Rumsfeld December 14, 2003 Page Two whether Halliburton should be considered for suspension or debarment proceedings, which could prevent the company from bidding on any federal contracts for a number of years. Thank you for your consideration of this request. Sincerely, Joseph I. Lieberman Ranking Member