Enceladus
2003-10-09 16:53:00 UTC
Spending On Iraq Sets Off Gold Rush
Thu Oct 9, 1:00 AM ET Add Top Stories - washingtonpost.com to My
Yahoo!
By Jonathan Weisman and Anitha Reddy, Washington Post Staff Writers
As the House today takes up President Bush (news - web sites)'s $87 billion
spending request for Iraq (news - web sites) and Afghanistan (news - web
sites), 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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end
Thu Oct 9, 1:00 AM ET Add Top Stories - washingtonpost.com to My
Yahoo!
By Jonathan Weisman and Anitha Reddy, Washington Post Staff Writers
As the House today takes up President Bush (news - web sites)'s $87 billion
spending request for Iraq (news - web sites) and Afghanistan (news - web
sites), 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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