US Army doles out 10m bonus to Halliburton

[creaturecat]

Auditors recommend otherwise; Army prevails:
http://www.smh.com.au/news/After-Saddam/US-Army-doles-out-12m-bonus-to-Halliburton/2005/02/25/1109180112360.html?oneclick=true

[kach22i]

US Army doles out $12m bonus to Halliburton

Kellogg Brown & Root had billed $US10.5 billion under the competitively bid logistics contract, said Dan Carlson, a spokesman for the Field Support Command. The firm had been paid $US7.2 billion.

Some Pentagon officials have questioned the use of award fees to motivate contractors building expensive weapons systems, saying the bonuses do not help bring projects in under budget. They are a part of many Pentagon contracts dubbed costs plus, which promise reimbursement for contractors' costs plus possible bonuses.

The US Army has approved $US9.4 million ($12 million) in bonus payments to a Halliburton subsidiary on more than $US1 billion of work supporting the wars in Iraq and Afghanistan, even though the Government has not approved the costs and terms of the contracts.

The Army Field Support Command said on Thursday that Kellogg Brown & Root's performance had been rated as excellent or very good on 14 task orders and it had therefore authorised interim "award fees". These amounted to $US5 million on $US392 million of logistics work in Afghanistan and Uzbekistan, and $US4.4 million on $US758 million of logistics work in Kuwait for the war in Iraq.

Democrats in Congress have been critical of the Halliburton subsidiary's war effort contracts because they were awarded mainly without bidding. Dick Cheney was Halliburton's chief executive before he stood for the vice-presidency in 2000.

This month the army said it was going against the advice of auditors, who cited $US1.8 billion in "unsupported costs", refusing to withhold 15 per cent of Kellogg Brown & Root's payments on the contract for which it has now awarded bonus payments.

In several instances the army approved Kellogg Brown & Root awards that were for only 50 per cent of the total bonus pool, which can amount to 2 per cent of the contract.

Mr Carlson said final awards would not be determined until the Government had approved the scope of all the work.

The evaluators "determined that the interim fees were appropriate", Mr Carlson said. Holding back 50 per cent of the award pool in several cases was a way of "protecting the Government while recognising the contractor's performance", he added.

A Democrat congressman, Henry Waxman, a strong critic of the Halliburton contracts, said: "Welcome to Wonderland. Instead of withholding payments as Pentagon auditors recommended, the Administration is showering Halliburton with millions in bonuses. It's simply incredible that a company would get this kind of reward for billing taxpayers for $US1.8 billion in unsupported costs."

This month the army said it was going against the advice of auditors, who cited $US1.8 billion in "unsupported costs", refusing to withhold 15 per cent of Kellogg Brown & Root's payments on the contract for which it has now awarded bonus payments.

Lets hope inthe end they are not awarded full billing, half way there though..............and the conflict of interest will only get deeper. All those military guys want to keep their promised "consulant" jobs lined up for retirement. Who's the commander and chief anyway? Isn't that where the buck stops?

[Moneyguy1]

None are so blind as those that will not see......

[Superman]

No kidding. To some of us, what's going on is ridiculously obvious. To others, pure, complete, embarrassing denial.

[Moneyguy1]

You noticed that too? I have noticed also some of the ranters seem to be absent this group; probably just on vacation...

[john70t]

Haliburton got its contracts through a closed no-bid process, the VP was/is(?) a CEO, it hired unregulated mercenary armies at will, problems occured from material shortages to U.S. soldiers not getting paid to getting overpaid, it overcharged the Gov by many billions and repaid a small percent, 15 billion in oil revenues is unacounted for.......plus, it's based out of the Cayman islands so it contributes NOTHING to the economy through taxes.

I don't see any problem here. What's your problem?

[masraum]

Well, I hate corruption, but can we kill Haliburton/KBR after I leave my current job. My company provides the satellite communications for KBR's voice and data. That's a lot of satellite bandwidth.

[Hugh R]

I'm a republican (for now) and it sickens me. How many millions did Halliburton give Cheney when he left? Maybe I should look into buying their stock. I'm for less government, not a gov't that takes from the people and gives to the mega-corporations.

[fintstone]

The award fee type contract is often used by the govt and saves a good deal of money. It is not a "bonus" but is the profit that is written into the contract...where the contractor fails to profit unless it meets certain specific requirements. apparently Haliburton met the terms...and as thus...received the payment per the contract.....sheesh

[RoninLB]

There was only one company in the whole world that could enter Iraq and perform such a convoluted mgt task successfully. Bush haters will attack anything associated with Bush. Problems are always worked out in due time. Halliburton is a great target for business haters.. enjoy.

[john70t]

Sorry I'd shoulda-but couldn't-explained more..there's nothing wrong with "buisness" that creates the worldwide exchange of goods and ideas and improves peoples lives, and there's nothing wrong with "capitalism" which was a bag of shaped rocks/sticks and shells, and is now a bunch of 1's and 0's stored magnetically.

I think there's something wrong with the (group) of people who seem to be purposefully determined to destroy the planetary conditions which support the development of human life -i.e. "we"- through overpopulation, polution, catistrophic warfare, etc.... The only easily-digestable example of this is if the apartment neghbor has twelve kids and now 3 of them have been ordained to share your bedroom to "even things out", and if the only food available is of indeterminant orgin....

I dunno, I guess I just seem to see self-serving chaos in the present national policy...

[350HP930]

Originally posted by RoninLB
There was only one company in the whole world that could enter Iraq and perform such a convoluted mgt task successfully.

If they are the only company that can do the work, then why do they just resub it out again.

This kind of detail contracting work used to be done directly by the military with much better oversight, but giving this work away to a crooked and politically connected subcontractor is nothing short of criminal.

Its just another example of privatization run amuck, but as usual the bush and war lovers will defend it no matter how corrupt it is.

[911pcars]

Military-Industrial complex.

That's a euphemism for, "I don't feel adequate. Let's gouge the public for more of their money".

Sherwood

[fintstone]

Originally posted by 350HP930
If they are the only company that can do the work, then why do they just resub it out again.

What do you mean by "resub it out again?"

Originally posted by 350HP930
This kind of detail contracting work used to be done directly by the military with much better oversight, but giving this work away to a crooked and politically connected subcontractor is nothing short of criminal.

Its just another example of privatization run amuck, but as usual the bush and war lovers will defend it no matter how corrupt it is.

Clearly after many years of downsizing, there are not people left in the military to do construction work or sling hash. Almost all military slots either are directrly combat related or are oversight for work that is contracted out. Many of the traditional military tasks are going to civil service folks...to include command jobs.

Most Americans, (liberals in particular) though it was a great idea to tremendously reduce the size of the military with the understanding that money would be saved in peacetime and that we could mobilize larger guard and reserve components to help fight and contract out the remainder of the support/logistic functions. Now that the strategy has come home to roost, they do nothing but complain about the guard and reserve being called to duty and the cost of cointractors. We could increase the size of our military to cold war proportions, but that would cost much more than the current contractors do....and to rapidly increase the size of our forces that much during wartime could only be accomplished via a draft. One must be careful what they wish for. As always, the alternative (cure) is often worse than the problem (illness).

[Moneyguy1]

Bring back the Sea Bees!!

[Superman]

Brave of you to engage these folks fint, and you're doing about as good-sounding a job as can be done under the circumstances.

Haliburton subcontracts out the work. So, if haliburton is the only company that can do this job (give me a break), then why is the actual job being done by other companies who are subcontractors to Haliburton? Further, if the government looked around and noticed that they were entirely dependent on one single company to contract out this work to (again, give me a break), shouldn't they consider whether this is a good bargaining position? That is, are you comfortable that our government is at the mercy of Trustworthy Haliburton, and Haliburton only, for gigantic security-related contracts of this sort? I don't believe this, do you? And if it were true, that's no good either. Oh, and for a survey of Haliburton's trustworthiness, just read some articles about their "performance" under this contract.

Yeah, Cheney noticed about fifteen years ago that he could "reduce" military budget and pad Haliburton's pocket at the same time. Worked well enough to make him CEO. Do you think he saved tax dollars this way? I'll bet a donut that the answer to this question is deeply disturbing and not this slightest bit surprizing.

Oh, and you guys are alright with private companies doing military work? National security in the hands of corporations? Please bear in mind that a "yes" answer to this question will show how thoroughly you have personally bought into the mythology that corporations are benevolent and responsible. And you'll want to call me a corporation-hater to help deflect. Please also include a short description of who corporations are required to be benevolent to, and to whom they are responsible, BY LAW.

You gubmint-hating military-lovers are in an uncomfortable and complex position in these kinds of discussions. Is Haliburton necessary because the military, like all gubmint agencies, is horrendously and laughably inefficient? Or is military efficient, but Haliburton is somehow necessary for some even more twisted reason?

I'm ready to be entertained by some justifications.

[RoninLB]

General Electric has been used for many years as an example in business school texts not because their assembly line workers know their stuff..

the actual problem is that world strategic security is too slow in following Bush's lead.. meaning a democratic coalition of 200-300,000 nation builders is still needed.

[Superman]

Most all graduate business degree programs use "The Harvard Model" of case analyses, and I attended one of them. Cases are written specifically to showcase a certain set of business behaviors. Many stories are impressive, others are not. Corporations are indeed good at what they do, for the most part. And that's a big part of my point. Corporations have a single goal. To maximize the selling price of a share of common stock, basically.

It is a brute fact that CEO's are expected, in fact are required by law, to avoid decisions which might reduce profits, and to pursue business transactions that will increase profits. So, when a CEO is confronted with a choice between doing the right thing -versus- doing the profitable thing (imagine the frequency with which CEO's face this exact choice), the CEO is required by both the stockholders and the law.....to do the most profitable thing, whether or not it is moral or ethical. The only limitation in this regard is if the immoral or unethical action is also illegal.

So yeah, I went to school and I have admired companies. I myself am a very competitive person. I respect and admire all that. I enjoy watching companies and understanding how they work. Do I hate them? Certainly not. Some of you guys have no idea how supportive I am about most aspects of our so-called "free" market capitalism. But while I do not hate them, I also am not naive about what their nature is and what their agenda is and what their constraints are (or are not). So, if it pleases you to dismiss my remarks as a corporation-hater, well that's fine (even though it's not true).

Some of you are indeed a bit naive, I would say.

(I'm not talking to you, Ron. In case you wondered. Will there be a Big
Ride this summer?)

[bryanthompson]

You gubmint-hating military-lovers

Some of you are indeed a bit naive, I would say.

How are those not personal attacks? You meant them as an insult, they should be treated as such.

[304065]

Thanks for the personal insults, Jim. Nice to know we have a worldly man of experience on the board to set us straight.

I submit that your understanding of the fiduciary duties of loyalty and care, and pretty much the entire legal context of business decisions, is hopelessly flawed.

Perhaps rather than preening yourself with comments about your great Harvard Model b-school degree, you should provide, in detail, an analysis of situations where adherence to fiduciary duties has clearly caused executives to do the "wrong" thing. And then, please define for all of us the "right" thing to do: you appear to have a monopoly on both compassion and political correctness, so I'm certain we could be enlightened by such an exalted intellect as yours.

Which is not to suggest in the slightest that there aren't bad decisions made by corporations. But to suggest that adherence to principles of fiduciary duty necessarily encourages managers to make bad decisions, well, that's a pretty far-fetched proposition, even for you.

Is this your approach to labor relations, also?