Hearings Mark Tougher Oversight of War Contracts

Original
By Stephanie Kirchgaessner
The Financial Times    Monday 05 February 2007

  Executives from government contractors in Iraq and Afghanistan, including KBR and Compass of the UK, face a rocky ride in Washington this week as Henry Waxman, new chairman of the House of Representative's chief investigative committee, begins hearings on allegations of "waste, fraud and abuse."

  The hearings, which open tomorrow, are expected to mark the beginning of a new phase in which contracting practices are subject to tougher oversight.

  Mr. Waxman has been a dogged critic of the Bush administration's handling of billions of dollars of US taxpayers' money in Iraq reconstruction contracts.

  The committee has called on the chief executives of Blackwater, a security contractor, KBR, a subsidiary of Halliburton, and Compass, food services group, among others, to answer questions.

  The hearing will feature the testimony of family members of four Blackwater employees who were killed in Falluja in 2004, and whose bodies were burned and dragged through the streets. The families are suing Blackwater for wrongful death.

  Mr. Waxman is likely to focus his line of inquiry on allegations that Halliburton wrongly entered into a subcontracting arrangement with ESS, a division of Compass that ran a dining facility in Iraq, which in turn used Blackwater to provide it with security services.

  Halliburton controls a $16 billion (£8 billion) contract in Iraq, known as Logcap, which provides logistical support to US troops.

  Under the provisions of the contract, Halliburton can use only the US military - not private security companies such as Blackwater - to provide armed protection to its contractors.

  In response to questions from Congress, the Department of Defense in July said that KBR had "no knowledge" of Blackwater having been hired by any of its subcontractors.

  But in a memo Mr. Waxman subsequently received from Compass, the company admitted that ESS had used Blackwater and the US security group had been deployed by other subcontractors.

  Mr. Waxman in December said, in a letter to Donald Rumsfeld, former defence secretary, that the security subcontract raised "serious questions" about the oversight exercised by Halliburton and the Pentagon regarding the tiering of subcontractors, and whether it was "proper" for Halliburton to bill the government for the services. The pervasive use of multiple tiers of sub-contractors has, according to Mr. Waxman, contributed to "exorbitant overhead fees" on government contracts.

  Compass said Steve Murray, the director of contracting at ESS, would testify at the hearing, scheduled for Wednesday, in spite of the fact that the committee had invited Richard Cousins, chief executive. Blackwater and KBR declined to answer questions about whether the chief executives of the groups would appear.

Paul Bremer, the former chief of the Coalition Provisional Authority, is set to make his first appearance before Mr. Waxman's committee tomorrow.

 

Technorati tags: Hearings, Oversight, War Contracts