[Congressional Record Volume 149, Number 54 (Thursday, April 3, 2003)]
[Senate]
[Pages S4811-S4813]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




              COMPETITIVE BIDDING ON GOVERNMENT CONTRACTS

  Mr. WYDEN. Mr. President, of course, the debate throughout the day 
has been about the wise use of taxpayers' money. Yesterday in the Wall 
Street Journal, there was an article entitled ``USAID Defends Secret 
Bids to Rebuild Iraq.'' At the same time, there was an article in the 
Washington Post entitled ``Contracts to Rebuild Iraq Go to Chosen 
Few.'' ``No Bidding War on Contracts in Iraq.''
  Mr. President, I ask unanimous consent that these two articles be 
printed in the Record.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

              [From the Wall Street Journal, Apr. 2, 2003]

     The Assault on Iraq--USAID Defends Secret Bids To Rebuild Iraq


national security is cited as reason few firms knew of $1.7 billion in 
                               contracts

                           (By Neil King Jr.)

       Washington.--Amid worries that preparations aren't moving 
     as fast as hoped, a top procurement official defended the 
     government's decision to approach only a handful

[[Page S4812]]

     of U.S. companies to help rebuild postwar Iraq.
       The U.S. Agency for International Development chose to put 
     out the bids in secret to a limited number of companies under 
     an exception that allows agencies to by-pass the usual 
     competitive bidding for national security reasons, said 
     Timothy Beans, the agency's chief of procurement.
       ``Anytime you are in wartime condition you don't have the 
     four or five months to go out on the street for the kind of 
     competition you'd like,'' Mr. Beans said.
       USAID began approaching preselected bidders for postwar 
     Iraq work as early as late January, when the possibility of 
     going to war with Iraq was still being hotly debated at the 
     United Nations. Requests for proposals went out for four 
     contracts in mid-February, with two more early last month. 
     Altogether, the work--including rebuilding highways and 
     bridges and rehabilitating Iraq's school system--is expected 
     to cost at least $1.7 billion.
       Similar exceptions were made for reconstruction after the 
     recent antiterror campaign in Afghanistan and in the mid-
     1990s after the war in Bosnia, Mr. Beans said. He conceded 
     that except for those three emergencies the restricted 
     contracting procedures are unusual.
       USAID officials said last week that as many as six contract 
     awards would be announced soon, but final decisions may now 
     be put off until next week. Some companies competing for the 
     contracts say they are receiving conflicting signals over the 
     length and ambitiousness of the work.
       Plans last month outlined an aggressive rebuilding 
     campaign, including sweeping changes to Iraq's education and 
     health systems, that would nonetheless last only 12 months. 
     Some U.S. officials now concede that any meaningful work will 
     take much longer than a year, but others in the 
     administration are wary of moving forward on anything that 
     would suggest a prolonged U.S. occupation of Iraq.
       The uncertainty over how to proceed also reflects mounting 
     unease over the U.S.-led military campaign, which has so far 
     offered scant evidence that average Iraqis are ready to 
     embrace American control of their country.
       Reconstruction officials within the administration had 
     planned to use the southern city of Basra as a test case for 
     the U.S. rebuilding effort. Iraq's second-largest city has a 
     dominant Shiite population that has long been at odds with 
     Saddam Hussein. But continued fighting there, and signs that 
     the local population might be less receptive than some 
     predicted, have put those plans on hold.
       Competition for the big infrastructure-rebuilding contract, 
     valued at $600 million, was limited to seven large U.S. 
     engineering companies, several of which have now either been 
     dropped from the running or formed teams with other bidders. 
     People involved in the bidding say the lead competitors are 
     Bechtel Corp. and Parsons Corp, which has taken on 
     Halliburton Co.'s Kellogg Brown & Root as a subcontractor. 
     Halliburton announced Monday that its KBR division won't seek 
     to be the prime contractor for rebuilding Iraq's 
     infrastructure, but ``remains a potential subcontractor for 
     this important work.''
       The administration's postwar plans for Iraq have stirred 
     charges in Europe that all major rebuilding work will go to 
     U.S. concerns. While none of the contracts will go to foreign 
     companies, those companies will be eligible to fill in as 
     subcontractors, Mr. Beans said.
                                  ____


               Contracts To Rebuild Iraq Go to Chosen Few

                          (By Jackie Spinner)

       KBR, the company the U.S. government picked this week to 
     put out oil-field fires in Iraq, has a long history of 
     working for the military on big projects in foreign hot 
     spots. The former Kellogg Brown & Root--a subsidiary of 
     Houston-based energy services firm Halliburton Co., which 
     Vice President Cheney headed from 1995 until 2000--developed 
     a contingency plan for extinguishing the fires as part of a 
     10-year Pentagon logistics contract it was awarded in 2001 
     through a competitive bid, company officials said. So when 
     the U.S. Army Corps of Engineers needed a firm to douse fires 
     ignited by retreating Iraqi forces, the company was already 
     on the ground in Kuwait. ``KBR have been over there, and they 
     had an existing contract with the Army,'' said Scott 
     Saunders, a spokesman for the Corps of Engineers. ``Because 
     of that and because of that need to snuff those fires 
     quickly, KBR was sole-sourced.'' The work is being 
     subcontracted to Boots & Coots International Well Control 
     Inc. and Wild Well Control Inc.
       The latest contract was awarded under a waiver the Bush 
     administration granted in January allowing government 
     agencies to handpick companies for Iraqi reconstruction 
     contracts. The U.S. Agency for International Development is 
     handling the bulk of the contracts. KBR is also on the short 
     list of companies the USAID invited to bid for the prime 
     contract to rebuild Iraq's infrastructure after the war, 
     including highways, bridges, airports and government 
     buildings. The others include Fluor Corp., Washington Group 
     Inc., Bechtel Group, Louis Berger Group and Parsons Corp. 
     That contract, for at least $900 million, could be awarded as 
     soon as today. The government is proposing to spend $2.4 
     billion on humanitarian aid and reconstruction in Iraq.
       Halliburton plans to put KBR and another subsidiary into 
     bankruptcy protection this summer as part of a plan to settle 
     outstanding asbestos-related claims for about $4 billion. But 
     KBR's government operations aren't part of that plan, 
     Halliburton said.
       Some government contract experts said the latest KBR award 
     shows how companies with long-standing ties to the military 
     get dibs on new work. The company has been building ships, 
     mess halls and toilets at base camps around the world for six 
     decades, originally as Brown & Root. Over the past decade it 
     has won contracts to provide logical support to troops, most 
     recently in Somalia, Haiti and the Balkans.
       But the experts said the problem is that not putting the 
     contracts out for bid allows critics to question the fairness 
     of the process and whether the most politically connected 
     companies have an edge in getting the awards.
       ``The administration has made potential use of shortcuts 
     and exceptions that let it put literally billions of taxpayer 
     dollars in the hands of selected contractors,'' said Charles 
     Tiefer, a law professor at the University of Baltimore and 
     the author of a casebook on government contracting. 
     ``Naturally, a large credibility gap looms between the 
     administration's plausible excuses that tight deadlines and 
     exceptional security needs compelled it to forgo the usual 
     competitive safeguards and the critics' observations that it 
     is awfully convenient for juicy plums to land in the lap of 
     the vice president's former company.''
       William H. Carroll, a government contract lawyer who also 
     teaches at American University's Washington College of Law, 
     said there is justification for getting the contracts out as 
     soon as possible. But he said it could come at a price.
       ``Because of the intense nature of the need to do things 
     quickly, the work may not be as well defined, and the fact 
     that there isn't a competitor putting pressure on price, 
     these are probably going to be expensive contracts,'' Carroll 
     said. ``I don't think there's an evil intent. But our 
     procurement process relies on competition to determine what 
     is a fair and reasonable price.''
       The General Accounting Office found in September 2000 that 
     the U.S. Army had not done enough to contain costs associated 
     with KBR's $2.2 billion work providing logistical and 
     engineering support in the Balkans.
       Officials ``frequently have simply accepted the level of 
     services the contractor provided without questioning whether 
     they could be provided more efficiently or less frequently 
     and at lower cost,'' the report said. The company and the 
     Pentagon disputed the findings, which did not question the 
     quality of the work KBR had performed.
       The Corps of Engineers said the value of the KBR contract 
     in Iraq will depend on the scope and number of fires it will 
     have to extinguish during and after a war that has not yet 
     ended. So far there are seven oil fires burning in Iraq. 
     Steven L. Schooner, co-director of the Government Procurement 
     Law Program at George Washington University's law school, 
     said KBR's track record is not in question.
       ``They have won the hearts and minds and stomachs of the 
     military,'' he said. ``They have done a fabulous job, and our 
     troops are better off for it.''
       Schooner said the Cheney connection to Halliburton should 
     not be an issue. But, he said, the non-competitive nature of 
     awarding the Iraqi reconstruction contracts has made it one.
       ``Had these contracts not been awarded in a secretive 
     manner it would be easier to cut off the questions earlier,'' 
     he said.

  Mr. WYDEN. Mr. President, suffice it to say, the Senate missed an 
opportunity tonight to stand up for openness and competition in 
contracting and to make sure there was an opportunity to spend 
prudently on the effort to rebuild Iraq. It seems to me that too much 
taxpayers' money is at stake in rebuilding Iraq to allow Federal 
officials to use a secret process to handpick companies to do this 
work. There ought to be an open and full and competitive process to 
ensure the prices charged are reasonable and the contractors selected 
are the most qualified.
  Senator Collins of Maine and I worked for 48 hours on a bipartisan 
basis to make it possible to offer an amendment that would ensure that 
there be real openness in contracting and that there be an effort to 
make sure that the billions of dollars that are going to be spent 
rebuilding Iraq be part of a contract process that is governed by 
competitive bid.
  It is a very simple proposition. We ought to make sure it is out in 
the open, it is transparent, that the public can see what is going on, 
and that contracts should not just go to a handful who have power and 
influence, particularly in this city.
  Unfortunately, because of an objection, that amendment was not added 
tonight. I come to the floor to say that I intend to keep coming back 
until the Senate stands up for openness in Government contracting and 
competitive bidding so that the taxpayers' money is used well.

[[Page S4813]]

  That is not what is happening with $1.7 billion worth of contracts 
for rebuilding highways and bridges and rehabilitating Iraq's school 
system. Recently, the U.S. Agency for International Development 
handpicked a selective group of companies to participate in a secret 
bidding process for awarding four separate contracts totaling $1.7 
billion. That is just one example of what is ahead with respect to how 
taxpayers' money is going to be used.
  In the past, the General Accounting Office has been very critical of 
this kind of approach. The General Accounting Office has found that 
contractors had not done enough to contain costs on projects involving 
engineering support in areas where the military was involved.
  According to a September 2000 report by the General Accounting 
Office, Federal officials said:

       Frequently, they have had accepted the level of services 
     the contract provided without questioning whether they could 
     be provided more efficiently and more frequently and at lower 
     cost.

  What could be more important for this Senate to stand up for? What 
could be more important than to make these contracts involving billions 
of dollars be let in a way that is efficient and open?
  The current plan to select contractors for reconstruction work in 
Iraq without competitive bidding creates the potential for more of the 
same, more of the same where noncompetitive contracting work is 
conducted by the Federal Government and we have a repeat of the 
overpriced contracts and less acceptable services that come about when 
contracting is not competitive.
  Given the enormous sums of taxpayer money that will be involved, 
there ought to be competitive bidding across the board. Certainly there 
ought to be competitive bidding unless someone shows a compelling 
national security reason to do otherwise. I am of the view that if 
Federal agencies are not going to use full and open competition, at a 
minimum they ought to have the burden of demonstrating why competition 
is not the proper way to avoid the contracts.
  Senator Collins and I wanted, tonight, with the very helpful counsel 
of Senator Clinton of New York, who also worked in this area, to offer 
an amendment to require the Federal agencies to make public the 
documents used to justify their decision to waive the normal 
requirements for open and fully competitive bidding. Think about that 
proposition. Heaven forbid we actually make public the documents that 
describe why we are not having competitive bidding. That strikes me as 
a very modest step when you are talking about billions of dollars' 
worth of taxpayer money.
  But because there was an objection tonight, now we are not going to 
have the refusal to go forward with competitive bidding even made 
public. It seems to me the way to make sure the taxpayers get the best 
value for their money and we have companies that compete for this work 
is to make sure that the standards for exempting contracts from 
competition are strict and rigorous and are designed to protect the 
needs of taxpayers and the national security.
  Our amendment would have required agencies to make the justification 
and approval documents it used, if you were to have a contract exempt, 
public. And it would ensure we have full and vigorous competition and 
would have required other Federal agencies to make their justifications 
public before they entered into any contracts to rebuild Iraq.
  I don't think the Senate wants to sit by and see these kinds of 
articles in our newspapers day after day: USAID Defends Secret Bids to 
Rebuild Iraq. Contracts to Rebuild Iraq Go To Chosen Few.
  Unless we have the Wyden-Collins bipartisan amendment to open up this 
process, to promote competition, to have full disclosure, we are going 
to have articles like this in our newspapers day after day after day. 
It is going to contribute to the cynicism and frustration that 
taxpayers have in this country with respect to how their money will be 
used. It will be a long year. We are going to see these articles again 
and again.
  I intend to come back to the Senate and stay at this. I wanted to 
make sure we would have a bipartisan amendment on this effort and 
worked very closely with the bipartisan leadership throughout the day. 
I thought we were there. I thought we had this amendment in a fashion 
acceptable to both sides. It is very regrettable it has not been 
accepted. I will continue to work with my colleagues. The taxpayers of 
this country ought to be angry about this kind of process used to let 
contracts.
  Certainly, if there is a national security reason or some sort of 
contract that requires an expedited arrangement, that needs to be 
treated in a way that protects our national security. That is not what 
is going on here. What we are seeing is businesses in Missouri, Oregon, 
Maine, and across the country not being part of the privileged circle. 
A lot of businesses are going to be angry about this because they are 
not part of that hand-picked elite that will have a chance to get the 
contracts. What is going on now is bad for business, it is bad for 
competition, it is bad for taxpayers, and I think it is bad for 
national security. I don't think we will get the most for our money if 
we continue to have the contracts, as the papers say, go to a chosen 
few.

  The Senate made a mistake. It is particularly unfortunate because two 
Senators worked for the last 48 hours in a bipartisan way to try to 
prevent the things we have seen in the last few days from happening 
again and again. It will happen again and again. That is why I intend 
to come back to the Senate. It is unfortunate there was an objection 
tonight to our bipartisan legislation.
  I look forward to seeing the Senate in the days ahead stand up again 
on a bipartisan basis for a process that is open, a process that 
promotes competition, that is good for taxpayers, good for business, 
and good for our country.
  I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The legislative clerk proceeded to call the roll.
  Mr. FRIST. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________