[Congressional Record Volume 152, Number 101 (Thursday, July 27, 2006)]
[Senate]
[Pages S8368-S8371]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




      HONEST LEADERSHIP AND ACCOUNTABILITY CONTRACTING ACT OF 2006

  Mr. DORGAN. Mr. President, this is a piece of legislation which we 
offered previously during this Congress, unsuccessfully, I might add, 
that I and others intend to offer once again.
  I want to describe it and describe why we intend to offer it again as 
we find additional legislation on the floor of the Senate with which to 
offer it as an amendment. It deals with accountability in contracting. 
The legislation we have introduced is called Honest Leadership and 
Accountability in Contracting Act of 2006. I introduced it on March 2, 
S. 2361. The bill is sponsored by 30 of my colleagues here in the 
Senate. Senator Reid joined me in announcing the legislation that day. 
The bill includes contributions from a number of Members of the Senate 
and the work they did on issues relating to this which we have put in 
the bill.
  I want to describe the bill briefly. It is a bill that will punish 
war profiteers with substantial penalties for profiteering during 
wartime contracts. It is a bill that will crack down on defense 
contract cheaters by restoring a rule on suspension and debarment, to 
say we are not satisfied any longer when we see someone cheating on a 
contract and cheating the American taxpayer to say, Well, you get a 
slap on the wrist and a pat on the back and a new contract. This gets 
tough. It cracks down on contract cheaters. It will force real contract 
competition, and it will do so by prohibiting the awarding of large 
monopoly, sole-source, no-bid contracts.
  The legislation has a number of other provisions as well, but it is 
important legislation. I want to describe why, and I want to describe 
some of the things I have been doing.
  Let me start by saying this is not about Democrats or Republicans. It 
is not about conservatives or liberals. Waste is not part of it. Waste 
is just waste. Contract abuse is not partisan. It is just abuse of the 
American taxpayer. Let me describe a couple of things to begin this 
discussion.
  This is April 30, 2006, in the New York Times. The United States pays 
for 150 Iraqi clinics and manages to build 20.
  A $243 million program led by the United States Army Corps of 
Engineers to build 150 health clinics in Iraq has in some cases 
produced little more than empty shells of crumbling concrete and 
shattered bricks cemented together in uneven walls.
  What is that about? It is about a huge contract, a contract to 
produce 150 health care clinics in Iraq, and now we see the money is 
gone, but the health care clinics weren't built--not 150 of them. Only 
20 of them were built. Yet the money is gone. Let me talk about these 
issues and go back to the beginning of what piqued my interest.
  In February of 2004, I began hearing from some whistleblowers who 
said: We want to tell our story. So as chairman of the Democratic 
Policy Committee, we convened some hearings and listened to them. We 
held eight oversight hearings on the issue of contracting abuses in 
Iraq and heard from whistleblowers. I will describe them.

[[Page S8369]]

  We had two oversight hearings on the response to Hurricane Katrina, 
and I will describe just a bit of that. But let me describe this, going 
back to February of 2004, almost 2\1/2\ years ago. This is a 
description of what is happening in contracts in Iraq.
  Henry Bunting is a fellow who came to see me. He worked in Kuwait. He 
worked for Kellogg, Brown and Root, which is a subsidiary of 
Halliburton. You might recall, they got big no-bid, sole-source 
contracts and made a lot of money. He worked as a field buyer in 
Kuwait.
  He told us they spent up to $7,500 a month to rent ordinary cars and 
trucks. Think of that. American taxpayers pay for that.
  The company had purchased monogrammed towels for $7.50 apiece when 
they could have cost $2.50. These are hand towels for American 
soldiers. The company that was buying them told Henry: We want the 
company name embroidered on the towel.
  That more than doubled the cost to the taxpayer. The company said: It 
doesn't matter, this is cost-plus; the American taxpayer is going to 
pick up the tab.
  It is almost unbelievable.
  Another thing Henry told us, 25 tons of nails, that is 50,000 pounds 
of nails, were ordered and delivered to Iraq. They were the wrong size. 
They are laying in the sand.
  It doesn't matter. The American taxpayer is going to pick up the tab.
  Henry came forward. I wonder what kind of courage it took for Henry 
to come forward and tell us that, but he did it and good for him. It 
piqued my interest, however, in February 2004, to hear whistleblowers 
talk about what was going on with respect to contracting in Iraq. Then, 
in subsequent stories we would hear about contracting abuses.

       ``Pentagon auditors found that Halliburton cannot properly 
     document more than $1.8 billion in work under its 
     contracts,'' Army officials said yesterday. The $1.8 billion 
     amounts to about 42 percent of the $4.3 billion the company 
     has billed to the U.S. Government under the contracts.

  Among other things, they were charging the U.S. Government for 
feeding 42,000 soldiers every day. It turns out they were only feeding 
14,000 soldiers. I can understand missing a cheeseburger or two, but 
28,000 meals? Overcharging by 28,000 meals a day? I don't think that is 
just missing a meal or two.
  So we began having some hearings because the committees of 
jurisdiction, the authorizing committees where this money was spent, 
were not having oversight hearings.
  We had a woman named Bunnatine Greenhouse come to Congress. I want to 
tell you what Bunnatine Greenhouse said. Bunnatine Greenhouse was the 
highest civilian official in the Corps of Engineers, the Army Corps of 
Engineers, in the Pentagon. She was the highest civilian official, 
highest ranking procurement official in the Corps of Engineers. She was 
in charge of all procurement.
  She had the courage to go public. Here is what she said:

       I can unequivocally state that the abuse related to 
     contracts awarded to KBR represents the most blatant and 
     improper contract abuse I have witnessed during the course of 
     my professional career.

  Let me tell you about this woman. Every evaluation ever given her 
said she is outstanding, she is exceptional. Now she doesn't have her 
job any longer. She lost that job because she had the courage to speak 
out. They are investigating that now at the Pentagon. But that is what 
she said.
  Instead of taking the company to task, instead of taking the folks in 
the Corps of Engineers to task, they took to task the woman who had the 
courage to come here and speak the truth.
  Bunnatine Greenhouse has been replaced. I mentioned she was demoted. 
She lost her job. She has been replaced by an American who has no 
experience in procurement. Isn't that interesting? They bring in a 
person with 40 years government experience and no experience in 
procurement. They are actually sending her to school to learn about 
procurement.
  I don't understand this. We have seen what happens when you bring in 
people without experience. We saw it in FEMA, filling top jobs with 
cronies who had no experience with disaster preparedness or relief, and 
it just collapsed.

  Now we have the top civilian contracting official in Iraq who pays 
for it with her job when she speaks out. She says what is going on is 
wrong, and we don't have to take her word for it; just look at the 
headlines. It is wrong. She pays for it with her job, and she is 
replaced by someone who doesn't have experience in contracting. It just 
baffles me that somehow this is continuing.
  I mentioned we have had a good many hearings. I have not preferred to 
have the hearings, but I have said if the authorization committee of 
jurisdiction isn't going to hold oversight hearings, and there are 
whistleblowers who want to speak, I am perfectly willing to hear them 
on behalf of the American taxpayers. The hearings have shown us just a 
dramatic amount of waste, fraud, and abuse. Much of it is being 
investigated.
  The fellow working for the U.S. Department of Defense for 30 years 
who ran the fuel operation to get fuel to the soldiers wherever they 
are in the world retired. Then he came to us publicly, and he said: 
What the American taxpayer is being charged to fuel those army trucks 
in Iraq is unbelievable. They are being so overcharged.
  This is from the guy who used to do it all over the world for 30 
years.
  We had a fellow named Rory show up at a hearing. Rory was a food 
service supervisor in Iraq. Rory actually testified by Internet. He was 
a food supervisor, worked for KBR, Halliburton.
  He said: You know, we had all kinds of food that was transported in 
to feed the troops in Iraq. We had food brought in that had expired 
date stamps on it: This food is expired. Don't serve after this date. 
Our supervisor said it doesn't matter what the date stamp says, serve 
the food. Put the food on the table. It doesn't matter that it is 
expired. He said that was routine.
  Second, he said he was told and others were told: Don't you dare talk 
to government investigators. When they come around, if you talk to a 
government investigator one of two things are going to happen. You are 
going to get fired or you are going to get sent to an area where there 
is significant hostile action.
  This man named Rory talked to investigators, and guess where he ended 
up. He ended up in Fallujah, during hostilities. It is pretty 
unbelievable to me that we have contractors who tell employees don't 
dare talk to a government auditor if they show up.
  Let me show a picture of some money. This is a picture of a 
transaction in the country of Iraq. This fellow came and wanted to 
testify. He was a fellow who was in Iraq, in this room.
  This, by the way, is $2 million in cash in one-hundred-dollar bills 
wrapped in Saran wrap. He is the fellow who dispensed the money, early 
on. He had all these contracts going on. This money went to a company 
called Custer Battles. We had a hearing on that as well. This $2 
million went to Custer Battles.
  Two guys show up in Iraq with not much experience and very little 
money and they decide to get contracts. They get contracts. It is the 
Wild West. This guy says it is like the Wild West. They say: You bring 
a bag because we pay in cash. That is the way we operate.
  Custer Battles gets a contract to provide security at the Baghdad 
airport. Among other things, it is alleged they took the forklifts, 
took them over to a warehouse, painted them blue, and then resold them 
to the Provisional Authority, which was Uncle Sam. But that is part of 
the story. They ended up getting $100 million, and this is $2 million 
of that. This fellow said we actually played football with these 
things. We pay in cash, bring a bag, it is like the old West. He said 
it was unbelievable.
  Let me show what the Baghdad airport director of security said about 
the company that got this money. He said:

       Custer Battles have shown themselves to be unresponsive, 
     uncooperative, incompetent, deceitful, manipulative and war 
     profiteers. Other than that, they are swell fellows.

  This is from the director of security, in a memo to the U.S. Federal 
Government, then called the Coalition Provisional Authority. The 
Baghdad airport director of security, here is what he said about the 
people who were getting our money.
  I look at all these things, and I ask the question: What is going on? 
How can they do this?

[[Page S8370]]

  Just the other day, the Pentagon finally announced that we are going 
to now require some bidding on contracts--billions of dollars late. Let 
me show you what they said. ``Army to end expansive, exclusive 
Halliburton deal.''
  I am not just talking about Halliburton. It happens most of these 
press things are about Halliburton, KBR, but there are others--Custer 
Battles and others as well. Whenever you have this much money being 
thrown out there with no-bid contracts and sole-source contracts, I am 
telling you it is like a hog in a crick. All you hear is grunting, 
there is a lot of shoving, and everybody wants the money.
  ``Army to end expansive exclusive Halliburton deal,'' It says:

       Army is discontinuing a controversial multibillion dollar 
     deal with oil services giant Halliburton to provide 
     logistical support to U.S. troops worldwide, a decision that 
     could cut deeply.

  Understand, the Army says very late: OK, now we will start bidding. 
We will have several companies bid. And by the way, once the bidding is 
done, we will have another company oversee the company that gets the 
bid.
  Oversight is the responsibility of the Pentagon. When they put out a 
contract, it is their responsibility to provide oversight. Our 
responsibility is to figure out what we are spending in Congress, who 
is spending it, with what efficiency, and if it is wasted, to call into 
account those who are wasting it.
  Let me go back to the first chart that I showed today. This is yet 
another company. This company is Parsons.

       A $243 million program led by the United States Army Corps 
     of Engineers, through a contractor, to build 150 health care 
     clinics in Iraq and has in some cases produced little more 
     than empty shells of crumbling concrete and shattered bricks 
     cemented together into uneven walls.

  We pay for 150 clinics and we get 20. The money is gone. The question 
is, Where did the money go and why? Who has it? What did we get for it? 
Is there accountability to the taxpayer for this sort of thing.
  I understand in wartime money is spent in a way that is different, 
from time to time, than it is spent in peacetime. Sometimes you just 
have to spend extra money to get things done. But $45 for a case of 
Coca-Cola; $7,600 a month to rent vehicles? I don't think so. I mean, 
that is just the tiny little tip of the iceberg.
  The question is, What comes of all of this? How do we stop all of 
this? How do we decide, on behalf of the American taxpayers, that this 
matters and we are not going to let this happen again? We have some 
people coming tomorrow who are going to talk about this contract, 
people who were in Iraq and watched this happen. We are going to 
evaluate what happened.
  As has been the case in every circumstance, we will refer what we 
find to the Department of Defense and ask why.
  We held a hearing on the subject of water. I know the Presiding 
Officer, in fact, in his subcommittee has taken a look at this and has 
asked some tough questions and is trying to figure out what was 
happening there.
  We have never quite figured out what has happened because the 
contractor and the Defense Department each point fingers and say 
nothing happened. Then they say the other side made it happen.
  About this water circumstance, we had people come to testify, saying: 
We were there.
  Here is the report. The report says they were hooking up for 
nonpotable water--that water which is used by soldiers in Iraq to brush 
their teeth, to wash their faces, to take showers--they were hooking up 
hoses that had water that was more dangerous than water that came right 
out of the Euphrates River, water with no disinfectant at all.
  In fact, we had an e-mail from an Army physician who is in Iraq. She 
said: I have seen this. In fact, I went and tracked the hoses to find 
out where this water was coming from and what the contractor was doing 
with it. It was contaminated water that was worse quality than the 
water you take if you dip a pail in the Euphrates.
  It is unbelievable. People get paid for this, they are incompetent, 
and they decide it doesn't matter? The person in charge of all the 
water in Iraq to be served to U.S. troops for Halliburton wrote an 
internal memorandum that I have made public. He said this was a near 
miss for us. It could have been mass sickness or even death. That was 
Will Granger, the top water quality manager, on May 13, last year.
  Remember, this is a company which says this didn't happen. The 
Pentagon says it didn't happen. This is the internal Halliburton 
company report:

       This event should be considered a ``NEAR MISS'' as the 
     consequences of these actions could have been very SEVERE, 
     resulting in mass sickness or death.

  Officially, this company still insists this didn't happen. Their 
internal reports by their own employees in Iraq demonstrate it not only 
happened, it was very serious.
  I don't do this because I am trying to make life miserable for 
somebody. I do this because we need to protect the American troops, 
first and foremost; and second, we need to protect the American 
taxpayers.
  I much prefer that the authorization committees of jurisdiction 
through which this money moves would hold tough accountability 
hearings, call people in, put them under oath. But that has not 
happened. As a result, I have held a series of hearings as chairman of 
the Policy Committee. Such a hearing will occur in the morning on this 
issue of health care clinics.
  My hope is that at some point, we will find an appetite in this 
Senate from people on both sides. This is not a Republican or a 
Democratic issue. I hope we will find an appetite by everyone in this 
Senate to decide we are going to insist on people being accountable for 
the money that is spent and for what is done with respect to providing 
for American soldiers and doing what is necessary to be done under 
these contracts.
  These contractors have fallen far short. The American taxpayers have 
been fleeced. They have taken a bath as a result of these kinds of 
actions. I know as I say this that there are undoubtedly some very good 
contractors. They have some good workers who risk their lives. They 
have done some good work. I say, God bless them. But when I see stories 
such as this, it makes my blood boil.
  Harry Truman served in this Chamber. In fact, the first desk I had 
was a desk sat in by Harry Truman. He sat in this Chamber back in the 
early 1940s when we were at war. A President of his own party was in 
the White House. Harry Truman said: There is too much waste, fraud, and 
abuse in the Pentagon, in military spending, and they established the 
Truman Committee. He went all around the country holding hearings. They 
found billions of dollars of waste, fraud, and abuse. That was the 
legacy of the Truman Committee.
  We ought to have one again. I have offered in the Senate, and I have 
been voted down. I think I have offered it now three times. By the way, 
I will offer it again. A good idea does not have to die a natural 
death. At some point, it can survive and succeed.
  But more than the Truman Committee, I believe we ought to pass the 
legislation I described as I started. That legislation is legislation I 
introduced on March 3 of this year. It is now the end of July. On March 
2, Senator Reid, myself, and 30 of my colleagues introduced legislation 
called the Honest Leadership and Accountability In Contracting Act of 
2006. It is long past the time for this Congress to have done what we 
should have done a month or 2 ago, 3 months ago; that is, pass this 
legislation, punish war profiteers, and do so aggressively. End 
cronyism in these key positions, especially in contracting, crack down 
on contract cheaters, and force real contract competition, real 
competition that gives the taxpayer the best price and holds 
accountable those contractors for getting the job done and getting it 
done in the right way.
  I am going to pursue this, as I have indicated, with additional 
hearings, if necessary. I would much prefer they be done by the 
authorizing committees. One way or another, we are going to pursue 
these questions and ask for accountability and demand accountability.
  As I said when I started, none of this is about politics. Republicans 
and Democrats work together on things from time to time in this Senate. 
This is one we can and should and I hope will work together on to fix 
for the good of this country and for the good of the American people.

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