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--- Begin Message ----Caveat Lector- http://www1.iraqwar.ru/?userlang=enDear General Flowers: Thank you for responding to my letter of April 10, 2003, about the Army Corps of Engineers' sole-source contract with the Halliburton subsidiary Kellogg Brown & Root. ... your letter indicates that the Administration is currently developing a proposal to issue a long-term contract to replace the Halliburton contract. Like the Halliburton contract, this contract would apparently designate a non-Iraqi company to produce and distribute Iraqi oil and generally exercise some of the responsibilities that an Iraqi oil company - or the newly reconstituted Iraqi oil ministry - would be expected to have. These new disclosures are significant and they seem at odds with the Administration's repeated assurances that Iraqi oil belongs to the Iraqi people. They thus raise additional questions that I hope you will be able to answer. www1.iraqwar.ru ======================= http://www1.iraqwar.ru/iraq-read_article.php?articleId=33845&lang=en Halliburton, U.S. Army and Iraqi oil 22.01.2004 [17:04] May 6, 2003 Lt. Gen. Robert B. Flowers ATTN: Directorate of Military Programs U.S. Army Corps of Engineers 441 G Street, NW Washington, DC 203 14 Dear General Flowers: Thank you for responding to my letter of April 10, 2003, about the Army Corps of Engineers' sole-source contract with the Halliburton subsidiary Kellogg Brown & Root. Your May 2 letter indicates that the contract is considerably broader in scope than previously known. Prior descriptions of the Halliburton contract had indicated that the contract was for extinguishing fires at oil wells and for related repair activities. It now appears, however, that the contract with Halliburton - a company with close ties to the Administration - can include "operation" of Iraqi oil fields and "distribution" of Iraqi oil. Your letter further indicates that the contract is likely to remain in place until at least the end of August and could last into 2004. Moreover, your letter indicates that the Administration is currently developing a proposal to issue a long-term contract to replace the Halliburton contract. Like the Halliburton contract, this contract would apparently designate a non-Iraqi company to produce and distribute Iraqi oil and generally exercise some of the responsibilities that an Iraqi oil company - or the newly reconstituted Iraqi oil ministry - would be expected to have. These new disclosures are significant and they seem at odds with the Administration's repeated assurances that Iraqi oil belongs to the Iraqi people. They thus raise additional questions that I hope you will be able to answer. The Scope and Length of the Halliburton Contract Information about the contract with Halliburton has been released by the Administration in dribs and drabs. The contract was issued to Brown & Root, a Halliburton subsidiary, without competition on March 8. However, the existence of the contract was not announced until March 24, and the Corps did not disclose until April 8 that the contract had a potential value of up to $7 billion. (1) Moreover, it was not until your May 2 letter, which I received late on Friday afternoon, that the Corps revealed that the scope of the contract includes "operation of facilities" and "distribution of products." Only now, over five weeks after the contract was first disclosed, are members of Congress and the public learning that Halliburton may be asked to pump and distribute Iraqi oil under the contract. The Brown & Root contract was first disclosed by Halliburton on March 24. The information provided by Halliburton at that time gave no indication that the contract could include operation of Iraqi oil fields. The company press release announcing the contract was titled "KBR Implements Plan for Extinguishing Oil Well Fires in Iraq."(2) That press release described the contract as "assessing and extinguishing oil well fires in Iraq and evaluating and repairing, as directed by the U.S. government, the country's petroleum infrastructure." In a one-page description of the contract that your office provided to me, the Corps generally confirmed this description. According to the Corps release, the Corps was in charge of "implementation of plans to extinguish oil well fires and to assess oil facility damage in Iraq" and would be contracting with Brown & Root to perform these functions. (3) The announcement of the Halliburton contract received considerable public attention. As a result of the incomplete disclosure, however, the news reports consistently described the contract as a contract to "put out oil-field fires,"(4) to "fight oil fires,"(5) or to "fix Iraqi oil fields. "(6) We now know, however, that the contract actually has a much broader scope than simply extinguishing oil well fires and repairing broken oil well infrastructure. In a letter to me on April 8, you disclosed that the contract was worth up to $7 billion and had a term of up to two years. And in your most recent May 2 letter, you further disclosed that the contract includes the operation of facilities and distribution of products. The May 2 letter also adds additional detail about the likely duration of the sole-source contract with Brown & Root. The letter states that "the best estimate" for awarding a new competitive contract is "approximately the end of August." However, the letter goes on to say that "the time required to complete [the process of awarding the contract] is estimated to be from four to nine months" - meaning the current contract could last through January 2004. Administration Intentions Regarding Iraqi Oil Besides shedding new light on the contract with Brown & Root, the May 2 letter indicates that the Corps is in the process of preparing a proposal for a long-term contract to replace the existing Brown & Root contract. According to the letter, the Corps is "completing the competitive acquisition strategy and plan, preparing the statement of work, and preparing the solicitation that will request proposals to perform the work." The May 2 letter states that this new contract will also authorize the contractor to operate oil facilities and distribute oil products. The contract with Halliburton and the planned successor contract raise significant questions about the Administration's intentions regarding Iraqi oil. The Administration has previously drawn a bright line on Iraqi oil: according to White House spokesman Ari Fleischer, "[t]he oil fields belong to the people of Iraq, the government of Iraq, all of Iraq. All the resources of Iraq need to be administered by the Iraqi government."(7) Likewise, Secretary of State Colin Powell has said that "[t]he oil of Iraq belongs to the Iraqi people."(8) And Secretary of Defense Donald Rumsfeld has reiterated that Iraqi oil "belongs to the Iraqi people."(9) In light of these statements, I am puzzled as to why the Corps is actively preparing a solicitation for a long-term contract to produce and distribute Iraqi oil. That contract would clearly seem to contradict Mr. Fleischer's statement that the "the oil fields belong to the people of Iraq." In fact, such a contract would apparently mean that Halliburton or another similar company - and not the Iraqi people - would be making the fundamental decisions on how much oil should be produced and who should produce it. Just this weekend, the Administration appointed an Iraqi, Thamer Abbas Ghadban, to run Iraq's oil ministry. According to press accounts, Mr. Ghadban will head a team overseeing the country's oil industry, as well as its oil sales and marketing operations. (10) The information provided in your May 2 letter, however, appears to conflict with these intentions. Your letter says that it will be the Corps - not Mr. Ghadban - that will issue a contract to operate facilities and distribute oil. While Iraqis may need American help in the short-term to rebuild the country 's oil infrastructure, it is less clear whether they need or want an outside company to produce and distribute their oil on a long-term basis. Indeed, press reports have already described tensions between Iraqi oil managers and Americans, (11) as well as frustration among Iraqi oil workers unable to resume their jobs. (12) Some Iraqi oil workers are apparently dissatisfied with the pace of work done by Brown & Root and with the lack of consultation about how to rebuild and operate the country's oil infrastructure. (13) The Administration's decision to appoint a former American oil executive to chair an advisory board overseeing the Iraqi oil ministry may well increase the perception among some Iraqis that they are not being given full control over the resources that the Administration previously indicated belonged to them. (14) There appears to be a conflict between the Administration's statements of intent (that the oil belongs to Iraqis) and its actions (issuing contracts to U.S. companies like Halliburton to produce and distribute the oil). This conflict should be addressed by the Administration in a forthright manner. Release of Information I am grateful to you for clarifying matters concerning the scope and duration of the Brown & Root contract. Moreover, I do not mean to suggest that the Corps has intentionally misled anyone about the contract. I am, however, concerned that the Administration's reluctance to provide complete information about this and other Iraqi contracts has denied Congress and the public important information and caused unnecessary confusion about the contracts' details. The solution to this problem is for the Corps to release the contract and any supporting documentation. I would thus like to reiterate the request for documents and information relating to the contract that I made in my letter of April 16 (attached). I believe that it would be in the best interests of all concerned parties - not least of the American taxpayer - for the Corps to release this information publicly as soon as possible. I also request that you release complete information on an ongoing basis about any task orders issued to Brown & Root under the contract, all work done under the contract to date, and any funds paid to the company. Thank you again for your cooperation. Sincerely, Henry A. Waxman Ranking Minority Member References (1) Letter from Lt. Gen. Robert B. Flowers, U.S. Army Corps of Engineers, to Rep. Henry A. Waxman (Apr. 8,2003). (2) Halliburton, KBR Implements Plan for Extinguishing Oil Well Fires in Iraq (Mar. 24, 2003). (3) U.S. Army Corps of Engineers, The Corps of Engineers ' Role in Combatting Iraqi Oil Fires (undated). (4) Contracts to Rebuild Iraq Go to Chosen Few, Washington Post (Mar. 28,2003). (5) The Iraq Money Tree, New York Times (Apr. 14,2003). (6) Halliburton May Be Replaced in Iraq Oilfield Contract, Bloomberg News (Apr. 14, 2003) (7) White House, Press Briefing by Ari Fleischer (Feb. 6,2003). (8)Powell Says U.S. Not after Iraqi Oil, Los Angeles Times (Jan. 23,2003). (9) NewsHour, PBS (Feb. 20,2003). (10) See, e.g., U.S. Names Iraqi as Team Leader of Oil Operations, Wall Street Journal (May 5,2003). (11) New Drill: Inside Iraq's Giant Oil Industry, Maze of Management Tensions, Wall Street Journal (Apr. 30,2003); Getting Iraq back into the Flow, Washington Post (May 6,2003). (12) At Iraqi Oil Plant, Bitterness and Frustration, Washington Post (Apr. 30,2003). (13) Id. (14) Details about the board's authority have apparently not yet been revealed. Three Get Top Posts to Revive Iraqi Oil Flow, New York Times (May 4,2003); U.S. Names Iraqi as Team Leader of Oil Operations, Wall Street Journal (May 5,2003) APPENDIX 1 DEPARTMENT OF THE ARMY U.S. Army Corps of Engineers WASHINGTON, 13.C. 20314-1000 May 2, 2003 Directorate of Military Programs Honorable Henry A. Waxman House of Representatives Washington DC 205 15-B 143 Dear Mr. Waxman: This is in response to your inquiry of April 10, 2003 regarding the contract for services to repair and provide for continuity of operations of the Iraqi oil infrastructure. The term and total cost of the current contract are limits on, and not our expectations regarding, the duration and potential dollar value of the contract. These limits are based on estimates drawn from contingency plans that addressed best to worst scenarios that might unfold in Iraq. In the worst scenario, a large proportion of Iraq's 1500 oil wells would be on fire, and there would be massive intentional oil spills and pollution resulting from the fires, extensive damage to associated infrastructure, including gas-oil separators, pipelines, pumping stations, refineries, and import facilities. Since the actual requirement for emergency services was unknown, the contract was structured to enable us to order the full range of services required by any potential situation, including a scenario in which there was extensive intentional damage to the Iraqi oil fields. This contract was designed from the outset as a bridge to competition and is structured accordingly. The indefinite delivery/indefinite quantity, cost plus award fee contract allows the Government to issue individual task orders for a specified period of performance at an estimated not-to-exceed dollar amount. We will limit orders under this contract to those services required prior to the availability of competitively awarded contracts. The scope of work provided by the current contract, and the contemplated competitive contract(s) that will replace it, includes extinguishing oil well fires and assessing the condition of oil facilities; cleaning up oil spills or other environmental damage at oil facilities; engineering design and repair or reconstruction of damaged infrastructure; operation of facilities; and distribution of products. In order to maximize competition, we started planning for the follow-on procurement as a classified, limited competition in parallel with the current contract. We did not wait for the end of hostilities to begin working to achieve, the savings that we expect competition to bring. In late March, the project was largely declassified, thus allowing us to publicly announce the requirement and plan for full and open competition. We are now completing the competitive acquisition strategy and plan, preparing the statement of work, and preparing the solicitation that will request proposals to perform the work. The solicitation will be advertised on the Federal, Business Opportunities (website www.fedbizopps.gov) by late spring or early summer. The best estimate for award of the contract based on this schedule is approximately the end of August. In October 2002, the United States Central Command (CENTCOM) Commander, in consultation with the Office of the Under Secretary of Defense for Policy, identified the classified requirement to develop contingency plans for the repair and continuity of operations of the Iraqi oil infrastructure. The Army's Logistics Civil Augmentation Program (LOGCAP) contract provides for development of such plans to address requirements of the Combatant Commanders. (The LOGCAP contract, which is re-competed periodically, had been competitively awarded by the United States Army Material Command to Kellogg, Brown & Root (KBR) in December 2001.) Because of its planning work under the LOGCAP contract, KBR was already very familiar with operational plans of Combatant Commanders and was a regular participant in contingency planning. After determining that the effort was within the scope of the LOGCAP contract, the Army Field Support Command issued a task order under the LOGCAP contract for Brown and Root Services (BRS), a division of KBR, to develop the required contingency plan. The effort was classified. The task order was issued November 11, 2002. On January 22, 2003, the Secretary of Defense designated the Army as the Executive Agent for the execution of the contingency plans, and on February 13,2003, the Secretary of the Army assigned the Executive Agent responsibility to the United States Army Corps of Engineers (USACE). USACE worked closely with CENTCOM operational planners and identified an immediate need both to continue planning and to pre-position equipment and technical experts. USACE determined that the most expeditious approach to meeting these requirements was to use the LOGCAP contract. On February 94,2003, after receiving approval from Headquarters Department of the Army, the U.S. Army Materiel Command issued a sole source letter contract to KBR under the LOGCAP contract to continue the planning and accomplish pre-positioning of equipment and personnel. The pre-positioning work commenced immediately. USACE needed to provide, on very short notice, an extremely broad range of services. In late February 2003 USACE received approval from Headquarters Department of the Army to issue a sole source contract to KBR to perform all services that might be necessary to carry out the contingency plans it had developed, and the contract was awarded March 8, 2003. This provides maximum flexibility, so that even if the worst case unfolded, USACE could issue task orders for performance of any combination of services without having to negotiate another contract. Likewise, the period of performance was based on the possibility of having to deal with a prolonged effort in an intense and chaotic environment not well suited to transition to one or more successor contractors. While the broad scope of the KBR contract enabled performance in any circumstance, it is purposefully designed as a temporary mechanism to enable execution until competitively awarded contracts can replace it. The contract is being used judiciously. Task orders are placed only for work that is required in the near term leaving as much as possible for performance under competitively awarded contracts. To conduct an effective full and open competition, there must be sufficient time to prepare and approve the acquisition strategy and planning, to define the scope of work for the contemplated contract(s), to prepare and issue an unclassified competitive solicitation, to allow industry to prepare adequate proposals, to thoroughly analyze and evaluate the proposals, to discuss and negotiate with potential contractors, and to make award(s) to the successful offeror or offerors. In this case, because of the effort already accomplished, the time required to complete this is estimated to be from four to nine months. The initial planning task was issued to BRS because it was within the scope of the competitively awarded LOGCAP contract, and not primarily because of a security clearance issue. To accomplish a classified planning task of this magnitude in a compressed period of time, BRS had to act immediately. It was able to do so because it was already engaged in the Combatant Commander's planning as part of the LOGCAP contract. If there had not been an existing contract under which the planning could be done, and we had conducted a classified competition, we would have had to have sufficient time not only for the competitors to obtain the required clearances, but also for the competition itself, The LOGCAP contract is in place because such time is often unavailable, and to take the time would slow contingency planning unacceptably and impair the mission. The total estimated cost of specific work to be performed is established prior to issuing the individual task order to the contractor. For each order, the government establishes the scope of work and estimated cost. The scope of work is presented to the contractor, who prepares its technical and cost proposal for accomplishing the work. Negotiations result in an agreed upon estimated cost, the task order is issued, and the contractor begins performance. The Administrative Contracting Officer monitors performance. During each evaluation period, the government determines the amount of award fee based on criteria including the quality of the contractor's performance and the effective control of costs. I trust this information answers your questions. Thank you again for your interest in the procurement process of the United States Army Corps of Engineers. Sincerely, Robert B. Flowers Lieutenant-General, U.S. Army Commanding http://www.house.gov/reform/min/inves_admin/admin_contracts.htm -__ ___ _ ___ __ ___ _ _ _ __ /-_|-0-\-V-/-\|-|-__|-|-|-/-_| \_-\--_/\-/|-\\-|-_||-V-V-\_-\ |__/_|--//-|_|\_|___|\_A_/|__/ SPY NEWS is OSINT newsletter and discussion list associated to Mario's Cyberspace Station - The Global Intelligence News Portal http://mprofaca.cro.net ######## CAUTION! ######### Since you are receiving and reading documents, news stories, comments and opinions not only from so called (or self-proclaimed) "reliable sources", but also a lot of possible misinformation collected by Spy News moderator and subscribers and posted to Spy News for OSINT purposes - it should be a serious reason (particularly to journalists and web publishers) to think twice before using it for their story writing, further publishing or forwarding throughout Cyberspace. 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