Tuesday, September 27, 2005

KBR's Excellent Adventure in Iraq

Yesterday I pointed out the no-bid folly engineered for the Gulf Coast after Hurricane Katrina ("Your Tax dollars at Work). Among the beneficiaries of that process was KBR, a subdivision of Halliburton, who has plenty of experience in no-bid contracting under this administration. While the companies connected to Halliburton may have experience in government contracting, there seems to be some questions about their experience in actually performing the work they've been contracted to do, according to the Los Angeles Times.

Engineering mistakes, poor leadership and shifting priorities have delayed or led to the cancellation of several projects critical to restoring Iraq's oil industry, according to interviews with more than two dozen current and former U.S. and Iraqi officials and industry experts.

The troubles have been compounded in some cases by security issues, poor maintenance and disputes between the U.S. and its main contractor, Houston-based KBR, a subsidiary of Halliburton Corp., according to the interviews and documents.

Despite the United States' spending more than $1.3 billion, oil production remains below the estimated prewar level of 2.5 million barrels per day and well below a December 2004 goal of up to 3 million barrels per day.

Interviews and documents from whistle-blowers show problems with at least three projects deemed crucial to Iraq's oil production:

• Qarmat Ali water treatment plant. This massive pumping complex is needed to inject water into Iraq's southern oil fields to aid in oil extraction. Under a no-bid contract, KBR was instructed to repair the complex at a cost of up to $225 million, but not the leaky pipelines carrying water to the fields. As a result, the water cannot be delivered reliably, raising concerns that some of Iraq's oil may not be recoverable.

• Al Fathah pipelines. As part of the same no-bid contract, the U.S. gave KBR a job worth up to $70 million to rebuild a pipeline network in northern Iraq despite concerns that the project was unsound. In the end, KBR built fewer than half the pipelines, and the project was given to another contractor. The delay has aggravated oil transport problems, which have forced Iraq to inject millions of barrels of oil back into the ground, a harmful practice for the oil fields and the environment. A government audit is being conducted based on a complaint by a whistle-blower.

• Southern oil well repairs. A $37-million project to boost production at dozens of Iraqi oil wells was canceled after KBR refused to proceed without a U.S. guarantee to protect it from possible lawsuits.

Current and former Iraqi oil officials expressed disappointment, frustration and anger at the U.S. performance.

They said that rather than tapping Iraqi state oil company officials, the U.S. program was overseen by American officials with little experience in the oil industry. In an interview, one senior U.S. official managing part of the restoration effort jokingly described his knowledge level as "Oil for Dummies."

Iraqi officials also said KBR relied too heavily on foreign contractors, conducted lengthy, unnecessary studies and failed to deliver promised equipment. They acknowledged that Iraq needed to spend more on its oil industry but wondered why the U.S. investment had not had more of an effect.
[Emphasis added]

I'm not terribly comforted by the notion that American tax dollars continue to flow into Halliburton, aided, no doubt, by their former CEO, Vice President Cheney. It would be akin to hiring Mike Brown as a consultant to determine what went wrong in the government response to Hurrican Katrina.

What? Oh. The government did. Well, then.


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