Reply #10: Guess who got the contract to restore and maintain Iraq's oil output? Halliburton (KBR)

[leveymg]

Here's an extract the Army Corps of Engineers website that explains who got that sole-source, no-bid contract to restore and maintain Iraq oil exports, and who paid for it: http://www.hq.usace.army.mil/cepa/iraq/faq.htm



USACE Missions--Oil Fire Suppression
and Restoration of Production

This page was last updated as of :
1/20/2004

Could you comment on the recent draft DCAA Audit Report?

We do not discuss draft audit documents. The audit process allows a company to provide the auditor with additional information or justification for the actions in question. The draft may change significantly before the final report as more information is received. It is the Corps’ intention to let the normal audit process work. In the meantime, questions about the audit itself will be answered by Office of the Secretary of Defense Public Affairs, Lt. Col. Rosalind Lynch at [phone].

What is your mission?

Task Force Restore Iraqi Oil (RIO) mission is to restore the capability for oil production, oil refining and gas processing to pre-war conditions. The Corps is supporting the U. S. Government's goal of restoring the Iraqi people's oil production resources as quickly as possible. RIO's end state objective is to have fires suppressed, environmental cleanup accomplished, oil production levels restored and our personnel safely redeployed back home. Under the humanitarian assistance portion of the mission, we are providing emergency supplies of gasoline, LPG and other petroleum products to distribution points operated by the Iraqi Oil Company. We are also assisting the Iraqi Ministry of Oil to export oil to benefit Iraq.


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How do you plan to accomplish your mission?

All work is being performed through the use of Private Sector Contractors in conjunction with the Iraqi Ministry of Oil.

Are any Iraqi Ministry of Oil personnel helping you out?

The Iraqi Ministry of Oil was re-established on May 3, 2003. The U.S. Army Corps of Engineers, under the direction of the Coalition Provisional Authority, is assisting the Ministry.

What are the current production levels?

The Coalition Provisional Authority and the Iraqi Ministry of Oil have requested the Corps to allow the Ministry to release production volume figures. We agree with this strategy because information about production levels will have an effect upon world oil prices.

Iraqi Ministry of Oil: Dhia A-Bakka 914-360-3526 (pr DEE’-a a-BAKKA)


LOGCAP Contract

What contract did RIO use to start carrying out its mission? An existing Army Field Support Command Logistics Civil Augmentation Program (LOGCAP) contract, competitively bid, was used to prepare contingency plans for the government. The contract was awarded to Brown & Root Services (later to be known as Kellogg, Brown and Root) of Houston on December 14, 2001.

When a potential requirement to develop contingency plans to extinguish oil well fires and to assess damage to oil facilities that might occur in Iraq in the event of hostilities was identified it became readily apparent that use of an existing contract (LOGCAP) would be the most efficient and expedient way to meet the very compressed time line for potential plan execution.

After DOD designated the U. S. Army Corps of Engineers as Executive Agent to implement plans to extinguish oil well fires and assess damages to oil facilities during Operation Iraqi Freedom, the Corps used the existing contract to pre-position firefighting equipment and personnel and to extinguish oil well fires in southern Iraq that were ignited during the war and to assess damages.


Kellogg, Brown & Root Contract (March 2003)

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When did the Corps issue its first contract in support of the RIO mission and to whom? On March 8, 2003 the Corps issued a contract to KBR to use for an interim period as a bridge to a competitive contract. It is an Indefinite Delivery/Indefinite Quantity (ID/IQ) contract. Task Orders are issued against this contract as needed to obtain services necessary to support the mission in the near term. This contract is specified to be for a maximum of $7 billion. It is for a maximum period of two years with three one-year renewal options. This is a cost plus award fee contract with a 2% fixed fee and a potential extra 5% for work achieved over and above what is normally achieved. This is determined by an award board that meets to go over all aspects of the work performed.

How was this contractor chosen?

Army Materiel Command utilized a competitively procured LOGCAP contract to perform the contingency planning for this mission. Through LOGCAP, Kellogg, Brown & Root (KBR) pre-positioned people and equipment to be able to provide emergency response related to the oil system, as well as other needs and services outlined under this contract. DOD selected KBR for a follow-on contract with the Corps of Engineers to perform the emergency response portion of this mission because they were the only contractor that could satisfy the requirement for immediate execution of the plan.

Who competed and, if sole course, what was justification?

The initial LOGCAP contract was extensively competed by the Army Materiel Command. The LOGCAP contract has the capability to be used for contingency planning. The USACE contract is sole source to KBR, as instructed by DOD, since KBR was the only company who could immediately satisfy the requirement of the plan, considering the urgency of potential hostilities.

What are the appropriate Federal Acquisition Regulation clauses allowing this action? Justification was due to the urgent need to get the contract in place and KBR's extensive knowledge of the project. FAR 6.302-1 provides for sole source procurements when "only one responsible source and no other supplies or services will satisfy agency requirements."

What is the dollar value of the contract?

It is unknown, depending on the extent of the damage. It is an Indefinite Delivery/Indefinite Quantity, cost-plus type contract. The government reimburses the contractor for its actual cost, plus a fee that is based on the performance of the contractor. The work will be transitional to the competitive contracts. This is easily done since the work is performed through specific task orders to the basic contract. When the new contracts are awarded, new task orders will be placed to the new contracts. A summary of Task Orders issued is posted on this site.

What is the anticipated profit ratio?

It is a cost-plus award fee contract. The contractor is guaranteed a fee of two percent and can make a maximum of seven percent, depending on performance. The five percent performance fee is based upon how well the contractor manages the work, the quality of the work, safety performance, and his ability to effectively control cost.
How are you doing quality control to avoid cost overruns and fraud, waste and abuse? The Corps has a long history of specialized expertise in managing large contracts such as this one. We have established a Facility Engineering Support Team, which is essentially a district office with two construction resident offices. We have an organization that will provide contractor oversight insuring quality work is done in a timely manner, safely and at a reasonable cost.

Is the Restore Iraqi Oil mission being paid for with only United States taxpayer money?

No. The funding sources for Restore Iraqi Oil include the Natural Resource Risk Remediation Fund, the Iraq Seized Assets Fund, the Development Fund for Iraq, and the Operation and Maintenance, Army Appropriation. The Natural Resource Risk Remediation Fund and O & M, A are US taxpayer sources allocated by Congress.

ON EDIT - See related post: http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=103&topic_id=253272&mesg_id=253272