Halliburton
Motto - Its Cost Plus Baby
By Evelyn Pringle
30 October, 2006
Countercurrents.org
Halliburton's
contracts for work in Iraq are what's known as costs plus contracts,
meaning that after all the costs for labor, materials and other expenses
are added together, the company makes its profit based on a percentage
of that total.
It certainly does not take
a financial genius to figure out that under the terms of such a contract,
a company has every motive in the world to increase the costs of every
project to increase profits.
Since the minute Dick Cheney
authorized the no-bid contracts for Halliburton, the granddaddy of war
profiteering has been ripping off American tax payers left, right and
center through the use of these cost plus contracts and another clear-cut
profiteering scheme was recently revealed in testimony at a Senate Democratic
Policy Committee hearing.
On September 18, 2006, Julie
McBride, a former Halliburton employee with the company's Morale, Welfare
& Recreation Department (MWR) in Iraq, testified that "the
mantra at Halliburton camps goes, 'It’s cost plus, baby.'"
Ms McBride was hired as an
MWR Coordinator in Camp Fallujah at facilities that organize recreational
activities for off-duty troops.
The two MWR facilities that
she coordinated were a Fitness Center and an Internet Café. The
Fitness Center had gym equipment, pool and ping pong tables, video games,
and a large room for movies, fitness classes and dances, and the Internet
Café housed telephones, computers, and a library.
At Camp Fallujah, she testified,
she became concerned about several Halliburton practices and especially
with the procedures used to compile the headcount for the MWR Department.
"Funding for the MWR
Department," Ms McBride stated, "was evidently based, in part,
on the headcount that Halliburton reported."
She explained that to obtain
a headcount, each off-duty soldier who entered the Fitness Center or
the Internet Café had to sign in, and that the number of soldiers
on the sign in sheet was referred to as the “Boots in the Door”
count.
She then testified that she
and other MWR employees were directed to utilize a specific methodology
to intentionally inflate this head count to run up costs and described
how it worked.
"To begin," she
told the panel, "each hour, on the hour, Halliburton staff were
instructed to record the number of soldiers in each of the five rooms
of the Fitness Center, and in the Internet Café library."
"In addition,"
she said, "each person who used any equipment in the Fitness Center
was
required to sign a form."
"This included balls,
ping pong paddles, pool cues, board games, video games, etc.,"
she noted
"Further," she
testified, "a record was kept of the number of troops who attended
fitness classes or other activities."
At the end of each day, she
said, Halliburton instructed MWR Coordinators to prepare a situation
report, or “sit rep,” to record what was purported to be
the MWR head count for the day.
"To inflate that figure,"
Ms McBride explained, "the Coordinators began by adding together
the “Boots in the Door” count, and the hourly totals for
each room in the Fitness Center throughout the day and in the library."
"For example,"
she said, "I was present in Iraq on February 27, 2005, when the
“Boots in the Door” count at the MWR facility in Fallujah
was about 330."
"The hourly count that
day," she noted, "for each room was over 1,300."
"These totals were then
combined for a Fitness Center headcount in excess of 1,600," she
stated, "or five times the actual number of troops that came into
the facility."
On top of that she said,
Halliburton would often add the number of troops who attended a fitness
class or activity, even though each person had already been counted
when he or she came in the door, and counted a second time in the hourly
head count.
In addition, she testified,
they would often add on the total number of equipment items that were
checked out that day and sometimes they would even add the number of
towels checked out by the troops.
"One day in February
2005, for example," Ms McBride told the panel, "179 towels
were added into the headcount."
On another day in January
2005, she said, they added 240 bottles of water used by the troops that
day.
"Sometimes," she
testified, "they used a sum total for the headcount that was higher
than the “Boots in the Door,” hourly room counts, activity
count, equipment count, and towels count combined."
After adding together all
of the numbers to arrive at a “sum total,” she said, Coordinators
were instructed to throw away the original “Boots in the Door”
figure and the larger total was then designated as the headcount for
that day and emailed to Halliburton administrators who compiled the
numbers for all of the MWR facilities in Iraq.
"There are many other
Halliburton MWR Coordinators who can verify this procedure," she
told the committee.
Ms McBride went on to describe
how the fraudulent headcounts are used to generate millions of dollars
in unearned profits for the company by running up costs. "By inflating
the number of users," she said, "Halliburton can rationalize
a greater need for facilities, equipment, staffing and administrators
than actually exists."
"The additional staffing,"
she said, "does not benefit the troops, but it does benefit Halliburton."
"Under its contract,"
Ms McBride points out, "the more facilities, equipment, staff and
administrators Halliburton can show a need for, the more profit Halliburton
makes."
She said that she also watched
Halliburton employees use their control of the MWR and dining facility
requisition procedures to requisition many items for their own personal
use, by claiming that the items were for the troops.
"I have personally observed,"
she said, "cases of soda, stacked on top of each other in Halliburton
administrative offices, which Halliburton employees obtained this way."
She pointed out that the
employees not only drank soda free but they also generated more undeserved
profits for Halliburton by running up the cost of supplies.
"By contrast,"
she told the committee, "US soldiers who make a quarter as much,
or less, must go to the PX to purchase their soda with money from their
own pockets."
Ms McBride also described
how Halliburton employees exploit requisitions to obtain luxuries that
are not afforded to the troops. "One example of this," she
said, "was a Super Bowl party, for Halliburton employees only,
at taxpayer expense."
According to Ms McBride,
Halliburton requisitioned a big screen TV and lots of food for employees
and thus, under the cost plus contract, the company even made money
off its private Super Bowl party.
Following the party, she
said, the Halliburton employees arranged a live television connection
for the big screen TV so that they could watch more football games.
She told the committee that
many Halliburton employees did not seem to care about the soldiers and
often ignored troop requests, or treated them like an annoyance.
"Those same employees,"
she said, "indulged their own whims at taxpayer expense."
She also described methods
used by Halliburton to discourages employees from speaking out about
these issues. "It’s not easy to stand up to Halliburton,"
she told the committee.
"After I voiced my concerns
about what I believed to be accounting fraud," Ms McBride said,
"Halliburton placed me under guard and kept me in seclusion."
She said her property was
searched, and she was specifically told that she was not allowed to
speak to any member of the US military. "I remained under guard
until I was flown out of the country," she said.
In concluding her testimony,
Ms McBride expressed her admiration and devotion to the US troops in
Iraq as well as her purpose in testifying before the committee.
"During my time at Camp
Fallujah," she said, "I came to love the young men and women
in the military, who serve our country so well."
"It was an honor for
me to help them in any way," she stated.
"I will never forget
their kindness," she said, "and their courage has inspired
me to speak out now on their behalf."
Democrats have promised to
end Halliburton's war profiteering in Iraq as soon as they take control
of Congress and hopefully tax payers will hold them to it.
(Evelyn Pringle
is a columnist for OpEd News and an investigative journalist focused
on exposing corruption in government and corporate America. Email [email protected])
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