WASHINGTON, Sept. 29 (UPI) -- Halliburton Co., the company Vice President Dick Cheney headed for five years, vaulted into the top 100 defense contractors when the United States invaded Iraq in 2003, according to a new analysis by a public interest group.

Halliburton "was not even on the list" until 2003 when it won $4.3 billion in defense contracts, including a no-bid contract for oil services in Iraq, according to the Center for Public Integrity in Washington.

In 2003, it landed at No. 14.

Until 2003, Halliburton and its subsidiaries Brown & Root Services and Kellogg Brown & Root never won contracts totaling more than $658 million a year. In the five years leading up to 2003, the company's total contracts amounted to only $2.45 billion.

Cheney ran Halliburton as chief executive officer from 1995 to 2000, when he resigned to run for vice president. While Iraq was Halliburton's great windfall, having Cheney at the helm was almost as lucrative: In the five years he headed the company, Cheney doubled the receipts from the previous five years, according to CPI. Three years later, Halliburton's fortunes would double again with the war contract.

About $1.9 billion of that $4.3 billion was awarded to Halliburton without the Pentagon having a full and open competition because of "urgency" -- that is, the coming war with Iraq and the expected devastation at the oil fields that never materialized. Halliburton's subsidiaries also were awarded $367 million worth of contracts on a sole source basis in 2003, meaning the Pentagon decided it was the only firm capable of fulfilling the contract.

CPI's 23 researchers examined 2.2 million contracts worth $900 billion awarded by the Pentagon between 1998 and 2003 to produce an exhaustive look at the nexus between politics, money and the defense industry. It revealed its results Wednesday and put a link on its Web site to the Pentagon's public but difficult-to-find contracting database.

Among its findings is the fact that President George W. Bush has received more money than any other political figure from defense contractors' political action committees and employees. Corporations are prohibited from making direct donations to candidates.

"In other words, in recent years, George W. Bush unmistakably has become the top defense contractors' favorite candidate," said Charles Lewis, director of CPI.

Bush collected $5.4 million from 1998 to the present.

His challenger, Sen. John F. Kerry, only collected $332,000 from defense contractors in that same period.

However, once Kerry emerged as a likely nominee, the contributions he received from the top defense contractors climbed dramatically. Between January and the end of July 2004, Kerry collected $1.6 million, compared to Bush's $824 million over that same period.

"It's interesting how money follows power and potential power," remarked the study's main author Larry Makinson.

According to CPI, the top 7,637 defense contractors -- those that earned more than $100 million from Pentagon contracts in a year -- contributed nearly $214 million to federal candidates, parties and leadership PACs from 1998 to 2003.

The 10 largest defense contractors contributed a total of more than $35 million from 1998 to 2003, with about two-thirds of that going to Republican candidates. The 737 defense contractors making over $100 million a year gave more than $88 million during that six-year period, combined.

"It's a tremendous return on their investment," Makinson said.

They've spent even more on hiring lobbyists to advance their interests in Washington. The top 737 defense companies spent $1.9 billion on Beltway lobbyists working Capitol Hill between 1998 and 2003.

Included in the 737 are 95 foreign corporations or companies owned by foreign governments that together earned more than $40 billion from Pentagon contracts over the six-year period.

The CPI report also highlights problems the Pentagon has in overseeing defense contracts. It has cut its procurement workforce -- contracting officers and the like -- in half since 1991, reducing numbers from about 400,000 to about 200,000, while at the same time dramatically increasing the amount of money it pays to contractors for not just weapons, but services as well. The number of contracts increased from about 13.2 million to 14.8 million, about 12 percent, over the same period. The Pentagon paid contractors $219 billion in 2003 alone, up from $129 billion in 1998. In 2003, just over half the Pentagon's budget was paid to contractors.

The Pentagon inspector general highlighted problems with the control of contractors in a 2003 report. The IG said that out of 113 service contract actions reviewed with an estimated value of $17.8 billion, at least 98 had one or more problems, including inadequate competition, lack of surveillance or inadequate price reasonableness determinations, according to CPI.

Then secretary of the Army Thomas White told Congress in 2002 that he did not know how many contractors were employed by the service and called for a collection of the data. The data collection has not yet been started, according to the report.


Copyright 2004 by United Press International.
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