February 17, 2005
The Honorable Condoleezza Rice
Secretary of State
U.S. Department of State
2201 C Street, NW
Washington, DC 20520
Dear Madam Secretary:
Recent press accounts indicate that you intend to appoint Ambassador
Richard H. Jones to a top post on your staff at the State Department.1
In his new position as “special coordinator” for Iraq,
he will answer directly to you on key issues related to Iraq, including
reconstruction, governance, and economic development. Formerly,
Mr. Jones served as Ambassador to Kuwait and as Ambassador Paul
Bremer’s deputy at the Coalition Provisional Authority.
I am writing because there are many unanswered questions about
why Ambassador Jones intervened on behalf of an obscure Kuwaiti
company that was overcharging U.S. taxpayers and the Iraqi people
to import gasoline into Iraq. This company, Altanmia, was a subcontractor
under Halliburton’s Restore Iraqi Oil contract. Last year,
State Department officials informed my staff that there were ongoing
criminal investigations into actions by personnel at the U.S. Embassy
in Kuwait with respect to this contract.2 Subsequent press accounts
reported that the Justice Department was also involved.3 To date,
I have not heard whether these investigations have been concluded
or whether Ambassador Jones and other embassy officials have been
cleared of wrongdoing.
With Rep. John Dingell, I first wrote to you in October of 2003
regarding the exorbitant prices Halliburton was charging to import
gasoline into Iraq through its Kuwaiti contractor, Altanmia.4 In
October and November of 2003, we also wrote to several other Administration
officials raising this issue.5
One month later, in December 2003, auditors at the Defense Contract
Audit Agency (DCAA) agreed with our concerns and issued a draft
audit report concluding that Halliburton and Altanmia had overcharged
the U.S. government by as much as $61 million for gasoline imported
from Kuwait into Iraq as of September 30. DCAA concluded that Halliburton
“has not demonstrated ... that they did an adequate subcontract
pricing evaluation prior to award” of the Altanmia subcontract.6
Despite these warnings, State Department documents obtained by
the Committee on Government Reform show that rather than acting
to halt these overcharges, senior State Department officials, including
Ambassador Jones, intervened to pressure U.S. contracting officials
to drop their efforts to find a less expensive source of gasoline.
On December 2, 2003 – just nine days before DCAA publicly
revealed its audit findings – Ambassador Jones sent an e-mail
directing officials to:
[T]ell KBR to get off their butts and conclude deals with Kuwait
NOW! Tell them we want a deal done with al-Tanmia within 24 hours
and don’t take any excuses. If Amb. Bremer hears that KBR
is still dragging its feet, he will be livid.
Within days, a senior government contracting official at the U.S.
Army Corps of Engineers complained about this inappropriate political
pressure. Mary Robertson was the career contracting official in
Iraq responsible for the Halliburton oil contract. On December 6,
2003, she wrote an extraordinary letter to Halliburton officials,
stating: “I will not succumb to the political pressures from
the GoK or the US Embassy to go against my integrity and pay a higher
price for fuel than necessary.” Ms. Robertson wrote, “there
are other firms who have indicated they can provide the product
and this is the ethical thing to do.” She concluded:
I will not direct KBR to negotiate only with Altanmia to purchase
fuel from Kuwait. My ethics will not allow me to direct KBR to go
sole source to a contractor when I know there are other potential
sources that can provide the fuel to the people in Iraq.7
A fundamental principle of government contracting is that “[g]overnment
business shall be conducted in a manner above reproach and, except
as authorized by statute or regulation, with complete impartiality
and with preferential treatment for none.”8 According to the
Federal Acquisition regulation (FAR), the actions of government
officials “must … be such that they would have no reluctance
to make a full public disclosure of their actions.” In addition,
the U.S. contract with Halliburton specifies that “[t]he Contractor
shall select subcontractors … on a competitive basis to the
maximum practical extent consistent with the objectives and requirements
of the contract.”9
In this case, however, it appears that Ambassador Jones intervened
to block the Corps of Engineers from negotiating a lower fuel price
and saving the U.S. government millions of dollars.
I request that you release the results of any investigations completed
by the State Department, Defense Department, or Justice Department
regarding this issue. If these investigations have not yet been
concluded, I request that you explain why you have appointed Ambassador
Jones to this sensitive Iraq position while the criminal investigations
remain ongoing.
Sincerely,
Henry A. Waxman
Ranking Minority Member
1 Rice Moves to Name Senior Advisers, Boston Globe (Feb. 17, 2005).
2 Telephone conversation between Department of State Inspector General
Legislative Affairs and Minority Staff, Committee on Government Reform
(Feb. 3, 2004) (reporting that the State Department Inspector General
received a request from the Defense Criminal Investigative Service
to investigate the actions of officials at the U.S. embassy in Kuwait
with respect to Halliburton’s contract to import gasoline into
Iraq).
3 E-Mail Muddies Probe of KBR, Houston Chronicle (Nov. 11, 2004) (“The
State Department’s Inspector General’s Office launched
an investigation into the embassy staff’s behavior earlier this
year. The Justice Department was also brought in to investigate the
alleged fuel overcharges”).
4 Letter from Reps. Henry A. Waxman and John D. Dingell to National
Security Advisor Condoleezza Rice (Oct. 29, 2003). See also Letter
from Rep. Henry A. Waxman to National Security Advisor Condoleezza
Rice (Jan. 15, 2004).
5 See Letter from Reps. Henry A. Waxman and John D. Dingell to Office
of Management and Budget Director Joshua Bolten (Oct. 15, 2003); Letter
from Reps. Henry A. Waxman and John D. Dingell to Lt. Gen. Robert
B. Flowers, Director, U.S. Army Corps of Engineers (Oct. 21, 2003);
Letter from Reps. Henry A. Waxman and John D. Dingell and Sen. Joseph
Lieberman to Joseph E. Schmitz, Inspector General, U.S. Department
of Defense (Nov. 25, 2003) (all letters online at http://www.democrats.reform.house.gov/investigations.asp?Issue=Iraq+Contracting).
6 U.S. Department of Defense, News Briefing (Dec. 11, 2003).
7 Letter from Mary C. Robertson, Administrative Contracting Officer,
U.S. Army Corps of Engineers, to Kellogg Brown & Root (Dec. 6,
2003).
8 Federal Acquisition Regulation, 48 CFR 3.101-1.
9 U.S. Army Corps of Engineers, Contract DACA63-03-D-0005, Clause
52.244-5(a) (Mar. 8, 2003). See also U.S. Department of State, News
Briefing by Ambassador Richard A. Boucher, Assistant Secretary of
State for Public Affairs (Oct. 30, 2003) (Assistant Secretary of State
Richard Boucher asserting: “The decisions are made by career
procurement officials. There’s a separation, a wall, between
them and political-level questions when they’re doing the contracts”). |