The Center for Public Integrity

With scores of revolving door connections, more than $1 million in campaign contributions and clients that receive most of their contracts from the Pentagon without competition, only one defense lobbying firm can claim to give its clients "an inside track to business opportunities with the federal government."

The PMA Group, a lobbying firm that specializes in defense contracting, has reported receiving $21.7 million in lobbying fees since 1998 from large defense companies—the most paid to any defense lobbying firm, according to a study by the Center for Public Integrity.

A PMA spokesman said he would not comment on the Center's report.

The fees paid to PMA appear to have paid off for these 41 defense contractors and their parent companies, who collectively won $266 billion in contracts from the Pentagon during the last six years. That amounts to almost 30 percent of the dollar value of all contracts awarded by the Department of Defense.

Though these companies spent another $121 million employing in-house lobbyists and occasionally other lobbying firms, PMA clients' total lobbying versus contracts works out to a ratio of almost $1,859 in contracts for every dollar spent on lobbying.

Of the $266 billion that PMA clients and their parents received in defense contracts, $167 billion—nearly two out of three dollars—were received from contracts that were awarded without "full and open" competition. In fact, PMA clients account for 47 percent of all such non-competitive contracts handed out by the Pentagon since 1998.

Lobby firms like PMA have become a staple of political influence. In all, defense contractors have reported spending $537 million on outside lobbying firms like PMA during the last six years, while they have spent $1.4 billion on in-house lobbying.

The oil services company Halliburton, largely through its subsidiary Kellogg, Brown & Root, has received more revenue from government contracts in the last year than from 1998 through 2002. In 2003, when the company had record revenue of $16.3 billion, Halliburton received contracts from the Department of Defense worth $4.3 billion, while in the previous five years it obtained less than $2.5 billion from the military, according to an analysis by the Center for Public Integrity.

Although figures are not yet available for 2004, government revenue is bound to increase as a result of the contracts the company has won for work in postwar Afghanistan and Iraq, which so far potentially totals $11.4 billion. Some of that work was actually awarded earlier; many of the company's contracts extend for multiple years.

In 1998, Halliburton's total revenue was $14.5 billion; that year, the company got contracts from the Pentagon worth $284 million. Two years later, revenue had dropped to just under $12 billion while work under DoD contracts more than doubled. In 2002, DoD awarded Halliburton tasks worth $485 million while the company's revenue was $12.6 billion.

Of the more than 150 American companies that together have received U.S. government contracts potentially worth more than $51 billion for postwar work in Afghanistan and Iraq, Halliburton is by far the largest recipient of contracts awarded in the two countries.

As part of its continuing Windfalls of War project, the Center for Public Integrity has been compiling information on contracts awarded by the U.S. government for support in Operation Enduring Freedom and Operation Iraqi Freedom. The Center has compiled its list of contractors and contract awards through information obtained from 95 requests and appeals filed under the Freedom of Information Act or through official government and company sources.

The Center for Public Integrity has obtained the 11 work orders worth $66.2 million awarded to CACI International Inc., the company at the heart of the Abu Ghraib prison abuse scandal in Iraq. Details of the work orders did not come to light until last April, when reports emerged of U.S. interrogators allegedly abusing prisoners at the notorious Baghdad prison.

In Iraq, Virginia-based CACI provides "interrogation support and analysis work for the U.S. Army in Iraq," according to the company. Job descriptions obtained by the Center show that CACI employees performed a variety of tasks in Iraq. Contractors were tasked with missions such as "debriefing of personnel ... intelligence report writing/quality control, and screening/interrogation of detainees at established holding areas." These contractors worked closely with military personnel. For example, those hired as interrogators were assigned to "coordinate and work in conjunction with [Military Police] unit and [Military Intelligence] interrogation units assigned to support operations of the Theater/Division Interrogation Facility."

First reported by The New Yorker, an Army investigation led by Major General Antonio M. Taguba, accused a CACI employee of being complicit in the physical abuse of prisoners. There have been several government investigations into the role of CACI and its employees surrounding the prison scandal. The firm says it is cooperating with the government's probes and has denied any wrongdoing.

More than 150 American companies have received contracts worth up to $48.7 billion for work in postwar Afghanistan and Iraq, according to the latest update of the Center for Public Integrity's Windfalls of War project.

This figure represents an increase of 82 companies and more than $40 billion since the Center first released its study of contracts awarded to U.S. companies for postwar work in Afghanistan and Iraq on Oct. 30, 2003.

The Center has continued to file Freedom of Information Act requests with, among others, the Department of Defense, the State Department and the U.S. Agency for International Development in hopes of getting the complete picture of U.S. contractors involved with Operation Iraqi Freedom and Operation Enduring Freedom. As was the case with the Center's initial report, contractors and dollar values have only been included in the overall list if there was authoritative information from either an official government source or a company source.

Since the Center's first release in October 2003, there has been more scrutiny of these postwar contracts by Congress, the media and various government agencies. This was partly due to the revelation that employees of private contractors Titan Corporation and CACI were present during the alleged torture of Iraqi prisoners at the Abu Ghraib prison.

Over a period of six months, the contracted value of one Iraqi task order of Halliburton subsidiary Kellogg, Brown & Root grew by a multiple of 36 and was modified 21 times, according to previously classified documents obtained by the Center for Public Integrity.

The task order, which was part of the March 8, 2003, no-bid Iraqi oil restoration contract awarded by the Army Corps of Engineers to KBR, increased from its original ceiling of $24 million to $887.37 million. Under task order 0005, which originally had a performance period of 90 days, KBR was responsible for importing fuel to Iraq. KBR did not break the $7 billion ceiling that had been specified for the sole-source contract, but the frequent modifications to the task order, which lays out specific work requirements under the contract, have some questioning the process.

The General Accounting Office, which did not specifically investigate the KBR oil contract, expressed concerns about revisions to contracts and task orders for work in Iraq. "Task orders were frequently revised. These revisions generated a significant amount of rework for the contractor and the contracting officers. Additionally, time spent reviewing revisions to the task orders is time that is not available for other oversight activities," David M. Walker, the comptroller of the General Accounting Office, told a June 15 Congressional hearing on contracting and the rebuilding of Iraq. "While operational considerations may have driven some of these changes, we believe others were more likely to have resulted from ineffective planning."

A private military company that has won contracts to assist the U.S. military in Iraq wrote the Pentagon rules for contractors on the battlefield.

Since 1997, Military Professional Resources Inc., which has two contracts (see the first for integration of Iraqi forces, and the second for linguists) worth a total of $2.6 million related to reconstruction in Iraq, has also produced Field Manual 100-21, also known as Contractors on the Battlefield. The manual "established a doctrinal basis directed toward acquiring and managing contractors as an additional resource in support of the full range of military operations," according to the company's Web site.

Michael B. Williams, the MPRI employee who is the primary author of the most recent edition of the manual, said the company started "with some basic guidelines" from the Army. "For the most part, however, this was a clean slate," he told the Center for Public Integrity.

The Army reviewed MPRI's draft, submitted revisions to the company and published the manual on January 3, 2003.

While the new manual contains detailed instructions on how deployed commanders should use contractors – from force protection measures to what kind of shoes contract employees should bring – it makes no mention of intelligence gathering or restrictions on contractor roles.

Reports on the use of contractors in Iraq have disclosed that private-sector employees have been performing sensitive intelligence work in and around combat zones. What's more, the report by Major General Antonio Taguba on the alleged abuse of prisoners at the Abu Ghraib Prison noted the involvement of civilian contractors at the Baghdad facility.

These revelations have raised questions about the efficacy and permissibility of using private contractors to perform military intelligence functions, but a three-and-a-half-year-old memorandum shows that the Army has been well aware of the risks of calling on contractors for intelligence work. On December 26, 2000, Patrick T. Henry, assistant secretary of the Army, dispatched a memo to the Army's assistant deputy chief of staff for intelligence declaring a policy that not only restricted the use of contractors, but also cautioned against the threats to national security posed by reliance on such workers in sensitive intelligence functions.

"At the tactical level," the memo declared, "the intelligence function under the operational control of the Army performed by military in the operating forces is an inherently Governmental function barred from private sector performance." In addition, Henry's memo noted, the "oversight exerted over contractors is very different from the command and control exerted over military and civilian employees. Therefore, reliance on private contractors poses risks to maintaining adequate civilian oversight over intelligence operations."

Even at the "operational and strategic level," the memo notes, "the intelligence function … should be exempted from private sector performance on the basis of risk to national security from relying on contractors to perform this function. …

The Pentagon has awarded seven contracts to San Diego-based Science Applications International Corp. to oversee much of the massive jobs of building a new government and mass media in post-war Iraq. Although the Defense Department and SAIC have chosen to keep much of the contract information secret—including the cost—the Center for Public Integrity has been able to glean some interesting details about the deals, which were all awarded in February 2003. The contracts all appear to last for one year and call for all of the work to be directed by Undersecretary of Defense for Policy Douglas Feith. Feith's top deputy at the Pentagon is Christopher "Ryan" Henry. Henry was a senior vice president at SAIC until October 2002.

One contract calls for SAIC to hire 150 so-called "Subject Matter Experts" who have been identified by the U.S. government as having "demonstrated an understanding of government operations required in (Iraq); language, cultural and geographic issues; and local recruitment requirements in (Iraq)." Specifically, the contract says the SMEs will, among other tasks, "identify, contact and recruit individuals in the exile and captive Iraqi community who are willing to devote themselves to the reconstruction and stability of Iraq." The contract requires SAIC to lease apartments, cover living expenses and provide support staff and services for the SMEs. Much of the work is to be done in Arlington, Va., but the contract does require the SMEs to deploy to Iraq for no fewer than 30 days. Although most of the dollar figures in the contracts were removed by the Pentagon in copies supplied to the Center for Public Integrity, one section indicates that, for certain "executive management consultants," the company will be paid $209 per hour.

While the Defense and State Departments have granted the lion's share of contracts in Iraq and Afghanistan directly from Washington, a few U.S. companies have made their deals directly with local governing authorities that have emerged with U.S. support or direction.

The companies do not appear on the lists of contracts the Center for Public Integrity obtained under the Freedom of Information Act; their direct dealings with the provisional authorities in Iraq and Afghanistan demonstrate the complexity of tracking the role of private companies in the post-war countries.

Three U.S. companies—banking and brokerage powerhouse J.P. Morgan Chase, oil giant Chevron/Texaco and global telecommunications provider MCI—have won contracts from the Coalition Provisional Authority in Iraq, the Iraq State Oil Marketing Organization, and the Afghanistan provisional government.

In Iraq, Peter McPherson, director of economic development for the Coalition Provisional Authority—whose members were appointed by Coalition Provisional Authority Administrator L. Paul Bremer on July 13, 2003—told reporters in an Aug. 29, 2003, teleconference from Baghdad that CPA will pay J.P. Morgan Chase $2 million over an up-to-three-year period to run an operating consortium of 13 banks from 13 countries that will constitute the Trade Bank of Iraq. The temporary bank's role is to issue and confirm credit letters to facilitate and encourage immediate importation of items like food, electrical equipment, and oil refinery machinery, and later that will allow for trade in oil and heavy machinery, worth hundreds of millions of dollars and effectively phasing out the UN oil-for-food program.