The Center for Public Integrity

More than 70 American companies and individuals have won up to $8 billion in contracts for work in postwar Iraq and Afghanistan over the last two years, according to a new study by the Center for Public Integrity. Those companies donated more money to the presidential campaigns of George W. Bush—a little over $500,000—than to any other politician over the last dozen years, the Center found.

Kellogg, Brown & Root, the subsidiary of Halliburton—which Vice President Dick Cheney led prior to being chosen as Bush's running mate in August 2000—was the top recipient of federal contracts for the two countries, with more than $2.3 billion awarded to the company. Bechtel Group, a major government contractor with similarly high-ranking ties, was second at around $1.03 billion.

However, dozens of lower-profile, but well-connected, companies shared in the reconstruction bounty. Their tasks ranged from rebuilding Iraq's government, police, military and media to providing translators for use in interrogations and psychological operations. There are even contractors to evaluate the contractors. 

Nearly 60 percent of the companies had employees or board members who either served in or had close ties to the executive branch for Republican and Democratic administrations, for members of Congress of both parties, or at the highest levels of the military.

The results of the Center's six-month investigation provide the most comprehensive list to date of American contractors in the two nations that were attacked in Washington's war on terror. Based on the findings, it did not appear that any one government agency knew the total number of contractors or what they were doing. Congressional sources said they hoped such a full picture would emerge from the General Accounting Office, which has begun investigating the postwar contracting process amid allegations of fraud and cronyism.

Raytheon Aerospace, which changed its name to Vertex Aerospace in June 2003, and its related companies have received more than $2.7 billion in U.S. government contracts since 1990, and the company is currently in Afghanistan with a contract from the Defense Department worth at least $7.4 million involving aircraft repair and maintenance.

If Raytheon had its way, that might be all that is known about its work for the Pentagon.

Under a presidential directive signed by Ronald Reagan on June 23, 1987, known as Executive Order 12600, companies have potential veto power over Freedom of Information Act requests for copies of their contracts with the U.S. government.

To comply with the Executive Order, before releasing any contract, a FOIA officer must contact the company to ask whether there is any information that should be withheld because it constitutes confidential commercial information that could cause competitive harm if released. Withholding this information is allowed under Exemption 4 of the Freedom of Information Act, which states that records cannot be obtained if they contain "trade secrets and commercial or financial information obtained from a person and (are) privileged or confidential."

In trying to determine which U.S. companies received government contracts for work in post-war Iraq and Afghanistan, the Center for Public Integrity filed 73 FOIA requests and appeals with the State Department, the U.S. Agency for International Development and the Pentagon and its related uniformed services.

In an initial response in May, the Pentagon listed a $7,382,194 contract with Raytheon for work in Afghanistan. But requests for a copy of the actual taxpayer-funded contract remain pending.

Government contracting has always been a complex matter, thick with legal wrangling and bureaucracy, but the last decade has seen a radical change in how the U.S. government purchases goods and services.

At one time, federal agencies constructed buildings, built machines and cleaned offices themselves, or found another agency to do it. Today, the U.S. government spends some $200 billion a year buying everything from information technology services to pencils to advanced weapons systems from the private sector.

The Defense Department alone accounts for 75 percent of that spending. Following a series of scandals in the 1980s, where the Pentagon was revealed to have paid outrageous sums for commercially available products, Congress decided to overhaul government procurement. The result was the Federal Acquisition Streamlining Act of 1994, which simplified the maze of procurement regulations to make it easier for federal agencies to buy products from the private sector.

The new law dovetailed with former Vice President Al Gore's "Reinventing Government" initiative, which aimed to trim the federal workforce, and matched the realities of the Pentagon's shrinking budget. As a result, where the federal workforce has shrunk, the contractor workforce has grown. Paul Light, a scholar at the Brookings Institution, calls this workforce the "shadow government," and estimated its size in 1999 at 5.6 million.

More than half of all government contracting today is spent on services—an increase of about 24 percent since 1990—making it the largest spending category. "Twenty years ago, (the government) contracted for supplies, construction and services, in that order. Now it's services, supplies and construction, but services are what's driving the train," says Steven Schooner, associate professor and co-director of the government Procurement Law Program at George Washington University.

On May 22, the U.N. Security Council gathered in New York to approve a resolution lifting sanctions on Iraq, creating a Development Fund for the country and providing limited immunity to corporations involved in oil and gas deals there for the next four years. The resolution directed that proceeds from future sales of Iraqi oil and gas be placed in the development fund and allowed the U.S.-led Coalition Provisional Authority to disburse the funds in consultation with the interim Iraqi administration.

That same day at the White House, President George W. Bush signed Executive Order 13303, which appears to give immunity from any judicial process to every entity with direct or indirect interests in Iraqi petroleum and related products. "The threat of attachment or judicial process against the Development Fund for Iraq, Iraqi petroleum and petroleum products, and interests therein ... constitutes an unusual and extraordinary threat to the national security and foreign policy of the United States," reads the executive order. It continues, "… any … judicial process is prohibited, and shall be deemed null and void."

Executive Order 13303 went unnoticed outside the government until July, when it was spotted by the Institute for Policy Studies, a liberal think tank.

Since then, accusations have been flying over whether or not the Bush administration has given blanket immunity to the oil industry in Iraq. "The Executive Order is a blank check for corporate anarchy," Tom Devine, legal director of the non-profit Government Accountability Project, wrote in a July 2003 assessment of the order for the Institute. "Its sweeping, unqualified language places industry above domestic and international law for anything related to commerce in Iraqi oil."

"Translated from the legalese, this is a license for corporations to loot Iraq and its citizens," Devine added.

One of the more interesting Iraq contracts the Center uncovered involves a tiny firm called Sullivan Haave Associates.

Sullivan Haave is actually a one-man shop run by a government consultant named Terry Sullivan. Sullivan says his firm was hired as a subcontractor by Science Applications International Corp., one of the most successful and best politically connected government contractors doing work in Iraq.

Sullivan says his job was to spend four months in Iraq providing advice to various ministries being set up there by coalition and local authorities.

Sullivan has a much more intimate relationship with the Pentagon than his competitors, however. He happens to be married to Carol Haave, who, since November 2001, has been deputy assistant secretary of defense for security and information operations. And yes, Haave is the same person who appears in the name Sullivan Haave Associates.

Haave seemed surprised when contacted by the Center for Public Integrity at her Pentagon office about the contract.

She said she was no longer associated with the company in any way. She then said she had no knowledge of any work the company might be doing in Iraq.

When asked who the Center might speak with about the contract, Haave said that person was currently out of the country and unavailable. She said she would try to reach the person and have him call the Center.

A short time later Sullivan called.

He said the contract had only been for four months and he had completed it in July. He said he did not know what the total cost of the contract was. "They paid me for four months of my time," he said.

Sullivan then disclosed that Haave was his wife, but said the contract had nothing to do with her position at the Pentagon.

"We have been very sensitive to the issue of conflict for a long time," said Sullivan, who said his wife had signed everything involving the company over to him before she took her current job.

President George W. Bush used the second anniversary of the September 11th terrorist attacks not only to praise the controversial USA Patriot Act but to promote further expanding federal law enforcement powers.