WASHINGTON - Pentagon officials have acknowledged that Vice President Dick Cheney's chief of staff and other Bush administration political appointees were involved in a controversial decision to pay Halliburton Inc. to plan for the postwar recovery of Iraq's oil sector, a Democratic lawmaker said Sunday.
The decision, overruling the recommendations of an Army lawyer, eventually resulted in the award of a $7 billion no-bid contract to Halliburton, which Cheney ran for five years before he was nominated for vice president.
Rep. Henry A. Waxman, D-Calif., who was briefed by Pentagon officials last week, issued a letter to the vice president Sunday demanding full disclosure of the top-secret process that led to awarding the contract to the Houston-based oil services company.
"To help clarify these important matters, I urge you to disclose all contacts between your office and the Defense Department relating to the Halliburton contracts," Waxman wrote in his letter.
Waxman's account of the Pentagon briefing - along with recently released internal Pentagon memos obtained by the nonprofit group Judicial Watch and a draft General Accounting Office report obtained by the Los Angeles Times - offers the most complete picture to date of the unusual procedures behind the decision to award the contract without the competitive bidding process usually required to protect taxpayer dollars.
The new revelations follow a series of political attacks by Democrats against the Bush administration on the Halliburton issue.
Cheney repeatedly has denied that he had any influence over the decision to award the massive contract last March. "As vice president, I have absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts let by the Corps of Engineers or anybody else in the federal government," he said on NBC's "Meet The Press" last fall.
Cheney's staff stood by that statement Sunday.
"The policy of this office always has been and continues to be that if a staff member is approached with information about a pending government contract for Halliburton, the standard response is to state that we don't get involved in those decisions and do whatever is best for the country," one aide said.
Pentagon officials also have said that Cheney did not influence the awarding of the contract. They have said that officials with Undersecretary of Defense for Policy Douglas Feith, who was responsible for overall planning in postwar Iraq, talked with the vice president's office as a courtesy to warn of a decision with potentially controversial political ramifications.
A Defense Department official contacted Sunday said Feith's office, working with other agencies, "recommended" that Halliburton get the contract because of the company's "unique capability" to carry out oil-field operations in a war zone. He also said that bidding on a subsequent contract was later opened to other companies.
In an earlier interview, Larry Di Rita, the Pentagon's chief spokesman, said the process was done without bidding to ensure both speed and discretion in the months leading to the war. He said the final decision to award the oil reconstruction contract to Halliburton was made by the U.S. Army Corps of Engineers.
"This was the considered judgment of technical, contracting experts," Di Rita said.
According to Waxman, the new disclosures were made during a June 8 briefing at the Pentagon to Democratic and Republican staff from the Government Reform Committee, on which Waxman is the ranking Democrat. Rep. Tom Davis, R-Va., the committee chairman, could not be reached for comment Sunday.
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At that meeting, Waxman said, Michael Mobbs - a special assistant to Feith - said that in summer 2002 he was placed in charge of the Energy Infrastructure Planning Group, whose job was to create a plan for the reconstruction of Iraq's oil industry in case of war. Mobbs did not return calls for comment.
Mobbs told Waxman's staff that he soon realized he needed outside experts to do the planning. He said he held "informal" discussions inside and outside the industry to determine who could draw up such plans.
By fall 2002, Mobbs had decided that three companies could do the planning: Halliburton, San Francisco-based Bechtel and Aliso Viejo, Calif.-based Fluor.
Contracting experts said that the determination of which companies are able to compete for a contract is usually made by career civil servants to avoid any appearance of undue political influence in the outcome.
"The suggestion that political appointees would be directing that type of investigation does not seem consistent with maintaining the appearance of propriety," said Steven L. Schooner, a government contracting expert at George Washington University's law school.
Mobbs told Waxman's staff that his group - not contracting officers - had chosen Halliburton to do the work because the company was already working with the military under a separate, multibillion-dollar contract to provide housing, food and other logistics.
Mobbs said an Army lawyer objected to using the logistics contract to conduct planning for the oil industry, saying that it was beyond its scope. A Defense Department lawyer working with Mobbs' task force, however, overruled the Army lawyer to allow Halliburton to conduct the planning.
The General Accounting Office, in a draft report expected to be released later this week, concluded that the Defense Department lawyer had made a mistake.
Several government contracting experts described the pursuit of different legal opinions as out of the ordinary.
"Rumsfeld's political lawyers steamrollered the career guys to push through Halliburton's secret deal," said Charles Tiefer, a law professor at the University of Baltimore who has recently written a book on government contracting. "It creates a disturbing appearance of influence when Cheney's lawyers are told several times Halliburton is getting special deals and they never say, `Make sure the career people agree this is being done right."'
The next step in the process came in October 2002, when Mobbs reviewed his decision to use Halliburton with an executive committee of deputies from various government agencies that included I. Lewis "Scooter" Libby, the vice president's chief of staff.
Mobbs told the committee representatives that he never felt any political pressure to award the contract. But he said he reviewed it with Libby and others to give them the chance to reverse his decision if they had political concerns.
Mobbs "confirmed that your office had a clear opportunity to exert influence over this proposal," Waxman said in his letter to Cheney. "He said that if anyone had raised an objection to selecting Halliburton without any competition, he would have gone back and reconsidered his approach."
On Nov. 8, the Army awarded Halliburton a $1.9 million order under the logistics contract to carry out the planning. Four months later, the Army gave Halliburton the no-bid contract worth up to $7 billion to execute the plan that Halliburton had developed, citing Halliburton's role in drawing it up, according to documents obtained by Judicial Watch through a Freedom of Information Act request.
Democratic officials said Mobbs knew all along that the lucrative oil contract would be awarded to the company that drew up the plans in the first place.
"It was known it would lead to the … contract. It turned out to be worth billions," said a senior Democratic staffer with knowledge of the briefing.
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