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WHAT'S GOOD FOR BOEING AND HALLIBURTON GOOD FOR AMERICA?
New Data Shows How Contractors Are Cashing In On War On Terror
A World Policy Institute Special Report
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Contact: Frida Berrigan, [email protected]212-229-5808, ext. 112
Michelle Ciarrocca, [email protected]212-229-5808, ext. 107
Bill Hartung, [email protected]212-229-5808, ext. 106 New York, NY, February 24th -- As a network of citizen's groups rallies today at scores of sites in the United States and around the world to denounce what organizers characterize as war profiteering by major contractors like Halliburton, Bechtel, and Lockheed Martin, the New York-based World Policy Institute is releasing a new analysis that documents a rapid increase in military contracts flowing to these firms as a result of the U.S. interventions in Iraq and Afghanistan (see Table I, below for an analysis of the Pentagon's top 10 contractors for FY 2003, the most recent year for which full statistics are available).
With the Pentagon budget at $400 billion per year and counting, plus a new Department of Homeland Security with a $40 billion per year budget, plus wars in Afghanistan and Iraq that have cost $180 billion to date, these are lucrative times to be a military contractor," said Michelle Ciarrocca, a Senior Research Associate at the World Policy Institute and co-author of a new analysis on the Pentagon's top 10 contractors.
The Pentagon's "Big Three contractors -- Lockheed Martin, Boeing, and Northrop Grumman -- alone split over $50 billion in prime contracts among them in FY 2003, noted Ciarrocca. To put this in some perspective, Lockheed Martin's Pentagon awards, at $21.9 billion, are greater in value than the entire budget for the federal government's largest single welfare program -- Temporary Assistance for Needy Families (TANF) -- which is meant to keep several million single parents and dependent children out of poverty," Ciarrocca noted. The Halliburton Factor: Iraq Rebuilding Contracts Fuel Revenue Growth
"The greatest beneficiary thus far from the Bush administration's 'war without end' approach to fighting terrorism has been Vice President Cheney's former company, Halliburton, notes, William D. Hartung, the co-author of the Institute's new analysis and the author of a new book on war profiteering in the Bush era entitled How Much Are You Making on the War, Daddy?: A Quick and Dirty Guide to War Profiteering in the Bush Administration (Nation Books/Avalon Group, 2004). Halliburton's prime contracts with the Pentagon jumped from $483 million in Fiscal Year 2002 to $3.9 billion in Fiscal year 2003, and increase of almost 700%.
The vast bulk of the $3.9 billion Halliburton received from the Pentagon in FY 2003 went for the company's work in and around Iraq and Afghanistan, including everything from building military bases, to providing meals, to doing the laundry, to maintaining military vehicles, to rebuilding Iraq's oil infrastructure. The $3.9 billion the company earned in 2003 doesn't include billions in new contracts that have been issued since that time for rebuilding oil infrastructure in southern Iraq or for work in other parts of the world. Halliburton has also built bases in Uzbekistan and prison camps in Guantanamo Bay, Cuba. "Anywhere you go where the U.S. Army has to deploy on short notice, Halliburton is there, working on a cost-plus contract," notes Frida Berrigan, Deputy Director of the Institute's Arms Project and a co-author of the new analysis. "The billions they have earned thus far are just the tip of the iceberg."
"The question now is whether the Pentagon and the Bush administration are willing and able to hold Halliburton accountable for the vast sums of taxpayer money that they have been entrusted with," notes Berrigan. The company's Iraq contracts have drawn fire on several fronts, from $1 per gallon overcharges for gasoline brought over the border from Kuwait; to $6.3 million in kickbacks on another Kuwaiti contract; to charging for three times as many meals as were actually served at a major army facility in Kuwait; to wasting millions on monogrammed towels and overpriced vehicle leases in one of its Kuwaiti purchasing offices. As former Halliburton purchasing officer Henry Bunting put it recently, the company's motto for its work in Iraq appears to be "don't worry about it, it's cost-plus."
"The question for the Pentagon, the White House, and the Congress is, Are they going to hold Halliburton accountable for the work they are doing in Iraq, or are they going to continue to let them take U.S. taxpayers for a ride, even as they provide shoddy support services to our troops in the field?," asked the Institute's Director, William D. Hartung. "As the government watchdog group Taxpayers for Common Sense has suggested, we need a concerted effort, comparable to the Truman Commission on war profiteering that operated during World War II, to hold firms like Halliburton accountable. Otherwise, they will continue to overcharge and under-perform. And when they get caught, they'll just fold the costs of any fines into their next cost-plus contract, with little real impact on their bottom line." (For more on Halliburton, see testimonies by William D. Hartung, Henry Bunting, and Stephen of Taxpayers of Common Sense from the recent Senate Democratic Policy Committee Hearing on Iraqi Contracting).
Halliburton is the best-known beneficiary of Iraq rebuilding work among the Pentagon's top contractors, but it isn't the only one. The Pentagon's number ten contractor for FY 2003, Computer Sciences Corporation, more than tripled its prime contracts from FY 2002 to FY 2003, from roughly $800 million to $2.5 billion. This brought the company from 21st on the Pentagon's list in 2002 to 10th in 2003. The bulk of CSC's growth comes from its acquisition of Dyncorps, a private military company which is engaged in everything from reforming the Iraqi justice system to providing private security to Afghan president Hamid Karzai to combating narco-traffickers and guerrillas in Colombia under contract to the U.S. government. Another fast-growing contractor in FY 2003 was the SAIC Corporation, which saw its contracts increase from $2.1 billion in FY 2002 to $2.6 billion in FY 2003. SAIC does everything from intelligence gathering to missile defense studies to Iraqi rebuilding-related work for the Pentagon. In fact, the company served as the location for a group of 150 pre-selected Iraqi exiles that the Pentagon had decided it wanted to "drop in" to key Iraqi ministries after the invasion and occupation of Iraq. A Pentagon spokesperson explained that it was better to have them working out of SAIC's offices prior to the U.S. intervention because it would be awkward if they had Pentagon phone numbers.
Lockheed Martin and Northrop Grumman: The Biggest Gainers
While companies like Halliburton and Computer Sciences Corporation experienced the fastest growth in contracts during 2003 due to their involvement in Iraq and other outposts of the Bush administration's war on terrorism, old standby Lockheed Martin experienced the greatest absolute increase, going from $17 billion to $21.9 billion in contracts between FY 2002 and FY 2003. To put this in some perspective, Lockheed Martin's increase in contracts for 2003 was greater than Halliburton's total Pentagon contract figure for the year. Lockheed Martin is present in most major lines of Pentagon business, from the Paveway GBU-12 and 16 laser-guided bomb kits that were used in Iraq and Afghanistan; to the F-22 and F-35 fighter planes ($4.7 and $4.5 billion, respectively, in the FY 2005 budget); to the radar for the Aegis Destroyer; to multiple aspects of the administration's missile defense program, which is pegged at 10.2 billion in the FY 2005 budget.
Northrop Grumman is the "new kid on the block" among the defense-industrial conglomerates. After almost being swallowed up by Lockheed Martin in the late 1990s, it bounced back with its own buying binge of major military shipyards like Newport News and space/missile defense specialist TRW. Northrop Grumman topped the $10 billion barrier for the first time in FY 2003, hitting $11.1 billion in prime contracts, up from $8.7 billion in 2002. From aircraft carriers and attack subs built at its Newport News, Virginia shipyards; to its major subcontracting role on the F/A-18E/F; to a major missile defense role via its acquisition of TRW; to its ownership of Vinnell, a private military firm that trains the Saudi National Guard and has a role in training the new Iraqi armed forces; to its role as prime contractor for the B-2 stealth bomber and the Global Hawk Unmanned Aerial Vehicle (UAV); to a wide array of defense electronic systems and electronic warfare contacts; Northrop Grumman may be positioned across a fuller spectrum of military systems than virtually any of its rivals.
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New Data Shows How Contractors Are Cashing In On War On Terror
A World Policy Institute Special Report
[FONT=Helvetica, Arial, San Sarif]</B>
Contact: Frida Berrigan, [email protected]212-229-5808, ext. 112
Michelle Ciarrocca, [email protected]212-229-5808, ext. 107
Bill Hartung, [email protected]212-229-5808, ext. 106 New York, NY, February 24th -- As a network of citizen's groups rallies today at scores of sites in the United States and around the world to denounce what organizers characterize as war profiteering by major contractors like Halliburton, Bechtel, and Lockheed Martin, the New York-based World Policy Institute is releasing a new analysis that documents a rapid increase in military contracts flowing to these firms as a result of the U.S. interventions in Iraq and Afghanistan (see Table I, below for an analysis of the Pentagon's top 10 contractors for FY 2003, the most recent year for which full statistics are available).
With the Pentagon budget at $400 billion per year and counting, plus a new Department of Homeland Security with a $40 billion per year budget, plus wars in Afghanistan and Iraq that have cost $180 billion to date, these are lucrative times to be a military contractor," said Michelle Ciarrocca, a Senior Research Associate at the World Policy Institute and co-author of a new analysis on the Pentagon's top 10 contractors.
The Pentagon's "Big Three contractors -- Lockheed Martin, Boeing, and Northrop Grumman -- alone split over $50 billion in prime contracts among them in FY 2003, noted Ciarrocca. To put this in some perspective, Lockheed Martin's Pentagon awards, at $21.9 billion, are greater in value than the entire budget for the federal government's largest single welfare program -- Temporary Assistance for Needy Families (TANF) -- which is meant to keep several million single parents and dependent children out of poverty," Ciarrocca noted. The Halliburton Factor: Iraq Rebuilding Contracts Fuel Revenue Growth
"The greatest beneficiary thus far from the Bush administration's 'war without end' approach to fighting terrorism has been Vice President Cheney's former company, Halliburton, notes, William D. Hartung, the co-author of the Institute's new analysis and the author of a new book on war profiteering in the Bush era entitled How Much Are You Making on the War, Daddy?: A Quick and Dirty Guide to War Profiteering in the Bush Administration (Nation Books/Avalon Group, 2004). Halliburton's prime contracts with the Pentagon jumped from $483 million in Fiscal Year 2002 to $3.9 billion in Fiscal year 2003, and increase of almost 700%.
The vast bulk of the $3.9 billion Halliburton received from the Pentagon in FY 2003 went for the company's work in and around Iraq and Afghanistan, including everything from building military bases, to providing meals, to doing the laundry, to maintaining military vehicles, to rebuilding Iraq's oil infrastructure. The $3.9 billion the company earned in 2003 doesn't include billions in new contracts that have been issued since that time for rebuilding oil infrastructure in southern Iraq or for work in other parts of the world. Halliburton has also built bases in Uzbekistan and prison camps in Guantanamo Bay, Cuba. "Anywhere you go where the U.S. Army has to deploy on short notice, Halliburton is there, working on a cost-plus contract," notes Frida Berrigan, Deputy Director of the Institute's Arms Project and a co-author of the new analysis. "The billions they have earned thus far are just the tip of the iceberg."
"The question now is whether the Pentagon and the Bush administration are willing and able to hold Halliburton accountable for the vast sums of taxpayer money that they have been entrusted with," notes Berrigan. The company's Iraq contracts have drawn fire on several fronts, from $1 per gallon overcharges for gasoline brought over the border from Kuwait; to $6.3 million in kickbacks on another Kuwaiti contract; to charging for three times as many meals as were actually served at a major army facility in Kuwait; to wasting millions on monogrammed towels and overpriced vehicle leases in one of its Kuwaiti purchasing offices. As former Halliburton purchasing officer Henry Bunting put it recently, the company's motto for its work in Iraq appears to be "don't worry about it, it's cost-plus."
"The question for the Pentagon, the White House, and the Congress is, Are they going to hold Halliburton accountable for the work they are doing in Iraq, or are they going to continue to let them take U.S. taxpayers for a ride, even as they provide shoddy support services to our troops in the field?," asked the Institute's Director, William D. Hartung. "As the government watchdog group Taxpayers for Common Sense has suggested, we need a concerted effort, comparable to the Truman Commission on war profiteering that operated during World War II, to hold firms like Halliburton accountable. Otherwise, they will continue to overcharge and under-perform. And when they get caught, they'll just fold the costs of any fines into their next cost-plus contract, with little real impact on their bottom line." (For more on Halliburton, see testimonies by William D. Hartung, Henry Bunting, and Stephen of Taxpayers of Common Sense from the recent Senate Democratic Policy Committee Hearing on Iraqi Contracting).
Halliburton is the best-known beneficiary of Iraq rebuilding work among the Pentagon's top contractors, but it isn't the only one. The Pentagon's number ten contractor for FY 2003, Computer Sciences Corporation, more than tripled its prime contracts from FY 2002 to FY 2003, from roughly $800 million to $2.5 billion. This brought the company from 21st on the Pentagon's list in 2002 to 10th in 2003. The bulk of CSC's growth comes from its acquisition of Dyncorps, a private military company which is engaged in everything from reforming the Iraqi justice system to providing private security to Afghan president Hamid Karzai to combating narco-traffickers and guerrillas in Colombia under contract to the U.S. government. Another fast-growing contractor in FY 2003 was the SAIC Corporation, which saw its contracts increase from $2.1 billion in FY 2002 to $2.6 billion in FY 2003. SAIC does everything from intelligence gathering to missile defense studies to Iraqi rebuilding-related work for the Pentagon. In fact, the company served as the location for a group of 150 pre-selected Iraqi exiles that the Pentagon had decided it wanted to "drop in" to key Iraqi ministries after the invasion and occupation of Iraq. A Pentagon spokesperson explained that it was better to have them working out of SAIC's offices prior to the U.S. intervention because it would be awkward if they had Pentagon phone numbers.
Lockheed Martin and Northrop Grumman: The Biggest Gainers
While companies like Halliburton and Computer Sciences Corporation experienced the fastest growth in contracts during 2003 due to their involvement in Iraq and other outposts of the Bush administration's war on terrorism, old standby Lockheed Martin experienced the greatest absolute increase, going from $17 billion to $21.9 billion in contracts between FY 2002 and FY 2003. To put this in some perspective, Lockheed Martin's increase in contracts for 2003 was greater than Halliburton's total Pentagon contract figure for the year. Lockheed Martin is present in most major lines of Pentagon business, from the Paveway GBU-12 and 16 laser-guided bomb kits that were used in Iraq and Afghanistan; to the F-22 and F-35 fighter planes ($4.7 and $4.5 billion, respectively, in the FY 2005 budget); to the radar for the Aegis Destroyer; to multiple aspects of the administration's missile defense program, which is pegged at 10.2 billion in the FY 2005 budget.
Northrop Grumman is the "new kid on the block" among the defense-industrial conglomerates. After almost being swallowed up by Lockheed Martin in the late 1990s, it bounced back with its own buying binge of major military shipyards like Newport News and space/missile defense specialist TRW. Northrop Grumman topped the $10 billion barrier for the first time in FY 2003, hitting $11.1 billion in prime contracts, up from $8.7 billion in 2002. From aircraft carriers and attack subs built at its Newport News, Virginia shipyards; to its major subcontracting role on the F/A-18E/F; to a major missile defense role via its acquisition of TRW; to its ownership of Vinnell, a private military firm that trains the Saudi National Guard and has a role in training the new Iraqi armed forces; to its role as prime contractor for the B-2 stealth bomber and the Global Hawk Unmanned Aerial Vehicle (UAV); to a wide array of defense electronic systems and electronic warfare contacts; Northrop Grumman may be positioned across a fuller spectrum of military systems than virtually any of its rivals.
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