un-metered oil in iraq

Just reading the report from Christian Aid and would like to share a few details. Probably the most important is that Iraq's oil production IS NOT METERED. There is no way to account for how much oil has been produced and/or subsequently sold.

Some excerpts from the Christian Aid report:

What the statements don’t say

1. Oil revenues

What is clearly missing from the CPA’s figures is any indication of how the figure for oil revenues has been reached. The financial statement for the [Development Fund of Iraq] DFI of 29 May, for instance,says that $10 billion in oil income was deposited between the DFI’s inception at the end of May 2003 and the end of May 2004. Yet the CPA ‘Administrator’s Weekly Report’ of 28 May says oil revenue was $11.5 billion for the same period.

Christian Aid made its own detailed calculations, with the best oil production and price figures available from oil industry analysts, and came up with oil income figures ofbetween $11.8 billion and $13 billion to the end of May 2004 – a divergence of between $1.8 billion and $3 billion from the CPA’s figure of $10 billion –potentially a 30 per cent difference. How is anybody supposed to know which of these figures is the accurate one?

We at bpost did not know this:

At the end of April 2004, a CPA funding-allocation meeting (the Program Review Board– PRB) acknowledged that: ‘Metering for crude oil extraction and sales is presently nonexistent in Iraq.’

The minutes of the PRB go on to state that: ‘A critical step in restoring the Iraqi oil infrastructure is to provide a system to control accountability of crude oil and its products.

So, nearly a year after the CPA took over Iraq’s oil production and a year after the Security Council resolution that requires proper oversight of Iraq’s oil was passed, a body run by the CPA acknowledged the lack of accountability over Iraq’s oil.

Details in the footnotes:

12 The minutes of the IAMB meeting held in Kuwait on 17-18 March 2004, record: ‘The IAMB was informed that crude oil extraction is currently not metered. This precludes a reconciliation of all crude oil extracted with its eventual utilization and represents an internal control weakness which needs to beaddressed urgently. The IAMB was informed of the steps taken by the CPA to mitigate the consequences of such weakness and to curtail smuggling. The IAMB welcomed these interim steps and recommended the expeditious installation of metering equipment in accordance with standard oil industry practices.’

The minutes of the IAMB meeting, held in New York on 22-23 April 2004, say: ‘the IAMB has had an exchange of views with KPMG on various aspects of the audits, and in particular, on the issues related to the extraction of crude oil, in light of the lack of metering.’

13 Minutes of IAMB meeting on 24 and 25 May 2004. The IAMB remains concerned that these two metering contracts have been awarded as ‘Task Orders’ – ie add-ons to existing contracts [it doesn’t say which companies are involved] and that these existing contracts might have been awarded without competitive bidding. The CPA said it would provide further information to the IAMB.

Without competetive bidding. What a surprise. Keep reading...

Footnote 13 is in reference to:

On 24 and 25 May, the CPA told the IAMB that two contracts to install meters across Iraq have been issued, and that this will take 12 to 18 months. But the IAMB is so concerned about the potential losses due to smuggling and lack of metering that it is considering asking oil experts from the IMF or World Bank to assess how much revenue has been lost.

According to this article, the contracts for meters was never awarded by the CPA.

US sloppily managed Iraqi oil money by Irwin Arieff, Reuters, June 22, 2004

The U.S.-led civil administration in Iraq is sloppily managing billions of dollars of Iraqi oil money and moving at a glacial pace to guard against corruption, an international watchdog agency charged on Tuesday. The Coalition Provisional Authority has left a door open to smuggling by failing to award contracts for equipment to meter Iraq's oil production despite having announced the contracts had been granted, the International Advisory and Monitoring Board said.

So here it is, 15 months after the war started and Iraq's oil production has no meters. But by golly, the US is going to build a $1 billion brand spanking new embassy in Baghdad. (They're shifting the money over from water projects. So chi chi diplomatic, n'est-ce pas?

It was the oil. It is the oil. It has always been about the oil.

missing money

Christian Aid has issued a critical report on funds that may be missing from Iraq's oil sales. Their last heads up was in October. Now that the CPA has been disbanded and sovereignty handed to an Iraqi interim government, no one may ever know if money was embezzled or misappropriated or how money was really spent. Chalabi is a known embezzler. There was that little business of satellite photos showing activity along the corridor into Kuwait, creating speculation the US was stealing oil and smuggling it via Kuwait.

An audit, reportedly critical, of the coalition’s handling of Iraqi revenues is not going to be delivered until mid-July – after the [CPA] has ceased to exist.

Christian Aid believes this situation is in flagrant breach of the UN Security Council resolution that gave control of Iraq’s oil revenues and other Iraqi funds to the Coalition Provisional Authority (CPA).

The Christian Aid report, is available for reading. Interestingly enough, it was released on June 28th.

Fuelling suspicion: the coalition and Iraq's oil billions (PDF)

What the statements don’t say:

1. Oil revenues

What is clearly missing from the CPA’s figures is any indication of how the figure for oil revenues has been reached. The financial statement for the [Development Fund for Iraq] DFI of 29 May, for instance, says that $10 billion in oil income was deposited between the DFI’s inception at the end of May 2003 and the end of May 2004. Yet the CPA ‘Administrator’s Weekly Report’ of 28 May says oil revenue was $11.5 billion for the same period.

Christian Aid made its own detailed calculations, with the best oil production and price figures available from oil industry analysts, and came up with oil income figures ofbetween $11.8 billion and $13 billion to the end of May 2004 – a divergence of between $1.8 billion and $3 billion from the CPA’s figure of $10 billion –potentially a 30 percent difference.

How is anybody supposed to know which of these figures is the accurate one?

Was Paul Bremer carrying any important financial documents when he quickly exited Iraq?

berry

We got a response from Denise Mika on the ANHAM contract and the Berry Amenedment. Oh well. We tried.

The numbers that were published in the article were estimates of the total amount.  There were 43 items in this acquisition ranging from heavy wheeled vehicles down to canteen cups.  When providing the estimate as to where the work was going to be performed on the contract, we did not account for the items that individually were approximately less than one percent of the total contract award amount.  While I can not disclose the identities of the subcontractors that the ANHAM Joint Venture is using, the items which fall under the restrictions of the Berry Amendment will be manufactured using U.S. produced materials as required.

Thank you.

Denise Mika

Denise does make you wonder though, who exactly are the subcontractors? Hmmm....

leave no rock unturned

There's a very long article today in the Chicago Tribune that should be read.

Insiders shape postwar Iraq

A little over a year ago, Stuart Bowen Jr. was lobbying for a company looking for work in the impending reconstruction of Iraq.

A former longtime aide to President Bush, Bowen tapped administration contacts on behalf of URS Group, a consulting firm, and the company eventually landed contracts worth up to $30 million for overseeing Iraqi construction projects.

Today, Bowen works for the Coalition Provisional Authority, the U.S.-led bureaucracy running Iraq. In his new job as inspector general, Bowen is the corruption watchdog over more than $20 billion of rebuilding, including the activities of URS, the company he represented.

The article goes on to follow the links of several advisors to the CPA to the administration and the Republican party. Rather than hire the best people for the job, they took those from their inner circle whose views matched their own regardless of their expertise. What a fiasco.

GOP loyalists prominent in rebuilding Iraq
Several key officials of the Coalition Provisional Authority had strong ties to top Republicans.

John Agresto, 58
Senior adviser to the Iraqi Ministry of Higher Education
Protege of Ronald Reagan's education czar William Bennett; Joyce Rumsfeld, wife of Defense Secretary, was on board of college he headed.

Stuart Bowen Jr., 46
Inspector General, Coalition Provisional Authority
Former longtime aide to President Bush; now monitors more than $20 billion in reconstruction aid.

Michael Fleischer, 48
Top economic adviser in Iraq
Brother of former White House press secretary Ari Fleischer; president of a New Jersey electronics equipment company.

Thomas Foley, 52
Former top economic adviser in Iraq
Harvard Business School colleague of President Bush and a fundraiser for his campaign.

James Haveman, 60
Oversaw the Iraqi Ministry of Health
One-time director of the Michigan health department; lacked reconstruction experience but got job with lobbying assist from former Michigan GOP governor.

Michael Karem, 57
Former coalition housing adviser
Former Reagan campaign aide; investigated but never charged in late 1980s Department of Housing and Urban Development scandal.

halliburton

Want to follow the news on Halliburton? Visit Halliburton Watch.

may 13, 2004

Defense Federal Acquisition Regulation Supplement (DFARS) Berry Amendment Changes

SYNOPSIS: DOD is issuing an interim rule amending DFARS 225.7002, Restrictions on Food, Clothing, Fabrics, Specialty Metals, and Hand or Measuring Tools, to implement Sections 826 and 827 of the National Defense Authorization Act for Fiscal Year 2004 (Public Law 108-136), which provide exceptions to the domestic source requirements of the Berry Amendment.

If you'd like to read more, there are links provided at the article above for additional information on DFARS 225.7002.

Wish we could figure out a way to determine where the materials being used to make the rucksacks in the Ukraine are coming from.

Ah well. We'll just keep plugging away at learning about the Berry Amendment and Iraq contracts.

statements regarding berry amendment

The following are statements made in regards to the Berry Amendment during the bidding process of the ANHAM/Nour USA contract. We've included links to the documents.

EXECUTIVE SUMMARY FOR FINAL REQUEST FOR PROPOSAL (PDF)

EXECUTIVE SUMMARY FOR FINAL REQUEST FOR PROPOSAL
dated 5 April 2004
Iraqi Armed Forces and Associated Security Forces Battalion Sets
Indefinite Delivery/Indefinite Quantity Contract

This Executive Summary is provided as a synopsis of important and relevant features of this final solicitation. If conflict exists between this summary and the provisions of the solicitation, the provisions of the solicitation govern. Please retrieve all documents from the TACOM website. All other websites do not contain a complete set of documents for your review. Significant changes from the draft solicitation are as follows:

b. In accordance with Public Law 108-136, The Berry Amendment was amended such that the following items are required to be of US origin: clothing; tents, tarpaulins, or covers; cotton and other natural fiber products, woven silk or woven silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coded synthetic fabric (including all textile fibers and yarns that are for use in such fabrics), canvas products, or wool (whether in the form or fiber or yarn or contained in fabrics, materials, or manufactured articles) or any item of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials. DFARS 225.7002-2 has additional exceptions. Please review this statute and its regulatory implementations carefully to assure compliance.

PRE-PROPOSAL CONFERENCE – QUESTIONS AND ANSWERS CONTINUED (PDF)

dated 20 APRIL 2004

134. Question. The Berry Amendment, we are trying to determine if the tents, ponchos, etc. can be manufactured outside of the USA using USA made material. Can you help us with this interpretation?

Answer: The tents, ponchos, and other articles such as poncho liner, load bearing vests, body armor, etc., may contain fibers or fabrics that are restricted to U.S. sources by 10 USC 2533a (in the preamble to this series of questions on the Berry Amendment published previously, see those articles still restricted by statute). If the components of the end items in questions were grown, reprocessed, reused or produced in the United States, then the requirements of 10 USC 2533a with regard to those components will have been satisfied.

QUESTIONS AND ANSWERS AFTER PRE-PROPOSAL CONFERENCE (PDF)

dated 22 APRIL 2004 - PUBLIC

18. Question. Could you kindly respond if it acceptable for bidders to express an exception to the Berry Amendment for a deliverable in the proposal (to keep the delivery dates) or will this disqualify the bidder.

Answer: Offerors are responsible for compliance with all applicable statutory and regulatory restrictions and offerors are encouraged to take advantage of all available exemptions, exceptions and exclusions, but offerors must make an informed decision themselves and they do so at their own risk. The government can not be responsible for offerors' interpretations of the applicable regulations. However, we will continue to do our best to offer explanations and clarifications to insure that offerors fully and completely understand solicitation requirements.

Based on these statements, it would appear the Ukrainians are using American made "components" in the construction of the rucksacks.

But how can bpost confirm this is indeed the case?

peeksie

So. Here we are. Feel free to skip today’s post. We’re going to break down a small portion of an Iraq contract. It’s long and tedious.

We’ve been talking about the Berry Amendment and ANHAM/Nour USA this week. But what does it all mean and what exactly are we talking about?

We decided to look at the information available from TACOM and to present a simplified break down of what we found (yes, we read ALL of the pdfs--hundreds of pages). We have more research to do as we’ll need to track down each of the vendors to see who is providing what. But that will have to come later.

Numbers are provided in the ANHAM’s final solicitation/contract (PDF) which we will have to assume is accurate. In some instances, there is no way to determine the cost of an item. We’ve noted this by: (portion, amount unknown)

For the purposes of space, we’ve omitted items/description not likely to be covered (such as tent poles, etc) We also figured you probably didn’t care what color an item was or how many snaps there were.

Keep in mind that we are just looking at a small portion of ONE contract worth $120,000 million out of a total Iraq supplemental of $160 billion. We’re also only looking at those items affected by ONE regulation, the Berry Amendment.

Gosh, we hope we didn't overlook anything. Ok. Here we go.

Items that might be affected by the Berry Amendment based on the descriptions provided in SECTION C DESCRIPTION/SPECIFICATIONS/WORK STATEMENT of the Executive Summary of April 5 (PDF):

C.2.4 Ambulance Vehicle:

g. […] an EMT first aid kit containing:

(1) 20 - approximately 1 inch x 3 inch adhesive bandages
(2) 4 - triangular sling/bandage
(3) 2 - approximately 4 inch x 4.1 yard gauze roll bandages
(4) 1 - approximately 6 inch x 4.1 yard gauze roll bandage
(5) 2 - approximately 3 inch x 5 yard latex free elastic bandages
(6) 10 - approximately 2 inch x 2 inch gauze dressing pads
(7) 10 - approximately 3 inch x 3 inch gauze dressing pads
(8) 10 - approximately 4 inch x 4 inch gauze dressing pads
(9) 1 - approximately 12 inch x 30 inch multi-trauma dressing
(10) 2 - approximately 8 inch x 10 inch trauma pad
(11) 3 - approximately 5 inch x 9 inch trauma pad
(12) 12 - Antiseptic cleansing wipes
(14) 1 - approximately 1 inch x 10 yard waterproof medical tape
(15) 1 - approximately 3 inch 10 yard porous cloth athletic tape

Quantity: 129
Cost per unit: $24,760.00 (portion, amount unknown)
Total: $3,194,040.00 (portion, amount unknown)

C.7.1 Sleeping Bag: Rectangular shaped bag with minimum size 34 inches x 82 inches. Dual bag construction with sewn in weather tube to keep cold from coming thru zipper. Insulation overlapping shingle two layer must be synthetic material with very low water absorption qualities A stuff sack must be provided that sleeping bag will fit in.

Quantity: 13,572
Cost per unit: $50.56
Total: $686,200.32

C.7.2 Entrenching Tool With Cover: [material unspecified]

Quantity: 13,572
Cost per unit: $9.24 (portion, amount unknown)
Total: $125,405.28 (portion, amount unknown)

C.7.3 Load Bearing Vest: Load bearing vest shall have the ability to attach and remove various equipment to include but not be limited to ammunition, grenade, canteens, and or other mission essential load carrying pockets. The vests shall be compatible with pistol belt C.7.13. The vest shall be adjustable to allow proper fitting. (2) Magazine pouches (six 30 round AK47 magazines)
(1) Compass pouch
(4) Multi- purpose pouches
Fabric: durable nylon
Pouches will be snap-on as well as Velcro

Quantity: 13,572
Cost per unit: $34.81
Total: $472,441.32

C.7.4 Poncho: The poncho is a rectangular shaped garment with an attached hood having a draw string cord around the face opening. The poncho and hood will be capable of use over the users helmet, body armor and all equipment. The poncho will be made from waterproof nylon fabric coated on one side only.

Quantity: 13,572
Cost per unit: $16.76
Total: $227,466.72

C.7.5 Poncho Liner: A quilted liner made from synthetic material with very low water absorption qualities that matches the dimensions of the poncho. The poncho liner will be capable of use as a field blanket to keep the user warm.

Quantity: 13,572
Cost per unit: $22.78
Total: $309,170.16

C.7.7 Body Armor: Individual armor that will protect the wearers torso (front, back and sides) and neck. The vest shall have the ability to add and remove various pouches, pockets and individual equipment to reduce load and configure as necessary depending on the mission. The vest shall be capable of carrying ballistic plates front and back.

Quantity: 13,572
Cost per unit: $553.50 (portion, amount unknown)
Total: $7,512,102.00 (portion, amount unknown)

C.7.8 Helmet with Cover: Helmet cover shall be cloth and fits snuggly over helmet.

Quantity: 13,572
Cost per unit: $114.36 (portion, amount unknown)
Total: $1,552,093.92 (portion, amount unknown)

C.7.11 Medium Tent: This tent will allow 8-12 individuals to sleep or perform unit operations. It will be rectangular in shape and constructed of heavy duty nylon. It will be waterproof. It will have rollable sides to allow ventilation and netted sides to prevent entry of flying insects.

Quantity: 270
Cost per unit: $3,074.28
Total: $830,055.60

C.7.12 Rucksack: The rucksack shall be constructed of durable lightweight weather resistant material with the following features:
Rucksack shall consist of a main pouch with closure and outside pockets. Shall have hangers for carrying individual equipment and attaching pockets. Removable pockets for carrying various military equipment.

Note: According to Irib News, the rucksacks have been subcontracted to Ukrainian state-owned factories.

Quantity: 13,572
Cost per unit: $65.55
Total: $889,644.60

C.7.13 Pistol Belt: Adjustable to accommodate waist sizes of 24 inches minimum to 56 inches maximum, with quick release mechanism. User will be able to attach various items to include Canteens, weapon or ammunition pouches as necessary. Color will be tan or green (olive drab). Nylon web Attachable to the load bearing vest

Quantity: 13,572
Cost per unit: $6.11
Total: $82,924.92

C.7.16 Canteen Cover:
The cover will be attachable to Load Bearing equipment, pistol belt, and body armor.

Quantity: 27,144
Cost per unit: $2.62 (portion, amount unknown)
Total: $71,117.28 (portion, amount unknown)

Next, we'll be looking at statements provided by TACOM regarding the Berry Amendment and the ANHAM contract. btw, we haven’t heard back from Denise Mika in response to our follow up email. Oh well.

Special thanks to JB & SR for contributing to today’s post.

vehicles

DOD Contract

NAVISTAR International Transportation, Knoxville, Kan., was awarded on June 15, 2004, a delivery order amount of $634,496 as part of a $5,924,977 firm-fixed-price contract for five dropside cargo trucks for the Iraqi Ministry Civilian Vehicle Support Program. Work will be performed in Garland, Texas, and is expected to be completed by June 16, 2006. Contract funds will not expire at the end of the current fiscal year. There were an unknown number of bids solicited via the World Wide Web on April 27, 2004, and two bids were received. The U.S. Army Tank-Automotive and Armaments Command, Warren, Mich., is the contracting activity (W56HZV-04-D-B023).

Washington Group International Employs More Than 1,000 Iraqi Citizens As Tasks in Iraq, Afghanistan, and Kuwait Surpass $550 Million

Washington Group International, Inc. announced today that it and its subcontractors are now employing more than 1,000 Iraqi citizens to help rebuild Iraq's electrical, water, and other critical infrastructure. The milestone was accomplished as the value of tasks Washington Group has been assigned by the Coalition Provisional Authority and the United States Army Corps of Engineers in Iraq, Afghanistan, and Kuwait has surpassed $550 million.

Wow. 1,000 Iraqis are now employed and it only took $550 million dollars.

air america

Randi Rhodes interviews American hero Rep. Henry Waxman (D-CA) on Air America today. Listen via streaming/real player. Link provided on the homepage of Air America.

Be sure to visit the website of Rep. Henry Waxman for information on his investigations into contracts.

FYI: Waxman has a tip line to report abuse related to Iraq Reconstruction Contracts. Tipsters can remain anonymous if needed.

This tip line has been established to assist the Special Investigations Division in investigating potential fraud, waste, and abuse in the awarding and execution of contracts to rebuild and rehabilitate Iraq, including actions by U.S. government agencies, prime contractors, and subcontractors. The confidentiality of any person providing information will be strictly preserved.

power

Short announcement today on a contract. CONTRACTS from the United States Department of Defense

Readiness Management Support L.C.*, Panama City, Fla., was awarded on June 9, 2004, a $10,510,712 construction contract for design and construction for 12 mega watts at Victory Base Power Plant, transformer substation and associated distribution system. Work will be performed in Baghdad, Iraq, and is expected to be completed by Sept. 30, 2004. Contract funds will not expire at the end of the current fiscal year. There were 14 bids solicited on March 23, 2004, and 14 bids were received. The U.S. Army Corps of Engineers, Baghdad, Iraq, is the contracting activity (W916QW-04-C-0013).

Readiness Management Support L.C has teamed with Shaw Environmental on another contract "to perform conventional and recovered chemical warfare materiel (RCWM) munitions response and other munitions related services."

Still playing with the same limited pool of contractors. Same old, same old.

very berry email

We wrote to Denise Mika, who is listed as the contracting officer on the solicitation/contract for the recent award to ANHAM, regarding the Berry Amendment.

Subject: RE: Berry Amendment and Contract W56HZV-04-D-0181

Ms. Dow,

The Berry Amendment applied to this contract and was in full compliance.  I am not familiar with the announcement at Defense Link.

Regards,
Denise Mika

Odd that she is unfamilliar with the contract announcement from Defense Link. It's not like it's hard to find. Here is the link to the contracts page at the DoD. Let's assume we haven't seen the announcement. We know from news articles that the contract was awarded on May 25th. Start with May 25th and move forward. On May 27th, the DoD posted the announcement. Now that wasn't very difficult.

Once again, here is the announcement:

ANHAM (Joint Venture), Vienna, Va., was awarded on May 25, 2004, a delivery order amount of $120,125,150 as part of a $120,125,150 firm-fixed-price contract for Iraqi Armed Forces and Associated Security Forces, 15 Battalion Sets, and six Brigade Headquarters Sets.  Work will be performed in the Ukraine (65 percent), Romania (8 percent), United Kingdom (8 percent), Vienna, Va. (7 percent), Canada (5 percent), China (4 percent), and Schaumburg, Ill. (3 percent), and is expected to be completed by Sept. 30, 2006.  Contract funds will not expire at the end of the current fiscal year.  There were ten bids solicited on March 29, 2004, and ten bids were received.  The U.S. Army Tank-Automotive and Armaments Command, Warren, Mich., is the contracting activity (W56HZV-04-D-0181).

Okey dokey. We'll make it easy and send her the announcement as well as the article from Irib News.

PS In case you missed it, comment from our earlier post on the Berry Amendment.

We found a cached version of the May 25, 2004 solicitation/contract with ANHAM. What we'd prefer to see is the original solicitation that should have gone thru either TACOM Procnet or FedBizOpps.

SOLICITATION/CONTRACT/ORDER FOR COMMERCIAL ITEMS

Issued To:
ANHAM JOINT VENTURE
8075 LEESBURG PIKE
SUITE 760
VIENNA, VA. 22182-2739

Contract #:
W56HZV-04-D-0181

There's an email address and contact info for the contracting officer:
DENISE MIKA /SIGNED/
(586)574-576
MIKAD@TACOM.ARMY.MIL

No mention of the Berry Amendment so we'll drop them an email and see what we can find out.

pending amendments

Upcoming amendments that pertain to the Berry Amendment. The Department of Defense Authorization bill is currently scheduled for June 15.

Key amendments filed for DOD Authorization bill next week

Buy American

Sen. Dayton (D-MN) introduced amendment No. 3197, a Buy American amendment that would strike Sections 842 and 843 from the bill to prevent a new waiver authority from longstanding domestic source requirements under the Berry Amendment.

Sen. McCain (D-AZ) introduced amendment No. 3319, 3320 and 3321 to limit the use of Buy American provisions.

For information on the bill, see S.2400 National Defense Authorization Act for Fiscal Year 2005

Title: An original bill to authorize appropriations for fiscal year 2005 for military activities of the Department of Defense, for military construction, and for defense activities of the Department of Energy, to prescribe personnel strengths for such fiscal year for the Armed Services, and for other purposes.

security

Controversial Commando Wins Iraq Contract

Occupation authorities in Iraq have awarded a $293 million contract effectively creating the world's largest private army to a company headed by Lieutenant Colonel Tim Spicer, a former officer with the SAS, an elite regiment of British commandos, who has been investigated for illegally smuggling arms and planning military offensives to support mining, oil, and gas operations around the world. On May 25, the Army Transportation command awarded Spicer's company, Aegis Defense Services, the contract to coordinate all the security for Iraqi reconstruction projects.

So much for Iraqis taking control of their own security. Lots more in the article written by Pratap Chatterjee as a Special to CorpWatch.

There's a conference of suppliers, Iraq Procurement coming up on November 24, 2004 in Jordan. Aegis Defense Services will be participating.

payback

A reader alerted us to the Berry Amendment and activity by ANHAM/Nour USA to subcontract to companies that are outside of the United States. So let's take a look and see what the deal is.

Berry Amendment

The Berry Amendment was originally enacted in 1941, and it was effectively reiterated as a part of each subsequent defense appropriations act until it was codified as 10 U.S.C. 2533a in 2002 by section 832 of Public Law 107-107.

Regarding purchases of textile and apparel items, the Berry Amendment requires that funds made available to DoD may not be used to purchase clothing; tents, tarpaulins, or covers; cotton and other natural fiber products, woven silk or woven silk blends, spun silk yarn for cartridge cloth, synthetic fabric or coated synthetic fabric (including all textile fibers and yarns that are for use in such fabrics), canvas products, or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or items of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials unless it is grown, reprocessed, reused, or produced in the United States. That is, covered end items, components, and materials purchased with funds made available to DoD must be produced wholly in the United States. The Berry Amendment is implemented through the Defense Federal Acquisition Regulation Supplement (DFARS) at Subpart 225.7002.

The Berry Amendment contains several exceptions, including acquisitions that are at or below the simplified acquisition threshold and those items purchased outside the United States in support of combat operations.

Here is the actual announcement of the contract award from the DoD.

United States Department of Defense Contracts for May 27, 2004

ANHAM (Joint Venture), Vienna, Va., was awarded on May 25, 2004, a delivery order amount of $120,125,150 as part of a $120,125,150 firm-fixed-price contract for Iraqi Armed Forces and Associated Security Forces*, 15 Battalion Sets, and six Brigade Headquarters Sets.  Work will be performed in the Ukraine (65 percent), Romania (8 percent), United Kingdom (8 percent), Vienna, Va. (7 percent), Canada (5 percent), China (4 percent), and Schaumburg, Ill. (3 percent), and is expected to be completed by Sept. 30, 2006.  Contract funds will not expire at the end of the current fiscal year.  There were ten bids solicited on March 29, 2004, and ten bids were received.  The U.S. Army Tank-Automotive and Armaments Command, Warren, Mich., is the contracting activity (W56HZV-04-D-0181).

According to the percentages provided above, only 10% of the contract work will be completed within the United States. Now let's look at the short announcement of the subcontract to Ukrainian state-owned companies.

Ukraine to supply Iraqi military

Ukrainian state-owned factories will act as subcontractors for Anham, a consortium managed by Nour USA, which has subordinate firms linked to Iraqi politician Ahmad Chalabi and his allies.

The Ukrainians will provide individual kits such as backpacks and personal webbing among other items, with the contract ending in September 2006, the report said.

Sounds alot like goods covered under the Berry Amendment. So what gives? if the subcontracting went predominately to Iraqi companies, great idea. The Iraqi economy needs the help.

But this appears to be more about peddling contracts to Coalition of the Willing partners and influencing those who the US/CPA would like to bring on board.

Bpost Note: We have a non-working link to the original solicitation which apparently specified this was a contract subject to the Berry Amendment. If anyone finds the text of the original solicitation, please forward it to us at blogistonpost@yahoo.com or feel free to post it in the comments section below.
http://contracting.tacom.army.mil/iraqrequire/04r0692/R0692.htm

* What the heck are Associated Security Forces?

various views

Two posts on Iraq by bloggers that we'd like to call attention to. First is a post from Juan Cole who cites a paper by Professor Roger Myerson of the University of Chicago, "How to Build Democracy in Iraq." Be sure to read the articles in the footnotes (links provided).

Did Prohibiting Local Elections Derail Iraq?

Even those who hoped to buy Iraqi public assets for bargain-basement prices should have recognized that, for long-term enforcement of their property rights, these transactions would need more legitimacy than occupation officials alone could provide. It seems clear that the only people who really stood to profit from a policy of denying elections were emigre political leaders who did not want competition from the home-grown political factions that these local elections would have cultivated.

The next must visit is a recent post by Christopher Allbriton in his blog, Back to Iraq.

Heart of Darkness

...in no particular order I witnessed a car bombing next to my hotel, started work for TIME Magazine, watched an interim government unveiled, interviewed a vice president, been mortared more times than I can count, missed two other car bombs by a few minutes, pined for New York and tentatively fell in love with Baghdad.

She’s a city that has seen better days, frankly. As mentioned, the electricity is bad. The gas lines are long — up to 5 km in some places — and U.S. soldiers still break up black market petrol rings even though that’s often the only way for Iraqis to get petrol.

Baghdad is also an incredibly stressful place to live and work, especially as a westerner, as I’ve mentioned. We’re targets, and when you look very western, like I do, you’re constantly aware of eyes on you and the hostility. At restaurants, the waiters sullenly clear your table, sometimes being none too careful about keepingchai or food from spilling on you. The kindness I encountered last year is absent; a western face brings a sullen welcome, calibrated to the bare minimum.

firefighters

US DOD: Contracts

PAE Government Services Inc., Los Angeles, Calif., was awarded on May 25, 2004, a delivery order amount of $1,676,520 as part of a $27,354,000 firm-fixed-price contract for 4,000 basic firefighters to be trained within two years in Iraq. Work will be performed in Iraq, and is expected to be completed by May 24, 2006. Contract funds will not expire at the end of the current fiscal year. The Coalition Provisional Authority Contracting Activity, Baghdad, Iraq, is the contracting activity

twists & turns

Shaw Group is under investigation by the SEC. They have a subsidiary Shaw Environmental currently doing work in Iraq. James Schlesinger, a member of the Defense Policy Board and recently appointed by Rumsfeld to review the abuse charges, is an advisor to Shaw Group.

Shaw Announces Hiring of Dr. James Schlesinger as a Consultant

July 26, 2002 - The Shaw Group Inc. is pleased to announce that Dr. James R. Schlesinger has been retained as a senior advisor to Shaw Environmental & Infrastructure, Inc. (Shaw E & I). In this role, Dr. Schlesinger will provide expert advice and counsel to Shaw E & I on matters relating to government business development and strategic acquisitions and partnerships.

So when you consider there is now an SEC investigation...

SEC investigation of Shaw Group acquisitions begins, release says

The federal Securities and Exchange Commission has launched an informal inquiry into how one of Baton Rouge's most-prestigious companies accounted for certain acquisitions during its last fiscal year.
[...]
While meaningful information was scarce Thursday evening ahead of the national holiday, routine filings with the SEC showed that Shaw made two acquisitions in the period, the purchase of Badger Technologies in April 2003 and of a drilling division of LFG&E International in November 2002.
[...]
In 2000, Shaw purchased the Boston engineering firm, Stone & Webster for $143 million. The venerable firm built power plants around the world. It positioned Shaw to profit during the power plant building boom prompted by the California energy crisis.

Badger Technologies was purchased by Shaw from another company also doing work Iraq, Washington Group.

Shaw Announces Acquisition of Badger Technologies Unit From Washington Group International, Inc.

April 21, 2003 - The Shaw Group Inc. today announced that its subsidiary, Stone & Webster, Inc., has acquired substantially all of the assets of the Badger Technologies unit from Washington Group International, Inc. for $17.7 million and the assumption of certain liabilities. Badger Technologies, previously part of Raytheon Engineers & Constructors, develops, licenses, and commercializes petrochemical and petroleum refining-related technologies. Most notably, the company licenses ethylbenzene and cumene technologies in cooperation with ExxonMobil Chemical Company, and styrene technology in cooperation with ATOFINA.

Did you count the number of companies who have contracts in Iraq?
Is anyone in Congress paying attention?
Is your head spinning yet?

torture is ok

The Center for Constitutional Rights has posted a PDF file of the position by the Department of Defense to circumnavigate laws on torture. You can download the report at CCR. Working Group Report on Detainee Interrogations in the Global War on Terrorism:  Assessment of Legal, Historical, Policy and Operational Considerations

Synopsis

CCR has posted the controversial Pentagon “Working Group Report on Detainee Interrogations in the Global War on Terrorism:  Assessment of Legal, Historical, Policy and Operational Considerations” on its website.  The report is further proof of the Bush administration’s disregard for the Constitution and civil liberties and shows there was planning at high levels of government to abuse and torture detainees.

power & ports

Portal Iraq has an update on power contracts. $100 million contracts awarded to Italian and American companies for power generation in Iraq

Two power generation contracts with ceilings of $100 million for power generation operation in Iraq have been awarded to an Italian company and an American company. Bertoli SRL of Italy and IAP Worldwide Services of the United States both won contracts to provide the procurement, delivery and installation of numerous electrical generator sets and associated components throughout Iraq.

The power contracts were awarded by the Program Management Office (PMO) who manages the $18.4 billion of the Congressional Appropriated Supplemental. We're going to assume the supplemental of October. The $87 billion one.

Dredging contracts to improve access to ports

Work has already started on a $7 million project for salvage and dredging at the port of Khor Az Zubayr. The contract was awarded by CPA South to an Iraqi company based in Baghdad. [no company name given]

According to the most recent List of PMO Awarded Contracts, NANA Pacific, Alaska was awarded $70 million on March 31, 2004 to do work on the ports in Iraq. These are not the first contracts that have been issued for ports. One of the very first went to Stevedoring Services of America of union busting fame (btw, they had a little trouble with their security clearance). Gotta get those oil tankers in and out. Not to mention the battleships.

In case anyone is interested, here's their latest summary from April 2. List of PMO Awarded Contracts (PDF) There's a helluva lot of money listed in there.

shoot

Well, this isn't pretty. The article has lots of details so try to read it if you have some time. Iraq Contract Goes to Firm with links to Chalabi, Pentagon

Virginia-based Nour USA was originally granted a $327 million contract to supply the new Iraqi military and Civil Defense Forces in January, according to New York Newsday.

[...]

According to Reuters, however, the decision to grant the contract to Nour was upheld last week following a government review. A press release by the US Army Tank-automotive and Armaments Command (TACOM) elaborated that the current contract is now worth $260 million, somewhat less than the original January deal. TACOM says the materials supplied by Nour would be used by Iraqi and "associated" armed forces, "in support of" the US-run Coalition Provisional Authority (CPA), which is scheduled to dissolved after transferring limited sovereignty to an interim Iraqi government on June 30.

[...]

Nour has been directly involved in some of the most controversial of these deals. Newsday reported in February that Chalabi received a $2 million "fee" for helping to arrange an $80 million contract to provide security for Iraqi oil pipelines, awarded last August to the mercenary firm Erinys International. Chalabi subsequently denied the allegation, but admits he considers Farouki a "friend." The Newsday report says that "within days" of being granted the contract, Erinys became a joint venture operation with Nour.

What a sick joke.

cha ching

With Some Strings Attached, Senate Approves War Money

The Senate on Wednesday gave the White House $25 billion for operations in Afghanistan and Iraq but joined the House in putting new controls on the money despite administration requests for substantial freedom in how to use it.

The administration has had enough blank checks.

On a 95-to-0 vote, senators agreed to add the money to a broad Pentagon spending plan, bringing the total cost of the legislation to more than $447 billion.

Wow. It looks like the Senate is finally working on a little accountability....

Under the Senate approach, $22.5 billion of the money is devoted to specific Pentagon accounts while the administration is allowed to allocate $2.5 billion as it sees fit.

However, it cannot spend any of the money unless the secretary of defense consults with senior members of both parties and provides a written report at least five days before any shift. The Pentagon must also provide monthly reports on how it uses the money. The House is imposing similar requirements.

What's particularly frustrating to us is the new requirement that the Pentagon provide monthly reports (a good thing). Providing monthly reports was an amendment to the $87 billion dollar supplemental presented by Barbar Boxer (D-CA) which at that time was voted down along party lines.

Better late than never.

2 reports

More on the report mentioned in the Washington Post.

"The Defense Department inspector general's report on contracting procedures in Iraq, issued in March, said "supplies and services were acquired quickly and contracting rules were either circumvented or liberally interpreted."

You can read the report, Contracts Awarded for the Coalition Provisional Authority by the Defense Contracting Command-Washington here: Report No. D-2004-057(PDF)

Pentagon oversight needed according to report

Meanwhile, GovExec has an article Democrats call on Pentagon to oversee Iraq reconstruction contracts which calls attention to a second report that highlights conflicts of interest and the waste of tax dollars.

A group of Democrats wants the Pentagon to assume responsibility for oversight of all reconstruction contracts in Iraq in order to prevent conflicts of interest and the waste of tax dollars.

The Coalition Provisional Authority in Iraq has awarded at least two oversight contracts that raise concern about possible conflicts of interest, four Democrats said Tuesday in a new report. Under the contracts, private companies have been given responsibility for managing projects being carried out by other companies with which they have business dealings in other countries.

The report, CONTRACTORS OVERSEEING CONTRACTORS: Conflicts of Interest Undermine Accountability in Iraq (PDF), by Democrats "examined two oversight agreements." From the Executive Summary of the report:

This report examines conflicts of interest in two oversight contracts issued by the Coalition Provisional Authority (CPA) in March 2004. It finds that the oversight contractors have close business relationships with the construction contractors that they have been hired to oversee.

On November 3, 2003, Congress appropriated $18.4 billion for the reconstruction effort in Iraq. In March 2004, CPA awarded ten large monopoly contracts for this reconstruction work. CPA also entered into seven other contracts with private companies to oversee the implementation of the ten reconstruction contracts.

This report examines two of the oversight contracts: (1) a $28.5 million contract awarded to a joint venture of Parsons and CH2M Hill to oversee $1.7 billion in public works and water projects by four other contractors (Fluor, Washington Group International, AMEC, and Black & Veatch); and (2) a $43 million contract awarded to a joint venture of Parsons and a separate company, ParsonsBrinckerhoff, to oversee $1.6 billion in power generation, transmission, and distribution projects by four other contractors (Fluor, Washington Group International, AMEC, and Perini).

The report finds that neither Parsons nor CH2M Hill is an independent watchdog. Each oversight contractor has significant conflicts of interest.

Parsons has close business ties to Fluor, one of the companies it is charged with overseeing under both of the oversight contracts. Parsons and Fluor are partners in a $2.6 billion joint venture to develop oil fields in Kazakhstan. In addition, actions that Parsons takes under the oversight contracts could directly affect its own reconstruction contracts. Parsons is teamed with Bechtel on USAID’s $1.8 billion Iraq Infrastructure II contract, which covers a range of sectors, including electricity and water projects. Parsons also has an $800 million contract for oilrelated work in northern Iraq. The prioritization and oversight of work under the CPA construction contracts could affect the work available for Parsons under the USAID contract, as well as Parson’s work in the northern oilfields.

CH2M Hill has similar conflicts of interest. It has ongoing domestic contractual relationships with three of the firms it is responsible for overseeing: Washington Group International, Fluor, and AMEC. CH2M Hill and Washington Group international are “integrated partners” on a $314 million Department of Energy cleanup project in Miamisburg, Ohio. In addition, AMEC, Fluor, and Washington Group International are all CH2M Hill subcontractors on a large Department of Energy cleanup project in Hanford, Washington.

Rumsfeld proposed shaving down the Department of Defense to eliminate waste of tax dollars in a speech he gave on September 10, 2001, DOD Acquisition and Logistics Excellence Week Kickoff—Bureaucracy to Battlefield.

Looks like the Rumsfeld program didn't work out.

oil

Iraq aims for 1.65 mbpd H2 term deals for Basra Lt

Iraq has signed term supply contracts for Basra Light crude for the second half of 2004 for 1.5 million barrels per day (bpd) of sales and aims to reach a total 1.65 million bpd, an industry source said on Tuesday.

[...]

In the process, SOMO has expanded slightly its market in oil-thirsty Asia and added a new customer in the United States, the SOMO source told Reuters by telephone from Baghdad.

[...]

Listed below are term buyers signed up so far by SOMO for the second half of 2004. New buyers are denoted with an *

NORTH AMERICA

ChevronTexaco, ConocoPhillips, Marathon Ashland Petroleum, ExxonMobil, Valero Energy, Vitol unit North Atlantic and Tesoro Pertroleum Corp*

EUROPE

Total, Royal Dutch/Shell, BP, ENI, Repsol YPF and Cepsa

ASIA

Indian Oil Corp, Reliance Petroleum, Hindustan Petroleum Corp, Bharat Petroleum Corp, Unipec, Sinochem, Mitsubishi Corp, PetroChina*, Chinese Petroleum Corp* and Thai Petrochemical Industry*

This is what it's all about. Oil. So while this may not be the most interesting news to read, this is the whole reason the US is occupying Iraq.

An article in the Washington Post mentions some new names contractor wise. Contractors Sometimes Stretch Their Deals

In April 2003, the Defense Department hired Military Professional Resources Inc., an Alexandria government contractor, to supply Arabic translators in Iraq. The two parties agreed on a $1.9 million price and the deal was done.

The translators were hired under a federal contract category designed for the employment of education and training analysts, not linguists, according to a report by the Defense Department's inspector general. The military contracting officer who approved the deal told investigators he did not check the General Services Administration schedule to make sure that translation services were within the scope of MPRI's contract with the government.

Hello. Kidding, right? Apparently not.

"Noncompliance of a GSA schedule is an issue between the GSA and the contractor," the report says.

MPRI, a subsidiary of L-3 Communications Corp., was never disciplined by the GSA, according to company and government officials.

The article goes on to discuss other contractors. But here is the key phrase:

The Defense Department inspector general's report on contracting procedures in Iraq, issued in March, said "supplies and services were acquired quickly and contracting rules were either circumvented or liberally interpreted."

Companies named in the report are:
MZM Inc. of the District
Science Applications International Corp. of San Diego
Unisys Corp. of Blue Bell, Pa.,
MPRI, a subsidiary of L-3 Communications Corp. (L3 was Jay Garner's stomping grounds)

Basically, hand out the money and worry about the details later. Who cares, its just the US treasury. There's more where that came from. We don't know if it's laziness or hubris but it's really inexcusable.

Chalk this up as another article on a report that will just fade into the woodwork. No one is accountable anymore.

question

Why do we get so many hits from google and other sources* on Ryan Manelick? Manelick was a contractor working for Ultra Services/Irex Corp killed in Iraq. We're just curious.

*One of the sites is Lunaville who is maintaing a list of contractors who have been killed in Iraq.

PS The astrology links? Most of those are to astrologers who follow politics. We like to keep an open mind.

bang for the buck

Military suppliers hard-pressed to meet demands

Dan Murphy, chief executive at bullet supplier Alliant Techsystems Inc., said the company's Army ammunition plant in Missouri has gone through its fastest increase in production since the Vietnam War. It has hired 1,000 workers in the past three years, and some production lines are running around the clock.

In the last 3 years. Interesting. When exactly did orders start to increase? Say, around the time of Cheney's energy task force meetings?

Contractors mentioned in the article are:
Alliant Techsystems Inc.
Saft America Inc.
Israel Military Industries Ltd.
Winchester unit of Olin Corp.

The aricle also quotes Loren Thompson of the Lexington Institute, "'The Army has been under-investing in equipment for a generation.'' Well, that's a mighty intriguing observation from a man who has supported and promoted the $10 billion missile defense shield aka Star Wars.

Maybe if the Lexington Institute had been promoting maintaining basic supplies, the Army wouldn't be in this position. But then, that would hardly have profitted the big defense contractors, now would it?

And speaking of Cheney, Time magazine has a short article on an internal email.

The Paper Trail

TIME has obtained an internal Pentagon e-mail sent by an Army Corps of Engineers official—whose name was blacked out by the Pentagon—that raises questions about Cheney's arm's-length policy toward his old employer. Dated March 5, 2003, the e-mail says "action" on a multibillion-dollar Halliburton contract was "coordinated" with Cheney's office. The e-mail says Douglas Feith, a high-ranking Pentagon hawk, got the "authority to execute RIO," or Restore Iraqi Oil, from his boss, who is Deputy Defense Secretary Paul Wolfowitz. RIO is one of several large contracts the U.S. awarded to Halliburton last year.

The e-mail says Feith approved arrangements for the contract "contingent on informing WH [White House] tomorrow. We anticipate no issues since action has been coordinated w VP's [Vice President's] office." Three days later, the Army Corps of Engineers gave Halliburton the contract, without seeking other bids. TIME located the e-mail among documents provided by Judicial Watch, a conservative watchdog group.

Fingers crossed that Cheney is forced to release notes on his energy task force meetings. If we were betting men, Halliburton was at the table.