In the fall of 2002, a group of Pentagon advisers assessing the condition of Iraq's oil fields saw the need for a plan to repair damage from the impending war. The effort had to be secret, because the government had not publicly committed itself to fighting, and it had to be done by trustworthy experts.
The Energy Infrastructure Planning Group turned to a familiar resource: Halliburton Co., the global oil services company where Dick Cheney was chief executive until a couple of weeks after he was nominated for vice president.
Democratic candidate John F. Kerry introduced an ad suggesting connections between Vice President Cheney and Halliburton contracts.
(Kerry-edwards 2004 Via AP)
It was a small project, worth $1.9 million to a company that brought in $12.6 billion in revenue that year. But it turned out to be the bridge to something much larger. Four months later, Pentagon officials granted Kellogg Brown & Root Inc., Halliburton's engineering and construction subsidiary, one of the contracting plums of the war: a classified no-bid deal worth up to $7 billion to do the restoration work.
Details about the genesis of those secret contracts have become part of an intensifying election-year effort by Democrats in Congress and the presidential campaign of Sen. John F. Kerry to question whether Halliburton became one of the Defense Department's favorite contractors because Cheney is vice president.
No one has presented evidence that Cheney made as much as a phone call on behalf of his former company in the run-up to the war, or since. But Halliburton's repeated missteps and legal troubles, the surge in its government business, and apparent contradictions in statements by Cheney and other administration officials have kept the issue alive.
Political analysts said that many voters may have no idea what services Halliburton provides to the government but that they know Cheney once ran the company.
John J. Pitney Jr., a government professor at Claremont McKenna College who once served as a fellow in Cheney's congressional office, said Halliburton inflames administration critics.
"For people who disapprove of the administration, Halliburton provides a handle," he said. "It summons up images of corporate connections and Big Oil."
Kerry campaign officials said swing voters in the Southwest indicated in recent focus groups that questions about Halliburton and Cheney had become a "top of the mind" and "flashpoint" issue.
Yesterday, the Kerry campaign introduced a television ad suggesting a connection between deferred pay Cheney received from Halliburton and the contracts awarded in Iraq.
"As president, I will stop companies like Halliburton from profiting at the expense of our troops and taxpayers," Kerry said in a speech in Albuquerque. "I will stop companies from receiving no-bid contracts from the government when the president or vice president is still receiving compensation from that company."
There's no question that Halliburton has done well as a wartime contractor, providing food, fuel, housing and other troop support. Its logistical contract for work in Iraq, Kuwait and elsewhere, won in a competitive bid, is the largest of its kind, worth more than $5.6 billion through May, according to the Government Accountability Office. That contract was a major step in making Halliburton the largest contractor in Iraq.
The company also was paid more than $2.5 billion under the sole source contract it secured to reconstruct Iraqi oil fields -- before the government decided to hold a competitive bid. Halliburton's KBR won part of the second oil fields contract through a competitive bidding process, a share worth up to $1.2 billion more.
As a measure of Halliburton's growing relationship with the Pentagon, income from government projects rose last year from $320 million in the second quarter to more than $2 billion in the fourth quarter. In all, the company reported $4.2 billion in revenue from the U.S. government last year, or more than a quarter of the company's total. In 2002, Halliburton relied on the government for less than 10 percent of its sales.