Bid-Rigging Without Borders


From an AP account that ran in the Washington Times:

Ten penalized firms get contracts in Iraq

By Matt Kelley

Ten companies with billions of dollars in U.S. contracts for Iraq reconstruction have paid more than $300 million in penalties since 2000 to resolve claims of bid-rigging, fraud, delivery of faulty military parts and environmental damage.

The United States is paying more than $780 million to one British firm that was convicted of fraud on three federal construction projects and banned from U.S. government work during 2002, according to an Associated Press review of government documents….

The two largest government contractors in Iraq, Bechtel Corp. and Halliburton Co., have paid several penalties in the past three years.

Halliburton paid $2 million in 2002 to settle charges it inflated costs on a maintenance contract at now-closed Fort Ord in California. Vice President Dick Cheney's former company did not admit wrongdoing.

Halliburton took in $3.6 billion last year from contracts to serve U.S. troops and rebuild the oil industry in Iraq.

Halliburton executives say the company is getting about $1 billion a month for Iraq work this year….

Some things to think about all this: First is that of course private companies are necessary in post-war Iraq. Who else is going to rebuild the country, upgrade infrastructure, etc, after all? Second is that of course there is going to be huge amounts of graft, rip-offs, bribes, you name it whenever such godawful sums of money are being thrown around; indeed, such behavior is going to be amped up by public-private nature of the contracts, since government in general doesn't have the same cost-cutting incentives built into it that private-sector initiatives do. Third is that of course this is hardly a new situation in Iraq (or elsewhere), as the U.N.'s abysmal Saddam-era "oil-for-fraud program" ably showed.

There are ways to minimize, if not completely eliminate the probability of corruption, many of which are discussed regularly by the wonks Reason Public Policy Institute, the sister organization of Reason magazine.