Reauthorization of Defense procurement bill delayed

Just hours before a U.S.-led invasion of Iraq began Wednesday, Democratic Rep. Maxine Waters of California raised questions about whether top Bush administration officials had conflicts of interest in calling on U.S. companies to rebuild post-war Iraq.

Waters questioned the propriety of including Kellog Brown & Root, a subsidiary of Haliburton Co.-the company that Vice President Cheney once led-in a list of companies being invited to bid on Iraq reconstruction projects.

"It really doesn't look good for the vice president of the United States ... to be able to increase the contracts" under the authority of the Defense Production Act, Waters told a House Financial Services subcommittee during the panel's scheduled markup of the act's reauthorization (H.R. 1280). The markup was recessed before the panel could complete work on the measure.

The DPA, which became law during the Korean War and is reauthorized periodically, gives the president authority to cut through procurement red tape to assure swift delivery of equipment, supplies and services to troops. Administration officials testifying at a hearing preceding the markup denied that the law could be used to increase the size of contracts. Rather, they said, the act provides authority to accelerate delivery of goods and services on existing agreements.

Saying there were "rampant rumors" and "suspicions" about conflicts of interest on the part of top administration officials, Waters offered an amendment that would bar companies whose former executives now serve as senior administration officials from participating for at least four years in contracts to which the act applies.

Rep. Peter King, R-N.Y, the chairman of the Subcommittee on Domestic and International Monetary Policy, Trade and Technology, admonished Waters for raising questions about the administration's rebuilding plan. "I think it's really irresponsible on the eve of the war to be (doing) this and implying something" about possible conflicts of interest, he said.

Waters replied that it is "irresponsible to wave the flag of war" in the face of potential conflicts of interest that could involve billions of dollars.

Kellogg Brown and Root is one of several U.S. companies that have been asked by the government to bid on rebuilding projects in Iraq. Others include Bechtel Group, Parson Corporation and Washington Group International. The Wall Street Journal, citing administration sources who had seen confidential plans for rebuilding Iraq, reported Monday that $1.5 billion was being offered to the companies, with only $50 million being made available to non-profit organizations.

Rep. Carolyn Maloney of New York, the subcommittee's ranking Democrat, expressed concern about the Waters amendment, saying that it would bar defense giant Lockheed-Martin from providing "needed defense supplies" because Deputy Secretary of State Richard Armitage had once served on the company's board. "As drafted, the amendment could do unintended harm," Maloney said.

But Maloney added that she does not want the act to be applied to contracts for rebuilding Iraq. "The rebuilding is not an emergency and in my opinion the DPA should not be used," Maloney told administration witnesses at the hearing.

Suzanne Patrick, the Defense Department's deputy under secretary for industrial policy, told Maloney the department did not plan to use the act for rebuilding projects, but other federal agencies, such as the Agency for International Development could apply the law's authority to reconstruction contracts for Iraq.

The Waters amendment was defeated 4 to 12.

Waters' amendment shook up a markup that had been expected to be routine. On the table was King's manager's amendment, which he said would make technical changes to the law and reauthorize it for four years instead of the five requested by the administration. Democrats wanted a reauthorization for four years instead of five so that Congress can reassess the legislation sooner.

The authorization for the DPA does not expire until the end of this fiscal year. But lawmakers are moving to reauthorize the law because they do not want to risk a repeat of the 1990-1991 Gulf War, when the authorization expired in the middle of the conflict.