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Fables of the ReconstructionBush isn't really favoring Halliburton and Bechtel.

By Daniel Drezner
Posted Monday, Nov. 3, 2003, at 3:54 PM ET

A new report by the Center for Public Integrity attempts to prove something that many people simply assume to be true: that the Bush administration has strongly favored cronies and campaign contributors in awarding reconstruction contracts for Iraq and Afghanistan. The CPI devoted six months to research and filed more than 70 Freedom of Information Act requests and appeals to get to the bottom of the story. The conclusion of the report, "Windfalls of War," is that a clear quid pro quo exists between government procurement and campaign contributions to George W. Bush. Charles Lewis, the group's executive director, released a statement arguing that the report reveals "a stench of political favoritism and cronyism surrounding the contracting process in both Iraq and Afghanistan."

There's just one problem: The CPI has no evidence to support its allegations.

The basic hypothesis of the report is that campaign contributions must have affected the allocation of reconstruction contracts; Halliburton's and Bechtel's large reconstruction contracts and generous support of politicians hint at such a finding. However, a closer look at the guts of the CPI report—the list of contract winners and the list of campaign contributions—exposes the flimsiness of this charge.

Consider the top 10 U.S. contractors in Iraq and Afghanistan in terms of dollars. The Washington Post story on the CPI report suggests a sinister connection:

The winners of the top 10 contracts for work in Iraq and Afghanistan contributed about $1 million a year to national political parties, candidates and political action committees since 1990, according to the group, which studies the links between money and politics.

However, a glance at Table 1 shows that of the 10 largest contractors, only four firms made contributions greater than $250,000 over the entire 12-year span of the study. Another four firms among the top 10 averaged less than $1,000 per year in campaign contributions, a pittance by Beltway standards. The Post's statement is technically accurate but conceals the fact that over 85 percent of the total figure comes from only three firms.

Table 1: Top 10 U.S. Contractors in Iraq and Afghanistan

CompanySize of reconstruction contracts (in dollars)Campaign contributions (in dollars)
Kellogg Brown & Root (Halliburton)$2,329,040,891$2,379,792
Bechtel Group Inc.1,029,833,0003,310,102
International American Products Inc.526,805,6512,500
Perini Corp.525,000,000119,000
Contrack International Inc.500,000,0002,000
Fluor Corp.500,000,0003,624,173
Washington Group International500,000,0001,185,232
Research Triangle Institute466,070,5081,950
Louis Berger Group300,000,000212,456
Creative Associates International Inc.217,139,36810,300
CompanySize of reconstruction contracts (in dollars)Campaign contributions (in dollars)
General Electric Co.5,927,8708,843,884
Vinnell Corp. (Northrop Grumman)48,074,4428,517,247
BearingPoint Inc.143,683,8854,949,139
Science Applications International Corp.38,000,0004,704,909
Fluor Corp.500,000,0003,624,173
Bechtel Group Inc.1,029,833,0003,310,102
Kellogg Brown & Root (Halliburton)2,329,040,8912,379,792
American President Lines Ltd.5,000,0002,185,303
Dell Marketing LP513,6781,774,971
Parsons Corp.89,000,0001,403,508

The CPI report covers 70 firms that have received money for reconstruction in Afghanistan and Iraq from the State Department, the U.S. Agency for International Development, and the Department of Defense. That's a large enough sample to provide an imperfect test of the Center for Public Integrity's underlying argument that contributions lead to contracts. If the corruption argument is true, then the size of campaign contributions should be strongly and positively correlated with the size of government contracts.

Running the numbers, the good news for the Center for Public Integrity is that there is indeed a positive correlation between contributions and contracts. The bad news is, the correlation coefficient turns out to be 0.192 and not statistically significant. To understand how weak those numbers are, go to this Web site and move your cursor to 0.2. An old joke among statistically minded social scientists is that "the world is correlated at 0.3."

A conscious effort to reward Bush cronies with lucrative government contracts would require a lot more coordination than the CPI uncovers.

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Daniel W. Drezner is the author of All Politics Is Global (Princeton University Press, forthcoming). He keeps a daily blog at www.danieldrezner.com/blog.
Photograph of Iraqi man working at a construction site on the Slate home page by Karim Sahib/Agence France Presse.
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Remarks from the Fray:

We are a bit puzzled by Daniel Drezner's critique of our report, Windfalls of War, in which we attempted to answer a rather simple question: Who is getting federal government contracts from the Defense Department, the State Department, and the U.S. Agency for International Development to perform work in Iraq and Afghanistan.

Dr. Drezner writes in his critique, "The conclusion of the report…is that a clear quid pro quo exists between government procurement and campaign contributions to George W. Bush." That's a rather breathtaking conclusion, but it's not ours. Anyone reading the roughly 60,000 words we published in the report will have a hard time finding us making such a statement. While the campaign contributions show that many of these companies, their employees and political action committees have been players in the political process, we never argue that there is a "clear quid pro quo" between contributions and contracts. There are myriad other ways in which companies can attempt to influence the federal government, including lobbying and the hiring of well-connected former government officials—nowhere do we state, however, that in any case these types of influence have been rewarded by a "clear quid pro quo."

We did, however, find a contracting process riddled with irregularities. To give one example, USAID's Inspector General concluded that the agency "did not adhere to the guidance on practical steps to avoid organizational conflicts of interest," in the awarding of an Iraqi education contract potentially worth $157 million to Creative Associates International Inc.

Four months before that contract was awarded, USAID hosted a roundtable discussion of Iraq's educational system, which a Creative representative—former USAID employee Frank Dall—attended. Creative had its own seat at the table when USAID discussed how to revamp Iraqi schools; no other company that bid on the contract had such access. Perhaps not surprisingly, Creative submitted the winning bid. We're not sure how Dr. Drezner defines "cronyism," but it appears to us (and USAID's Inspector General as well) that this wasn't exactly the fairest way to award a contract.

Perhaps Dr. Drezner should read what we actually wrote, rather than what he thinks we wrote.

Bill Allison
Managing Editor
Center for Public Integrity

(To reply, click here)

(11/06)

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