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American Morning

Halliburton Under Fire

Aired December 18, 2003 - 08:06   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


SOLEDAD O'BRIEN, CNN ANCHOR: The Halliburton Company, formerly run by Vice President Dick Cheney, has been under fire since Pentagon auditors raised questions about a bill for bringing gasoline into Iraq. Halliburton was awarded a contract to repair Iraq's oil fields on a non-competitive, emergency basis. That is, no other companies got the bid for that job. That contract was then extended to include trucking gasoline into the country.
Earlier this morning, I spoke with Retired Lieutenant General Charles Dominy, now a vice president at Halliburton, and I asked him about the reports that the company is overcharging the government.

(BEGIN VIDEOTAPE)

LT. GEN. CHARLES DOMINY, HALLIBURTON VICE PRESIDENT: We were directed by the Corps of Engineers to procure fuel from Kuwait. Remember, this was an emergency situation in Iraq and fuel needed to be moved rapidly. So we went through our procurement process in Kuwait as directed and got a subcontractor to accomplish the mission.

We recommended to the Corps of Engineers that we open a second source. And that's the good news part of this story. We got that second source from Turkey and were able, through competition, to get a lower price from Turkey. And that has actually saved the government over $130 million since that happened.

And so now we have two thirds of the fuel coming from Turkey, one third of the fuel coming from Kuwait and that makes abundant good sense from convoy distances and it seems to be working well.

O'BRIEN: Talking about the fuel that's coming from Kuwait, though, explain the process to me of how this Kuwaiti company -- and I believe the name is Altenmia (ph) -- became the only one that was able to get the work. Was there some kind of pressure from the U.S. government or the Kuwaiti government to use this one particular company?

DOMINY: We went about our normal procurement process and Altenmia was one of four subcontractors who competed for this project. They had the lowest bid and they had the overall highest quality of any of the subcontractors. And so they're the ones that have the job and that's the correct way to do it.

O'BRIEN: Pentagon officials have said why can't you find a subcontractor that has a better price. You're saying that there are three others and they were all higher and there's no better price than $2.27 a gallon in Kuwait? DOMINY: That's exactly the way it is. We've worked very hard to reduce that price and we've negotiated very strongly with that company and have managed to reduce it an additional four percent over the last month or so. And we'll continue to work hard on that.

There's a premium to be paid when you have to move through hostile territory with those fuel trucks. He's had over 60 trucks damaged. He's had five drivers killed. It's a very arduous task. It can take over eight days just to do a round trip into Baghdad.

We'd hoped to be able to do about four round trips a month and we're averaging less than three because it is a very arduous task.

O'BRIEN: And it would be impossible to bring the same amount of fuel out of Turkey at a lower price?

DOMINY: Actually, it would not. We've pretty well tapped out Turkey in terms of capacity. And so the balance that's in place right now seems to be the strongest balance possible. And that brings in the overall price at about $1.60 per gallon for all of the service into Iraq.

(END VIDEOTAPE)

O'BRIEN: That was Retired Lieutenant General Charles Dominy, who is now a vice president at Halliburton.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com







Aired December 18, 2003 - 08:06   ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: The Halliburton Company, formerly run by Vice President Dick Cheney, has been under fire since Pentagon auditors raised questions about a bill for bringing gasoline into Iraq. Halliburton was awarded a contract to repair Iraq's oil fields on a non-competitive, emergency basis. That is, no other companies got the bid for that job. That contract was then extended to include trucking gasoline into the country.
Earlier this morning, I spoke with Retired Lieutenant General Charles Dominy, now a vice president at Halliburton, and I asked him about the reports that the company is overcharging the government.

(BEGIN VIDEOTAPE)

LT. GEN. CHARLES DOMINY, HALLIBURTON VICE PRESIDENT: We were directed by the Corps of Engineers to procure fuel from Kuwait. Remember, this was an emergency situation in Iraq and fuel needed to be moved rapidly. So we went through our procurement process in Kuwait as directed and got a subcontractor to accomplish the mission.

We recommended to the Corps of Engineers that we open a second source. And that's the good news part of this story. We got that second source from Turkey and were able, through competition, to get a lower price from Turkey. And that has actually saved the government over $130 million since that happened.

And so now we have two thirds of the fuel coming from Turkey, one third of the fuel coming from Kuwait and that makes abundant good sense from convoy distances and it seems to be working well.

O'BRIEN: Talking about the fuel that's coming from Kuwait, though, explain the process to me of how this Kuwaiti company -- and I believe the name is Altenmia (ph) -- became the only one that was able to get the work. Was there some kind of pressure from the U.S. government or the Kuwaiti government to use this one particular company?

DOMINY: We went about our normal procurement process and Altenmia was one of four subcontractors who competed for this project. They had the lowest bid and they had the overall highest quality of any of the subcontractors. And so they're the ones that have the job and that's the correct way to do it.

O'BRIEN: Pentagon officials have said why can't you find a subcontractor that has a better price. You're saying that there are three others and they were all higher and there's no better price than $2.27 a gallon in Kuwait? DOMINY: That's exactly the way it is. We've worked very hard to reduce that price and we've negotiated very strongly with that company and have managed to reduce it an additional four percent over the last month or so. And we'll continue to work hard on that.

There's a premium to be paid when you have to move through hostile territory with those fuel trucks. He's had over 60 trucks damaged. He's had five drivers killed. It's a very arduous task. It can take over eight days just to do a round trip into Baghdad.

We'd hoped to be able to do about four round trips a month and we're averaging less than three because it is a very arduous task.

O'BRIEN: And it would be impossible to bring the same amount of fuel out of Turkey at a lower price?

DOMINY: Actually, it would not. We've pretty well tapped out Turkey in terms of capacity. And so the balance that's in place right now seems to be the strongest balance possible. And that brings in the overall price at about $1.60 per gallon for all of the service into Iraq.

(END VIDEOTAPE)

O'BRIEN: That was Retired Lieutenant General Charles Dominy, who is now a vice president at Halliburton.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com