12: “WE’RE PROFITEERS”

  1. IQPC, “Forward Operating Bases 2012,” conference website, http://www.iqpc.com/Event.aspx?id=678548; IQPC, “Sponsorship Opportunities,” “Forward Operating Bases 2012,” conference website, http://www.iqpc.com/Event.aspx?id=655810.

  2. Parts of this chapter stem from my articles “‘We’re Profiteers’: How Military Contractors Reap Billions from U.S. Military Bases Overseas,” Monthly Review 66(3); and “Where Has All the Money Gone? How Contractors Raked in $385 Billion to Build and Support Bases Abroad Since 2001,” TomDispatch, May 14, 2013, http://www.tomdispatch.com/blog/175699/david_vine_baseworld_profiteering. Special thanks for this chapter go to Michael Tigar, John Mage, Tom Engelhardt, Clifford Rosky, Laura Jung, all those who generously offered their time and insights during interviews, and many, many others for their help with the work involved.

  3. Commission on Wartime Contracting in Iraq and Afghanistan, “Transforming Wartime Contracting: Controlling Costs, Reducing Risks,” final report to Congress, August 2011.

  4. David Cay Johnston, “The U.S. Government Is Paying Through the Nose for Private Contractors,” Newsweek, December 12, 2012, http://www.newsweek.com/us-government-paying-through-nose-private-contractors-224370.

  5. Pratap Chatterjee, Halliburton’s Army: How a Well-Connected Texas Oil Company Revolutionized the Way America Makes War (New York: Nation Books, 2009), 24–27, 18–20.

  6. P. W. Singer, Corporate Warriors: The Rise of the Privatized Military Industry (Ithaca: Cornell University Press, 2003), 80.

  7. Chatterjee, Halliburton’s Army, 61–62.

  8. Ibid., 214.

  9. Commission on Wartime Contracting in Iraq and Afghanistan, 208–10.

10. Switzerland would have been number five on the list, given 116,527 contracts listing the place of performance as Switzerland. However, the vast majority of these contracts are for delivering food to troops in Afghanistan and, to a lesser extent, at bases in countries worldwide other than Switzerland. The explanation is that one of the major companies providing food, an arm of Supreme Group, is based in Switzerland. Canada and Saudi Arabia would also have made the top ten. Those contracts are also for the most part unrelated to the limited U.S. military presence in the two countries. Thus I exclude those three countries from this list.

11. Linda Bilmes, “Who Profited from the Iraq War?” EPS Quarterly 24, no. 1 (March 2012), 6. The Federal Procurement Data System that’s supposed to track government contracts “often contains inaccurate data,” according to the Government Accountability Office (“Federal Contracting: Observations on the Government’s Contracting Data Systems,” report, GAO-09-1032T, Washington, DC, September 29, 2009). For example, my research showed hundreds of thousands of contracts with no “place of performance” listed. On the other hand, some of the contacts included in the list are unrelated to the provision of goods and services for overseas bases; however, the simultaneous omission of base-related contracts means this methodology provides a useful portrait of where contracts and taxpayer dollars are going overseas. Still, the totals listed should be treated as rough estimates.

12. See e.g. Washington Post, “Black Budget”; Beckhusen and Shachtman, “See for Yourself.”

13. Or various iterations of the same term.

14. Commission on Wartime Contracting in Iraq and Afghanistan, 209.

15. Chatterjee, Halliburton’s Army, 49.

16. Ibid., 9.

17. Sharon Weinberger, “Military Logistics: The $37 Billion (Non)Competition,” Wired, August 30, 2011, http://www.wired.com/2011/08/military-logistics-the-37-billion-noncompetition/.

18. Valerie B. Grosso, “Defense Contracting in Iraq: Issues and Options for Congress,” Congressional Research Service, report, Washington, DC, June 18, 2008.

19. United States House of Representatives Committee on Oversight and Government Reform, “It’s Your Money: Iraq Reconstruction,” n.d. [2006], http://oversight-archive.waxman.house.gov.

20. Ellen Nakashima, “KBR Connected to Alleged Fraud, Pentagon Auditor Says,” Washington Post, May 5, 2009.

21. Dana Hedgpeth, “Audit of KBR Iraq Contract Faults Records for Fuel, Food,” Washington Post, June 25, 2007; U.S. Department of Justice Office of Public Affairs, “United States Sues Houston-based KBR and Kuwaiti Subcontractor for False Claims on Contracts to House American Troops in Iraq,” press release, November 19, 2012, http://www.justice.gov/opa/pr; Walter Pincus, “U.S. Files Civil Suit Against Defense Contractor KBR,” Washington Post, April 2, 2010.

22. Chatterjee, Halliburton’s Army, 63–64.

23. Defense Industry Daily, “LOGCAP 4: Billions of Dollars Awarded for Army Logistics Support,” August 3, 2011, http://www.defenseindustrydaily.com/Billions-of-Dollars-Awarded-Under-LOGCAP-4-to-Supply-US-Troops-in-Afghanistan-05595/.

24. U.S. Department of Justice Office of Public Affairs.

25. The best source for this section is David de Jong, “Supreme Owner Made a Billionaire Feeding U.S. War Machine,” Bloomberg, October 7, 2013, http://www.bloomberg.com/news/2013-10-06/supreme-owner-made-a-billionaire-feeding-u-s-war-machine.html.

26. Andrew Zajac, “Supreme Foodservice Sues Over U.S., Afghan Food Contract,” Bloomberg, April 8, 2013, http://www.bloomberg.com/news/2013-04-08/supreme-foodservice-sues-over-u-s-afghan-food-contract.html. See also Supreme Foodservice, GmbH v. United States, no. 13-245 C (September 18, 2013).

27. Walter Pincus, “Agency Extends Afghan Food-Supply Contract for Firm that Hired Former Director,” Washington Post, January 4, 2011.

28. Neil Gordon, “Pentagon Ordered to Lift Suspension of Kuwaiti Contractor’s Affiliates,” POGO Blog, July 3, 2012, http://pogoblog.typepad.com/pogo/2012/07/pentagon-ordered-to-lift-suspension-of-kuwaiti-contractors-affiliates.html.

29. David Beasley, “Agility Prosecutors Probing ‘Potential New Charges’ in U.S., Judge Writes,” Bloomberg, July 27, 2011, http://www.bloomberg.com/news/2011-07-27/agility-prosecutors-probing-potential-new-charges-u-s-judge-writes.html.

30. Neil Gordon, “POGO Obtains Second Helping of ‘Compelling Reason’ Memos,” POGO Blog, October 9, 2013, http://www.pogo.org/blog/2013/07/20130709-pogo-obtains-second-helping-of-compelling-reason-memos.html.

31. Project on Government Oversight (POGO), “Fluor Corporation,” Federal Contractor Misconduct Database, n.d. [2014], http://www.contractormisconduct.org/index.cfm/1,73,222,html?CaseID=1780; Transparency International UK, “Defence Companies Anti-Corruption Index 2012,” report, London, October 2012.

32. Project on Government Oversight (POGO), “Top 100 Contractors,” Federal Contractor Misconduct Database, n.d. [2014], http://www.contractormisconduct.orghttp://www.contractormisconduct.org/index.cfm?sort=4.

33. U.S. Department of Defense, “Department of Defense Annual Energy Management Report Fiscal Year 2011,” report, Washington, DC, September 2012; U.S. Energy Information Administration, “Countries,” n.d.[2013], http://www.eia.gov/countries/index.cfm?view=consumption.

34. Johnston, “U.S. Government Is Paying.”

35. American Society of Military Comptrollers, “Service Support Contractors: One of the FY 2012 Budget Efficiencies,” PowerPoint presentation, Arlington, VA, October 2011, http://www.asmconline.org/wp-content/uploads/2011/10/ASMCBreakfastServiceSupportContractors.pptx.

36. Belasco, “Cost of Iraq,” 38.

37. Lolita C. Baldor, “Top Army General Accused of Lavish Spending,” Boston Globe, August 18, 2012.

38. Center for Responsive Politics, “Defense,” n.d. [2014], http://www.opensecrets.org/industries/indus.php?Ind=D.

39. Center for Responsive Politics, “DynCorp International, Expenditures,” n.d. [2014], http://www.opensecrets.org/pacs/expenditures.php?cycle=2012&cmte=C00409979; “DynCorp International, Recipients,” n.d. [2014], http://www.opensecrets.org/pacs/pacgot.php?cmte=C00409979&cycle=2012.

40. Center for Responsive Politics, “Halliburton Co, Summary,” n.d. [2014], http://www.opensecrets.org/lobby/clientsum.php?id=D000000281&year=2012.

41. Government Accountability Office, “Decision in the Matter of Kellogg Brown & Root Services, Inc.,” File: B-400787.2, B-400861, Washington, DC, February 23, 2009.

42. Center for Responsive Politics, “Supreme Group USA, Summary,” n.d. [2014], http://www.opensecrets.org/lobby/clientsum.php?id=D000065800&year=2012.

43. Center for Responsive Politics, “Agility Public Warehousing Co, Summary,” n.d. [2014], http://www.opensecrets.org/lobby/clientsum.php?id=D000065284&year=2011.

44. Center for Responsive Politics, “Fluor Corp, Summary,” n.d. [2014], http://www.opensecrets.org/lobby/clientsum.php?id=D000000277&year=2014.

45. David Isenberg, Shadow Force: Private Security Contractors in Iraq (Westport, CT: Praeger Security International, 2009), 65.

46. Robert S. McIntyre et al., “Corporate Taxpayers & Corporate Tax Dodgers 2008—10,” report, Institute on Taxation and Economic Policy, Providence, RI, November 2011, 8; U.S. Government Accountability Office, “Corporate Income Tax: Effective Tax Rates Can Differ Significantly from the Statutory Rate,” report to Congress, GAO-13-520, Washington, DC, May 2013.

47. Robert D. Hershey Jr., “Tax Questions for Military’s Contractors,” New York Times, February 12, 2004.

48. Farah Stockman, “Top Iraq Contractor Skirts U.S. Taxes with Offshore Shell Companies,” Boston Globe, March 9, 2008, E7.

49. Ibid.

50. Ibid. A 2008 change in U.S. tax law closed the loophole that allowed companies to avoid paying Social Security and Medicare taxes but left the loophole intact for unemployment taxes, meaning that former employees remain ineligible for unemployment insurance. Government Accountability Office, “Defense Contracting: Recent Law Has Impacted Contractor Use of Offshore Subsidiaries to Avoid Certain Payroll Taxes,” Highlights of GAO-10–327, Washington, DC, January 2010.

51. Chatterjee, Halliburton’s Army, 210–11; Laura Mandaro, “Halliburton’s Dubai Move Raises Issue of Expat Taxes,” MarketWatch, March 13, 2007, http://www.marketwatch.com/story/halliburton-dubai-move-revives-foreign-tax-controversy.

52. Congressional Research Service, “Tax Exemption for Repatriated Foreign Earnings: Proposals and Analysis,” report, Washington, DC, April 27, 2006.

53. Senate Republican Policy Committee, “Territorial vs. Worldwide Taxation,” September 19, 2012, http://www.rpc.senate.gov/policy-papers/territorial-vs-worldwide-taxation; Emily Chasan, “At Big U.S. Companies, 60% of Cash Sits Offshore: J. P. Morgan,” Wall Street Journal, May 17, 2012.

54. U.S. Government Accountability Office, “Defense Contracting: Recent Law.”

55. Senate Republican Policy Committee, “Territorial vs. Worldwide Taxation.”