February 15, 2004

Halliburton and privatization

Here's a rather damning article about Halliburton in particular and crony capitalism in general from The New Yorker. It details the "revolving door" between government and industry, among other things, citing Vice President Cheney's dealings as just the most obvious example. One rather startling item: somebody estimates that if all the jobs Halliburton and its like were done by the Army, there would need to be 300,000 soldiers in theater rather than the 130,000 currently there.

Halliburton, in the face of all this criticism, has started advertising in selected markets. I saw some of the testimony mentioned in the article; it seemed pretty damning to me. One of the company's business practices was to make a series of purchases from one supplier, keeping each buy under $2,500 so competitive bidding wasn't required. Another, as quoted in the article (I heard this on C-Span as well) was this remark: "a Halliburton motto was: 'Don't worry about price. It's cost-plus.' " What that means is that Halliburton would bill the government for a price set by its vendor plus a percentage previously negotiated. There's no incentive to bargain for a lower price if the company knows it's going to get its percentage no matter what.

This points out something that has bothered me for some time. What happens if the US military becomes so dependent upon private contractors that the Army can't fight without their help? Or if there's only one remaining supplier in the United States for a military requirement? There was a story on All Things Considered a while back (I suspect it came from here; the 1/12/04 entry) which discussed an apparent glitch in the supply of bullets to the Army; there's only one munitions factory in the country which makes them. If your only ammunition source is subject to a terrorist's attack, what are you going to do? Or if your supplier of electronic widgets for cruise missiles is located in a foreign country which suddenly decides it's not going to support your policy, what then? The argument for privatizing military and other government functions has been that it saves money; at what point does the laudable goal of saving taxpayer money overtake the need for accomplishing a specific task swiftly and with full control?

Posted by Linkmeister at February 15, 2004 08:41 AM

It reminds me off the "weapons of staff reduction" going on all over the world, too. Like here at my job, they've laid off half the staff and reduced each position to *one.* *ONE* person. One editor, one audio person, one producer...and so when that *one* person gets sick? Then what? It's just mind-boggling that to save a buck, the people "up top" LOSE THEIR FREAKIN' MINDS! It's just common sense, people.

Posted by: JeanNINE at February 19, 2004 09:28 AM