I’ve been websearching but so far to no avail. I came across some comments about Halliburton that I find hard to believe. While they don’t deny preferential contracts, they conclude that the profit margin of the Iraq contracts look very small.
This is from an article in the NYT:
"The rebuilding of Iraq’s oil industry has been characterized in the months since by increasing costs and scant public explanation. An examination of what has grown into a multibillion-dollar contract to restore Iraq’s oil infrastructure shows no evidence of profiteering by Halliburton, the Houston-based oil services company, but it does demonstrate a struggle between price controls and the uncertainties of war, with price controls frequently losing. …
So far this year, Halliburton’s profits from Iraq have been minimal. The company’s latest report to the Securities and Exchange Commission shows $1.3 billion in revenues from work in Iraq and $46 million in pretax profits for the first nine months of 2003. But its profit may grow once the Pentagon completes a formal evaluation of the work. If the government is satisfied, Halliburton is entitled to a performance fee of up to 5 percent of the contract’s entire value, which could mean additional payments of $100 million or more. …"
And this is a quote from Steven Kelman, a former Clinton administration official:
“Many people are also under the impression that contractors take the government to the cleaners. In fact, government keeps a watchful eye on contractor profits – and government work has low profit margins compared with the commercial work the same companies perform. Look at the annual reports of information technology companies with extensive government and nongovernment business, such as EDS Corp. or Computer Sciences Corp. You will see that margins for their government customers are regularly below those for commercial ones. As for the much-maligned Halliburton, a few days ago the company disclosed, as part of its third-quarter earnings report, operating income from its Iraq contracts of $34 million on revenue of $900 million – a return on sales of 3.7 percent, hardly the stuff of plunder.”
If this information is true, I can’t believe why Halliburton is such a big deal to the Democrats except for the stereotype of a “big, evil oil corporation.” (Again, the issue of preferential contracts aside.) Does anyone have any info that contradicts these figures or puts them in a more constructive context?