Has Bush said he’s going to not only demand the money back, but exclude Halliburton from future Iraq contracts as well?
Didn’t think so.
Has there been a visible political price? So far, no; it’s in the white noise, really. It’s been pushed off the front pages by newer stuff.
Anyway, what I said still holds, since your reply skirted most of my reasoning: when Company A has a contract with Company B, and plays fast and loose with it, Company B will demand their recompense - and be extremely reluctant to deal with Company A ever again - and word will get around about Company A, in all likelihood. That ain’t “tails, no loss.” But if there’s any evidence that Halliburton will pay a price for this incident, I don’t see it. Maybe you do, and you’re welcome to explain what will happen next that will cause it to realize that price.
Anyhow, my baseball analogy was so clearly bracketed by the word “Halliburton,” and pronouns standing in for that corporate name, that it should have been clear to all just who it applied to. Let’s run tape, with some additional bolding to drive the point home:
What has Halliburton played ‘fast and loose’ with? As far as I can tell, their contract was cost-plus. They took their cost and added their margin as per the contract. Not a single person or cite has suggested anything different.
Obviously, the cost from the subcontractor was too high, resulting in a final price that was not reasonable. Are you suggesting that Halliburton engineered this increased cost? Is Halliburton to blame for the Kuwaiti company’s high costs? Halliburton’s CEO said that his company tried to switch subcontractors, but couldn’t due to gov’t regulations. Again, no cites thus far claim anything different on that point.
If anything, the Bush Administration is to blame for not allowing Halliburton to get competitive bids for this work.
Don’t be obtuse. There is a price in the public opinion of the administration, and with that a decrease in the political capital needed to advance the administration’s agenda (not to mention the re-election efforts of Bush in particular and Republican officeholders in general). **
Even if the Bush administration is run by a troop of Boy Scouts who have been perfectly clean and above-board in their dealings with Halliburton, it would be staggeringly inappropriate to make such a pronouncement at this point in time.
Would you really want your president to summarily cut off a leading company from contracting with the government over one overage without knowing whether that overage was due to simple error, to things beyond the company’s control, or due to fraudulent activity? Didn’t think so. **
I didn’t skirt your reasoning, I addresseed it directly, and I explained exactly why I think the “reputation” argument would still apply to Halliburton, as follows:
Halliburton contracts with more parties than just the US government, and has to be wary of their reputation for when they deal with those parties.
I think the political risk inherent to doing business with shady partners means that even the feds would likely turn to alternative contractors if Halliburton proved disreputable. After all, it isn’t like the Bush administration has a dearth of contacts in the energy services field.**
I realize you want to limit your analogy to Halliburton. But you miss my point: the logic you apply in setting up that analogy would apply to any party to any contract – if the non-punitive nature of contract damages are insufficient to deter Halliburton from acting inappropriately, they should also be insufficient to deter other contracting parties from acting inappropriately. The exclusion of all but Halliburton is artificial. If your hypothetical is true for Halliburton, it should be true for all (or at least most) ordinary contracting situations as well.
In light of that statement I listed forth many of the provisions, clauses, mechanisms and concepts that have had to be put into place due to the basic nature of a party to breach a contract if they believe if it is in their best interest to do so- unlike the worldview you tied to set forth. Do all of contracting parties do it- no. But more then enough do it, that numerous mechanisms needed to be put into place to try and deter their behavior. But, as you noted, absent a FCA case, contract damages are not punative. So at worst Halliburton just has to give the money back and pick out a scapegoat (subcontractor or Army Corps- either one is fine).
While you seem to understamd the concept of Efficient Breach, your implementation of it is overly simplistic in a non-widget world:
Assuming Halliburton did use their sub to double the fuel charges, they would only have to pay it back if they got caught, (see the Wolfwitz Cite for the attempted restrictions on government looking) and even then not have to face any punative damages or reputational risk within the Bush Adminstration.
Under these circumstances, it would be efficient for them to go ahead and pad the bill as much as possible under the guise of “wartime” costs. And as you can see by reading the Cites, that is what they are claiming now.
Aircraft Carriers, Boeing Tankers, and Submarines- all to often much of the profits come in via cost over-runs, service agreements, and revised agreements entered into down the line. Not much of a stretch for Halliburton to think the same way as it is dealing with the same folks at the Pentagon and Bush Adminstration.
Charming. Wrong, but charming. However, I don’t need to stoop to insults. Being right helps. Cites are more effective too.
But as the old saying goes- if the law is on your side- pound on the law. If the facts are on your side- pound on the facts. If nothing is on your side- pound on the table. Have fun with the table.
Oh please. For a client in a business dispute “serious, legitimate disputes over the interpretation or validity of the contract” is entirely self-defined. Your own need for qualification should show you that.
And who else are they going to buy from? Raise campaign contributions from? Deliver Military contracting pork from? Surely I don’t have to list the myriad of large scale military contracting debacles and massive cost overruns to see how unrealistic your statement is? Just in case, let me Cite just one company for you:
This is one a bit op-ed like, but the fact’s are presented clear- especially with regards to the very close ties the Military industry based corporations have gained in the Pentagon.
And this is only one aspect of the Boeing disaster. And this is only company. Throw in the name of any major defense contractor into Google with the right keywords and watch the scandles, major cost over-runs, and conflicts of interest fly. Now doesn’t that baserunner analogy just seem silly now?
Listing provisions isn’t tantamount to understanding them, and nothing you listed (save the FCA, in an earlier post) were “put into place due to the basic nature of a party to breach a contract if they believe if it is in their best interest to do so.” Nothing you’ve posted indicates to me that you understand the concepts you refer to.
I dealt with your examples point-by-point. The UCC is, like common law, essentially an expectation-damages system. Liquidated damages clauses are not permitted if they are a penalty. This is not an efficient breach situation (if it is, then every contracting party should attempt fraud – you are attempting to discount the damages by adding the risk of discovery, which is a calculus that any contracting party can perform – even moreso if the contract doesn’t have audit stipulations). **
Right. Which makes them just like any other party to a contract, subject to expectation damages upon breach. **
Again, if actual fraud can be considered part of an efficient breach, then most contracting parties will seek to defraud the other side – the risk of discovery discounts the cost of damages, and thus the value of committing fraud. Any contracting party can do that calculus for any given contract; Halliburton is not unique in that regard.
(Also, the Wolfowitz cite, as noted earlier, deals with CPA activity; as per above, there isn’t anything in any of the articles cited that indicates Wolfowitz’s comments deal in any way with Halliburton’s contracts, and such a connection is unlikely to say the least. Unless you’re an X-Files fan, I suppose.)
**
Citing to something without actually understanding it isn’t terribly effective. And I’m not insulting you: in the paragraph I was responding to, you were tossing out buzzwords with no accompanying argument as to how they apply to the OP. **
Your fist has already worn a groove in the wood. You’re the one that keeps tossing out concepts without understanding them, leaving me to explain why they don’t apply.
Simply sputtering "but, but, what about the UCC "isn’t “pounding the law.” Explaining, as I did, that the UCC is essentially an expectation-damages system, is pounding the law. I leave it as an exercise for the reader as to who the true table-pounder is. **
Do you dispute that qualification? If Halliburton has a reasonable claim that their activity under the contract was permissible by its terms, do you think it improper for them to challenge the government’s allegation of overcharging? Why?
I’ve been willing to operate for purposes of argument on the assumption that Halliburton did in fact act in contravention to the requirements of the contract. But if you take away that assumption, you only strengthen my case – what you’re then left with is a good-faith dispute between contracting parties, which is neither nefarious nor uncommon. **
Any of the other energy services companies that compete with Halliburton. **
Do you even bother to read your cites before you post them? This doesn’t deal with the breach of an existing contract; it deals with the negotiation of a really, really bad contract between Boeing and the government.
If you want to argue that the Halliburton contract is a bad deal for the taxpayers, that the administration is too cozy with them to truly negotiate at arm’s-length, and that it’s a bad deal all around, fine. But that’s not the topic of the OP. The OP isn’t saying the Halliburton contract is a bad one; it’s saying that Halliburton breached its obligations under that contract by charging the government more than it was permitted under its terms.
I would really want my President to not grant no-bid contracts to companies they’re chummy with. I think it’s often hard to tell where an overage came from. But I’d like my government to toe as tough a line on this sort of thing as possible, that would still have qualified contractors willing to do business with it. Seems Halliburton’s had a couple of these mistakes and attempted mistakes in its favor lately; unless they’ve made some in the other direction, yes, I’d like them to be cut out of the action. Especially since you say there’s a goodly supply of qualified replacements waiting to take its place.
Dewey, I’m not sure why I even bother talking with you if you’re going to say things that are that appallingly naive. Have you slept through every Presidential administration in your life??
Maybe it’s the ‘growing up around Washington’ thing, but I don’t remember a time when I wasn’t aware in my bones that contractors pretty much all consider Uncle Sugar to be basically a pool of money that everybody’s trying to get as big a share as possible of.
If Company A sees Company B screw the Feds out of a bit more money, their attitude isn’t, “we can’t trust Company B to do business with”, but rather “why isn’t that us in there doing that??”
See elf6c’s examples above. Think other companies are going to be reluctant to do business with Boeing? Hell, no. They’re going to be figuring out how to get on a gravy train like Boeing is on. And if Boeing offers them a subcontract for a piece of the action, they’ll jump at it. Yum!
Again, see elf6c’s post. (Thanks, elf!)
First of all, the “exclusion of all but Halliburton” was your creation. If I draw a portrait of you, I’m not “excluding all people but you” from that portrait in any sense other than a pedantic one. And only in that technical sense (my technical sense, btw, as an ex-combinatorist) was I ‘excluding’ anyone from my analogy; I was simply talking about Halliburton, period.
Now that I’ve explained that to you in small words, the analogy, for the reasons stated yet one more time, would also apply to other government contractors who can do little wrong in the eyes of the current Administration. It would not apply to arms-length contracts between private businesses. If you still can’t figure out why, please have Igor find a new brain for you. Thanks.
You guys just got through citing to articles in major news outlets, and now you’re claiming it’s getting insufficient attention? **
A reasonable point. But not one dealing with the OP. **
Well, it seems to me they’re doing just that – a government audit caught the overage, and the company will have to repay the funds. **
Cite for the “other mistakes” by Halliburton? Everything outside of the OP I’ve read about them indicates they do a good job for the contracted price. One can argue that they improperly get work because of their ties to the administration, but outside of this thread I haven’t read of them falling down on their contracted obligations once they’ve been given the work.**
I assume that, but if it’s an incorrect assumption then much of this discussion is useless. If Halliburton is literally the only company on earth that can do this type of work, there’s no point to complaining about most of this – if there is no alternative to using Halliburton, well, then there’s no alternative to using Halliburton, y’know?**
At least i don’t have such a Michael Moore-like hatred of corporations and Bush such that I’m willing to ignore ordinary market reputation constraints. **
Fallacy of the excluded middle. Company A can think both. The two aren’t mutually exclusive.
And multinationals do business with government entities other than the US federal goverment, after all. It isn’t just private-sector contracts they have to worry about losing. **
And see my response to elf6c: the Boeing example is an example of a lousy contract negotiated in the first instance, not an example of the breach of an existing contract. It is inapplicable to this situation. **
Again, see my reply to same. **
But again, the argument you were making about the insufficiency of ordinary contract damages could apply to any set of contracting parties. The “I was simply talking about Halliburton, period” argument is artificial. **
Igor is on leave, so perhaps you’d like to actually articulate your argument? Or are you just substituting snarkiness for an actual point?
I don’t buy the notion that there are no reputational constraints on goverment contractors (“being thrown out of the game”) and since the conseqence for a breach of this type is the same (“return to first”), I don’t think the distinction you’re attempting ins a meaningful one.
I replied to this several posts back. I’ll let you find it. I’m getting bored.
Then maybe you should reply to the entire paragraph, which collectively has a point - rather than to each individual sentence, which really doesn’t, just by itself.
Ditto.
Back on page 1.
I don’t particularly hate corporations either. But I’ve got some sense of the rules by which they operate in the Federal environment. If growing up in a company town and having a sense of how things work in it makes me Michael Moore, then you must be frickin’ Pollyanna.
That wasn’t logic, that was reportage.
That is certainly so, in many cases. I can’t tell you how the reciprocal back-scratching game works in Paris or Riyadh, only that I’m sure there is one. I can only report on how this capital is run. And that Uncle Sugar has by far the deepest pockets and biggest contracts in most areas, since we’ve got the biggest economy.
I disagree. In fact, I find that to be a distinction without a difference.
You keep saying so, ignoring the distinction between contracts between businesses that both want to make money, versus between a business that wants to make money and a government run by people who like that business.
But the main thing was, I was talking about Halliburton, and there’s nothing wrong with that. Now if you want to use that analogy to show how it breaks down in another situation the analogy should apply to - that is, to another contract between a business that wants to make money and a government run by people who like that business - be my guest. But until then, you have no point you’re making with this ‘excluded’ stuff.
Look, I just made it for the fourth time. I’m throwing in the towel for round five, because explaining stuff to the deaf and dumb has me quite worn out.
Dewey, I quite frankly didn’t believe you were so wilfully obtuse. Seems you just don’t hear what you don’t want to hear. I’m giving up on you. Sorry.
Mmmm, sleazy! See it doesn’t say that. But you can’t see it. And even if you did see it, you shouldn’t have seen it because it makes us look bad. So you’re the bad guy. Yeah, that’s the ticket!
Actually, I am waiting for the Chewbacca Defense at this point.
At this point of trying to have a civil discussion with you, I have to agree with RTFirefly at best you have been willfully obtuse. Although your reliance on insults over analysis and citation should have been the first clue- I still had hopes. But after you omitted the FCA from your analysis, made amusingly naive statements regarding the past and current behavior of major military contractors and constantly tried to ignore the basic tendancies of contracting parties to act in a self-interested manner absent outside contraints if it did not gibe with whatever point you are claiming to make this time- I give up as well.
RTFirefly is right. Oh well, no real loss I guess. Nice to see Brutus won’t be too lonely.
The entire paragraph is just a list of gripes you have with the Bush admiinstration. It thus makes sense to take each in turn, and determine the validity of each gripe. As I noted, the no-bid gripe is a valid one. I think the others are less valid. Why you’re bothered by the fact that take each allegation in turn and evaluate them on their own particular merits is quite a mystery. **
Having just skimmed page one, I only see links to the OP’s complaints plus some complaints about no-bid contracts. I see nothing about Halliburton having “a couple of these mistakes [i.e., mistakes of the type described in the OP] and attempted mistakes.”
Incidentally, my request for a cite was followed by the following sentences (which you deleted in your reply):
I specifically noted the issue with no-bid contracts, and was quite clear about what I was asking for a cite over: the contention that Halliburton had fudged on other existing contracts. I was not asking for cites stating that Halliburton got work for reasons other than competitive bidding. **
:rolleyes:
However you choose to characterize your words, it doesn’t affect the validity of my response.
Really, this “jaded old curmudgeon telling the naive whippersnapper how the world works” routine is wearing thin. Save your posturing for someone who gives a fuck. **
This is a non-answer answer. It appears to address my point without actually doing so. You should try running for office. **
You see no difference between negotiating a lopsided deal and fudging on an already-signed deal? **
The incentives to cheat are the same. The potential for getting caught are the same (in fact, they’re greater, since government contracts are subject to more public scrutiny than contracts between private companies). The type of damages available are the same. Your hand-waving dismissals notwithstanding, your analogy, taken seriously, would apply to all contracting parties everywhere.
You aren’t the Lord of the Analogy. It’s perfectly fair for me to point out that your logic applies to a broader set of facts than you initially painted. **
Actually, my first sentence – the one you are responding to here – was just me responding to snarkiness in kind. You snipped the second sentence, where I actually dealt with your argument. Between this and your earlier seizing on the “anonymous poster” part of my post, it sometimes seems you’d rather focus on my occasional flip remarks than look to the substantive arguments I’m making.
Do you not believe that internal audit documents are confidential? Do you believe that a corporation is acting properly if it releases confidential documents willy-nilly?
I really wish I could contribute something intelligent to a very interesting pit debate, but unfortunately the only thing I can say in rebuttal to all of you is
Milk, milk, lemonade,
The other end is where fudge is made points to bum
I have not insulted you. I have pointed out that it is not clear from your posts that you understand the legal concepts you’re citing fully, and I’ve explained why I don’t think each of those concepts applies. That isn’t an insult. That’s a defensible conclusion reached from your posts. **
Not true. In my critique of your post, I specifically pointed out that your mention of the FCA was an exception – that it did say what you said it meant, and that it did support your point; see the parenthetical in the sentence to which you’re replying.
Of course, whether or not the FCA would apply to this particular case is a question worthy of discussion in and of itself. **
Actually, my arguments have been cetnered on the self-interest of the parties involved; one’s reputation is part of one’s self-interest. The rest of the above is simply your characterization of my remarks. What is or isn’t “amusingly naive” is really eye-of-the-beholder territory. **
I think it remarkable that you claim I “rely on insults rather than analysis” and yet included that last sentence in your post.
So, what you are saying is that a Democratic candidate for President, with (obviously) a stake in making this look as bad as possible, has made unsubstantiated charges, based on illegally obtained material, and which charges have not been confirmed by the audit agency -
but it is “sleazy” for the company to defend itself against these charges?
Just stopping by to see if some cites have made it into the discussion, and we’re good on one out of two, since elf6c has linked to the Washington Post story about Halliburton’s internal auditors warning them months ago that they were overcharging for the fuel they were carting in.
Think Bechtel’s gonna have a harder time finding work as a result? If so, I’ve got some beachfront property in North Dakota that you’ll absolutely love.
There’s been a few developments relating to Halliburton. Back around Jan. 10, the pentagon’s Defense Contract Audit Agency, which was looking into Halliburton’s books, was found to have “altered files to cover up fraud.” Not Halliburton files mind you, but it does raise the question of who will audit the auditors of the Halliburton records.
Today, the Pentagon’s inspector general is claimed to have opened an investigation into possible criminal violations in connection with oil service company Halliburton’s fuel imports to Iraq.
Apparently Altanmia wasn’t even a fuel distribution company until after it got the Halliburton contract:
This is getting pretty stinky for something that’s supposed to be on the up and up.