Halliburton cost-plus contract- what percent?

[Eric J in MN]

Lots of reports say that Halliburton is being paid in Iraq with a contract which repays what they spend, plus a percent.

But what is the percent?

[Stephanie]

1. I saw one percent - I think it was in the New Yorker story about cheney

One percent, which leads to the "cost-plus" attitude. The more you charge, the more your 1% adds up to. Not good when you're on the wrong side of the transaction.

*edit - this is the article - haven't located the figure. It's possible I saw that somewhere else, or not at all....

http://www.newyorker.com/fact/content/?040216fa_fact

[Stephanie]

4. Here

CONTRACT SPORT
by JANE MAYER
What did the Vice-President do for Halliburton?
Issue of 2004-02-16 and 23
Posted 2004-02-09


As Defense Secretary, Cheney developed a contempt for Congress, which, a friend said, he came to regard as “a bunch of annoying gnats.” Meanwhile, his affinity for business deepened. “The meetings with businessmen were the ones that really got him pumped,” a former aide said. One company that did exceedingly well was Halliburton. Toward the end of Cheney’s tenure, the Pentagon decided to turn over to a single company the bulk of the business of planning and providing support for military operations abroad—tasks such as preparing food, doing the laundry, and cleaning the latrines. As Singer writes in “Corporate Warriors,” the Pentagon commissioned Halliburton to do a classified study of how this might work. In effect, the company was being asked to create its own market.

Halliburton was paid $3.9 million to write its initial report, which offered a strategy for providing support to twenty thousand troops. The Pentagon then paid Halliburton five million dollars more to do a follow-up study. In August, 1992, Halliburton was selected by the U.S. Army Corps of Engineers to do all the work needed to support the military during the next five years, in accordance with the plan it had itself drawn up. The Pentagon had never relied so heavily on a single company before. Although the profit margins for this omnibus government contract were narrower than they were for private-sector jobs, there was a guaranteed profit of one per cent, with the possibility of as much as nine per cent—making it a rare bit of business with no risk.

[Semi_subversive]

2. As a former contract negotiator

for the CA Dept. of Transportation and using federal funds, 9-10 % is a fair profit.

[Stephanie]

3. Not when your costs are running into the billions

Do you think?

*edit - from the quote I found above, you are right, it could go up to that. Astounding.