In October, 2004, Bunnatine Greenhouse, a top military official responsible for making sure the Army Corps of Engineers complies with contracting rules, came forward and revealed that top Pentagon officials showed improper favoritism to Halliburton when awarding military contracts.
The allegations made by this official were first reported by Time Magazine.
Greenhouse said that when the Pentagon awarded Halliburton a five-year $7 billion contract, it pressured her to withdraw her objections, actions which she claimed were unprecedented in her experience.
Greenhouse charged that contracts were approved over her reservations, some of which were handwritten on the original contracts, and extensions of contracts were awarded because underlings signed them in collusion with senior officials without her knowledge.
A five-year Iraq contract was awarded less than a month before the invasion, under a clause which allowed for no-bid contracts in the case of a "compelling emergency." Greenhouse contends that she objected to the 5-year terms of the contract, questioning the probability of an emergency lasting for five years.
Federal contracting rules say contracts must be awarded by career civil servants, not political appointees. Greenhouse claimed the Army ignored this requirement when giving contracts to Halliburton and violated "the integrity of the federal contracting program as it relates to a major defense contractor."
"Employees of the U.S. government have taken improper action that favored KBR's interests," Greenhouse wrote. "This conduct has violated specific regulations and calls into question the independence" of the contracting process, she said.
She also said the Army altered documents in order to justify the Halliburton's contract work in the Balkans. In a letter from Michael Kohn, Greenhouse's attorney, to then acting Army Secretary Les Brownlee, Greenhouse charged that on a Balkan's contract, a deputy assistant secretary of the Army had ordered changes in documents to legitimize the contract "for political reasons."
According to Kohn's letter, in January 2002, Greenhouse sent an investigative team to review the Halliburton operation in the Balkans. After which she reported: "The general feeling in the theater is that the contractor (KBR) is 'out of control'" and was able to manipulate Corps of Engineer officials.
The Balkan's contract was scheduled to expire no later than May 27, 2004. However, it was extended without Greenhouse's knowledge, after a search for other contractors was stopped. Although the contract was originally awarded a "compelling emergency" exception, the extended contract was awarded under another exception, that KBR was the "one and only source."
The August 29, 2005 New York Times reports: "A top Army contracting official who criticized a large, noncompetitive contract with the Halliburton Company for work in Iraq was demoted Saturday for what the Army called poor job performance.
"The official, Bunnatine H. Greenhouse," the Times wrote, "has worked in military procurement for 20 years and for the past several years had been the chief overseer of contracts at the Army Corps of Engineers, the agency that has managed much of the reconstruction work in Iraq."