Halliburton, which supplies military support services in Iraq and elsewhere, routinely purchased items at higher prices from preferred suppliers, said Henry Bunting, who worked for the company in Kuwait last year.
"There were frequent instructions by procurement supervisors and management to keep ... requisitions under the $2,500 threshold to avoid competitive bidding," Bunting, of Houston, told the Senate Democratic Policy Committee.
"Remember, this is a 'cost plus contract' so Halliburton would get reimbursed for its costs plus a percentage," he said.
The chairman of the panel, Sen. Byron Dorgan, D-N.D., said the hearing was needed because of allegations that Halliburton overcharged for delivery of gasoline to Iraq; that company employees took kickbacks and that the firm charged too much for meals served to troops in Iraq.
"It seems to me that these incidents may well reflect a broad mind-set: one that was born on the day that these contracts were awarded without competition, and that was nurtured through a lack of oversight by this current administration and majority-controlled Congress," Dorgan said.
Sen. Frank Lautenberg, D-N.J., said he has been requesting for nine months that the Senate Governmental Affairs Committee, led by Republicans, conduct the hearing.
Bunting, who quit after working 15 weeks for Halliburton in Kuwait, handed Dorgan an embroidered towel with the logo of a Halliburton subsidiary, saying a company manager insisted on ordering the towels for between $4.50 and $5.50 instead of $1.60 for cheaper towels.
On Thursday, two House members wrote Pentagon auditors about allegations of waste by Bunting and a second, unidentified former Halliburton worker. The letter was sent by Reps. Henry Waxman, D-Calif., and John Dingell, D-Mich.
Halliburton, run by Cheney before his 2000 vice presidential campaign, has consistently denied overcharges.
Bunting was a field buyer who filled requisitions from Halliburton employees by locating vendors. The second ex-employee was a procurement supervisor who did similar work.
According to Waxman and Dingell, Bunting and the unidentified whistleblower contend:
- Top Halliburton officials frequently told employees that high prices charged by vendors were not a problem because the U.S. government would reimburse the costs and then pay the company an additional fee.
- Higher than necessary prices were paid for ordinary vehicles, leased for $7,500 a month, and for furniture and cellular telephone service.
- Halliburton tried to keep as many purchase orders as possible below $2,500 so its buyers could avoid the requirement to solicit quotes from more than one vendor.
- Supervisers provided buyers with a list of preferred Kuwaiti vendors, including companies that charged excessive prices. Buyers were not encouraged to identify alternative vendors.
Congressional Democrats and the party's presidential candidates have made Halliburton's extensive government contracts a major election issue, contending the business showed favoritism toward Cheney's former company.
The vice president has repeatedly said he had no involvement with the company once he left Halliburton before the 2000 campaign. However, his financial disclosure form indicates he still receives deferred compensation from the firm.
Halliburton was a top Pentagon contractor well before Cheney became vice president. According to Defense Department statistics, from fiscal year 1996 to 2000, Halliburton won $2.4 billion in contracts. During the first two years of the Bush administration, Halliburton's take was about equal to its average over the last five years of the Clinton administration.
But in fiscal year 2003, Halliburton became the seventh biggest Pentagon contractor, with $3.9 billion is Defense Department business.