Global Business and Ethics
Paul Davis
MGT/216
June 14, 2010
Paul Nesbitt

In 2002, a Texas company and subsidiary of Halliburton, Kellogg, Brown, and Root (KBR) arrived in Kuwait to provide material support i.e., food services, trucks, cots, tents, gymnasiums, showers, generators, air conditioners, you name it, KBR supplied it for the troops gathering there for the 2003 invasion of Iraq. According to CorpWatch, KBR received a ten-year, no-bid contract that provided international logistical support services for the Army, known as LOGCAP, the Logistics Civil Augmentation Program (CorpWatch, 2010). While KBR held the contract, the company’s employees in Kuwait handed off the actual work to subcontractors that were hounding the KBR offices looking to get a lucrative piece of the action during wartime business. Work amounting in billions of dollars that was subcontracted led to major controversial headlines worldwide, as these questionable agreements that included $186 million in bloated overcharges that was discovered by Pentagon auditors, of the $186 million, $108 million was excessive costs. Many of the questionable contracts were carelessly written and very little or no effort was made to seek competitive offers. It seems that often times politics is separated from the ethical practices other organizations are subject to upholding as everyday principles and values. When an organization is able to profit in such an obvious way and has lead to many deaths the ethical and social responsibility can no longer be ignored, and this company should suffer serious consequences for their actions. Due to the mismanagement, poor planning and oversight of work in Iraq Halliburton since separating itself from Kellogg, Brown, and Root (KBR) is no longer giving armed forces logistics support. Factors that influence Halliburton’s planning framework are the competition, vendors, and health and safety laws. With strategic planning it is necessary to examine an organizations business and choosing and motivating the appropriate people. Tactical planning involves taking a more detailed look at the immediate future, determining what actions to take and how they will effect the organization as a whole. Operational planning is discussing short term ways of achieving goals. Whereas, contingency planning, just as important if not more so than any other is trying to determine what will happen and how to adjust when and if matters go off schedule. In 2003, a plan was put on the table called, ‘Restoration of Iraqi Oil Infrastructure Final Work Plan.’ This plan allowed the US to give all the work to KBR in Iraqi, even before they had been awarded the contract. Baker Hughes, Schlumberger, and Tenchip, a few of the Halliburton competitors, were unable to view this document until two weeks prior to their own submissions were due.
This eliminated the competition and does not allow any other vendors winning this billion dollar investment deal for at a few years until a new contract is implemented, allowing room to focus on operational planning goals. Halliburton earned money from what are called “cost-plus” contracts primarily from the government. These types of contracts allow Halliburton to make all required purchases to complete the task and then later charging the government for the good and services that were provided with an additional fee to earn a profit. This is a sound management decision which involves short-term ways of accomplishing long-term objectives. However, Congress criticized Halliburton for increasing costs to the U.S. Army for food, shelter, and transportation of troops in the Middle East. It is reported that supervisors did not promote their buyers to give them alternative, less costly vendors. They felt the higher Halliburton purchases were the more the government would have to pay them back which would increase company profits tremendously.
With a company such as Halliburton, whose primary source of income is generated by drilling for oil in foreign territories, it is important that they adhere to the public health and safety codes. Codes that ensure environmental protection are secured for our clean air, water and soil. Enforced by the EPA Halliburton has faced some scrutiny for their pioneered technique of hydraulic fracturing, an oil and gas drilling. “Hydraulic fracturing provides access to hard-to-reach oil and gas deposits by pumping liquids underground at high pressure. The liquids sometimes include diesel fuel or other hazardous chemicals. Some of the fluids remain in the ground,” (Hamburger & Miller, 2004). At the time allowed them to dominate the fracturing market and accumulates about $1.5 billion a year in revenue.

References
Hamburger, T., & Miller, A.C. (2004, October 15). Investigation of drilling regulations is urged. Los Angeles Times, p. 1.
Phinney, D. (2005). Halliburton bribery scandal deepens former Kuwait manager indicted for million dollar payoff. CorpWatch. Retrieved from http://www.corpwatch.org/article.php?id=12011