By Lisa Myers Senior investigative correspondent
NBC News
updated 10/29/2004 7:50:00 PM ET 2004-10-29T23:50:00

The FBI wants to question Bunny Greenhouse, the top civilian procurement officer for the Army Corps of Engineers, charged with ensuring fair competition in Pentagon contracts. In an exclusive interview with NBC News, Greenhouse alleges that federal contracting officials repeatedly and improperly bent the rules to favor Halliburton.    

"It was the worst abuse of the procurement and contracting system that I have seen,” says Greenhouse. “It was misconduct and part of that misconduct was blatant." 

In one example, Greenhouse points to the Pentagon's decision, citing the emergency of the war, to award Halliburton a no-bid contract to repair the Iraqi oil industry -- not just for one year, but for five years, for a contract cost of up to$7 billion.

Greenhouse wrote that the contract was too long.

"One year to me, was reasonable," says Greenhouse. “But not five years.”

She was overruled. But after controversy erupted, the Pentagon awarded part of the contract to another company.

In another example, government auditors found Halliburton may have overcharged by $61 million for fuel. But, waiving government rules, the Pentagon did not force Halliburton to justify its prices. Greenhouse says she didn't learn the rules were being waived until later, and would have objected.

Some experts say all this appears legal, but highly unusual. The FBI is investigating the overcharging and now sees Greenhouse as a possible witness.

“It all favored Halliburton,” say Greenhouse.

Why the favoritism? Greenhouse claims co-workers told her it was for unspecified "political reasons." She says she is not alleging any impropriety by President Bush or Vice President Cheney.

“None whatsoever,” she says.

After she raised her objections, Greenhouse says eventually cut out of key decisions. In July, documents show she objected to extending a Halliburton contract in the Balkans, writing "incorrect!", "no!" and "I cannot approve this." She refused to sign. Eventually an assistant did.

Retired military officials tell NBC News that it's unusual for a commander to repeatedly overrule the concerns of someone in Greenhouse's position. But they say there could be legitimate reasons.

The Pentagon won't comment on allegations of misconduct, citing ongoing investigations, but insists all Halliburton contracts were handled properly. A Halliburton spokesman says, "Old allegations have once again been recycled, this time one week before the election."

When asked if she is trying to influence the election or hurt President Bush, Greenhouse says, “Not at all.”

Greenhouse, a registered Independent, insists the timing was triggered by a letter from the Pentagon this month, demoting her. It says, "Your last two final performance ratings were less than fully successful."

So is Greenhouse just a poor performer trying to save her career? Some former co-workers say she has had problems on the job. But a former boss says Greenhouse has great integrity, though also had detractors because she was a stickler for the rules.

"There were those that wanted to take short cuts in the contracting process, she didn't allow short cuts,” says Ret. Commanding General Joseph Ballard, who served in the U.S. Army Corps of Engineers from 1996-2000.

Greenhouse says she tried to fix the problems internally and is speaking out publicly as a last resort.

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