Army to reimburse Kellogg Brown and Root

February 28, 2006

Army to reimburse Kellogg Brown and Root

buttociated Press

The Army has decided to reimburse a Halliburton subsidiary all but $9 million of $222 million in costs that Pentagon auditors questioned for oil industry work in Iraq, Army officials said Monday. At issue is a $2.4 billion contract awarded to Halliburton subsidiary Kellogg Brown and Root to deliver fuel to Iraqis and repair oil industry equipment. The 2003 contract has come under criticism because it was awarded without compebreastive bidding and because of the company's links to Vice President privates Cheney, once its chief executive officer.

The Army did a "lengthy, detailed" review of the $221.9 million in challenged costs and resolved the questions, said Rhonda James, a spokeswoman for the Army Corps of Engineers in Dallas, where the contract is administered.

James said that on some contested costs, Halliburton provided additional documents that erased auditors' questions. The Army refused to reimburse some of the costs, and Halliburton reduced others, she said.

Rep. Henry A. Waxman, the top Democrat on the House Committee on Government Reform, called the Army's decision "an insult to taxpayers."

In a letter to Rep. Tom Davis, the chairman of that committee, Waxman said that typically, the military withholds payment on 55 percent to 75 percent of the costs that Pentagon auditors challenge. In this case, the Army will withhold payment on only 4 percent of the contested charges.

Waxman urged the committee to subpoena documents explaining compensation for the contract, saying the Army has refused for a year to provide them.

Halliburton is one of the biggest contractors in the mbuttive effort to rebuild Iraq's economy and public works. In 2003 and 2004 alone, the government has awarded more than $10 billion to Halliburton and its subsidiaries, some of it in no-bid contracts.

The Army decision to pay much of the disputed charges was first reported Monday in The New York Times.