Supply Chain

Halliburton Accused of ”Deficiencies” in Iraq

The U.S. military is holding back $186 million for meals due to possible overpricing at dining halls for troops in Kuwait and Iraq.
Stephen TaubJune 16, 2004

Government auditors are turning up the heat on Vice President Dick Cheney’s former company.

William Reed, director of the Pentagon’s Defense Contract Audit Agency (DCAA), testified in congressional hearings that his agency found “significant deficiencies” in how Halliburton has handled billions of dollars of work in Iraq, according to Reuters.

Halliburton subsidiary Kellogg Brown and Root (KBR) can potentially earn more than $18 billion under two major contracts in Iraq — one to handle logistics for U.S. troops and another to restore the country’s oil infrastructure, the wire service noted.

“DCAA has identified significant deficiencies in KBR’s estimating practices related to the award of subcontract costs,” Reed reportedly told the House of Representatives Committee on Government Reform, in prepared testimony. He added that the deficiencies led to possible overpricing at dining halls for U.S. troops in Kuwait and Iraq. As a result, according to the published account, the military has been holding back $186 million for meals.

KBR’s internal analysis found that it probably overestimated meal charges by about 19 percent, reported Reuters; Reed testified that this figure is probably closer to 36 percent.

The General Accounting Office also presented a report at the hearing, added the wire service, which found problems with Halliburton’s logistics contract. “We found the use of the LOGCAP contract in Kuwait and Iraq was not adequately planned, nor was it planned in accordance with applicable Army guidance,” said David Walker, comptroller general of the GAO, according to Reuters.

Walker reportedly said that work plans were frequently revised, making oversight difficult. As examples, he cited one task order supporting troops in Iraq that was revised seven times in less than a year, and another for logistical support for troops in Kuwait that was changed 18 times.