Pentagon auditors found more than $100 million in questionable costs in one section of a massive, no-bid Halliburton Co. contract for delivering fuel to Iraq, according to a summary of their report released yesterday by congressional Democrats.
The audit faulted Halliburton subsidiary Kellogg Brown & Root Inc. for providing cost data that did not match its accounting records, and for failing to negotiate lower prices for fuel from a Kuwaiti supplier. The audit also described as "illogical" a case in which KBR reported it had purchased liquefied gas for $82,100, and then spent $27.5 million to transport it.
Rep. Henry A. Waxman (D-Calif.), above, pressed the administration to publicize all the audits and to recover contract overcharges. (Alex Wong, Meet The Press--AP)
The Defense Contract Audit Agency, which produced the audit, had reported in December 2003 that Halliburton may have overcharged the government by up to $61 million by buying more expensive fuel from Kuwait rather than from Turkey.
The audit summary, written in October 2004 but withheld from public release, covers one out of 10 sections from a $2.5 billion contract under which Halliburton was tapped to deliver fuel, fight oil well fires and repair oil facilities in Iraq after the U.S.-led invasion in the spring of 2003. Of the $2.5 billion, approximately $1.6 billion came from Iraqi oil proceeds and the rest was funded by U.S. taxpayers.
Halliburton, where Vice President Cheney served as chief executive from 1995 to 2000, has come under persistent criticism for its handling of several Iraqi reconstruction contracts. For example, auditors turned up $1.8 billion in "unsupported costs" in a $10.5 billion Army logistics contract that KBR won on a competitive bid. Despite those findings and a recommendation to withhold some of the payments, the Army decided last month to continue paying Halliburton in full, plus performance bonuses.