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U.S.A.: Pentagon Gives $72 Million Bonus to Halliburton

The U.S. Army awarded $72 million in bonuses to Halliburton Co. for logistics work in Iraq, but had not decided whether to give the Texas company bonuses for disputed dining services to troops.

by Sue PlemingReuters
May 10th, 2005

WASHINGTON - The U.S. Army said on Tuesday it had awarded $72 million in bonuses to Halliburton Co. for logistics work in Iraq but had not decided whether to give the Texas company bonuses for disputed dining services to troops.

Army Field Support Command in Rock Island, Illinois, said in a statement it had given Halliburton unit Kellogg Brown & Root ratings from "excellent" to "very good" for six task orders for work supporting U.S. troops in Iraq.

The Army said its Award Fee Board in Iraq had met in March and had agreed to pay KBR bonuses for work it did in support of U.S. forces there.

The Army said in a statement later that while it had given the company an additional $72 million, it had denied KBR $10.1 million in bonuses and not paid the maximum allowed on any of the task orders.

"We have protected the taxpayer FIRST," said the Army in a statement released later, pointing out this paragraph had been "inadvertently left off" the original news release.

The Army said dining facility costs questioned by auditors from the Defense Contract Audit Agency had not yet been considered by the military's Award Fee Board. No details were available as to when this dining fee bonus would be resolved.

Much of Halliburton's work for the U.S. military, ranging from building bases to delivering mail, is on a cost-plus basis, which means the company can earn up to 2 percent extra depending on its performance.

Bonuses are awarded based on, among other factors, how efficient and responsible the company is to requests from the Army and is an indicator of how the Army views KBR's performance in the field.

New Jersey Democratic Sen. Frank Lautenberg, a vocal critic of Halliburton's performance in Iraq, said Halliburton did not deserve a bonus.

"It is outrageous that the Bush Administration would give Halliburton a bonus after we have seen its overcharges, sloppy accounting and kick-back schemes in Iraq," Lautenberg said. "Giving Halliburton a bonus is like giving your worst employee a raise."

KBR's logistics deal with the U.S. military has been in the spotlight from the outset in Iraq, with allegations by auditors that they overcharged for some work, including dining services.

In addition, investigators are looking into whether the Texas-based firm charged too much to supply fuel to Iraqi civilians, a claim the firm says is not justified.

Halliburton, which was run by Vice President Dick Cheney until he joined the 2000 race for the White House, has earned more than $7 billion under its 2001 logistics contract with the U.S. military.

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