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USA: US Army Criticised Over Halliburton Contract

The Guardian
July 22nd, 2004

The US army bungled the planning and management of a multi-billion dollar contract with Halliburton to provide food and other services to troops in Iraq, congressional investigators today concluded.

Investigators from the US government's accountability office found a "pattern of contractor management problems" leading to cost disputes between the Pentagon and Halliburton. They also criticised Halliburton's staffing and accounting.

So far, the military has agreed to pay Halliburton - which was headed by the US vice-president, Dick Cheney, between 1995 and 2000 - more than $5bn (£2.7bn) on the deal.

Separate federal investigations are examining whether Halliburton had overcharged the army for fuel and meals, and looking into allegations that former company workers could have taken bribes from a Kuwaiti subcontractor.

A seperate report from congressional Democrats said Halliburton charged the government $2.68 per gallon to import gasoline to Iraq from Kuwait, but a government agency did the same work for $1.57 a gallon. That difference had cost the government an extra $166.5m, the report said.

Wendy Hall, a Halliburton spokeswoman, said price comparisons were "unfair" because the terms of the contracts were probably different. She added that the company had not obtained a copy of the government arrangement cited in the Democrats' report.

The report said Halliburton had hired a Kuwaiti company to buy the gas as a middleman and transport it into Iraq, while the defence energy support centre bought the fuel directly and hired the company only to transport it.

Halliburton has said that Kuwait's government-controlled oil company would sell gasoline only through the firm, named Altanmia, adding that it "did the best it could" amid the chaos of war.

It has complained of problems with military overseeing of the contract - complaints echoed in today's GAO report.

The report said problems with army oversight included waiting until May 2003 - after the fall of Baghdad - to develop a plan for providing support services to troops in Iraq. The "piecemeal approach to planning" resulted in constant changes being made to the support plan - more than 150 in all.

It also revealed that, in some cases, it had taken more than a year for the final costs of projects worth billions of dollars to be worked out.

However, the report said Halliburton's staffing problems and "antiquated accounting system" had hampered the process of finalising costs for portions of the contract.

It said the company's cost estimates were frequently inaccurate or lacked the proper documentation, and added that Halliburton was often behind schedule on its work.

In a statement, Halliburton said it had "placed continuous pressure" on itself to "do better" and was following constantly-changing directions given by military officials.

 




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