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U.S.A.: Army Awards Halliburton Bonuses for Some Iraq Work

Although under scrutiny for its contracts in Iraq, Halliburton has been given bonuses for some of its work supporting the U.S. military in Kuwait and Afghanistan. The Army said KBR's performance has been rated as "excellent" to "very good" for more than a dozen "task orders" in Kuwait and Afghanistan supporting troops.

by Sue Pleming Reuters
February 24th, 2005

WASHINGTON - U.S. defense contractor Halliburton, under scrutiny for its contracts in Iraq, has been given bonuses for some of its work supporting the U.S. military in Kuwait and Afghanistan, the Army said on Thursday.

But the Army said performance-based bonuses had not been paid yet to Halliburton's Kellogg Brown and Root unit for dining services for U.S. troops in those countries. Military auditors have criticized those services as too costly and have asked the Texas-based company to justify its charges.

"Dining Facilities costs questioned by the Defense Contract Audit Agency (DCAA) have not been included in Award Fee Boards but are scheduled to be addressed later," the statement said.

Army Field Support Command in Rock Island, Illinois, said award fee boards held over recent months rated KBR's performance as "excellent" to "very good" for more than a dozen "task orders" in Kuwait and Afghanistan supporting troops.

Much of Halliburton's work for the U.S. military is on a cost-plus basis, which means the company can earn up to 2 percent extra depending on their performance. An Army spokesman said KBR had been awarded $9.4 million in bonus payments from its work in Kuwait and Afghanistan.

Overall, KBR has earned $7.2 billion under a massive 2001 logistics contract with the U.S. military and has obligations to earn more than $10 billion under that deal. It has separate deals with the government for reconstruction work in Iraq.

The bulk of money paid out so far under the logistics deal -- about $6.6 billion -- is for work in Iraq which still must be assessed for bonuses that could amount to hundreds of millions of dollars.

Army contracting officer Sylvia Youngman said the first military award fee board for KBR's Iraq task orders would begin on Feb. 28 and would likely take many weeks.

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

KBR's logistics deal with the Army has been fraught with problems from the outset in Iraq, with allegations by auditors that KBR overcharged for some of its work and criticism of the company's accounting procedures.

Critics, especially from the Democratic Party, have accused the Pentagon of giving special treatment to KBR because of its former ties to Vice President Dick Cheney, who ran the company from 1995-2000.

Several U.S. government departments have launched investigations into Halliburton's work in Iraq, including a probe into whether it overcharged to supply fuel to Iraqi civilians. The company has said its prices were fair and has denied any wrongdoing.





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