farmgirl
12-12-2003, 01:05 AM
http://story.news.yahoo.com/news?tmpl=story&cid=542&e=1&u=/ap/20031212/ap_on_go_ca_st_pe/halliburton_probe
By MATT KELLEY, Associated Press Writer
WASHINGTON - Pentagon (news - web sites) auditors found that Vice President **** Cheney (news - web sites)'s former company may have overcharged the Army by as much as $61 million for gasoline in Iraq (news - web sites), senior defense officials said Thursday.
Halliburton apparently didn't profit from the possible overcharges, the officials said, speaking on condition of anonymity. The problem, the officials said, was that Halliburton may have paid a subcontractor too much for the gasoline in the first place.
The Pentagon officials said the Halliburton subsidiary involved in Iraq reconstruction work, Kellogg, Brown & Root, also submitted a proposal for cafeteria services that was $67 million too high. The officials said the Pentagon rejected that proposal.
The defense officials said they had no reason to believe the problems were anything other than "stupid mistakes" by Halliburton.
Houston-based Halliburton pledged to cooperate with the inquiry.
"We expect and want continuing reviews and audits that detail our work in Iraq," Dave Lesar, Halliburton's chairman, president and chief executive officer, said in a statement. "Any contract that is this large and grows this fast is, of course, going to be subject to question."
News of the problems came as President Bush (news - web sites) worked to justify his decision to limit Iraq reconstruction contracts to companies from the United States or countries that supported the war. The move angered governments whose firms were cut out of the bidding process, including France, Germany, Russia and Canada.
Many prominent Democrats also have criticized the Halliburton contracts specifically, suggesting they were a political payoff for a company with strong ties to the GOP and whose executives gave generously to the Bush campaign.
Sen. Frank Lautenberg, D-N.J., on Thursday asked for Senate hearings on the Pentagon's findings.
"I have long been troubled by the continued growth of the Pentagon's no-bid contract with Halliburton, and the delay in the Pentagon's promise to compete this contract competitively," Lautenberg wrote to Senate Government Affairs Committee Chairwoman Susan Collins, R-Maine.
Cheney and Pentagon officials deny any political motive for awarding the no-bid contracts to KBR, which has a long-standing relationship with the military as a major Pentagon contractor.
Routine audits by the Defense Contract Audit Agency uncovered the problems.
Pentagon officials said they were concerned about the problems with KBR's contracts, which were awarded without competitive bidding for up to $15.6 billion for rebuilding Iraq's oil infrastructure and assisting U.S. troops there. About $5 billion has been spent or obligated to spend on those contracts so far.
"Contractor improprieties and/or contract mischarging on department contracts will neither be condoned nor allowed to continue," Dov Zakheim, the Pentagon's budget chief, said Thursday.
The defense officials, who are involved in the audit of the contracts, said the Pentagon was negotiating with KBR over how to resolve the fuel-pricing issue. They declined to name the subcontractor that provided the fuel, saying that company may not have been notified of the inquiry's findings.
The possible overcharging involved 56.6 million gallons of gasoline KBR supplied in Iraq from the end of the war until Sept. 30, the Pentagon officials said. The officials said the KBR was charging $2.27 a gallon for gasoline while another contract was for $1.18.
Democratic Reps. Henry Waxman of California and John Dingell of Michigan had accused KBR of price-gouging for gasoline used in Iraq.
The Army is to open its KBR contracts to competitive bidding next month. The contracts evolved from work to put out oilfield fires to overseeing rebuilding of Iraq's oil infrastructure and providing fuel for the country. KBR also provides support services to U.S. troops in Iraq such as serving hot meals.
Halliburton has said it needs to charge a high price for fuel because it must be delivered in a combat zone. Several KBR workers have been killed or wounded in attacks by Iraqi insurgents.
The allegations of overcharging are not the first against KBR. Last year, the firm paid $2 million in fines to settle charges it inflated prices for repairs and maintenance at Fort Ord, Calif.
Congress' General Accounting Office (news - web sites) found in 1997 and 2000 that KBR had billed the Army for questionable expenses on its support contracts for operations in the Balkans. Those reviews cited instances such as charging $85.98 per sheet of plywood that cost $14.06 and billing the Army for cleaning some offices up to four times per day.
Cheney, a former defense secretary, stepped down as chief executive officer of Halliburton when he became Bush's running mate in 2000 and has said he played no role in contracts for his former company. Cheney became head of the company in 1995.
By MATT KELLEY, Associated Press Writer
WASHINGTON - Pentagon (news - web sites) auditors found that Vice President **** Cheney (news - web sites)'s former company may have overcharged the Army by as much as $61 million for gasoline in Iraq (news - web sites), senior defense officials said Thursday.
Halliburton apparently didn't profit from the possible overcharges, the officials said, speaking on condition of anonymity. The problem, the officials said, was that Halliburton may have paid a subcontractor too much for the gasoline in the first place.
The Pentagon officials said the Halliburton subsidiary involved in Iraq reconstruction work, Kellogg, Brown & Root, also submitted a proposal for cafeteria services that was $67 million too high. The officials said the Pentagon rejected that proposal.
The defense officials said they had no reason to believe the problems were anything other than "stupid mistakes" by Halliburton.
Houston-based Halliburton pledged to cooperate with the inquiry.
"We expect and want continuing reviews and audits that detail our work in Iraq," Dave Lesar, Halliburton's chairman, president and chief executive officer, said in a statement. "Any contract that is this large and grows this fast is, of course, going to be subject to question."
News of the problems came as President Bush (news - web sites) worked to justify his decision to limit Iraq reconstruction contracts to companies from the United States or countries that supported the war. The move angered governments whose firms were cut out of the bidding process, including France, Germany, Russia and Canada.
Many prominent Democrats also have criticized the Halliburton contracts specifically, suggesting they were a political payoff for a company with strong ties to the GOP and whose executives gave generously to the Bush campaign.
Sen. Frank Lautenberg, D-N.J., on Thursday asked for Senate hearings on the Pentagon's findings.
"I have long been troubled by the continued growth of the Pentagon's no-bid contract with Halliburton, and the delay in the Pentagon's promise to compete this contract competitively," Lautenberg wrote to Senate Government Affairs Committee Chairwoman Susan Collins, R-Maine.
Cheney and Pentagon officials deny any political motive for awarding the no-bid contracts to KBR, which has a long-standing relationship with the military as a major Pentagon contractor.
Routine audits by the Defense Contract Audit Agency uncovered the problems.
Pentagon officials said they were concerned about the problems with KBR's contracts, which were awarded without competitive bidding for up to $15.6 billion for rebuilding Iraq's oil infrastructure and assisting U.S. troops there. About $5 billion has been spent or obligated to spend on those contracts so far.
"Contractor improprieties and/or contract mischarging on department contracts will neither be condoned nor allowed to continue," Dov Zakheim, the Pentagon's budget chief, said Thursday.
The defense officials, who are involved in the audit of the contracts, said the Pentagon was negotiating with KBR over how to resolve the fuel-pricing issue. They declined to name the subcontractor that provided the fuel, saying that company may not have been notified of the inquiry's findings.
The possible overcharging involved 56.6 million gallons of gasoline KBR supplied in Iraq from the end of the war until Sept. 30, the Pentagon officials said. The officials said the KBR was charging $2.27 a gallon for gasoline while another contract was for $1.18.
Democratic Reps. Henry Waxman of California and John Dingell of Michigan had accused KBR of price-gouging for gasoline used in Iraq.
The Army is to open its KBR contracts to competitive bidding next month. The contracts evolved from work to put out oilfield fires to overseeing rebuilding of Iraq's oil infrastructure and providing fuel for the country. KBR also provides support services to U.S. troops in Iraq such as serving hot meals.
Halliburton has said it needs to charge a high price for fuel because it must be delivered in a combat zone. Several KBR workers have been killed or wounded in attacks by Iraqi insurgents.
The allegations of overcharging are not the first against KBR. Last year, the firm paid $2 million in fines to settle charges it inflated prices for repairs and maintenance at Fort Ord, Calif.
Congress' General Accounting Office (news - web sites) found in 1997 and 2000 that KBR had billed the Army for questionable expenses on its support contracts for operations in the Balkans. Those reviews cited instances such as charging $85.98 per sheet of plywood that cost $14.06 and billing the Army for cleaning some offices up to four times per day.
Cheney, a former defense secretary, stepped down as chief executive officer of Halliburton when he became Bush's running mate in 2000 and has said he played no role in contracts for his former company. Cheney became head of the company in 1995.