Secret Squirrel
07-12-2006, 02:13 PM
The U.S. Army said on Wednesday it has decided to end a Halliburton Co. (HAL.N: Quote, Profile, Research) unit's multibillion-dollar contract to provide logistical support to soldiers in Iraq, and will rebid the contract later this year.
Army officials said the unit, KBR, will be allowed to take part in the new competition, but that one option under consideration is to split the work among three companies.
Dave Foster, an Army spokesman at the Pentagon, said the contract will be rebid. "The need for the service continues," Foster said. "They (Army officials) are simply restructuring the way they're going about requesting people to fill that need."
Halliburton, formerly run by Vice President Dick Cheney, has drawn scrutiny from auditors, congressional Democrats and the Justice Department for the quality and pricing of its work in Iraq that includes supplying water, dining and laundry services to the troops.
"The Army lives on lessons-learned. We get better each and every time we do it," Foster said. "There's discussion under way that there may be -- may be -- a better way of doing this if you open it up to as many as three bids for the contract."
The Washington Post reported the decision to end Halliburton's exclusive contract in its Wednesday edition.
Texas-based Halliburton is the world's second-largest oil services company and the U.S. military's biggest contractor in Iraq. Last year, the Army paid the company more than $7 billion under the contract, the Post said.
Halliburton said the U.S. Army's move to end the contract to provide logistical services to U.S. troops did not come as a surprise.
"It is neither unusual nor unexpected that the LOGCAP contract may be replaced with another competitively bid approach as previous iterations of this contract vehicle have experienced," Halliburton spokeswoman Melissa Norcross said in a statement.
The company has defended its troop support work. In Iraq, Kuwait and Afghanistan, KBR said it has prepared nearly 375 million meals, washed more than 18.5 million bundles of laundry and transported supplies more than 100 million miles.
"By all accounts, KBR's logistical achievements in support of the troops in Iraq, Kuwait and Afghanistan have been nothing short of amazing," Norcross said.
Shares of Halliburton were trading down 1.3 percent at $74.62 on the New York Stock Exchange in early afternoon trading, well above its 12-month low of $45.77 in July last year but below a high of $83.95 set on April 20.
Halliburton declined to comment on whether the contract cancellation would affect its planned initial public offering of KBR stock, expected to raise up to $550 million.
One company watcher said the company had been telling investors for months the government could end the contract.
"I wouldn't think this would have much impact on (KBR) one way or the other," Kurt Hallead, analyst with RBC Capital Markets said. (Additional reporting by Matt Daily in Houston)
link (http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&symbol=&storyID=2006-07-12T163123Z_01_N12292332_RTRIDST_0_ARMS-HALLIBURTON-IRAQ-UPDATE-1.XML&pageNumber=1&WTModLoc=InvArt-C1-ArticlePage1&sz=13)
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Army officials said the unit, KBR, will be allowed to take part in the new competition, but that one option under consideration is to split the work among three companies.
Dave Foster, an Army spokesman at the Pentagon, said the contract will be rebid. "The need for the service continues," Foster said. "They (Army officials) are simply restructuring the way they're going about requesting people to fill that need."
Halliburton, formerly run by Vice President Dick Cheney, has drawn scrutiny from auditors, congressional Democrats and the Justice Department for the quality and pricing of its work in Iraq that includes supplying water, dining and laundry services to the troops.
"The Army lives on lessons-learned. We get better each and every time we do it," Foster said. "There's discussion under way that there may be -- may be -- a better way of doing this if you open it up to as many as three bids for the contract."
The Washington Post reported the decision to end Halliburton's exclusive contract in its Wednesday edition.
Texas-based Halliburton is the world's second-largest oil services company and the U.S. military's biggest contractor in Iraq. Last year, the Army paid the company more than $7 billion under the contract, the Post said.
Halliburton said the U.S. Army's move to end the contract to provide logistical services to U.S. troops did not come as a surprise.
"It is neither unusual nor unexpected that the LOGCAP contract may be replaced with another competitively bid approach as previous iterations of this contract vehicle have experienced," Halliburton spokeswoman Melissa Norcross said in a statement.
The company has defended its troop support work. In Iraq, Kuwait and Afghanistan, KBR said it has prepared nearly 375 million meals, washed more than 18.5 million bundles of laundry and transported supplies more than 100 million miles.
"By all accounts, KBR's logistical achievements in support of the troops in Iraq, Kuwait and Afghanistan have been nothing short of amazing," Norcross said.
Shares of Halliburton were trading down 1.3 percent at $74.62 on the New York Stock Exchange in early afternoon trading, well above its 12-month low of $45.77 in July last year but below a high of $83.95 set on April 20.
Halliburton declined to comment on whether the contract cancellation would affect its planned initial public offering of KBR stock, expected to raise up to $550 million.
One company watcher said the company had been telling investors for months the government could end the contract.
"I wouldn't think this would have much impact on (KBR) one way or the other," Kurt Hallead, analyst with RBC Capital Markets said. (Additional reporting by Matt Daily in Houston)
link (http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&symbol=&storyID=2006-07-12T163123Z_01_N12292332_RTRIDST_0_ARMS-HALLIBURTON-IRAQ-UPDATE-1.XML&pageNumber=1&WTModLoc=InvArt-C1-ArticlePage1&sz=13)
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