Army to Pay Halliburton Unit Most Costs Disputed by Audit - New York Times
Army to Pay Halliburton Unit Most Costs Disputed by Audit - New York Times
The Army has decided to reimburse a Halliburton subsidiary for nearly all of its disputed costs on a $2.41 billion no-bid contract to deliver fuel and repair oil equipment in Iraq, even though the Pentagon's own auditors had identified more than $250 million in charges as potentially excessive or unjustified.
The Army said in response to questions on Friday that questionable business practices by the subsidiary, Kellogg Brown & Root, had in some cases driven up the company's costs. But in the haste and peril of war, it had largely done as well as could be expected, the Army said, and aside from a few penalties, the government was compelled to reimburse the company for its costs.
Under the type of contract awarded to the company, "the contractor is not required to perform perfectly to be entitled to reimbursement," said Rhonda James, a spokeswoman for the southwestern division of the United States Army Corps of Engineers, based in Dallas, where the contract is administered.
...
One of Halliburton's most persistent critics, Representative Henry A. Waxman, a California Democrat who is the ranking minority member of the House Committee on Government Reform, said in a written statement about the Army's decision, "Halliburton gouged the taxpayer, government auditors caught the company red-handed, yet the Pentagon ignored the auditors and paid Halliburton hundreds of millions of dollars and a huge bonus."
About $208 million of the disputed charges was mostly related to the cost of importing fuel, which was at the heart of the controversy surrounding the contract. Kellogg Brown & Root hired a little-known Kuwaiti company, Altanmia, to transport fuel in enormous truck convoys. The Pentagon auditors found that in part because of the transportation fees that Kellogg Brown & Root agreed to pay Altanmia, the cost for a gallon of gasoline was roughly 40 percent higher than what the American military paid when it did the job itself — under a separate contract it had negotiated with Altanmia.
The Army said in a written statement that it had largely accepted Kellogg Brown & Root's assertions that costs had been driven up by factors beyond its control — the exigencies of war and the hard-line negotiating stance of the state-owned Kuwait Petroleum Corporation. The Army said the Kuwaiti fuel company blocked attempts by Kellogg Brown & Root to renegotiate its transportation contract with Altanmia. In the end, the Army decided to pay the Halliburton subsidiary all but $3.81 million of the $208 million in fuel-related costs questioned by auditors.
The Army has decided to reimburse a Halliburton subsidiary for nearly all of its disputed costs on a $2.41 billion no-bid contract to deliver fuel and repair oil equipment in Iraq, even though the Pentagon's own auditors had identified more than $250 million in charges as potentially excessive or unjustified.
The Army said in response to questions on Friday that questionable business practices by the subsidiary, Kellogg Brown & Root, had in some cases driven up the company's costs. But in the haste and peril of war, it had largely done as well as could be expected, the Army said, and aside from a few penalties, the government was compelled to reimburse the company for its costs.
Under the type of contract awarded to the company, "the contractor is not required to perform perfectly to be entitled to reimbursement," said Rhonda James, a spokeswoman for the southwestern division of the United States Army Corps of Engineers, based in Dallas, where the contract is administered.
...
One of Halliburton's most persistent critics, Representative Henry A. Waxman, a California Democrat who is the ranking minority member of the House Committee on Government Reform, said in a written statement about the Army's decision, "Halliburton gouged the taxpayer, government auditors caught the company red-handed, yet the Pentagon ignored the auditors and paid Halliburton hundreds of millions of dollars and a huge bonus."
About $208 million of the disputed charges was mostly related to the cost of importing fuel, which was at the heart of the controversy surrounding the contract. Kellogg Brown & Root hired a little-known Kuwaiti company, Altanmia, to transport fuel in enormous truck convoys. The Pentagon auditors found that in part because of the transportation fees that Kellogg Brown & Root agreed to pay Altanmia, the cost for a gallon of gasoline was roughly 40 percent higher than what the American military paid when it did the job itself — under a separate contract it had negotiated with Altanmia.
The Army said in a written statement that it had largely accepted Kellogg Brown & Root's assertions that costs had been driven up by factors beyond its control — the exigencies of war and the hard-line negotiating stance of the state-owned Kuwait Petroleum Corporation. The Army said the Kuwaiti fuel company blocked attempts by Kellogg Brown & Root to renegotiate its transportation contract with Altanmia. In the end, the Army decided to pay the Halliburton subsidiary all but $3.81 million of the $208 million in fuel-related costs questioned by auditors.
posted by LexMonkey at 3/06/2006 05:28:00 PM ||
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