- A Pentagon audit has found Vice President
Dick Cheney's former company may have overcharged
the Army by $1.09 per gallon for nearly 57 million
gallons of gasoline delivered to citizens in
Iraq, senior defense officials say.
found potential overcharges of up to $61 million
for gasoline that a Halliburton subsidiary delivered
as part of its no-bid contract to help rebuild
Iraq's oil industry.
the company apparently didn't profit from the
discrepancy, according to officials who briefed
reporters Thursday on condition of anonymity.
The problem, the officials said, was that Halliburton
may have paid a Kuwaiti subcontractor too much
for the gasoline in the first place.
Halliburton statement released Thursday said
the Kuwaiti company was the only one that met
the Army Corps of Engineers' specifications.
"Halliburton only makes a few cents on the dollar
when fuel is delivered from Kuwait to Iraq,"
the statement read.
Pentagon officials said Halliburton's Kellogg,
Brown & Root subsidiary also submitted a proposal
for cafeteria services that was $67 million
too high. The officials said the Pentagon rejected
defense officials said they had no reason to
believe the problems were anything other than
"stupid mistakes" by Halliburton. They said
the company and the Pentagon were negotiating
a possible settlement of the matter, which could
include repayment by Halliburton.
the statement Thursday, Halliburton chairman,
president and CEO Dave Lesar said, "We welcome
a thorough review of any and all of our government
of the problems came as President Bush worked
to justify his decision to limit $18.6 billion
in 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
Canada, France, Germany and Russia.
Democrats also have criticized the Halliburton
contracts, suggesting they were a political
payoff for a company with strong ties to the
GOP and whose executives gave generously to
the Bush campaign.
Frank Lautenberg, D-N.J., called Thursday for
Senate hearings on the Pentagon's findings.
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.
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.
audits by the Defense Contract Audit Agency
uncovered the problems.
officials said they were concerned about 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 is obligated to be spent on
those contracts so far.
improprieties and/or contract mischarging on
department contracts will neither be condoned
nor allowed to continue," said Dov Zakheim,
the Pentagon's budget chief.
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 Kuwaiti subcontractor
that provided the fuel, saying that company
may not have been notified of the inquiry's
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 KBR was charging
$2.27 a gallon for gasoline while another contract
for gas delivered from Turkey was for $1.18
United States subsidized the price of the gasoline,
meaning Iraqis only paid the prewar price of
4 cents per gallon.
Reps. Henry Waxman of California and John Dingell
of Michigan had accused KBR of price-gouging
for gasoline used in Iraq.
Army is to open its KBR contracts to competitive
bidding next month. The contracts evolved from
work to put out oilfield fires into overseeing
reconstruction 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.
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.
allegations of overcharging are not the first
against KBR. Last year, the firm paid $2 million
to settle charges that it inflated prices for
repairs and maintenance at Fort Ord, Calif.
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.
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