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Pentagon Finds Halliburton Overcharged

December 11, 2003

WASHINGTON (AP) _ A Pentagon investigation has found overcharging and other violations in a $15.6 billion Iraq reconstruction contract awarded to Vice President Dick Cheney’s former company, a defense official said Thursday.

An ongoing audit of Halliburton’s Kellogg, Brown & Root subsidiary found substantial overcharging for fuel and other items, the official said, speaking on condition of anonymity. The problems go beyond overcharging, the official said, declining to elaborate.

The Defense Contract Audit Agency has talked with KBR executives during the audit, the official said.

A KBR spokeswoman, Patrice Mingo, did not immediately return telephone and e-mail messages seeking comment.

Democratic Reps. Henry Waxman of California and John Dingell of Michigan have accused KBR of price gouging for gasoline used in Iraq. The two congressmen said Halliburton charges the Army $2.65 a gallon for gas under a no-bid contract, while another Pentagon agency imports fuel from Kuwait to Iraq at a cost of $1.09 to $1.15 per gallon.

The Army is to open its KBR contract to competitive bidding next month.

Halliburton has denied any price gouging. The company has said it needs to charge a high price because the fuel must be delivered in a combat zone.

Several KBR workers have been killed or wounded in attacks by Iraqi insurgents.

Some of the Democratic presidential candidates have said the awarding of several no-bid contracts to Halliburton appears to be a political payoff to a firm whose executives were Bush campaign donors. Bush administration and Halliburton officials have denied politics played any role in awarding the contracts to KBR, which also has Pentagon contracts for food service and other support for troops in Iraq and other countries.

Cheney, a former defense secretary, stepped down from Halliburton when he became Bush’s running mate in 2000 and has said he played no role in contracts for his former company.

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