A Pentagon audit of Halliburton, the oil services firm once run by Vice President Dick Cheney, found the company may have overbilled the US government by more than US$120 million on Iraq contracts, US defense officials said on Thursday.
Defense officials said Halliburton's Kellogg Brown and Root unit, which has denied wrongdoing, may have been overcharged by a Kuwaiti sub-contractor by US$61 million for fuel brought into Iraq from Kuwait under a deal signed in March with the US Army Corps of Engineers to rebuild Iraq's oil industry.
That no-competition deal, which has clocked up about US$2 billion in business so far, is set to be replaced by two new, competitively bid contracts to rebuild Iraq's oil sector.
After several delays, a decision on those US$2 billion contracts is expected by mid-January and military sources said the audit would likely be considered when Halliburton's proposal was reviewed for the follow-on deals.
Under another KBR 10-year contract to provide logistical support for troops, the auditors found what they deemed a US$67 million overcharge for dining facilities throughout the region.
"DCAA [Defense Contract Audit Agency] audits have found some problems that the department is addressing" with KBR, Dov Zakheim, the Pentagon's chief financial officer, said in a written statement.
KBR is not suspected of improperly pocketing any taxpayer funds in either case but may have failed to ensure its subcontractors performed as required, defense officials said.
So far the company has generated about US$2 billion in business from the March contract and more than US$2 billion from the logistics contract for which it supplies services ranging from delivering mail to doing laundry for US troops.
Chris Lehane, a spokesman for Democratic presidential hopeful Wesley Clark, said: "George W. Bush is a president for Big Oil, of Big Oil, and `buy' Big Oil. He is more concerned about the success of Halliburton than having a success strategy in Iraq."
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