Halliburton, Again

From Holden:

Damn, I can’t wait until Rep. Henry Waxman gets subpeona power.

Even as a Halliburton subsidiary was absorbing harsh criticism of its costs on a 2003 no-bid contract for work in Iraq, the government officials overseeing a second contract wrote that the company was running up exorbitant new expenses on similar work, according to a report issued yesterday by the staff for the Democrats on the House Government Reform Committee.

The report, prepared for a frequent critic of Halliburton, Representative Henry A. Waxman of California, was based on previously undisclosed correspondence and performance evaluations from 2004 and 2005.

The documents show that the government’s contracting officers became increasingly frustrated as they tried to penetrate what they considered to be inaccurate or misleading progress reports and expense vouchers filed by the subsidiary, Kellogg Brown & Root.

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From Holden:

Kellogg Brown & Root’s second contract, awarded in January 2004 for rebuilding oil infrastructure in southern Iraq, has a maximum value of $1.2 billion. A company spokeswoman, Melissa Norcross, said that the report was “as devoid of context as it is new information” and that many of the issues raised by the contracting officers had been resolved.


But Mr. Waxman, the ranking Democrat on the committee, said the report showed that the company had “actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract.”

William L. Nash, a retired Army general who is a senior fellow at the Council on Foreign Relations and an expert on post-conflict zones, said the unusually revealing documents laid bare “a microcosm of all the ills” of the Iraq rebuilding effort. “This a continuing example of the mismanagement of the Iraq reconstruction from the highest levels down to the contractors on the ground,” he said.


Both Kellogg Brown & Root contracts called for things like repairing oil wells and pipelines, installing power generators at oil facilities and importing fuel to Iraq. The first contract, worth $2.4 billion, generated enormous controversy after Pentagon auditors questioned more than $200 million in fuel delivery costs.

Critics like Mr. Waxman called the challenged costs overcharges, a description rejected by the company, which claimed a measure of vindication last month when the Army overruled the auditors and reimbursed nearly all of the delivery charges.

The new report, which says that Pentagon auditors have questioned $45 million of the $365 million in reviewed costs, may revive the battle. A spokesman for the Defense Contract Audit Agency confirmed the figures.


But what are likely to be seen as the most striking portions of the report are those that cite the variously stern, heated and even anguished language of contracting officers trying to bring the company to heel.

“As I have said in numerous meetings, KBR’s lack of cost containment and funds management is the single biggest detriment to this program,” one officer, Maj. Michael V. Waggle, wrote in the cure notice. He noted that the company had listed an impossibly high cost overrun of $436,019,574 on one job, charges of $114,308 for an oil spill cleanup that failed to remove any oil and another set of tasks in which the overruns were 36.9 percent of all costs.

The slides used in presentations during the deliberations of the board that determined the first award fee are almost equally eye-catching. On one slide, covering the company’s success at meeting its planned schedules, a section labeled “Strengths” bears only the notation “N/A,” presumably meaning no answer or not applicable. The “Weaknesses” section contains four detailed items.