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Halliburton Oversight Criticized

By Robert O'Harrow Jr. and Vanessa Williams
Washington Post Staff Writers
Thursday, August 19, 2004; Page E01

An Army official responsible for administering the giant logistical contract with Halliburton Co. for food, housing and other services in Iraq and Kuwait said yesterday that his command has not had enough trained people to properly oversee the arrangement.

Col. Tim Considine, deputy commander for the Army Field Support Command, made his remarks in response to questions about a confusing series of events on Monday and Tuesday, in which the Army waffled on whether to withhold some payments to subsidiary Kellogg Brown & Root Inc. because of persistent questioning from Pentagon auditors about billing.

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On Monday, the day after a regulatory deadline for imposing such sanctions, Halliburton reported that its officials had been told they would get more time to justify billing claims. On Tuesday morning, the company released a statement saying the Army said it would withhold 15 percent of payments on future invoices, pending negotiations over bills. Later Tuesday, the Army announced it would put off any decision about withholding until next week.

Considine said officials decided to give Halliburton more time to learn more about the impact of sanctions on the ability of the company and its subcontractors to provide troop support. Considine said his operation has been stretched so thin by managing the contract that it did not have time to address such things until after Sunday's deadline.

Considine said the Army Field Support Command was unprepared at the outbreak of war in 2003 to manage what has become the largest contract of its kind. The Army has obligated $5.7 billion on the contract so far, and it has issued checks for $4.3 billion. "We ramped up for this fight so quickly, we weren't properly resourced early on. . . . It has stressed our resources," he said. "We have really struggled."

Democrats yesterday seized on the extension, the third this year, as evidence that the Army and the Bush administration have given special treatment to Halliburton, where Dick Cheney was chief executive before he was elected vice president.

The company faces investigations and audits examining whether KBR and its subcontractors overcharged the government for fuel, food and other services in Iraq under the contract for logistics support, known as LogCAP.

Sen. John Edwards (N.C.), the Democratic candidate for vice president, used a speech about an employment and training program in Louisiana to suggest the possibility of undue outside influence on the decision.

"Did somebody make a phone call? I don't know what happened but something happened," he said. "This is what I know: Halliburton's getting their money but the jobs centers aren't getting theirs. How about somebody making a phone call for the job centers and the career centers?"

Sen. Frank Lautenberg (D-N.J.) said: "The Bush administration's policy with Halliburton seems to be 'Don't worry about overcharging, don't worry about bilking the U.S. taxpayers, and certainly don't worry about getting paid.' "

Considine said he consulted frequently on Tuesday with his boss, Brig. Gen. Jerome Johnson, before the decision was made to put off the deadline. But Considine said he has not heard of any outsider calling or trying to influence his decision. "There's been no political pressure whatsoever," Considine said.

Considine blamed Halliburton for some of the confusion this week, saying company officials misinterpreted statements by him and others at the Army Field Support Command. Over the weekend, Considine said, he sent a KBR official an e-mail suggesting the Army would put off the deadline. But nobody in the Army told Halliburton anything definitive before the company put out a news release saying the deadline had been extended, he said.

On Tuesday, he said, Army officials said in a meeting with Halliburton officials that they would move ahead with the withholding but wanted more information about the impact. Halliburton then released a statement saying sanctions were taking effect. Even though an Army spokeswoman affirmed the gist of the Halliburton release, the Army appeared to reverse itself a few hours later.

"KBR jumped the gun and heard what they wanted to hear," in part because "they have some concerns about the [company's] stock price," Considine said.

A Halliburton spokeswoman disputed Considine's account, but decline to elaborate. "We stand by the accuracy of everything we've said," Halliburton spokeswoman Wendy Hall said in a statement. "We had a duty and responsibility to update the market since the suspension of the withhold expired Sunday. We passed on truthfully and accurately the information we received."

Halliburton is supposed to submit paperwork today that describes the impact if the Army withholds 15 percent of payments. The company said on Tuesday that Halliburton would not be unduly harmed financially because it would in turn withhold some payments to its subcontractors.


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