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Army to Rebid Part of Iraq Contract

Competitive Process Planned for Some of Halliburton's Work

By Robert O'Harrow Jr.
Washington Post Staff Writer
Wednesday, September 8, 2004; Page E03

The U.S. Army is moving ahead with plans to rebid portions of the giant logistical contract with Halliburton Co. for food, housing and other troop support in Iraq, officials said yesterday.

In a memo last month, Deputy Assistant Secretary Tina Ballard urged the Army Field Support Command to begin planning for a shift from one massive wartime agreement to several contracts for the long run, possibly with several different companies, Army officials said yesterday. Some details of the memo were reported Tuesday by the Wall Street Journal.

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Maj. Gen. Wade H. McManus Jr., commanding general of the Joint Munitions Command, which is helping to oversee the Iraq contract, said in an interview in March that the Army was considering letting other companies compete for some of the work. He said then that laundry, trash removal, power generation, dining facilities, sanitation and non-tactical vehicle support would be areas likely to be opened to competition.

Plans for the change follow months of questions about the performance by Halliburton subsidiary Kellogg Brown & Root Inc., which won the logistical contract through a competitive bidding process in 2001. KBR has been paid about $4.5 billion for troop support in Iraq and Kuwait so far.

The Army is considering withholding 15 percent of future payments to KBR because the company has not adequately justified some $1.8 billion in pending bills. The company has come under fire from Democrats, who claim it has received special treatment because Dick Cheney served as Halliburton's chief executive before his election as vice president.

Yesterday, Army officials said there was no connection between their frustration with some of KBR's work and the decision to consider rebidding portions of the support work. Officials said that rebidding is part of the process of striving for competitive efficiencies. The final decision of when to rebid rests with battlefield commanders.

"The transition from contingency to sustainment contracting is a normal process," said Daniel Carlson, a spokesman for the Army Field Support Command. "We're in the early stage of transition." The Pentagon followed a similar procedure in the Balkans.

Halliburton officials stressed they were not being punished. "This is not about problems or penalties," spokeswoman Wendy Hall said.

Halliburton chief executive David Lesar sounded ambivalent about whether the company would bid for more government work, especially if it was broken into several different contracts. "I'm not sure that we're going to rebid," Lesar told investors at an energy conference in New York sponsored by Lehman Brothers Inc.


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