Halliburton Payments Won't Be Withheld

"What is important to note is that the top priority has always been making sure that the troops get taken care of," she said.

The withholding of payments to KBR because of "definitization" questions was supposed to have begun last summer, about the time an audit report said $1.8 billion worth of work in Iraq and Kuwait had not been adequately accounted for. An official responsible for overseeing the logistics support, or LogCAP, contract chose to defer the decision to avoid any impact on the troops in Iraq, Kuwait and Afghanistan.

At the end of November, Army officials asked to waive the 15 percent withholding rule. That request was forwarded to the undersecretary of defense for acquisition, technology and logistics. The decision was made by Deidre Lee, the Pentagon director of acquisition and procurement policy, Army spokesman Carlson said.

Halliburton still faces questions from auditors about work in Iraq, including whether KBR overcharged for gasoline while on contract to help rebuild Iraqi oil fields. Under that contract, KBR did about $2.5 billion of work. KBR won a competitive bid for part of a contract to continue repairing Iraq's oil fields.

The Justice Department is investigating older allegations about profiteering in the Balkans and other activity in Nigeria and Iran.

Late last year, Halliburton announced some good news, saying that the Defense Contract Management Agency had approved its systems for estimating costs on the LogCAP work.

KBR and several other Halliburton subsidiaries are emerging from bankruptcy proceedings related to asbestos litigation.

Company officials announced recently that they plan to put KBR up for sale.