The FBI has expanded an investigation into allegations of contract irregularities by Halliburton Co. subsidiary Kellogg Brown & Root Inc. in Iraq and Kuwait.
The FBI requested an interview with a Pentagon official who complained recently that the Army gave KBR preferential treatment when granting it a $7 billion classified contract to restore Iraq's oil fields just before the war began in March 2003, her lawyers said yesterday.
The request comes at a sensitive time because Vice President Cheney once was Halliburton's chief executive and Democrats have accused the Bush administration of favoring the giant oil-services company.
The FBI wants to discuss allegations by Bunnatine H. Greenhouse, a senior Army Corps of Engineers civilian responsible for ensuring contracting competition. She said Army officials did not justify the award or show that KBR had "unique attributes," as required by procurement law, according to a letter her lawyers wrote to acting Army Secretary Les Brownlee and provided to members of Congress.
The letter said Army officials ignored her repeated complaint that the contract was granted without following normal procedures. It also said the Army allowed KBR representatives to participate in meetings "outside the scope of information KBR should be privy to," before the contract was awarded.
Government auditors said nine months later that KBR may have overcharged the government $61 million for fuel, which Halliburton has denied. Halliburton also is being investigated by the Justice Department and Securities and Exchange Commission regarding work it did in Nigeria, Iran and Iraq.
Halliburton spokeswoman Wendy Hall dismissed Greenhouse's charges as politically motivated. Hall said "the old allegations by Bunny Greenhouse have once again been recycled, this time one week before the election." Hall said the Government Accountability Office concluded that the oil-field-restoration contract was properly awarded. The Army later put the contract up for bids, and KBR was one of two contractors to win.
The company has disclosed in public filings that the Justice Department is investigating what it charged for fuel.
"We continue to work with all of the investigating bodies to resolve issues related to fuel delivery in Iraq," Hall said.
Greenhouse was not available for comment yesterday. In a telephone interview, her lawyer, Stephen M. Kohn, said federal investigators also are interested in discussing with his client earlier contracts KBR had with the Army to provide logistical support in the Balkans.
"Our concern is that Ms. Greenhouse not be retaliated against, which is what happens to most whistle-blowers," said Kohn, who specializes in whistle-blower cases. "It has not been easy for her.
The FBI investigation appears to be related to one that has been going on for several months involving the collection of records from various Pentagon agencies and private individuals.
Carol A. Sanders, a spokeswoman for the Corps of Engineers, said the FBI has sought records in recent months relating to Halliburton contracts. "We've cooperated with everybody who has the right to be looking, including the FBI," she said. "Our role is to cooperate."
Sanders said she could not say whether Greenhouse's case is related.
The FBI agent seeking to interview Greenhouse is Jeffrey G. Jackson, who works at a field office in Illinois. Earlier this year, he interviewed former KBR employees about their allegations of mismanagement of government money in Iraq. Among them was Henry Bunting, a KBR field buyer who said in July that he told Jackson and another federal agent about improper spending of money and lack of accountability by KBR operations in Kuwait during the war.