KBR Gets $72 Million in Bonuses for Iraq Work

By Charles R. Babcock
Washington Post Staff Writer
Wednesday, May 11, 2005

The Army said yesterday it has awarded an additional $72 million in bonuses to Halliburton Co. subsidiary Kellogg Brown & Root Inc. on logistics support of the war in Iraq, grading the company's performance "very good" or "excellent."

Halliburton's work in Iraq has been controversial because an early contract to rebuild oil fields was awarded without competition and because auditors had challenged its billings on some work. Vice President Cheney was Halliburton's chief executive from 1995 to 2000.

The bonuses announced yesterday were for a contract known as LOGCAP, which KBR won in competitive bidding, to support the military in the Middle East and South Asia. Its value mushroomed after the wars in Afghanistan and Iraq. KBR's services include construction and food and laundry service.

Linda K. Theis, a spokeswoman for the U.S. Army Field Support Command, which administers the logistics contract, said yesterday that the awards totaled about 88 percent of the $82 million bonus pool set aside for the six task orders for work in Iraq. Contractors can earn extra fees worth up to 2 percent of the amount of their work.

In earlier rounds, the Army had awarded KBR $17.4 million on about $2 billion in task orders.

The two sides reached an agreement on about $10 billion of that work in April. At the same time, they agreed to settle a dispute over billings for meals served to troops. Halliburton said then that the Army would pay the company $1.18 billion while keeping $55.1 million of the $200 million that had been withheld because of the dispute. They also agreed to switch the supply of meals to a fixed-price contract that would not be eligible for bonuses.

Theis said yesterday that the government's obligations under the LOGCAP contract totaled $11.4 billion as of Monday and that KBR had been paid $8.1 billion as of early April.

Jennifer W. Dellinger, a spokeswoman for KBR, said in an e-mail that the awards were good news for the company and are a reaffirmation "that we are doing an excellent job for our client, the U.S. Army."

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