Democrats Criticize Payments to KBR
Tuesday, June 28, 2005
Pentagon auditors have questioned more than $1 billion in costs by contracting giant Halliburton Co. for its work in Iraq, a number several times higher than previously disclosed, according to a report by congressional Democrats.
The report, based on Defense Contract Audit Agency documents and a briefing by DCAA officials, details $813 million in questioned costs on a Halliburton contract to provide logistical support to U.S. troops and $219 million on a no-bid contract to restore Iraqi's oil network.
The Defense Contract Audit Agency found an additional $442 million in Halliburton charges that were "unsupported," meaning the company had not provided enough documentation to justify the cost, the report said.
Among the costs that Pentagon auditors questioned were $152,000 in "movie library costs," a $1.5 million tailoring bill that auditors deemed higher than reasonable, more than $560,000 worth of heavy equipment that was considered unnecessary, and two multimillion-dollar transportation bills that appeared to overlap.
Halliburton spokeswoman Cathy Mann defended the company's performance, saying in a statement that many of the questioned costs have already been resolved and that the report amounted to "a gross mischaracterization of the true facts."
"It's DCAA's job to ask questions and it's our job to provide the answers, which we have done," Mann said. "Audits are part of the normal contracting process, and it is important to note that the auditors' role in the process is advisory only."
Mann said she thinks the allegations against Halliburton are politically motivated. Vice President Cheney is the company's former chief executive, and Halliburton is the Pentagon's largest contractor in Iraq. That combination has made the company a top target of Democrats.
A Pentagon spokeswoman said she could not confirm information in the report because officials had not had the chance to review it.
Yesterday's report came on a day when witnesses spoke out against Halliburton's contracts at a Capitol Hill event sponsored by the Democratic Policy Committee. Democrats said they have been stymied in their efforts to get congressional Republicans to hold formal hearings on the topic. Instead, Democrats have held their own informal hearings.
Speaking by video, Rory Mayberry, a former food production manager at Halliburton subsidiary Kellogg Brown & Root Inc., told Democratic lawmakers how Halliburton charged the government for as many as 10,000 meals a day it never served. He also said the company paid unusually high prices for its food, fed food as much as a year beyond its expiration date to the troops and ordered employees not to talk to U.S. government auditors.
"For trucks that were hit by convoy fire and bombings, we were told to go into the trucks and remove the food items and use them after removing the bullets and any shrapnel," he said.
Meanwhile, Bunnatine H. Greenhouse, the top civilian contracting official at the U.S. Army Corps of Engineers, testified that KBR was given an unusual amount of sway over the terms of its no-bid contract to rebuild Iraq's oil infrastructure. She also said the secretary of defense's office intervened on the company's behalf.
"I can unequivocally state that the abuse related to contracts awarded to KBR represents the most blatant and improper abuse I have witnessed during the course of my professional career," said Greenhouse, a veteran of more than two decades in the government who said she has faced sanctions from her employer for speaking out.
U.S. Army Corps of Engineers spokesman Gene Pawlik said "the contract with KBR made sense because they had been involved in the planning that went into it." Pawlik added it would have been "very difficult and very time consuming to turn around and compete a contract" at a time when the United States had an urgent need to get the work done.
Sen. Byron L. Dorgan (D-S.D.), who chaired yesterday's event, said explanations from the Pentagon and the company don't wash. "It is a disgusting thing to be profiteering during war times," Dorgan said. "We see evidence of that now, and nobody seems to care much about it."
But Michael Bopp, staff director of the Senate Homeland Security and Governmental Affairs Committee, said the Democrats' efforts amount to "tilting at windmills."
"It's a misguided assumption that our committee, or any committee, needs to hold a hearing to figure out what Halliburton is doing in Iraq," said Bopp, who contended that Halliburton's contracts have been scrutinized by multiple investigators.