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Halliburton Cited For Iraq Overhead
KBR's "rates are high," said Scott Amey, general counsel of the watchdog group Project on Government Oversight. "They would send up a red flag for me." But Amey said it would take a more thorough review of exactly where the money went to know how much was wasted.
In addition to noting KBR's overhead costs generally, the report focuses on a nine-month stretch between February 2004 -- when KBR was directed by the government to gear up for work -- and November 2004, when substantial work actually began. During that period, KBR spent $53 million on overhead and $13 million on direct project costs.
Report authors said that was due to "poor planning" by the government, which had asked the company to mobilize before key decisions had been made about which projects would be funded.
Halliburton stock jumped $1.58 yesterday, to close at $30.84 after news that the company had beaten Wall Street's expectations for third-quarter revenue and profit.
Halliburton had previously announced that it garnered $611 million in profit last quarter, up from $499 million in the comparable quarter last year.
KBR took in $1.2 billion in revenue for the quarter from Iraq-related work, though the company said the profit margin on that work was just 3.7 percent before corporate expenses and taxes.
Halliburton, which does most of its work in energy services, filed documents yesterday with federal regulators to spin off a portion of KBR as a public company.
Halliburton officials have said in the past that the unit is a drag on the parent company's earnings and share price.