THE WAR IN IRAQ has been very good for Halliburton, the Texas-based military contractor.
In the last two years, the Bush administration has awarded Halliburton's Kellogg,
Brown and Root subsidiary $10.5 billion in contracts to do everything from providing
meals to the troops to repairing Iraqi oil wells.
But over the last several months, report after report has come out alleging that
KBR has overcharged the Pentagon by hundreds of millions of dollars. There is
also deepening suspicion that Halliburton -- whose former CEO is Vice President
Dick Cheney -- got preferential treatment because of political connections.
The nonpartisan Government Accounting Office was the first to raise questions
about billing irregularities when it found that KBR had charged $88 million
for 3.4 million meals that it never served. Then, the Defense Contract Audit
Agency, which monitors all Pentagon contracts, said it had identified overbillings
and questionable costs totaling $213 million for fuel that KBR had shipped to
Iraq from Kuwait.
In one outrageous example, KBR allegedly billed $27.5 million to deliver liquefied
petroleum gas that had been purchased in Kuwait for $82,000. The government
auditors called the huge mark-up "illogical" -- the understatement
of the century.
The Justice Department has launched its own probe. And federal investigators
are looking into allegations that the Pentagon showed improper favoritism in
awarding no-bid contracts to KBR. A high-ranking civilian whistleblower at the
U.S. Army Corps of Engineers has alleged that KBR was allowed to write the specs
for a $2.5 billion oil-repair contract. Not surprisingly, it was the only company
qualified to do the work and won a no-bid contract.
The company's performance, however, left a lot to be desired, according to
a recent State Department report that called KBR's work "poor." California
Democratic Rep. Harry Waxman, the ranking minority member of the House Government
Reform Committee, says, "The Bush administration gave Halliburton a blank
check, and the taxpayer has been stuck with the bill."
A lot of the money that the U.S. government used to pay Halliburton came out
of Iraqi oil revenues. Waxman alleges that KBR and the Pentagon hid the overbillings
from U.N. auditors who monitor the Iraq oil fund by sending them a copy of the
Pentagon audit with large sections blacked out.
Halliburton officials deny any wrongdoing. They say they wanted to protect
"proprietary information" and remove things that were "factually
inaccurate or misleading." True, there is no proof that the military contractor
did anything wrong. But the government reports raise serious questions.
The Pentagon has ignored the findings of its own auditors, and the contracts
keep on rolling in. In the case of the phantom meals, the Army at first refused
to pay, then relented, dubiously claiming that most soldiers probably ate more
than a normal- sized portion.
This kind of twisted logic is simply not acceptable. It is time for a broad
inquiry into the U.S. government's involvement with KBR.