- WASHINGTON (Reuters) - A
U.S. military energy unit announced on Tuesday that it was taking over
the task of providing fuel for Iraq, ending a Pentagon deal with Vice President
Dick Cheney's former company Halliburton (HAL.N: Quote, Profile, Research)
amid allegations of price gouging by the Texas-based energy services giant.
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- The Pentagon's Defense Energy Support Center said it
had been directed to assume control of rebuilding Iraq's oil industry and
that it would award new contracts through a competitive bidding process.
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- In its Wednesday editions, The Washington Post quoted
Pentagon officials as saying that the change had been under discussion
for months and that the timing was not related to allegations against Halliburton
subsidiary Kellogg Brown & Root (KBR), which was awarded a no-bid contract
in March to rebuild Iraq's oil industry.
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- The Defense Energy Support Center said in a statement
that the agency had been directed to "support the Iraqi Ministry of
Oil and Task Force-Restore Iraqi Oil (TF-RIO) by importing and distributing
fuel to the Iraqi civilian population."
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- "The center will strive to put competitively awarded
contracts in place as quickly as possible for this mission," DESC
director Richard Connelly said. "Existing TF-RIO contracts will remain
in place until adequate DESC contract solutions are implemented."
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- A KBR spokesperson was not immediately available for
comment.
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- Earlier this month, the Pentagon said that a draft audit
found evidence that KBR may have overcharged U.S. taxpayers $61 million
to supply fuel to Iraq from Kuwait.
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- Halliburton strongly denies wrongdoing. Cheney was chief
executive of Halliburton from 1995 to 2000.
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- In response to questions posed by Pentagon auditors,
KBR's president and chief executive, Randy Harl, said the firm "delivered
fuel to Iraq at the best value, the best price and the best terms."
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- Harl also said that the U.S. military had approved the
delivery of fuel from Kuwait, even though it was at a higher cost than
that available via Turkey.
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- KBR was the first to suggest ways of cutting costs and
had suggested Turkey was a better source than Kuwait for getting fuel into
Iraq, adding that the recommendation resulted in a $164 million savings
for American taxpayers.
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- The U.S. Army Corps of Engineers said in October that
it would replace by the end of December KBR's no-bid deal. But at the beginning
of the month, the Corps extended the deadline for awarding two new contracts
until Jan. 17, 2004.
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- The work given to KBR in Iraq has been criticized by
Democrats, who alleged cronyism and favoritism in handing out the contracts.
- © Reuters 2003. All Rights Reserved.
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