- WASHINGTON (AFP) -- The US
Army Corps of Engineers waived a requirement last month that a Halliburton
subsidiary provide price and costing data for fuel supplied by a Kuwaiti
company despite charges by Pentagon auditors that the US government was
being overcharged.
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- Lieutenant General Robert Flowers, commander of the Army
Corps of Engineers, signed the waiver only a week after President George
W. Bush declared that the Texas-based energy giant should repay the government
if it overcharged for the fuel.
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- A December 5 draft audit by the Pentagon concluded that
Halliburton's Kuwaiti subcontractor was asking twice the price offered
by other suppliers in the region.
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- But on December 19, Flowers approved Halliburton's request
for a waiver of a requirement that its subsidiary Kellogg, Brown and Root
Services (KBRS) submit price and costing data to justify its sole-source
contract with the Kuwaiti supplier Altanmia, according to documents released
by the Army Corps of Engineers.
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- "Despite the fact that KBRS has been prevented from
competing the purchase of fuel, transport and delivery out of Kuwait, KBRS
has been able to provide data that otherwise indicate the fair and reasonable
price of these services," the waiver said.
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- "KBRS has continued to negotiate the best price
possible, and we will direct them to continue to do so," it said.
"In these circumstances, I conclude that submission of cost and pricing
data is not necessary."
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- The contract set off a storm in Washington following
the disclosure of the Pentagon audit. The fact that Vice President Dick
Cheney was Halliburton's former chief executive added a political dimension
to the controversy.
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- "If there is an overcharge, like we think there
is, we expect that money to be repaid," Bush said on December 12.
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- Halliburton vehemently denied the allegations.
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- A spokeswoman for the Army Corps of Engineers said the
waiver request was not in response to the audit, but rather was required
to enable KBRS to continue supplying fuel and kerosene to US forces in
Iraq under its contract with the Pentagon.
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- KBRS, which was awarded the fuel contract in May, selected
Altanmia from three Kuwaiti suppliers after it submitted the low bid.
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- The Army Corps of Engineers decided in November it needed
more fuel and kerosene than originally anticipated, but the Kuwaiti government
would not allow any Kuwaiti supplier other than Altanmia to submit bids,
according to the waiver.
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- "So back in December, we asked KBRS to provide more
fuel from Kuwait and Turkey. We couldn't provide more fuel from Turkey
because there was some transportation problems at the border at that time.
We had to go back to Altanmia," said Carol Sanders, an Army Corps
of Engineers spokeswoman.
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- KBRS then negotiated some reductions in price because
of the enlarged scope of the contract, she said.
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- Since Altanmia was now KBRS's sole source of supply,
US regulations required it to obtain cost and pricing data from the supplier
to justify its asking price. According to the waiver documents, Altanmia
refused on the grounds that Kuwaiti law forbids disclosure of such data.
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- KBRS then sought the waiver which Flowers granted after
determining it was "in the best interest of the United States government,"
according to the documents.
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