Auditors Take Aim At
Halliburton's Work In Iraq

By Sue Pleming
WASHINGTON (Reuters) -- Pentagon auditors took aim at Vice President Dick Cheney's old company Halliburton on Tuesday and said they found "significant deficiencies" in its handling of billions of dollars of work in Iraq.
In testimony at a hearing on Iraq contracts on Capitol Hill, the head of the Pentagon's audit agency cited problems with the Texas-based firm's billing system and sub-contracts and potential over-charging for meals served to troops.
Halliburton subsidiary Kellogg Brown and Root has the potential to earn more than $18 billion under two major contracts in Iraq, one to handle logistics for U.S. troops and another to restore Iraq's oil infrastructure.
"DCAA has identified significant deficiencies in KBR's estimating practices related to the award of subcontract costs," said William Reed, director of the Defense Contract Audit Agency, in prepared testimony.
He said these deficiencies led to potential overpricing at dining halls in Kuwait and Iraq for U.S. troops and that the military was holding back on paying $186 million for meals.
The company's own internal analysis found KBR probably over-estimated meal charges by about 19 percent but military auditors said this could be as high as 36 percent, Reed told the House of Representatives Committee on Government Reform.
Halliburton, which is being investigated by several government departments for its contracts in Iraq, has vigorously defended its work there.
The company is a popular target of criticism by Democrats during this presidential election year, a focus the Republicans say is driven by a bid to damage the credibility of the Vice President, who ran Halliburton from 1995-2000.
Democratic Rep. Henry Waxman of California told Cheney in a letter last weekend that one of Cheney's key staffers, Lewis Libby, and other senior administration officials were briefed about the Defense Department's plan to award Iraq deals to Halliburton.
Cheney's office denies any wrongdoing and says the vice president did nothing improper and played no role in getting his former company lucrative Iraq business.
Waxman was expected at Tuesday's hearing to blast the committee's chairman, Rep. Tom Davis of Virginia, for not allowing former Halliburton employees to give testimony about alleged overspending and waste by the company in Iraq.
A report by the General Accounting Office, which was presented at the hearing, found some problems with the use of Halliburton's logistics contract to do work in Iraq.
"We found the use of the LOGCAP contract in Kuwait and Iraq was not adequately planned, nor was it planned in accordance with applicable Army guidance," said David Walker, comptroller general of the GAO, which conducts investigations at Congress's request.
He said work plans, or task orders, were frequently revised which made oversight difficult. For example, a task order supporting troops in Iraq was revised seven times in less than a year. Another for logistical support for troops in Kuwait was changed 18 times between September 2002 and December 2003.
Auditors also found problems with other contracts in Iraq including billing issues in a $420 million deal given to San Diego-based Titan Corp . to provide translators.
One of Titan's employees and a subcontractor were named in a prison abuse scandal in Iraq and Reed said the company had told the government it would "adjust" previously billed work done by these people amounting to over $178,000.
Auditors are also looking at a contract held by CACI International, which provided interrogators for Iraq and which has been named in the prison abuse scandal.
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