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Halliburton Overcharged Millions
By MATT KELLEY, Associated Press Writer
WASHINGTON - Pentagon (news - web sites)

Auditors found that Vice President Dick Cheney (news - web sites)'s former company may have overcharged the Army by as much as $61 million for gasoline in Iraq (news - web sites), senior defense officials said Thursday.
Halliburton apparently didn't profit from the possible overcharges, the officials said, speaking on condition of anonymity. The problem, the officials said, was that Halliburton may have paid a subcontractor too much for the gasoline in the first place.
The Pentagon officials said the Halliburton subsidiary involved in Iraq reconstruction work, Kellogg, Brown & Root, also submitted a proposal for cafeteria services that was $67 million too high. The officials said the Pentagon rejected that proposal.
The defense officials said they had no reason to believe the problems were anything other than "stupid mistakes" by Halliburton.
In an e-mail statement, Halliburton spokeswoman Wendy Hall denied the company had overcharged. She said Halliburton was responding to questions from Pentagon auditors and was "confident our responses will satisfy" them.
News of the problems came as President Bush (news - web sites) worked to justify his decision to limit Iraq reconstruction contracts to companies from the United States or countries that supported the war. The move angered governments whose firms were cut out of the bidding process, including France, Germany, Russia and Canada.
Many prominent Democrats also have criticized the Halliburton contracts specifically, suggesting they were a political payoff for a company with strong ties to the GOP and whose executives gave generously to the Bush campaign.
Sen. Frank Lautenberg, D-N.J., on Thursday asked for Senate hearings on the Pentagon's findings.
"I have long been troubled by the continued growth of the Pentagon's no-bid contract with Halliburton, and the delay in the Pentagon's promise to compete this contract competitively," Lautenberg wrote to Senate Government Affairs Committee Chairwoman Susan Collins, R-Maine.
Cheney and Pentagon officials deny any political motive for awarding the no-bid contracts to KBR, which has a long-standing relationship with the military as a major Pentagon contractor.
Routine audits by the Defense Contract Audit Agency uncovered the problems.
Pentagon officials said they were concerned about the problems with KBR's contracts, which were awarded without competitive bidding for up to $15.6 billion for rebuilding Iraq's oil infrastructure and assisting U.S. troops there. About $5 billion has been spent or obligated to spend on those contracts so far.
"Contractor improprieties and/or contract mischarging on department contracts will neither be condoned nor allowed to continue," Dov Zakheim, the Pentagon's budget chief, said Thursday.
The defense officials, who are involved in the audit of the contracts, said the Pentagon was negotiating with KBR over how to resolve the fuel-pricing issue. They declined to name the subcontractor that provided the fuel, saying that company may not have been notified of the inquiry's findings.
The possible overcharging involved 56.6 million gallons of gasoline KBR supplied in Iraq from the end of the war until Sept. 30, the Pentagon officials said. The officials said the KBR was charging $2.27 a gallon for gasoline while another contract was for $1.18.
Democratic Reps. Henry Waxman of California and John Dingell of Michigan had accused KBR of price-gouging for gasoline used in Iraq.
The Army is to open its KBR contracts to competitive bidding next month. The contracts evolved from work to put out oilfield fires to overseeing rebuilding of Iraq's oil infrastructure and providing fuel for the country. KBR also provides support services to U.S. troops in Iraq such as serving hot meals.

Halliburton has said it needs to charge a high price for fuel because it must be delivered in a combat zone. Several KBR workers have been killed or wounded in attacks by Iraqi insurgents.
The allegations of overcharging are not the first against KBR. Last year, the firm paid $2 million in fines to settle charges it inflated prices for repairs and maintenance at Fort Ord, Calif.
Congress' General Accounting Office (news - web sites) found in 1997 and 2000 that KBR had billed the Army for questionable expenses on its support contracts for operations in the Balkans. Those reviews cited instances such as charging $85.98 per sheet of plywood that cost $14.06 and billing the Army for cleaning some offices up to four times per day.
Cheney, a former defense secretary, stepped down as chief executive officer of Halliburton when he became Bush's running mate in 2000 and has said he played no role in contracts for his former company. Cheney became head of the company in 1995.

that those contracts didn't go to a French company! We know how they would have screwed the american people by their past conduct!

It's also nice to see that Bush's pentagon is investigating/publishing this and not just letting it go/ covering it up. Honor in the white house once again!

It's also nice to read an article that has less bias than most I have seen! They clearly stated that this may be the case instead of saying that it is already a fact, like many liberal biased media do. Few things are worse than editorializing the news.

It's also nice to see Halliburton using good logic. What company, in their right mind, wouldn't charge more than the normal rate for doing business in a combat zone? Anyone who knows anything about investing knows that the higher the risk, the higher the potential reward. The lower the risk, the lower potential rewards. The same thing goes for business deals.

I do agree that non-bidding is outragous in many/some instances, however. Can you imagine how happy a terrorist group would be to win a low bid just to gain access to a target! Security is a good reason not to allow bidding on absolutely everything.

Muhammad says, "Yeah, I can feed your troops for 1/3 the price of anyone else." I'll only have to feed them for one day since they will be eating biological weapons anyway, thus I can do it cheaply! Then I can give the money you pay me to other terrorist groups to play with.

Rodney

I don't think its so much a question of honor as having no choice - the over charges were well documented and given Dick Cheney's relationship with Haliburton the administration knew it was sitting on a real time bomb. But if you want to think it was honor Rodney, then by all means, give it heck.

As far as editorializing in the news - didn't you say you get your info from radical right wing talk radio? It strains credulity to listen to someone complain about media bias when that person is a fan of the radical self rightious right wing! I think we need a reality check here.

Your logic concerning Haliburton is also suspect. You suggest that any company "in their right mind" would charge more than the normal rate for doing business in the combat zone. But again, you've missed the point. No one has claimed they shouldn't charge more, rather the charge is that they engaged in war profiteering, ie charging much more than their costs would justify. Remember that Haliburton did not have to bid on this multi-billion dollar deal, which makes their charges suspect right off the bat - they had a governemnt approved monopoly.

Even Bush said today it looks like Haliburton subsidiaries engaged in profiteering - so why are you so quick to defend them?

As far as your suggestion that, if we allow bids, we might accidently accept the low bid from a terrorist group who wants to provide the food for our troops - well, suffice it to say I assume you were kidding. Don't you suppose there might be other ways of controlling for terrorists who want to bid on feeding our troops?

But I would suggest you examine your claim that security is a good reason not to allow bidding on everything. Shall we allow bidding on nothing then? Or just things with no security risk? What things would that be? And who is it we should trust to appoint the winners for the hundreds of thousands of bids sent out for US government procurements every year? I mean, seriously, would you expect the US govt might have accepted a bid to reconstruct Iraq from a loose knit group of muslim fundamentalists? Hmmmm, lets see, we have this bid here from Haliburton for $32 billion or else we could go with the bid here from Islamic Jihad Rebuilding Corporation for $87,000....hmmmmm, well, lets just go withy the cheap guys - what the heck...

As absurd as that little scenario seems, that is what your suggesting - that we can't have open bids due to terrorists threats. Pretty silly, no?

You have to have at least one wheel on the road if you want to try to understand these things.

Joe

Chaney is no longer involved with Halliburton?

When he became vice President, he quit his job with them and he sold all his stock so there wouldn't be even a hint of impropriety. Chaney being "forced" to sell his stock at this specific time probably cost him an enormous amount of money because he didn't have the option of selling it at a specific time/price. Yet the Bush bashers try to make this look like a current link when that link was dissolved years ago just for these potential conflict of interest reasons like some are now falsely alleging. The truth is, Chaney most likely lost a great deal of money by leaving Halliburton as opposed to the allegation that he is profiting from his former link to them and the war.

How come the Bush bashers don't mention that Halliburton has it's profits limited to a minimum of 3% and a maximum of 7% or their costs, thus, they can't price gouge by law, and they haven't in this case! That is one reason why they have a government approved monopoly-their profits are at a set level so regular monopoly problems are avoided. Another reason is that there are only 2 or 3 companies of this size in the world capabable of doing the jobs they do. Would you prefer our government/tax dollars fund a French company instead?

How come no one mentions that it was a subsidiary of Halliburton that subcontracted to yet another company, and it is that company that overcharged? Since they overcharged Halliburton, it is not Halliburton that is making the excess profits! The most Halliburton could have profited from this is a mere 7% of that overcharge at most, and it could be as low as 3%. This is a mere pittance to a company of Halliburtons size.

I know why no one mentions these facts! They couldn't bash Bush with a strait face if they did!

Yes, I do approve of certain things not being bid on. Could you imagine if our military was bid out? What a joke that would be! We'd have a military of the lowest bidding mercenaries on the planet! And things as serious as rebuilding a country that still have a war going on shold not be "bid out" in my opinion, due to security concerns.

No, I am not defending Halliburton right off the bat. But I am condemning people that are accusing them when the details show otherwise, just so they can try to bash the current administration. I am just telling the facts like they are. I will condemn the press when they say that Halliburton is making excess profits, when articles show that they are not. I will condemn the press when they imply there is a Chaney/Halliburton link, and thus a link to the "evil" Bush administration, when there is not. I will condemn the headlines when they imply that Halliburton deliberately overcharged millions, when that is not the case. If you look at the headlines that imply this, and then closely read the details of these articles, you will see that the headlines don't have any resemblance to fact. The fact is, a subsidiary of Halliburton was overcharged by a subcontractor. People are trying to say Halliburton was screwing the public, when in fact, Halliburton was being screwed by another company, and then passing the costs on to us. It is another obvious attempt at liberal press Bush bashing by ignoring or underplaying major, important parts of the picture (the small print details in the article) and hoping the public will only notice, regurgitate, and quote the false "headlines".

You said As far as editorializing in the news - didn't you say you get your info from radical right wing talk radio?

Nope, that's not what I said. Again you are just looking at a small part of the picture and ignoring other parts. I'll say it again. I listen to a radio station that has both right wing hosts during the day, and left wing hosts during the night, and I examine what both sides are saying before I make up my mind. Yes, I do listen to right wing radio. Why do you forget to mention that I also listen to left wing radio? Is it for the same reasons above, to distort the entire picture? (that you don't mention the facts about Halliburtons profits, no current link to Chaney/subcontractors either?)

And I also don't quote headlines that imply things that are contradicted by the imformation found within the same articles they lead.

Rodney

Rodney,

You used a lot of words in your reply. Did it occur to you to reply to the 3 questions I asked? I thinnk my questions really went to the heart of your assertions. Was it inconvenient to respond to them?

Your defense of Cheney was certainly admirable. Did you bother to check what golden parachute was in effect for Cheney when he left Haliburton? I mean, you implied he left on less than great financial terms. Can you do a little research and let us know what he was paid upon his departure? You might find it interesting. Apparently your right wing radio shows didn't provide you with the actaul details, huh?

Nice attempt to dodge all the issues though....

Joe

Well, first, his golden parachute is irrelevant. He would get that no matter when he left. In fact, if it was tied to a period of service, it could have been even larger than what he received, so it could have been another monetary loss for him. Golden parachutes are usually something negotiated when someone takes that kind of position. The point was, he could not control the sale of his stock so he most probably lost a lot of money doing this, not gained wealth from the war like many allege. Second, he is not linked to Halliburton anymore, and to imply that he is, in order to try and discredit this administration, is unjust.

You did pose a lot of questions. I counted about 8, and most of them didn't seem to be in want of an answer. I'm not sure which 3 you are talking about exactly.

Let's see if I can explain it this way to answer some of them, hopefully the right ones. There are only a couple of companies that are large enough to do Halliburtons job, so open bidding is stupid. The bidding could only be done by a couple of companies that are capable of doing the job. If you eliminate foreign companies, then there are only one or two. When you link profits to expenses (like is done with Halliburton), to ensure a fair profit, what is the point of bidding?

Yes, some things should not be bid on due to security, and some things should not be bid on because only a few can do the job. Some very small things should not be bid on at all because the bidding process would be more costly than the job. Fairly small jobs, that don't involve security, should be bid on. And I can easily see Halliburton being used exclusively for this job because it's personnel checks may be more acceptable to the pentagon than unknown companies or companies with know, less valuable personnel checks.

Rodney

hello there!