KBR to Get Back Most of Disputed Iraq Costs

The Army has decided to reimburse a Halliburton subsidiary all but $9 million of nearly $222 million in costs that Pentagon auditors questioned for oil industry work in Iraq, military officials said Monday.

At issue is a $2.4-billion contract awarded without competitive bidding to the subsidiary, KBR, to deliver fuel to Iraqis and repair oil equipment. The 2003 contract came under criticism because of the lack of bidding and because of Halliburton’s links to Vice President Dick Cheney, once its chief executive.

The Army did a “lengthy, detailed” review of the $221.9 million in challenged costs and resolved the questions, said Rhonda James, a spokeswoman for the Army Corps of Engineers in Dallas, where the contract is administered.

James said that on some contested costs, Halliburton provided additional documents. The Army refused to reimburse some of the costs, and Halliburton reduced others, she said.

Rep. Henry A. Waxman of Los Angeles, the top Democrat on the House Committee on Government Reform, called the reimbursement decision “an insult to taxpayers.”

In a letter to Rep. Thomas M. Davis III (R-Va.), chairman of the committee, Waxman said that the military typically withholds payment on 55% to 75% of costs that Pentagon auditors challenge. In this case, the Army will withhold payment on about 4% of the contested charges.