Despite Inquiry, Halliburton Wins Iraq Bid

Despite a Pentagon probe into alleged overcharging for fuel delivered to Iraq, the Army awarded Vice President Dick Cheney’s former company a contract Friday to rebuild Iraq’s oil industry.

Halliburton won a competitive bid to rebuild the oil industry in southern Iraq, a contract worth up to $1.2 billion over two years, the Army Corps of Engineers said in a statement.

The Army gave Halliburton subsidiary KBR a no-bid contract to rebuild oil infrastructure throughout Iraq shortly after the U.S.-led invasion of Iraq last March. The Army opened that contract for competitive bids last fall and split it into one for northern Iraq and one for southern Iraq.

The northern Iraq contract, worth up to $800 million, went to a joint venture of California-based Parsons Corp. and the Australian firm Worley Group Ltd.

Just days before the Army’s award to Halliburton, Pentagon auditors asked for an investigation into possible criminal wrongdoing involving the no-bid KBR oil industry reconstruction contract.

Officials in the Defense Department’s Office of Inspector General haven’t decided which investigators will do the work, the office said Friday.

The Defense Contract Audit Agency last month questioned KBR’s charges for gasoline it bought in Kuwait and trucked into Iraq for the civilian market. KBR charged more than double the price for gasoline brought in from Kuwait than it did for gas trucked in from Turkey. Auditors said KBR may have overcharged the Army by $61 million between May and September.

Halliburton has denied any wrongdoing and said the Army approved its subcontract with a Kuwaiti supplier, the Altanmia Marketing Co. The Army told auditors the high price was justified because KBR had to get fuel deliveries going quickly to avert a fuel crisis in Iraq.

The oil contract probe will focus mainly on possible wrongdoing by government officials, not Halliburton, a senior defense official has said.

Democrats have demanded further investigations and criticized the Halliburton contracts as evidence of the Bush administration’s rewarding its corporate friends. Cheney ran Halliburton from 1995 until he quit in 2000 to become Bush’s running mate, and the company’s executives have donated thousands of dollars to the Bush campaign.

White House and Pentagon officials say political considerations do not affect the Defense Department’s contract decisions. Cheney, a former Defense secretary, is not involved in those decisions.