December 12, 2003
Haliburton sticks it to taxpayers

War profiteering? Whod'a thunk it?

Houston-based Halliburton Co. may have overbilled taxpayers by as much as $61 million for trucking gasoline into Iraq, Pentagon auditors said Thursday.

The Pentagon's Defense Contract Audit Agency said Halliburton also may have tried to charge the government $67 million more to manage cafeterias for U.S. troops than the company had agreed to pay the subcontractors hired to actually do the work.

In the military's first public criticism of Halliburton subsidiary KBR since the company went to work in Iraq, Pentagon officials said Thursday that they had discovered "serious problems" with the company's costs and demanded a detailed response.

"Right now the burden is on the company to come back and say why this has happened," a senior Pentagon official said.


The $61 million in fuel overcharges, through Sept. 30, were calculated by taking the difference between what Halliburton billed the government for fuel bought in Kuwait and shipped to Iraq and what another contractor paid to provide gasoline to Iraq by importing it through Turkey, an official said.

Halliburton billed $2.27 a gallon for the fuel, which included transportation costs. The unnamed contractor charged $1.18 a gallon, the official said.

Asked if he believed Halliburton was intentionally padding two no-bid contracts that could yield as much as $15.6 billion from work in Iraq, the official said, "I do not think it is a systematic problem with overcharging."

There is no allegation that Halliburton profited by the excess billing. The $2.27 price was charged to Halliburton by the sole Kuwaiti contractor allowed by the government of that country to bid on a Halliburton subcontract.

What the Pentagon does allege is that Halliburton did not do everything required under government contracting rules to find the best possible price for goods procured under a no-bid contract.

I'm told that competition is often a force in lowering prices. Maybe we should, you know, try that one of these days.

Posted by Charles Kuffner on December 12, 2003 to Iraq attack | TrackBack

I am shocked, yes shocked that a fine comapny such as Haliburton would do such a thing as overcharge for their services. ;-)

Posted by: William Hughes on December 12, 2003 7:57 AM

Maybe we should first read the detailed response that's been requested. Nobody's been convicted of anything here, but if there's a problem, that's why we have auditors and a legal system.

Surely tolerant liberals don't believe in convicting before all evidence is before us. :)

Posted by: kevin whited on December 12, 2003 1:54 PM

Yes, I'm sure they have an explanation. I'm sure we'll be hearing more explanations like it going forward, too.

Posted by: Charles Kuffner on December 12, 2003 2:28 PM

How about this explanantion? Haliburton's subsidiary overpaid the Kuwaitis for the oil and merely passed on the overpriced oil to the federal government. What would they have done differently? The Army Corps of Engineers had specifications drawn up and the Kuwaiti company met those specs. Halliburton made a statement that this company was the only one to meet the specs. If the Kuwaiti's knew this, they're gonna hike the price.

Seems to me that the military's specs should be looked at as opposed to Halliburton. But no, Halliburton once had the veep on its board, so they're the baddie. [/sarcasm]

Posted by: elgato on December 12, 2003 6:33 PM

Well, then, there was also the $67 million overcharge for cafeteria services. These things do happen, one supposes.

But fine. Let's pretend it wasn't the big bad eeevil Halliburton. Isn't anyone concerned about the awarding of no-bid contracts? Will anyone claim that such overcharges are much less likely on competitively-bid contracts? Surely enlightened conservatives still believe in free-market competition and minimizing government expenditures, right? :-)

Posted by: Charles Kuffner on December 13, 2003 8:31 AM