Halliburton: $9.6 Billion In Iraq So Far
By Pamela Hess
United Press International

February 25th, 2005

Washington - Halliburton’s logistics contract with the U.S. Army in Iraq has been worth at least $9.6 billion since the start of the war and is mounting at a cost of about $6 billion a year, according to Army documents and officials.

The company, headed by Vice President Dick Cheney for five years prior to his election in 2000, has been paid $6.6 billion for its work so far, with another $3 billion in payments pending completion of the work, said Dan Carlson, spokesman for Army Field Support Command, Rock Island, Ill.
The logistics contract is not just for work performed in Iraq, but that ongoing war accounts for the lion’s share of the work. The money obligated to the company under the contract amounts to $10.5 billion, with a little under a billion for work in Afghanistan. In 2005, the Iraq contract is expected to be worth more than $6 billion, with $500 million for Afghanistan and $500 million for other projects, according to an Army budget official and Army documents.

Halliburton subsidiary KBR - formerly known as Kellogg, Brown & Root - holds the contract, known as the Army’s Logistics Civil Augmentation Contract, or LOGCAP, an open-ended “cost plus” contract. The Army issues “task orders” for logistics work it needs done - meals served, facilities constructed - and KBR charges a percentage of the cost of the work as its profit.

The LOGCAP arrangement began in 1992, with KBR’s predecessor Brown & Root the first winner. It held the contract until 1997 when the General Accounting Office discovered Brown & Root had overcharged the Army for its work on the war and peacekeeping mission in Bosnia. DynCorp won the contract in 1997, but KBR won it back in December 2001 and will hold it for 10 years, according to the contract terms.

KBR has a separate contract originally worth up to $7 billion to restore Iraq’s oil infrastructure, awarded on the brink of the war in March 2003. That contract was later divided and opened for competition; KBR won a contract for the restoration of the southern oil fields only for a maximum value of $1.2 billion.

Halliburton’s fortunes increased dramatically with the onset of the Iraq war. In 2003 alone it received contracts from the Defense Department worth $4.3 billion, more in one year than it won in Pentagon contracts over the previous five years combined, according to the Center for Public Integrity. The total worth of DOD contracts from 1998 to 2003 was $2.5 billion.

In January 2004, Halliburton fired two of its employees in Kuwait who accepted a $6 million bribe in exchange for awarding Army subcontracts to a Kuwaiti-based company involved in Iraq reconstruction. The next month, Pentagon auditors discovered Halliburton overcharged the military $27.4 million for meals served to American troops at five military bases in Iraq and Kuwait last year.

Despite the controversies surrounding KBR’s billing practices, military officials in Iraq told United Press International in 2004 they were satisfied with the quality of food and hygiene facilities provided by the company, saying their troops were generally well fed and healthy and had higher morale as a result. They could not speak to the financial side of the contract.

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