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Probe Targets Halliburton's Meals Supplier

Contractor agrees to repay $27.4 million and says it is aiding the investigation into a Saudi firm's billing for overseas troops' food.

February 03, 2004|T. Christian Miller | Times Staff Writer

WASHINGTON — In the latest controversy surrounding Halliburton Co.'s work for the U.S. military, government officials said Monday that the company had potentially overcharged $27.4 million for meals served to troops abroad.

Halliburton, which agreed to repay the money, said in a statement that it was cooperating with the government in an investigation of its subcontractor, Saudi Arabia-based Tamimi, for billing for meals that allegedly were never served to troops and civilian contractors at five military bases. In addition, auditors were looking into food service contracts at more than 50 other locations in Kuwait and Iraq.

Halliburton officials denied wrongdoing, saying that the enormous logistical difficulties of serving thousands of troops a month made it difficult to gain an accurate count of how many meals needed to be served.

"We have served more than 50 million meals to soldiers in the past year, and any assignment of this size is, of course, going to be subject to question," Randy Harl, president and chief executive of Halliburton subsidiary KBR, said in a statement.

Government auditors discovered the overbilling, which allegedly took place over nine months last year, during a routine examination of the contract to supply food to five bases in Kuwait, a Pentagon official said late Monday.

Halliburton said it had agreed to forgo further payments on the contract to resolve the matter.

The military has awarded Halliburton contracts worth billions of dollars to provide everything from dishwashing to oil-pipeline reconstruction in Iraq. Those contracts have drawn scrutiny from Democrats, in part because of the ties between Halliburton and Vice President Dick Cheney, who ran the company from 1995 to 2000.

Late last year, government auditors accused Halliburton of overcharging $61 million for gasoline. The Army Corps of Engineers cleared the company of wrongdoing, but the Pentagon's inspector general is continuing an inquiry. Congressional representatives led by Henry A. Waxman (D-Los Angeles) have urged a wider investigation by Congress as well.

Last month, in an unrelated case, the company admitted that two employees had accepted kickbacks totaling as much as $6.3 million for helping a subcontractor bilk the Pentagon for work in Iraq. The company has since repaid the money, although it has not released the names of the employees or the Kuwaiti company that paid the bribes.

The latest allegations brought renewed criticism from Capitol Hill.

"If the reports are true, this is blatant overcharging," Waxman said in a statement.

Defense-contract analysts said the string of scandals was evidence that neither the U.S. government nor Halliburton had enough workers on the ground to monitor the contracts.

The Coalition Provisional Authority, which oversees reconstruction activities in Iraq, has only recently appointed an inspector general. Contract oversight authority is now spread among several agencies.

Even the best-intentioned firms may have trouble keeping tabs on contracts in a chaotic environment such as Iraq.

"Part of the problem is that [Halliburton] is trying to focus more on the tasks and getting people fed and worrying about payments later," said Steven Schooner, a contracts expert at George Washington University. "The government has clearly allocated insufficient contract management resources in Iraq."

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