WASHINGTON — Frustrated government auditors pleaded, cajoled and finally threatened Halliburton Co. executives who repeatedly failed to comply with government reporting requirements under a key Iraq contract with a $1.2-billion potential price tag, newly released documents show.
The documents, along with a report, were issued Tuesday by the Democratic staff of the House Committee on Government Reform. Rep. Henry A. Waxman (D-Los Angeles) had requested the report on the contract, considered crucial to the restoration of oil production capacity in southern Iraq.
The 15-page report cites findings by auditors that Halliburton overcharged -- "apparently intentionally" -- on the contract by using hidden calculations, and attempted in one instance to bill the government for $26 million in costs it did not incur. Auditors also challenged $45 million in other costs, labeling them as "unreasonable or unsupported," the report said.
The report blamed the Department of Defense for awarding the contract despite warnings from auditors that Halliburton's cost estimating system had "significant deficiencies." Although federal officials have criticized the company and threatened to cancel its contracts, Halliburton remains the largest private contractor in Iraq.
The contract, awarded in January 2004, was one of three Iraq pacts for the company once headed by Vice President Dick Cheney.
Although the other two agreements -- one for supplies for U.S. troops and the other for fuel and oil industry repairs -- have faced heavy criticism as no-bid contracts, Waxman and his staff said Tuesday's report was the first to focus on the third Halliburton contract, for the repair of oil fields in southern Iraq, which was awarded after a competitive bidding process.
"Halliburton has pulled off the impossible," Waxman, a staunch critic of the firm, said in releasing the report. "It has actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract."
Melissa Norcross, a spokeswoman for Halliburton and a subsidiary, KBR, dismissed the report as partisan, and said it focused on issues that had been resolved. She said Waxman failed to include a State Department report to Congress that commended the company "for numerous improvements" to its cost reporting system.
In the days after the U.S. invasion in March 2003, Bush administration officials said the revitalization of Iraq oil fields would finance the country's reconstruction. Since then, though, oil output has failed to exceed prewar levels.
