Halliburton Awarded New $1Bil Military Contract


June 22, 2005, 4:28 PM EDT

HOUSTON -- Halliburton Co. won a contract potentially worth more than $1 billion to support U.S. troops in the Balkans and other areas in Europe.

The U.S. Army Corps of Engineers contract was awarded to Halliburton subsidiary KBR despite ongoing allegations of overbilling by the unit, the largest U.S. contractor in Iraq. Halliburton has consistently denied wrongdoing.

Halliburton is guaranteed a minimum of $5 million for the first year and an additional $1 million for each of the four optional years under the contract, which replaces the Balkans Support Contract awarded to Halliburton in May 1999, the Army Corps said in a release. The U.S. may spend up to $1.25 billion for the company's services in the five-year period.

The Army Corps said it expects the cost of support services for troops in the Balkans to be $68 million in the first year, and $234 million over the five-year life of the contract, and does not yet know the cost of support for regions outside the Balkans.

KBR's tasks in Europe will include vehicle and equipment maintenance, water production, food and laundry services, firefighting and building housing for troops on peacekeeping operations in the Balkans.

"This decision is an endorsement of the best-in-class support that KBR provides to the U.S. military worldwide," said Andy Lane, Halliburton executive vice president and chief operating officer, according to the Army Corps release. A telephone call to the company for comment was not immediately returned.

Halliburton, run by Vice President Dick Cheney for five years until he resigned in 2000 to be President Bush's running mate, has been under fire since the beginning of the war in Iraq. KBR has more than $10 billion in work orders from the Army to support U.S. troops and rebuild Iraq's oil industry.

Various agencies are investigating allegations of overbilling and favoritism because of Cheney's past connections. Cheney and the Pentagon also have said the vice president plays no role in contract decisions.