Undisclosed documents shed light on further Halliburton billing abuse; $57m in new questioned charges


Published: Tuesday March 28, 2006

An analysis by a Democratic congressman of Halliburton's third major contract in Iraq found that the firm's third contract was ripe with allegations of billing abuse, RAW STORY has learned.

According to Waxman's review, some $57 million in charges were questioned by the Defense Contract Audit Agency, an arm of the Pentagon, in a random audit of several task orders. Out of $111 million in costs examined, $57 million were questioned or unsupported -- more than 50% of the total costs for these orders.

Halliburton has faced scrutiny of its Iraq contracts before -- they were awarded a secret "no-bid" contract as the US went to war in Iraq in March 2003. Army auditors previously questioned large chunks of Halliburton's billing, but the company was awarded a bonus for their work regardless.

Though the Army flagged $263 million of an earlier $1.5 billion contract as unsupported, they ultimately decided to pay the firm $253 million of the 263. This was reported by the New York Times in February.

Rep. Henry Waxman (D-CA) released the first analysis of Halliburton's "Restore Iraqi Oil" 2 contract Tuesday. The examination of previously undisclosed correspondence, evaluations, and audits reveals that government officials and investigators have harshly criticized Halliburton's performance under RIO 2. The documents disclose an "overwhelmingly negative" performance, including:

(Bullet points from a release)

  • Intentional Overcharging: Halliburton repeatedly overcharged the taxpayer, apparently intentionally. In one case, "[c]ost estimates had hidden rate factors to increase cost of project without informing the Government." In another instance, Halliburton "tried to inflate cost estimate by $26M." In a third example, Halliburton claimed costs for laying concrete pads and footings that the Iraqi Oil Ministry had "already put in place."
  • Exorbitant Costs: Halliburton was "accruing exorbitant indirect costs at a rapid rate." Government officials concluded that Halliburton's "lack of cost containment and funds management is the single biggest detriment to this program." They found a "lack of cost control ... in Houston, Kuwait, and Iraq." In a partial review of the RIO 2 contract, DCAA auditors challenged $45 million in costs as unreasonable or unsupported.
  • Inadequate Cost Reporting: Halliburton "universally failed to provide adequate cost information," had "profound systemic problems," provided "substandard" cost reports that did "not meet minimum standards," and submitted reports that had been "vetted of any information that would allow tracking of details." Halliburton produced "unacceptable unchecked cost reports."
  • Schedule Delays: Halliburton's work under RIO 2 was continually plagued by delays. Halliburton had a "50% late completion" rate for RIO 2 projects. Evaluations noted "untimely work" and "schedule slippage."
  • Refusal to Cooperate: Evaluations described Halliburton as "obstructive" with oversight officials. Despite the billions in taxpayer funds Halliburton has been paid, the company's "leadership demonstrated minimal cooperative attitude resolving problems."