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Halliburton overcharged for Iraq oil work-report
By Andrea Shalal-Esa
March 28, 2006

 WASHINGTON, March 28 (Reuters) - Oil services company Halliburton Co. (HAL.N: Quote, Profile, Research) repeatedly overcharged taxpayers and provided substandard cost reports under a $1.2 billion contract to restore Iraq's southern oil fields, according to a new report by U.S. Rep. Henry Waxman.

Waxman, a California Democrat, said Democratic staff members of the House Committee on Government Reform examined a series of government audits and correspondence that criticized Halliburton's performance under the "Restore Iraqi Oil 2" (RIO2) contract.

The documents, he said, cited profound systemic problems, misleading and distorted cost reports, and an "obstructive" attitude toward oversight.

Halliburton, a Texas-based company formerly run by Vice President Dick Cheney, said the committee report focused on old issues that have been resolved.

"After two years and from thousands of miles away, it is easy to criticize decisions and actions that were based on urgent mission requirements and severe time constraints," the company said in a statement.

Halliburton said that the contract went through "countless changes" and review by at least 15 different government contracting officials.

Halliburton is the largest private contractor in Iraq.

The Democratic report said that in addition to the RIO 2 contract, Halliburton was also paid $13.5 billion for providing troop support under a logistics contract with the U.S. Army, and $2.4 billion under the original RIO contract to import fuel into Iraq and rebuild Iraq oil infrastructure.

The documents showed that Pentagon's Project and Contracting Office (PCO) found that Halliburton repeatedly overcharged the government, Waxman said.

In one case, the agency said Halliburton "tried to inflate cost estimate by $26M." In another, it said Halliburton claimed costs for laying concrete pads and footings that the Iraqi Oil Ministry had already installed.

The report said the same agency reported that Halliburton was "accruing exorbitant indirect costs at a rapid rate," while the Defense Contract Audit Agency challenged $45 million of $365 million in costs as unreasonable or unsupported.

 The PCO also criticized Halliburton's accounting for costs, citing "profound systemic problems," and said some of its documents were stripped of information that would allow tracking of details.

In addition, it said Halliburton's work under RIO 2 was 50 percent late, and company officials refused to cooperate with oversight officials.

Halliburton, run by Cheney from 1995-2000, has been under scrutiny for its contracts in Iraq, and several U.S. government agencies have looked into whether it overcharged for some work.

Halliburton, the world's second-largest oil services company, has said that criticism of its work in Iraq was politically motivated.

A top U.S. Army procurement officer, Bunny Greenhouse, last year described Halliburton's deals in Iraq as "contract abuse" and said auditors had flagged more than $1 billion in potential overcharges.

© Reuters 2006. All Rights Reserved.

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