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Marketplace (National Public Radio): Halliburton investigation

October 22nd, 2005

Get a no-bid contract, pass go, collect $2 1/2 billion even though the Army's investigating you. The Army's been trying to decide what to do about billions of dollars' worth of bills submitted by Halliburton for the work it's doing in Iraq. Pentagon auditors have tagged lots of those bills as questionable or unsupported. Documents provided to The Wall Street Journal indicate that, despite those questions, the military's going to let Halliburton keep some, possibly even all, of the money it's already been paid. John Dimsdale reports from Washington.

JOHN DIMSDALE reporting:

In 2001, the US military gave Halliburton subsidiary Kellogg Brown & Root a 10-year contract to provide troops with all sorts of services from food and shelter to oil field repairs. So far, KBR's bill has been close to $12 billion, but Army auditors question the legitimacy of more than $2 1/2 billion charged for such things as meals and fuel in Iraq and Afghanistan. The Pentagon is supposed to withhold some payments when bills are not documented, but so far it hasn't. In one document obtained by The Wall Street Journal, an Army general says it would be unfair to disallow payments when, quote, "in the fog of the contingency, KBR did not obtain sufficient supporting documentation." William Hartung at the World Policy Institute says it's time for the Pentagon to consider giving the contract to another company.

Mr. WILLIAM HARTUNG (World Policy Institute): The fog of war also creates a climate where a company can take advantage. You know, you need a company that you can trust in that kind of situation where the government purchaser is vulnerable.

DIMSDALE: But Pratap Chatterjee, the managing editor of CorpWatch and the author of "Iraq, Inc" says the Pentagon is in a bind.

Mr. PRATAP CHATTERJEE (Managing Editor, CorpWatch): It mostly depends completely on Halliburton to provide every kind of service from setting up the tents, digging the toilets, cleaning the toilets, cutting soldiers' hair, peeling the potatoes. Every aspect of the military depends on Halliburton.

DIMSDALE: Pentagon officials are checking with other contractors to figure out appropriate reimbursements for services Halliburton has failed to document. Halliburton claims their billing has been supported by, quote, "extraordinary documentation."

In Washington, I'm John Dimsdale for MARKETPLACE.

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