US military extends work of Halliburton despite critics

WASHINGTON - The United States military has signed on Halliburton to do nearly US$5 billion ($7.48 billion) in new work in Iraq under a giant logistics contract that has so far earned the Texas-based firm US$9.1 billion, the Army said yesterday.

Linda Theis, a spokeswoman for US Army Field Support Command in Rock Island, Illinois, said the military signed the work order with Halliburton unit Kellogg Brown and Root in May.

The new deal, worth US$4.97 billion over the next year, was not made public when it was signed because the Army did not consider such an announcement necessary, she said.

"We did not announce this task order as this is really not something we ever really thought about doing," Theis said.

Halliburton, which was run by Vice-President Dick Cheney from 1995-2000, has been under scrutiny for its contracts in Iraq, and several US Government agencies are looking into whether it overcharged for some work.

In March, a former KBR employee and a Kuwaiti citizen were indicted for defrauding the US Government of more than US$3.5 million by inflating the cost of fuel tankers.

The new work order, called Task Order 89, is valid until April 30, 2006, and went ahead despite critical military audits released last week by Democratic opponents of KBR's Iraq work.

A top US Army procurement official said last week that Halliburton's deals in Iraq were the worst example of contract abuse she had ever seen.

KBR strongly rejected the claim as "political rhetoric".

KBR was awarded the logistical contract with the military in December 2001, covering tasks from feeding US troops to delivering mail, doing laundry and building barracks.

Called LOGCAP, KBR had by May 31 been paid US$9.1 billion under the deal, which has nine option years that have been renewed three times. They are up for renewal each December.

Of this amount, US$8.3 billion was for work in Iraq and the remainder for Afghanistan and elsewhere.

Money obligated for future work amounted to US$11.4 billion, said Theis, pointing out not all of this money would necessarily be spent.

The Pentagon has been looking into whether to contract out some services done by KBR under its giant deal, but Theis said she had not heard of any decisions to make changes.

Halliburton has received bonuses for some of its work, and Theis said decisions on possible further bonuses would likely be announced this month.

- REUTERS