The United States army is preparing to abandon a contract with Halliburton, the company formerly run by the vice-president, Dick Cheney, which has been investigated for allegedly overcharging it.
The contract to provide housing, food and other services to US troops in Iraq and Afghanistan, potentially worth $13-billion, is expected to be broken into smaller parts and opened to competitive bids in the next few months.
The Halliburton division awarded the contract, Kellogg Brown & Root, has been fighting a rearguard action against allegations of massive overcharging for much of the past year.
Last month Pentagon auditors suggested that the army should withhold payment of 15% of Halliburton’s invoices in Iraq, saying that the company had been unable to account properly for at least $1,8-billion of the $4,3-billion it had so far asked for.
The army is still considering the recommendation.
In a memo of August 25, cited by the Wall Street Journal on Tuesday, Tina Ballard, the army’s chief procurement officer, ordered officials to ”immediately begin the transition to competitively awarded sustainment contracts for support of US military forces in Iraq.”
Halliburton has been swamped by controversy since it emerged that it had been given contracts to repair oilfields and give logistical back up to the army in Iraq.
To the Democrats Halliburton has become shorthand for cronyism and special interests in the Bush administration.
The logistics work was given to the company without a competitive tender under an existing 10-year contract to provide a wide range of contingency services to US troops.
The army is expected to invite tenders for six different contracts.
It is expected that they will include food services, housing and transportation.
Wendy Hall, a spokesperson for Halliburton, said the company had expected the army’s decision.
”Such a transition is anticipated,” she said, ”and planned for in all our contingency operations.
”Our contingency work in the Balkans was bid out in much the same way.”
She said Halliburton would review the contracts on offer before deciding whether to make a bid.
The memo is said to address the increasing frustration of army officers at the effort to reach a final estimate for the work being carried out by KBR.
One option apparently being considered is for the army to come up with its own quote.
Halliburton has accused its critics of using it to score political points against Cheney.
But the company has provided the Democrats with plenty of ammunition.
Last month it admitted finding evidence that a consortium it leads had at least discussed bribing Nigerian officials to win a contract.
And it paid $7,5-million to settle a claim by the US financial watchdog that it had failed to disclose an important accounting change during Cheney’s tenure which allowed it to keep meeting Wall Street’s forecasts. – Guardian Unlimited Â