The U.S. military said Wednesday it would soon take over Halliburton’s role of getting fuel into Iraq, a decision that follows a draft Pentagon audit that found Vice President Dick Cheney’s old firm may have overcharged for the job.
The Pentagon’s Defense Energy Support Center (DESC) said it had expanded its traditional mandate of providing fuel to the U.S. military and would now be responsible for importing and distributing fuel products to the Iraqi people.
“This is the first time our agency has been given this kind of work,” said DESC spokeswoman Lynette Ebberts, who declined to comment on whether the DESC was taking the work because of price gouging allegations against Halliburton.
Halliburton’s unit Kellogg Brown and Root is expected to continue bringing in fuel to Iraq under a no-competition deal it signed in March with the U.S. Army Corps of Engineers until DESC has advertised new contracts for the work.
“What is really important here is that fuel support is not interrupted to the Iraqi people. We will use whatever means we have to accomplish that,” said Ebberts.
Halliburton spokeswoman Wendy Hall said the task of getting fuel into Iraq was always understood by the company to be a temporary job.
“KBR has repeatedly tried to transfer the fuel delivery mission to another supplier,” said Hall in an e-mail response. ”We will work with the DESC to perform a smooth transition of the transportation mission.”
The DESC was asked several months ago to look into taking over the job of supplying fuel, a request that became more urgent after a preliminary Pentagon audit this month found evidence KBR may have overcharged U.S. taxpayers $61 million to supply fuel to Iraq via Kuwait.
Halliburton strongly denies wrongdoing and said it delivered fuel to Iraq at the best price under extremely dangerous conditions. Cheney was chief executive of Halliburton from 1995 to 2000.
Despite being an oil-rich nation, Iraq suffers from a fuel shortage and products have been trucked in since the end of the U.S.-led war that toppled President Saddam Hussein.
Ebberts said a team of DESC experts would go to Iraq in mid-January to assess what was needed and competitively bid fuel contracts would be advertised soon after to replace the work currently being done by KBR. KBR can bid for that work.
She did not know the value of that work but said it was separate from $2 billion worth of contracts set to replace KBR’s no-competition deal. These two oil reconstruction contracts, one for the north and the other for southern Iraq’s oil fields, are due to be announced by Jan. 17, after several delays.
“Our goal is to have full and open competition (for the fuel contracts) but we do have other contract options available, such as extending existing contracts as necessary or we can use bridging contracts using limited competition procedures,” said Ebberts, without specifying which contracts could be used.
U.S. Army Corps of Engineers spokesman Bob Faletti defended KBR and said the new arrangement had nothing to do with criticism of the Texas company, its performance in Iraq or with the military’s audit, which is not yet complete,
“KBR has done an excellent job,” said Faletti.
Asked specifically whether the shift from using KBR was due to criticism from Congress, Faletti said he did not believe this was the case.