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Iraq Inspector Cites Halliburton Cost Problems
Thursday May 6, 2004 1:32 pm ET

WASHINGTON (Summary of Reuters Article) - Inspector general for the U.S. Coalition Provisional Authority (CPA), Stuart Bowen, said ongoing audits of Halliburton's KBR unit had found more problems that caused the company to overcharge the U.S. government for services rendered. The inspector general said he found problems with hotel costs and the purchase of trucks, but that a broad audit, to be released soon, will show problems with KBR's purchases used to carryout its task of providing services to the CPA. KBR's work in Iraq could potentially cost $18 billion to the U.S. government. KBR, which has more than 24,000 employees in the Iraq-Kuwait region, said its higher-than-normal prices in Iraq have been driven up by the high level of danger. The inspector general responded by saying it was inappropriate for KBR to tie the killings of Halliburton workers to high costs in Iraq. KBR has lost over 30 employees and sub-contractors in Iraq. The inspector general said KBR overcharged the U.S. government at the Kuwaiti Hilton, which is not located in Iraq. He said the Defense Contract Audit Agency will soon announce an audit on Task Order 44, covering services to the CPA's offices in Iraq. U.S. Army Materiel Command said the task order amounted to $467 million and covered items such as office space, laundry, transportation and food services to the CPA. Government auditors are also investigating the contracting process for a $1.2 billion deal given to KBR in January to restore the oil infrastructure in southern Iraq.