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Halliburton faces more accusations
Feb. 12, 2004

By Lisa Sanders, CBS.MarketWatch.com

Former workers allege U.S. was overcharged routinely

DALLAS (CBS.MW) -- Halliburton, under fire already for its work in the Middle East, is facing fresh charges from two former employees who allege that the company routinely overbilled the U.S. government.

In a letter to a Pentagon agency that's reviewing Halliburton's (HAL: news, chart, profile) work, Democratic Reps. Henry Waxman and John Dingell said the whistleblowers' allegations range from the company's cavalier attitude about prices to its anti-competitive business practices.

Halliburton was not immediately available for comment.

Henry Bunting, who is scheduled to testify before the Senate on Friday, worked as a field buyer in the LOGCAP procurement office in Kuwait. Another man, who wishes to remain anonymous, worked as a procurement supervisor in the same office. The Army awarded the multibillion LOGCAP contract to Halliburton in 2001. It calls for the company to assist the military with planning for the use of civilian contractors in wartime. The preponderance of the work performed under the contract is in Iraq.

The letter states that Bunting and the other man were frequently told not to worry about high prices charged by vendors. The rationale was that the U.S. government "would reimburse Halliburton's costs and then pay Halliburton an additional fee. One whistleblower said that a Halliburton motto was: 'Don't worry about the price. It's cost-plus.'"

The employees also told Waxman's staff that the company was wasteful in its spending -- for example, buying embroidered towels for $7.50 when ordinary towels would have cost about one-third of the price -- and they said that Halliburton avoided competition among vendors.

"Instead of having multiple vendors submit competitive quotes for needed materials and selecting the lowest quote, Halliburton frequently sought only one quote from a single vendor," the letter said. In many cases, Halliburton buyers would ask only one Kuwaiti vendor to submit a quote for requisitions -- as long as the quote was below $2,500, the whistleblowers claimed. The company often used higher price vendors from a preferred list when a lower price could be obtained from a cheaper provider, the men alleged.

"These two whistleblowers are former Halliburton employees with first-hand knowledge of Halliburton's procurement practices," Waxman and Dingell wrote. "If their accounts are accurate, the company is systematically overcharging the taxpayer on hundreds of routine requisitions each day ... the cumulative cost to the taxpayer could be enormous."

Late last month, Halliburton agreed to delay billing the U.S. government for meals served to soldiers in the Middle East after the Defense Department's auditors raised questions about the amount the company charged for food service.

Earlier that month, Halliburton acknowledged it may have overbilled for contract work ranging from laundry service to oil-field reconstruction in Iraq and credited the U.S. government for $6.3 million in case an investigation confirmed the overcharges. The company said its auditors discovered possible overcharges by a Kuwaiti subcontractor and that there might have been kickbacks or improper payments made.

Separately, the U.S. is investigating allegations that Halliburton schemed to bribe Nigerian officials during the time that Vice President Dick Cheney ran the company.

Shares of Halliburton closed at $31.63, up 59 cents.

Lisa Sanders is a Dallas-based reporter for CBS.MarketWatch.com.