By DAVID IVANOVICH
Copyright 2006 Houston Chronicle Washington Bureau
WASHINGTON - Halliburton Co. exposed troops in Iraq to contaminated water even after a former company worker publicly accused the Houston-based contractor of failing to chlorinate water supplies, Senate Democrats alleged Thurs- day.
Back in January, a one-time water purification specialist for Halliburton subsidiary KBR told a Democratic panel he tested water used for showers, shaving and washing clothes at Camp Junction City in Ramadi last March and found it had not been treated with chlorine.
Sen. Byron Dorgan, D-N.D., chairman of the Senate Democratic Policy Committee, said he will release a report today from an Army doctor confirming that water contamination problems continued even after the issue was raised on Capitol Hill.
Halliburton allowed troops to bathe in water pumped from the Tigris River that tested positive for E. coli and coliform bacteria, Dorgan said.
Halliburton spokeswoman Cathy Mann pointed to a March 14 statement on water quality that said, "KBR has worked closely with the Army to develop standards and take action to ensure that the water provided in Iraq is safe and of the highest quality possible.
"Halliburton and KBR are committed to doing the right thing because we care about the health and welfare of the troops, our employees and all those who serve and work in Iraq."
Friday, April 07, 2006
Friday, March 31, 2006
Halliburton overcharged for Iraq oil work: report
By Andrea Shalal-Esa
Reuters
Tuesday, March 28, 2006; 7:30 PM
WASHINGTON (Reuters) - Halliburton Co., the world's second largest oil services company, repeatedly overcharged taxpayers and provided substandard cost reports under a $1.2 billion contract to restore Iraq's southern oil fields, according to a new report by U.S. Rep. Henry Waxman.
Waxman, a California Democrat, said Democratic staff members of the House Committee on Government Reform examined a series of previously undisclosed government audits and correspondence that criticized Halliburton's performance under the "Restore Iraqi Oil 2" (RIO2) contract.
The documents, which cover the period from January 2004 to July 2005, painted "an absolutely abysmal picture of Halliburton's RIO2 work" and cited profound systemic problems, misleading and distorted cost reports, he said.
Halliburton, a Texas-based company formerly run by Vice President Dick Cheney, dismissed the committee report as partisan and said it focused on old issues with the two-year contract that have been resolved.
"After two years and from thousands of miles away, it is easy to criticize decisions and actions that were based on urgent mission requirements and severe time constraints," the company said in a statement.
Halliburton, the largest private contractor in Iraq, said the contract went through "countless changes" and review by at least 15 different government contracting officials.
Waxman, who has introduced legislation to limit sole-source contracts in the future, said lawmakers did not know much about what had happened with the contract since July 2005, adding: "From what we can see, major problems remain."
Halliburton said its engineering and construction arm KBR, which is gearing up for an initial public stock offering, had received 30 task orders under the contract to date, for a total current value of nearly $750 million and work was ongoing.
The Democratic report said that, in addition to the RIO 2 contract, Halliburton was also paid $13.5 billion for providing troop support under a logistics contract with the U.S. Army, and $2.4 billion under the original RIO contract to import fuel into Iraq and rebuild Iraq oil infrastructure.
The Pentagon's Project and Contracting Office (PCO) found that Halliburton repeatedly overcharged the government, Waxman said, citing the documents.
PCO put KBR on notice in January 2005 that it could cancel the contract for cause. It lifted the notice six months later, saying KBR demonstrated "adequate" compliance. In January, it exercised one of three one-year options to extend the deal.
In one case, the agency said Halliburton tried to inflate cost estimates by $26 million. In another, it said Halliburton claimed costs for laying concrete pads and footings that the Iraqi Oil Ministry had already installed.
The report said the same agency reported Halliburton was "accruing exorbitant indirect costs at a rapid rate," while the Defense Contract Audit Agency challenged $45 million of $365 million in costs as unreasonable or unsupported.
The PCO also cited "profound systemic problems" with Halliburton's cost reporting and said some documents were stripped of information that would allow tracking of details.
It said Halliburton's work under RIO 2 was 50 percent late and officials refused to cooperate with oversight officials.
Halliburton, run by Cheney from 1995-2000, has been under scrutiny for its contracts in Iraq.
© 2006 Reuters
Reuters
Tuesday, March 28, 2006; 7:30 PM
WASHINGTON (Reuters) - Halliburton Co., the world's second largest oil services company, repeatedly overcharged taxpayers and provided substandard cost reports under a $1.2 billion contract to restore Iraq's southern oil fields, according to a new report by U.S. Rep. Henry Waxman.
Waxman, a California Democrat, said Democratic staff members of the House Committee on Government Reform examined a series of previously undisclosed government audits and correspondence that criticized Halliburton's performance under the "Restore Iraqi Oil 2" (RIO2) contract.
The documents, which cover the period from January 2004 to July 2005, painted "an absolutely abysmal picture of Halliburton's RIO2 work" and cited profound systemic problems, misleading and distorted cost reports, he said.
Halliburton, a Texas-based company formerly run by Vice President Dick Cheney, dismissed the committee report as partisan and said it focused on old issues with the two-year contract that have been resolved.
"After two years and from thousands of miles away, it is easy to criticize decisions and actions that were based on urgent mission requirements and severe time constraints," the company said in a statement.
Halliburton, the largest private contractor in Iraq, said the contract went through "countless changes" and review by at least 15 different government contracting officials.
Waxman, who has introduced legislation to limit sole-source contracts in the future, said lawmakers did not know much about what had happened with the contract since July 2005, adding: "From what we can see, major problems remain."
Halliburton said its engineering and construction arm KBR, which is gearing up for an initial public stock offering, had received 30 task orders under the contract to date, for a total current value of nearly $750 million and work was ongoing.
The Democratic report said that, in addition to the RIO 2 contract, Halliburton was also paid $13.5 billion for providing troop support under a logistics contract with the U.S. Army, and $2.4 billion under the original RIO contract to import fuel into Iraq and rebuild Iraq oil infrastructure.
The Pentagon's Project and Contracting Office (PCO) found that Halliburton repeatedly overcharged the government, Waxman said, citing the documents.
PCO put KBR on notice in January 2005 that it could cancel the contract for cause. It lifted the notice six months later, saying KBR demonstrated "adequate" compliance. In January, it exercised one of three one-year options to extend the deal.
In one case, the agency said Halliburton tried to inflate cost estimates by $26 million. In another, it said Halliburton claimed costs for laying concrete pads and footings that the Iraqi Oil Ministry had already installed.
The report said the same agency reported Halliburton was "accruing exorbitant indirect costs at a rapid rate," while the Defense Contract Audit Agency challenged $45 million of $365 million in costs as unreasonable or unsupported.
The PCO also cited "profound systemic problems" with Halliburton's cost reporting and said some documents were stripped of information that would allow tracking of details.
It said Halliburton's work under RIO 2 was 50 percent late and officials refused to cooperate with oversight officials.
Halliburton, run by Cheney from 1995-2000, has been under scrutiny for its contracts in Iraq.
© 2006 Reuters
Thursday, March 30, 2006
Halliburton, in trouble again, to float KBR - Business - Business - smh.com.au
NEW YORK: Halliburton, the American energy and construction group which used to be run by US vice-president Dick Cheney, is understood to have hired Goldman Sachs to run the $US9 billion ($12.8 billion) float of its Kellogg Brown & Root subsidiary.
KBR has been heavily criticised for its dominant role in war-torn Iraq as major contractor to the US military, the contracts won apparently without arms' length tenders being called, and for heavily overcharging.
In Washington on Tuesday frustrated US Government auditors pleaded, cajoled and finally threatened Halliburton executives who repeatedly failed to comply with government reporting requirements under a key Iraq contract with a $US1.2 billion potential price tag, newly released documents show.
The documents, along with a report, were issued on Tuesday by the Democratic staff of the House Committee on Government Reform.
The 15-page report cites findings by auditors that Halliburton overcharged - "apparently intentionally" - on the contract by using hidden calculations and attempted, in one instance, to invoice the US Government for $US26 million in costs it did not incur.
The report blamed the Department of Defence for awarding the contract despite warnings from auditors that Halliburton's cost estimating system had "significant deficiencies".
Halliburton remains the largest private contractor in Iraq.
The contract, awarded in January 2004, was one of three Iraq contracts awarded to Halliburton.
While the other two agreements - one for supplies for US troops and the other for fuel and oil industry repairs - have faced heavy criticism as no-bid contracts, Mr Waxman and his staff said Tuesday's report was the first to focus on the third Halliburton contract, for the repair of oilfields in southern Iraq, which was awarded after a competitive bidding process.
Melissa Norcross, a spokeswoman for Halliburton, dismissed the report as "partisan".
Halliburton is planning to float 20 per cent of KBR in the next few months and the remaining 80 per cent in a year's time. KBR has been selling some of its assets, including Kellogg Brown Root Production Services, based in Aberdeen, Scotland, for £100 million ($248 million) to its own management two weeks ago.
The sale came amid renewed speculation about the future of the Plymouth-based Devonport group in the UK, which refits Britain's nuclear submarine fleet and is 51 per cent owned by KBR
KBR has been heavily criticised for its dominant role in war-torn Iraq as major contractor to the US military, the contracts won apparently without arms' length tenders being called, and for heavily overcharging.
In Washington on Tuesday frustrated US Government auditors pleaded, cajoled and finally threatened Halliburton executives who repeatedly failed to comply with government reporting requirements under a key Iraq contract with a $US1.2 billion potential price tag, newly released documents show.
The documents, along with a report, were issued on Tuesday by the Democratic staff of the House Committee on Government Reform.
The 15-page report cites findings by auditors that Halliburton overcharged - "apparently intentionally" - on the contract by using hidden calculations and attempted, in one instance, to invoice the US Government for $US26 million in costs it did not incur.
The report blamed the Department of Defence for awarding the contract despite warnings from auditors that Halliburton's cost estimating system had "significant deficiencies".
Halliburton remains the largest private contractor in Iraq.
The contract, awarded in January 2004, was one of three Iraq contracts awarded to Halliburton.
While the other two agreements - one for supplies for US troops and the other for fuel and oil industry repairs - have faced heavy criticism as no-bid contracts, Mr Waxman and his staff said Tuesday's report was the first to focus on the third Halliburton contract, for the repair of oilfields in southern Iraq, which was awarded after a competitive bidding process.
Melissa Norcross, a spokeswoman for Halliburton, dismissed the report as "partisan".
Halliburton is planning to float 20 per cent of KBR in the next few months and the remaining 80 per cent in a year's time. KBR has been selling some of its assets, including Kellogg Brown Root Production Services, based in Aberdeen, Scotland, for £100 million ($248 million) to its own management two weeks ago.
The sale came amid renewed speculation about the future of the Plymouth-based Devonport group in the UK, which refits Britain's nuclear submarine fleet and is 51 per cent owned by KBR
Wednesday, March 29, 2006
Report Adds to Criticism of Halliburton's Iraq Role - New York Times
Even as a Halliburton subsidiary was absorbing harsh criticism of its costs on a 2003 no-bid contract for work in Iraq, the government officials overseeing a second contract wrote that the company was running up exorbitant new expenses on similar work, according to a report issued yesterday by the staff for the Democrats on the House Government Reform Committee.
The report, prepared for a frequent critic of Halliburton, Representative Henry A. Waxman of California, is based on previously undisclosed correspondence and performance evaluations from 2004 and 2005.
The documents show that the government's contracting officers became increasingly frustrated as they tried to penetrate what they considered to be inaccurate or misleading progress reports and expense vouchers filed by the subsidiary, Kellogg Brown & Root.
In August 2004, one of the officers wrote to the company that "you have universally failed to provide adequate cost information as required."
A few months later, after the company was served with a "cure notice," in which the government threatened to terminate the contract if performance was not improved, or "cured," another officer said he was writing "in sheer frustration with the consistent lack of accurate data."
Kellogg Brown & Root's second contract, awarded in January 2004 for rebuilding oil infrastructure in southern Iraq, has a maximum value of $1.2 billion. A company spokeswoman, Melissa Norcross, said that the report was "as devoid of context as it is new information" and that many of the issues raised by the contracting officers had been resolved.
The company, Ms. Norcross said, was forced to work with an ever-shifting cast of oversight organizations and at least 15 government contracting officials. "With each change, the company adjusted to meet the needs of its customer," she said, "all while operating in an extremely hostile war zone."
But Mr. Waxman, the ranking Democrat on the committee, said the report showed that the company had "actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract."
William L. Nash, a retired Army general who is a senior fellow at the Council on Foreign Relations and an expert on post-conflict zones, said the unusually revealing documents laid bare "a microcosm of all the ills" of the Iraq rebuilding effort. "This a continuing example of the mismanagement of the Iraq reconstruction from the highest levels down to the contractors on the ground," he said.
The second contract was not terminated after the cure notice, and contracting officers later noted improvements in some areas. But the company received what appears to be a rebuke when it was given nothing out of a possible $7.9 million in socalled award fees for its first year of work on the contract. The award fees are incentives given by the government to reward good performance.
An award fee given for a later period, roughly the first half of 2005, was about 20 percent of the maximum, which Mr. Nash, who has been involved in determining such fees, described as extraordinarily low.
Both Kellogg Brown & Root contracts called for things like repairing oil wells and pipelines, installing power generators at oil facilities and importing fuel to Iraq. The first contract, worth $2.4 billion, generated enormous controversy after Pentagon auditors questioned more than $200 million in fuel delivery costs.
Critics like Mr. Waxman called the challenged costs overcharges, a description rejected by the company, which claimed a measure of vindication last month when the Army overruled the auditors and reimbursed nearly all of the delivery charges.
The new report, which says that Pentagon auditors have questioned $45 million of the $365 million in costs they reviewed, may revive the battle. A spokesman for the Defense Contract Audit Agency confirmed those figures.
Responding to the numbers, an official with Kellogg Brown & Root said, "Audits are part of the normal contracting process, and it is important to note that the auditors' role in the process is advisory only."
But what are likely to be seen as the most striking portions of the report are those that cite the variously stern, heated and even anguished language of contracting officers trying to bring the company to heel.
"As I have said in numerous meetings, KBR's lack of cost containment and funds management is the single biggest detriment to this program," one officer, Maj. Michael V. Waggle, wrote in the cure notice. He noted that the company had listed an impossibly high cost overrun of $436,019,574 on one job, charges of $114,308 for an oil spill cleanup that failed to remove any oil and another set of tasks in which the overruns were 36.9 percent of all costs.
The slides used in presentations during the deliberations of the board that determined the first award fee are almost equally eye-catching. On one slide, covering the company's success at meeting its planned schedules, a section labeled "Strengths" bears only the notation "N/A," presumably meaning no answer or not applicable. The "Weaknesses" section contains four detailed items.
The report, prepared for a frequent critic of Halliburton, Representative Henry A. Waxman of California, is based on previously undisclosed correspondence and performance evaluations from 2004 and 2005.
The documents show that the government's contracting officers became increasingly frustrated as they tried to penetrate what they considered to be inaccurate or misleading progress reports and expense vouchers filed by the subsidiary, Kellogg Brown & Root.
In August 2004, one of the officers wrote to the company that "you have universally failed to provide adequate cost information as required."
A few months later, after the company was served with a "cure notice," in which the government threatened to terminate the contract if performance was not improved, or "cured," another officer said he was writing "in sheer frustration with the consistent lack of accurate data."
Kellogg Brown & Root's second contract, awarded in January 2004 for rebuilding oil infrastructure in southern Iraq, has a maximum value of $1.2 billion. A company spokeswoman, Melissa Norcross, said that the report was "as devoid of context as it is new information" and that many of the issues raised by the contracting officers had been resolved.
The company, Ms. Norcross said, was forced to work with an ever-shifting cast of oversight organizations and at least 15 government contracting officials. "With each change, the company adjusted to meet the needs of its customer," she said, "all while operating in an extremely hostile war zone."
But Mr. Waxman, the ranking Democrat on the committee, said the report showed that the company had "actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract."
William L. Nash, a retired Army general who is a senior fellow at the Council on Foreign Relations and an expert on post-conflict zones, said the unusually revealing documents laid bare "a microcosm of all the ills" of the Iraq rebuilding effort. "This a continuing example of the mismanagement of the Iraq reconstruction from the highest levels down to the contractors on the ground," he said.
The second contract was not terminated after the cure notice, and contracting officers later noted improvements in some areas. But the company received what appears to be a rebuke when it was given nothing out of a possible $7.9 million in socalled award fees for its first year of work on the contract. The award fees are incentives given by the government to reward good performance.
An award fee given for a later period, roughly the first half of 2005, was about 20 percent of the maximum, which Mr. Nash, who has been involved in determining such fees, described as extraordinarily low.
Both Kellogg Brown & Root contracts called for things like repairing oil wells and pipelines, installing power generators at oil facilities and importing fuel to Iraq. The first contract, worth $2.4 billion, generated enormous controversy after Pentagon auditors questioned more than $200 million in fuel delivery costs.
Critics like Mr. Waxman called the challenged costs overcharges, a description rejected by the company, which claimed a measure of vindication last month when the Army overruled the auditors and reimbursed nearly all of the delivery charges.
The new report, which says that Pentagon auditors have questioned $45 million of the $365 million in costs they reviewed, may revive the battle. A spokesman for the Defense Contract Audit Agency confirmed those figures.
Responding to the numbers, an official with Kellogg Brown & Root said, "Audits are part of the normal contracting process, and it is important to note that the auditors' role in the process is advisory only."
But what are likely to be seen as the most striking portions of the report are those that cite the variously stern, heated and even anguished language of contracting officers trying to bring the company to heel.
"As I have said in numerous meetings, KBR's lack of cost containment and funds management is the single biggest detriment to this program," one officer, Maj. Michael V. Waggle, wrote in the cure notice. He noted that the company had listed an impossibly high cost overrun of $436,019,574 on one job, charges of $114,308 for an oil spill cleanup that failed to remove any oil and another set of tasks in which the overruns were 36.9 percent of all costs.
The slides used in presentations during the deliberations of the board that determined the first award fee are almost equally eye-catching. On one slide, covering the company's success at meeting its planned schedules, a section labeled "Strengths" bears only the notation "N/A," presumably meaning no answer or not applicable. The "Weaknesses" section contains four detailed items.
Report Adds to Criticism of Halliburton's Iraq Role - New York Times
Even as a Halliburton subsidiary was absorbing harsh criticism of its costs on a 2003 no-bid contract for work in Iraq, the government officials overseeing a second contract wrote that the company was running up exorbitant new expenses on similar work, according to a report issued yesterday by the staff for the Democrats on the House Government Reform Committee.
The report, prepared for a frequent critic of Halliburton, Representative Henry A. Waxman of California, is based on previously undisclosed correspondence and performance evaluations from 2004 and 2005.
The documents show that the government's contracting officers became increasingly frustrated as they tried to penetrate what they considered to be inaccurate or misleading progress reports and expense vouchers filed by the subsidiary, Kellogg Brown & Root.
In August 2004, one of the officers wrote to the company that "you have universally failed to provide adequate cost information as required."
A few months later, after the company was served with a "cure notice," in which the government threatened to terminate the contract if performance was not improved, or "cured," another officer said he was writing "in sheer frustration with the consistent lack of accurate data."
Kellogg Brown & Root's second contract, awarded in January 2004 for rebuilding oil infrastructure in southern Iraq, has a maximum value of $1.2 billion. A company spokeswoman, Melissa Norcross, said that the report was "as devoid of context as it is new information" and that many of the issues raised by the contracting officers had been resolved.
The company, Ms. Norcross said, was forced to work with an ever-shifting cast of oversight organizations and at least 15 government contracting officials. "With each change, the company adjusted to meet the needs of its customer," she said, "all while operating in an extremely hostile war zone."
But Mr. Waxman, the ranking Democrat on the committee, said the report showed that the company had "actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract."
William L. Nash, a retired Army general who is a senior fellow at the Council on Foreign Relations and an expert on post-conflict zones, said the unusually revealing documents laid bare "a microcosm of all the ills" of the Iraq rebuilding effort. "This a continuing example of the mismanagement of the Iraq reconstruction from the highest levels down to the contractors on the ground," he said.
The second contract was not terminated after the cure notice, and contracting officers later noted improvements in some areas. But the company received what appears to be a rebuke when it was given nothing out of a possible $7.9 million in socalled award fees for its first year of work on the contract. The award fees are incentives given by the government to reward good performance.
An award fee given for a later period, roughly the first half of 2005, was about 20 percent of the maximum, which Mr. Nash, who has been involved in determining such fees, described as extraordinarily low.
Both Kellogg Brown & Root contracts called for things like repairing oil wells and pipelines, installing power generators at oil facilities and importing fuel to Iraq. The first contract, worth $2.4 billion, generated enormous controversy after Pentagon auditors questioned more than $200 million in fuel delivery costs.
Critics like Mr. Waxman called the challenged costs overcharges, a description rejected by the company, which claimed a measure of vindication last month when the Army overruled the auditors and reimbursed nearly all of the delivery charges.
The new report, which says that Pentagon auditors have questioned $45 million of the $365 million in costs they reviewed, may revive the battle. A spokesman for the Defense Contract Audit Agency confirmed those figures.
Responding to the numbers, an official with Kellogg Brown & Root said, "Audits are part of the normal contracting process, and it is important to note that the auditors' role in the process is advisory only."
But what are likely to be seen as the most striking portions of the report are those that cite the variously stern, heated and even anguished language of contracting officers trying to bring the company to heel.
"As I have said in numerous meetings, KBR's lack of cost containment and funds management is the single biggest detriment to this program," one officer, Maj. Michael V. Waggle, wrote in the cure notice. He noted that the company had listed an impossibly high cost overrun of $436,019,574 on one job, charges of $114,308 for an oil spill cleanup that failed to remove any oil and another set of tasks in which the overruns were 36.9 percent of all costs.
The slides used in presentations during the deliberations of the board that determined the first award fee are almost equally eye-catching. On one slide, covering the company's success at meeting its planned schedules, a section labeled "Strengths" bears only the notation "N/A," presumably meaning no answer or not applicable. The "Weaknesses" section contains four detailed items.
The report, prepared for a frequent critic of Halliburton, Representative Henry A. Waxman of California, is based on previously undisclosed correspondence and performance evaluations from 2004 and 2005.
The documents show that the government's contracting officers became increasingly frustrated as they tried to penetrate what they considered to be inaccurate or misleading progress reports and expense vouchers filed by the subsidiary, Kellogg Brown & Root.
In August 2004, one of the officers wrote to the company that "you have universally failed to provide adequate cost information as required."
A few months later, after the company was served with a "cure notice," in which the government threatened to terminate the contract if performance was not improved, or "cured," another officer said he was writing "in sheer frustration with the consistent lack of accurate data."
Kellogg Brown & Root's second contract, awarded in January 2004 for rebuilding oil infrastructure in southern Iraq, has a maximum value of $1.2 billion. A company spokeswoman, Melissa Norcross, said that the report was "as devoid of context as it is new information" and that many of the issues raised by the contracting officers had been resolved.
The company, Ms. Norcross said, was forced to work with an ever-shifting cast of oversight organizations and at least 15 government contracting officials. "With each change, the company adjusted to meet the needs of its customer," she said, "all while operating in an extremely hostile war zone."
But Mr. Waxman, the ranking Democrat on the committee, said the report showed that the company had "actually done a worse job under its second Iraq oil contract than it did under the original no-bid contract."
William L. Nash, a retired Army general who is a senior fellow at the Council on Foreign Relations and an expert on post-conflict zones, said the unusually revealing documents laid bare "a microcosm of all the ills" of the Iraq rebuilding effort. "This a continuing example of the mismanagement of the Iraq reconstruction from the highest levels down to the contractors on the ground," he said.
The second contract was not terminated after the cure notice, and contracting officers later noted improvements in some areas. But the company received what appears to be a rebuke when it was given nothing out of a possible $7.9 million in socalled award fees for its first year of work on the contract. The award fees are incentives given by the government to reward good performance.
An award fee given for a later period, roughly the first half of 2005, was about 20 percent of the maximum, which Mr. Nash, who has been involved in determining such fees, described as extraordinarily low.
Both Kellogg Brown & Root contracts called for things like repairing oil wells and pipelines, installing power generators at oil facilities and importing fuel to Iraq. The first contract, worth $2.4 billion, generated enormous controversy after Pentagon auditors questioned more than $200 million in fuel delivery costs.
Critics like Mr. Waxman called the challenged costs overcharges, a description rejected by the company, which claimed a measure of vindication last month when the Army overruled the auditors and reimbursed nearly all of the delivery charges.
The new report, which says that Pentagon auditors have questioned $45 million of the $365 million in costs they reviewed, may revive the battle. A spokesman for the Defense Contract Audit Agency confirmed those figures.
Responding to the numbers, an official with Kellogg Brown & Root said, "Audits are part of the normal contracting process, and it is important to note that the auditors' role in the process is advisory only."
But what are likely to be seen as the most striking portions of the report are those that cite the variously stern, heated and even anguished language of contracting officers trying to bring the company to heel.
"As I have said in numerous meetings, KBR's lack of cost containment and funds management is the single biggest detriment to this program," one officer, Maj. Michael V. Waggle, wrote in the cure notice. He noted that the company had listed an impossibly high cost overrun of $436,019,574 on one job, charges of $114,308 for an oil spill cleanup that failed to remove any oil and another set of tasks in which the overruns were 36.9 percent of all costs.
The slides used in presentations during the deliberations of the board that determined the first award fee are almost equally eye-catching. On one slide, covering the company's success at meeting its planned schedules, a section labeled "Strengths" bears only the notation "N/A," presumably meaning no answer or not applicable. The "Weaknesses" section contains four detailed items.
Saturday, March 25, 2006
Battle Creek Enquirer - Whistleblower, "community heroes" honored
Bunnatine Greenhouse describes leadership as "taking the responsibility to do what is right and make a difference," so she seemed to fit right in with local leaders and activists in Battle Creek.
Greenhouse, a former senior contracting official of the U.S. Army Corps of Engineers, made headlines when she testified against Halliburton — one of the world's largest providers of oil and gas services — alleging specific instances of fraud, waste and other irregularities by Halliburton in regard to its operations in Iraq.
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Greenhouse was the key speaker and guest of honor at a Community Heroes Mixer held Friday at McCamly Plaza. The event honored both Greenhouse and community members who have created positive change in the local area.
"I am so honored to be in Battle Creek and you all have etched something on my mind and in my heart," Greenhouse said. "This is an activist community and people here work to improve this community for their neighbors. I am blessed to have had the Battle Creek experience."
The South Central Michigan American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), PheNix Concepts, a local Concerned Citizens group and Families Against Murder/For Equal Justice (F.A.M.E.) sponsored Greenhouse's visit. The evening was emceed by Richard Frantz, president of the South Central Michigan AFL-CIO, Reba Harrington of PheNix Concepts and Mary Knapp, a community activist.
Several dozen community members were awarded certificates on behalf of PheNix Concepts and the AFL-CIO for "outstanding community leadership and unselfish service."
Trace Christenson, a reporter for the Enquirer was an award recipient. A complete list of winners and their accomplishments will be published at a later date.
Greenhouse was presented with a T-shirt from F.A.M.E. with a list of victims of local unsolved murders on the back, which she commented she will wear in Washington with pride. Mildred Mallard, owner of ABC Boutique in Battle Creek presented Greenhouse with a collectible statue of Sojourner Truth.
"We are so proud that you shared your story with us. You remind of us so much of Sojourner," Mallard said. "She said speak the truth and we want you to continue to speak your truth."
After the awards, Greenhouse — joined by her lawyer Michael Kohn — delivered a passionate speech on her demotion and dismissal from her position at the Army Corps of Engineers. A video of an Enquirer interview with Greenhouse is available online at battlecreekenquirer.com.
"I was dismissed from my job because I did my job too well," Greenhouse said. "I am now fighting the most important fight of my career and I am fighting for the people. Please know that Battle Creek's support gives me the strength to go on fighting."
Greenhouse, a former senior contracting official of the U.S. Army Corps of Engineers, made headlines when she testified against Halliburton — one of the world's largest providers of oil and gas services — alleging specific instances of fraud, waste and other irregularities by Halliburton in regard to its operations in Iraq.
ADVERTISEMENT
Greenhouse was the key speaker and guest of honor at a Community Heroes Mixer held Friday at McCamly Plaza. The event honored both Greenhouse and community members who have created positive change in the local area.
"I am so honored to be in Battle Creek and you all have etched something on my mind and in my heart," Greenhouse said. "This is an activist community and people here work to improve this community for their neighbors. I am blessed to have had the Battle Creek experience."
The South Central Michigan American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), PheNix Concepts, a local Concerned Citizens group and Families Against Murder/For Equal Justice (F.A.M.E.) sponsored Greenhouse's visit. The evening was emceed by Richard Frantz, president of the South Central Michigan AFL-CIO, Reba Harrington of PheNix Concepts and Mary Knapp, a community activist.
Several dozen community members were awarded certificates on behalf of PheNix Concepts and the AFL-CIO for "outstanding community leadership and unselfish service."
Trace Christenson, a reporter for the Enquirer was an award recipient. A complete list of winners and their accomplishments will be published at a later date.
Greenhouse was presented with a T-shirt from F.A.M.E. with a list of victims of local unsolved murders on the back, which she commented she will wear in Washington with pride. Mildred Mallard, owner of ABC Boutique in Battle Creek presented Greenhouse with a collectible statue of Sojourner Truth.
"We are so proud that you shared your story with us. You remind of us so much of Sojourner," Mallard said. "She said speak the truth and we want you to continue to speak your truth."
After the awards, Greenhouse — joined by her lawyer Michael Kohn — delivered a passionate speech on her demotion and dismissal from her position at the Army Corps of Engineers. A video of an Enquirer interview with Greenhouse is available online at battlecreekenquirer.com.
"I was dismissed from my job because I did my job too well," Greenhouse said. "I am now fighting the most important fight of my career and I am fighting for the people. Please know that Battle Creek's support gives me the strength to go on fighting."
Thursday, March 16, 2006
Chron.com | Firm Failed to Protect U.S. Troops' Water
By LARRY MARGASAK Associated Press Writer
© 2006 The Associated Press
WASHINGTON — Halliburton Co. failed to protect the water supply it is paid to purify for U.S. soldiers throughout Iraq, in one instance missing contamination that could have caused "mass sickness or death," an internal company report concluded.
The report, obtained by The Associated Press, said the company failed to assemble and use its own water purification equipment, allowing contaminated water directly from the Euphrates River to be used for washing and laundry at Camp Ar Ramadi in Ramadi, Iraq.
The problems discovered last year at that site _ poor training, miscommunication and lax record keeping _ occurred at Halliburton's other operations throughout Iraq, the report said.
"Countrywide, all camps suffer to some extent from all or some of the deficiencies noted," Wil Granger, Theatre Water Quality Manager in the war zone for Halliburton's KBR subsidiary, wrote in his May 2005 report.
AP reported earlier this year allegations from whistleblowers about the Camp Ar Ramadi incident, but Halliburton never made public Granger's internal report alleging wider problems.
The water quality expert warned Halliburton the problems "will have to be dealt with at a very elevated level of management" to protect health and safety of U.S. personnel.
Halliburton said Wednesday it conducted a second review last year that found no evidence of any illnesses in Iraq from water and it believes some of its earlier conclusions were incomplete and inaccurate. The company declined to release the second report.
The company said it has "worked closely with the Army to develop standards and take action to ensure that the water provided in Iraq is safe and of the highest quality possible."
Halliburton was headed by Vice President Dick Cheney for several years before he ran for vice president. Its KBR subsidiary, also known as Kellogg Brown & Root, works under contract to provide a number of services to the U.S. military in Iraq, including providing water and purifying it.
The contaminated, non-chlorinated water at Ar Ramadi was discovered in March 2005 in a commode by Ben Carter, a KBR water expert at the base. In an interview, Carter said he resigned after KBR barred him from notifying the military and senior company officials about the untreated water.
A supervisor at Ar Ramadi "told me to stop e-mailing" company officials outside the base and warned that informing the military "was none of my concern," Carter said. He said he threatened to sue if company officials didn't let him be examined to determine whether he suffered medical problems from exposure to the contaminated water.
Granger's report cited several countrywide problems:
_A lack of training for key personnel. "Theatre wide there is no formalized training for anyone at any level in concerns to water operations."
_Confusion between KBR and military officials over their respective roles. For instance, each assumed the other would chlorinate the water at Ar Ramadi for any uses that would require the treatment.
_Inadequate or nonexistent records that could have caught problems in advance. Little or no documentation was kept on water inventories, safety stand-downs, audits of water quality, deliveries, inspections and logs showing alterations or modifications to water systems.
_Relying on employees the company identified as semiskilled labor, and paid as unskilled workers in the pay structure.
The report said the event at Ar Ramadi could have been prevented if KBR's Reverse Osmosis Units on the site had been assembled, instead of relying on the military's water production facilities.
"This event should be considered a 'near miss' as the consequences of these actions could have been very severe resulting in mass sickness or death," Granger wrote.
The report said that KBR officials at Ar Ramadi tried to keep the contamination from senior company officials.
"The event that was submitted in a report to local camp management should have been classified as a recordable occurrence and communicated to senior management in a timely manner," Granger wrote. "The primary awareness to this event came through threat of domestic litigation."
Beginning last May, Halliburton said it began using its equipment to remove contaminants, bacteria, and viruses in Ar Ramadi, and disinfect the water with chlorine. The company said KBR has worked closely with the Army to develop safe water standards.
It said its subsequent review in August-September 2005 found nonpotable water used for washing "was effectively filtered" to remove at least 99 percent of the parasite giardia and 90 percent of viruses. The Ar Ramadi water also tested negative for bacteria, Halliburton added.
© 2006 The Associated Press
WASHINGTON — Halliburton Co. failed to protect the water supply it is paid to purify for U.S. soldiers throughout Iraq, in one instance missing contamination that could have caused "mass sickness or death," an internal company report concluded.
The report, obtained by The Associated Press, said the company failed to assemble and use its own water purification equipment, allowing contaminated water directly from the Euphrates River to be used for washing and laundry at Camp Ar Ramadi in Ramadi, Iraq.
The problems discovered last year at that site _ poor training, miscommunication and lax record keeping _ occurred at Halliburton's other operations throughout Iraq, the report said.
"Countrywide, all camps suffer to some extent from all or some of the deficiencies noted," Wil Granger, Theatre Water Quality Manager in the war zone for Halliburton's KBR subsidiary, wrote in his May 2005 report.
AP reported earlier this year allegations from whistleblowers about the Camp Ar Ramadi incident, but Halliburton never made public Granger's internal report alleging wider problems.
The water quality expert warned Halliburton the problems "will have to be dealt with at a very elevated level of management" to protect health and safety of U.S. personnel.
Halliburton said Wednesday it conducted a second review last year that found no evidence of any illnesses in Iraq from water and it believes some of its earlier conclusions were incomplete and inaccurate. The company declined to release the second report.
The company said it has "worked closely with the Army to develop standards and take action to ensure that the water provided in Iraq is safe and of the highest quality possible."
Halliburton was headed by Vice President Dick Cheney for several years before he ran for vice president. Its KBR subsidiary, also known as Kellogg Brown & Root, works under contract to provide a number of services to the U.S. military in Iraq, including providing water and purifying it.
The contaminated, non-chlorinated water at Ar Ramadi was discovered in March 2005 in a commode by Ben Carter, a KBR water expert at the base. In an interview, Carter said he resigned after KBR barred him from notifying the military and senior company officials about the untreated water.
A supervisor at Ar Ramadi "told me to stop e-mailing" company officials outside the base and warned that informing the military "was none of my concern," Carter said. He said he threatened to sue if company officials didn't let him be examined to determine whether he suffered medical problems from exposure to the contaminated water.
Granger's report cited several countrywide problems:
_A lack of training for key personnel. "Theatre wide there is no formalized training for anyone at any level in concerns to water operations."
_Confusion between KBR and military officials over their respective roles. For instance, each assumed the other would chlorinate the water at Ar Ramadi for any uses that would require the treatment.
_Inadequate or nonexistent records that could have caught problems in advance. Little or no documentation was kept on water inventories, safety stand-downs, audits of water quality, deliveries, inspections and logs showing alterations or modifications to water systems.
_Relying on employees the company identified as semiskilled labor, and paid as unskilled workers in the pay structure.
The report said the event at Ar Ramadi could have been prevented if KBR's Reverse Osmosis Units on the site had been assembled, instead of relying on the military's water production facilities.
"This event should be considered a 'near miss' as the consequences of these actions could have been very severe resulting in mass sickness or death," Granger wrote.
The report said that KBR officials at Ar Ramadi tried to keep the contamination from senior company officials.
"The event that was submitted in a report to local camp management should have been classified as a recordable occurrence and communicated to senior management in a timely manner," Granger wrote. "The primary awareness to this event came through threat of domestic litigation."
Beginning last May, Halliburton said it began using its equipment to remove contaminants, bacteria, and viruses in Ar Ramadi, and disinfect the water with chlorine. The company said KBR has worked closely with the Army to develop safe water standards.
It said its subsequent review in August-September 2005 found nonpotable water used for washing "was effectively filtered" to remove at least 99 percent of the parasite giardia and 90 percent of viruses. The Ar Ramadi water also tested negative for bacteria, Halliburton added.
Monday, February 27, 2006
Army to Pay Halliburton Unit Most Costs Disputed by Audit - New York Times
By JAMES GLANZ
The Army has decided to reimburse a Halliburton subsidiary for nearly all of its disputed costs on a $2.41 billion no-bid contract to deliver fuel and repair oil equipment in Iraq, even though the Pentagon's own auditors had identified more than $250 million in charges as potentially excessive or unjustified.
The Army said in response to questions on Friday that questionable business practices by the subsidiary, Kellogg Brown & Root, had in some cases driven up the company's costs. But in the haste and peril of war, it had largely done as well as could be expected, the Army said, and aside from a few penalties, the government was compelled to reimburse the company for its costs.
Under the type of contract awarded to the company, "the contractor is not required to perform perfectly to be entitled to reimbursement," said Rhonda James, a spokeswoman for the southwestern division of the United States Army Corps of Engineers, based in Dallas, where the contract is administered.
The contract has been the subject of intense scrutiny after disclosures in 2003 that it had been awarded without competitive bidding. That produced criticism from Congressional Democrats and others that the company had benefited from its connection with Dick Cheney, who was Halliburton's chief executive before becoming vice president.
Later that year auditors began focusing on the fuel deliveries under the contract, finding that the fuel transportation costs that the company was charging the Army were in some cases nearly triple what others were charging to do the same job. But Kellogg Brown & Root, which has consistently maintained that its costs were justified, characterized the Army's decision as an official repudiation of those criticisms.
"Once all the facts were fully examined, it is clear, and now confirmed, that KBR performed this work appropriately per the client's direction and within the contract terms," said Cathy Mann, a company spokeswoman, in a written statement on the decision. The company's charges, she said, "were deemed properly incurred."
The Pentagon's Defense Contract Audit Agency had questioned $263 million in costs for fuel deliveries, pipeline repairs and other tasks that auditors said were potentially inflated or unsupported by documentation. But the Army decided to pay all but $10.1 million of those contested costs, which were mostly for trucking fuel from Kuwait and Turkey.
That means the Army is withholding payment on just 3.8 percent of the charges questioned by the Pentagon audit agency, which is far below the rate at which the agency's recommendation is usually followed or sustained by the military — the so-called "sustention rate."
Figures provided by the Pentagon audit agency on thousands of military contracts over the past three years show how far the Halliburton decision lies outside the norm.
In 2003, the agency's figures show, the military withheld an average of 66.4 percent of what the auditors had recommended, while in 2004 the figure was 75.2 percent and in 2005 it was 56.4 percent.
Rick Barton, co-director of the postconflict reconstruction project at the Center for Strategic and International Studies in Washington, said despite the difficulties of doing business in a war zone, the low rate of recovery on such huge and widely disputed charges was hard to understand. "To think that it's near zero is ridiculous when you're talking these kinds of numbers," he said.
The Halliburton contract is referred to as a "cost-plus" agreement, meaning that after the company recovers its costs, it also receives various markups and award fees. Although the markups and fees are difficult to calculate exactly using the Army figures, they appear to be about $100 million.
One of Halliburton's most persistent critics, Representative Henry A. Waxman, a California Democrat who is the ranking minority member of the House Committee on Government Reform, said in a written statement about the Army's decision, "Halliburton gouged the taxpayer, government auditors caught the company red-handed, yet the Pentagon ignored the auditors and paid Halliburton hundreds of millions of dollars and a huge bonus."
About $208 million of the disputed charges was mostly related to the cost of importing fuel, which was at the heart of the controversy surrounding the contract. Kellogg Brown & Root hired a little-known Kuwaiti company, Altanmia, to transport fuel in enormous truck convoys. The Pentagon auditors found that in part because of the transportation fees that Kellogg Brown & Root agreed to pay Altanmia, the cost for a gallon of gasoline was roughly 40 percent higher than what the American military paid when it did the job itself — under a separate contract it had negotiated with Altanmia.
The Army said in a written statement that it had largely accepted Kellogg Brown & Root's assertions that costs had been driven up by factors beyond its control — the exigencies of war and the hard-line negotiating stance of the state-owned Kuwait Petroleum Corporation. The Army said the Kuwaiti fuel company blocked attempts by Kellogg Brown & Root to renegotiate its transportation contract with Altanmia. In the end, the Army decided to pay the Halliburton subsidiary all but $3.81 million of the $208 million in fuel-related costs questioned by auditors.
The Kellogg Brown & Root contract, called Restore Iraqi Oil, or RIO, will be paid with about $900 million of American taxpayer money and $1.5 billion of Iraqi oil proceeds and money seized from Saddam Hussein's government. Official criticism of the work became so intense that in November, an auditing board sponsored by the United Nations recommended that the United States repay some or all of the $208 million related to the alleged fuel overcharges — an allegation Halliburton says has never been justified.
In fact, Ms. Mann said, the Army's decision clearly showed that "any claims that the figures contained in these audit reports are 'overcharges' are uninformed and flat wrong." She said that the fuel charges themselves had been 100 percent reimbursed and that the reductions all came from adjustments on administrative costs associated with that mission.
Still, the Army conceded that some of the criticisms of the company's business practices were legitimate. As a result, the Army said, it would exclude about half of the auditors' questioned charges from the amount used to derive the markups and fees, which are calculated as a sliding percentage of the costs. That decision could cost the company a maximum of about $7 million.
Ms. James, the Corps of Engineers spokeswoman, said that in addition to the other modest penalties that Kellogg Brown & Root had been assessed by the Army's contracting officers, the sliding percentages on some of the fees had been lowered by unspecified amounts to reflect shortcomings in the company's dealings in Iraq. "All fees were awarded in accordance with the award fee plan set out in the contract, which placed more emphasis on timely mission accomplishment than on cost control and paperwork," Ms. James said.
Mr. Barton, of the Center for Strategic and International Studies, said that with the relatively small penalties paid by the company for falling short in its performance in Iraq, it was hard to see what the Army's scrutiny of the company's practices had amounted to in the end.
"When they say, 'We questioned their business model or their business decisions' — well, yeah, so what?" Mr. Barton said. "You questioned it but there was no result."
In answer to written questions, a spokesman for the Defense Contract Audit Agency, Lt. Col. Brian Maka, said the settlement of the disputed charges was based on "broader business case considerations" beyond just Pentagon audits.
But when asked whether the Army's decision reflected on the quality of the audits, Colonel Maka said only that the agency "has no indication of problems with the audit process," and he referred questions on the settlement itself to the Army.
A former senior Defense Department manager knowledgeable about the audits and the related contracting issues said, "That's as close as D.C.A.A. can get to saying, 'We're not happy with it either.' "
Because of the size of the contract and the contention surrounding Halliburton's dealings with the government, the RIO audits were carried out by the agency's top personnel and were subjected to extraordinarily thorough reviews, the former manager said.
This is unlikely to be the last time the Army and Halliburton meet over negotiated costs. On a separate contract in Iraq, for logistics support to the United States military, more than $11 billion had been disbursed to Kellogg Brown & Root by mid-January, according to the Army Field Support Command, based in Rock Island, Ill. Pentagon auditors have begun scrutinizing that contract as well.
The Army has decided to reimburse a Halliburton subsidiary for nearly all of its disputed costs on a $2.41 billion no-bid contract to deliver fuel and repair oil equipment in Iraq, even though the Pentagon's own auditors had identified more than $250 million in charges as potentially excessive or unjustified.
The Army said in response to questions on Friday that questionable business practices by the subsidiary, Kellogg Brown & Root, had in some cases driven up the company's costs. But in the haste and peril of war, it had largely done as well as could be expected, the Army said, and aside from a few penalties, the government was compelled to reimburse the company for its costs.
Under the type of contract awarded to the company, "the contractor is not required to perform perfectly to be entitled to reimbursement," said Rhonda James, a spokeswoman for the southwestern division of the United States Army Corps of Engineers, based in Dallas, where the contract is administered.
The contract has been the subject of intense scrutiny after disclosures in 2003 that it had been awarded without competitive bidding. That produced criticism from Congressional Democrats and others that the company had benefited from its connection with Dick Cheney, who was Halliburton's chief executive before becoming vice president.
Later that year auditors began focusing on the fuel deliveries under the contract, finding that the fuel transportation costs that the company was charging the Army were in some cases nearly triple what others were charging to do the same job. But Kellogg Brown & Root, which has consistently maintained that its costs were justified, characterized the Army's decision as an official repudiation of those criticisms.
"Once all the facts were fully examined, it is clear, and now confirmed, that KBR performed this work appropriately per the client's direction and within the contract terms," said Cathy Mann, a company spokeswoman, in a written statement on the decision. The company's charges, she said, "were deemed properly incurred."
The Pentagon's Defense Contract Audit Agency had questioned $263 million in costs for fuel deliveries, pipeline repairs and other tasks that auditors said were potentially inflated or unsupported by documentation. But the Army decided to pay all but $10.1 million of those contested costs, which were mostly for trucking fuel from Kuwait and Turkey.
That means the Army is withholding payment on just 3.8 percent of the charges questioned by the Pentagon audit agency, which is far below the rate at which the agency's recommendation is usually followed or sustained by the military — the so-called "sustention rate."
Figures provided by the Pentagon audit agency on thousands of military contracts over the past three years show how far the Halliburton decision lies outside the norm.
In 2003, the agency's figures show, the military withheld an average of 66.4 percent of what the auditors had recommended, while in 2004 the figure was 75.2 percent and in 2005 it was 56.4 percent.
Rick Barton, co-director of the postconflict reconstruction project at the Center for Strategic and International Studies in Washington, said despite the difficulties of doing business in a war zone, the low rate of recovery on such huge and widely disputed charges was hard to understand. "To think that it's near zero is ridiculous when you're talking these kinds of numbers," he said.
The Halliburton contract is referred to as a "cost-plus" agreement, meaning that after the company recovers its costs, it also receives various markups and award fees. Although the markups and fees are difficult to calculate exactly using the Army figures, they appear to be about $100 million.
One of Halliburton's most persistent critics, Representative Henry A. Waxman, a California Democrat who is the ranking minority member of the House Committee on Government Reform, said in a written statement about the Army's decision, "Halliburton gouged the taxpayer, government auditors caught the company red-handed, yet the Pentagon ignored the auditors and paid Halliburton hundreds of millions of dollars and a huge bonus."
About $208 million of the disputed charges was mostly related to the cost of importing fuel, which was at the heart of the controversy surrounding the contract. Kellogg Brown & Root hired a little-known Kuwaiti company, Altanmia, to transport fuel in enormous truck convoys. The Pentagon auditors found that in part because of the transportation fees that Kellogg Brown & Root agreed to pay Altanmia, the cost for a gallon of gasoline was roughly 40 percent higher than what the American military paid when it did the job itself — under a separate contract it had negotiated with Altanmia.
The Army said in a written statement that it had largely accepted Kellogg Brown & Root's assertions that costs had been driven up by factors beyond its control — the exigencies of war and the hard-line negotiating stance of the state-owned Kuwait Petroleum Corporation. The Army said the Kuwaiti fuel company blocked attempts by Kellogg Brown & Root to renegotiate its transportation contract with Altanmia. In the end, the Army decided to pay the Halliburton subsidiary all but $3.81 million of the $208 million in fuel-related costs questioned by auditors.
The Kellogg Brown & Root contract, called Restore Iraqi Oil, or RIO, will be paid with about $900 million of American taxpayer money and $1.5 billion of Iraqi oil proceeds and money seized from Saddam Hussein's government. Official criticism of the work became so intense that in November, an auditing board sponsored by the United Nations recommended that the United States repay some or all of the $208 million related to the alleged fuel overcharges — an allegation Halliburton says has never been justified.
In fact, Ms. Mann said, the Army's decision clearly showed that "any claims that the figures contained in these audit reports are 'overcharges' are uninformed and flat wrong." She said that the fuel charges themselves had been 100 percent reimbursed and that the reductions all came from adjustments on administrative costs associated with that mission.
Still, the Army conceded that some of the criticisms of the company's business practices were legitimate. As a result, the Army said, it would exclude about half of the auditors' questioned charges from the amount used to derive the markups and fees, which are calculated as a sliding percentage of the costs. That decision could cost the company a maximum of about $7 million.
Ms. James, the Corps of Engineers spokeswoman, said that in addition to the other modest penalties that Kellogg Brown & Root had been assessed by the Army's contracting officers, the sliding percentages on some of the fees had been lowered by unspecified amounts to reflect shortcomings in the company's dealings in Iraq. "All fees were awarded in accordance with the award fee plan set out in the contract, which placed more emphasis on timely mission accomplishment than on cost control and paperwork," Ms. James said.
Mr. Barton, of the Center for Strategic and International Studies, said that with the relatively small penalties paid by the company for falling short in its performance in Iraq, it was hard to see what the Army's scrutiny of the company's practices had amounted to in the end.
"When they say, 'We questioned their business model or their business decisions' — well, yeah, so what?" Mr. Barton said. "You questioned it but there was no result."
In answer to written questions, a spokesman for the Defense Contract Audit Agency, Lt. Col. Brian Maka, said the settlement of the disputed charges was based on "broader business case considerations" beyond just Pentagon audits.
But when asked whether the Army's decision reflected on the quality of the audits, Colonel Maka said only that the agency "has no indication of problems with the audit process," and he referred questions on the settlement itself to the Army.
A former senior Defense Department manager knowledgeable about the audits and the related contracting issues said, "That's as close as D.C.A.A. can get to saying, 'We're not happy with it either.' "
Because of the size of the contract and the contention surrounding Halliburton's dealings with the government, the RIO audits were carried out by the agency's top personnel and were subjected to extraordinarily thorough reviews, the former manager said.
This is unlikely to be the last time the Army and Halliburton meet over negotiated costs. On a separate contract in Iraq, for logistics support to the United States military, more than $11 billion had been disbursed to Kellogg Brown & Root by mid-January, according to the Army Field Support Command, based in Rock Island, Ill. Pentagon auditors have begun scrutinizing that contract as well.
Monday, February 06, 2006
IPO stems insider stock sales - Houston - MSNBC.com
KBR disclosure curbs brisk trading activity by Halliburton CEO
By Jim Greer
Houston Business Journal
Updated: 7:00 p.m. ET Feb. 5, 2006
David Lesar made millions on insider stock sales over the past two months, but Halliburton Co. policy prevented the chairman and CEO from making millions more this week.
On Jan. 27, Lesar went public with the news that 20 percent of the energy service company's KBR unit was slated for an initial public offering.
On Jan. 26, he sold 75,000 shares of Halliburton at more than $73 per share for a gross of about $5.5 million.
Added to eight previous stock sales executed in December and January, Lesar cashed in just under 354,000 shares for about $24.3 million in an eight-week period (see chart).
The KBR public offering announcement lit an even bigger fire under an already hot Halliburton stock price.
At close of trading on Jan. 27, the stock had moved into the $79 range after closing near $75 on the previous day. On Jan. 30, the price topped $82 before settling near $81.
On Feb. 1, in midday trading, shares of Houston-based Halliburton changed hands around $81.31, or about 8.4 percent above the stock's closing price the day before Lesar announced plans to publicly spin off the longtime engineering and construction business formerly known as Kellogg Brown & Root.
At midday on Feb. 1, the price remained north of $81, about 8.4 percent above the closing price the day Lesar executed his most recent sale.
But Lesar personally couldn't cash in on the extra boost Halliburton shares got from the KBR IPO news on the following day. Company policy restricts insiders from cashing in on material information that hasn't been made public knowledge.
The rule closed the trading window on Jan. 27 and forced Lesar to leave millions of dollars on the table.
At the stock's Feb. 1 perch above $81, shedding the same 353,981 shares that were sold in December and January transactions would have delivered Lesar an extra $4.5 million or so pretax.
Specifics for investors
The potentially plumper payout remains purely hypothetical.
A Halliburton representative points to the company's "Code of Business Conduct: Use and Public Disclosure Of Material Nonpublic Information."
This stodgy-sounding corporate policy, which reflects U.S. Securities and Exchange Commission regulations, states that it is a violation of federal laws "for any person to buy or sell securities if he or she is in possession of material nonpublic information relating to those securities."
The KBR IPO details publicly disclosed by Lesar on Jan. 27 appear to fall into the "material nonpublic information" category.
Last year, Halliburton reported an intent to sell or spin off KBR, with an IPO as one possible option. Timing remained unclear.
The specific course of action for KBR wasn't announced until Lesar's Jan. 27 disclosure that Halliburton would pursue a KBR IPO filing.
Wall Street already expected that Halliburton would do an IPO instead of pursuing another option. But Lesar on Jan. 27 offered specifics that investors have been awaiting, according to Citigroup Investment Research analyst Geoff Kieburtz.
Immediately after filing a 10K, the annual report due by mid-March, Halliburton expects to file KBR IPO documents, Kieburtz adds.
So various details on the planned IPO, including proceeds Halliburton could receive, aren't likely to emerge until next month, at the earliest.
But today, "the substantial proceeds expected from the IPO are already fueling rumors" of future acquisitions that Halliburton will make, according to a Jan. 30 report from equity analyst David Rewcastle of Argus Research Co.
Even ahead of the KBR stock offering, Halliburton is awash in cash.
Argus Research on Jan. 30 raised the 2006 earnings per share projection for Halliburton by $1.05 to $5.25. At the same time, Argus unveiled a preliminary estimate that envisions Halliburton earning $6.55 per share for 2007.
Halliburton is the world's second-largest energy services company.
Late in the day on Jan. 26, Halliburton announced robust financial results for the fourth quarter and full year of 2005.
"The best (year) in our 86-year history," Lesar said in the Jan. 26 news release.
Halliburton's announcement of the banner year, including fourth-quarter earnings that beat analyst expectations, came out only hours after Lesar made the last of his most recent stock sales.
So the earnings news, like the KBR details, also had qualified as material nonpublic information. One more reason Lesar wouldn't have been able to cash in his stock at the new highs set this week.
Still, Lesar's selling of Halliburton shares at prices well below previous levels points up the fact that insiders aren't necessarily the best traders. Indeed. Lesar also shed stock in the oilfield services giant before December last year, again leaving millions of dollars on the table.
"His track record's actually quite bad," says Jonathan Moreland, editor of Insider Insights. "He sells and it goes up."
But Lesar still has ample ammunition for future trading.
According to a Jan. 26 filing with the Securities and Exchange Commission, Lesar still beneficially owns nearly 700,000 shares of Halliburton.
By Jim Greer
Houston Business Journal
Updated: 7:00 p.m. ET Feb. 5, 2006
David Lesar made millions on insider stock sales over the past two months, but Halliburton Co. policy prevented the chairman and CEO from making millions more this week.
On Jan. 27, Lesar went public with the news that 20 percent of the energy service company's KBR unit was slated for an initial public offering.
On Jan. 26, he sold 75,000 shares of Halliburton at more than $73 per share for a gross of about $5.5 million.
Added to eight previous stock sales executed in December and January, Lesar cashed in just under 354,000 shares for about $24.3 million in an eight-week period (see chart).
The KBR public offering announcement lit an even bigger fire under an already hot Halliburton stock price.
At close of trading on Jan. 27, the stock had moved into the $79 range after closing near $75 on the previous day. On Jan. 30, the price topped $82 before settling near $81.
On Feb. 1, in midday trading, shares of Houston-based Halliburton changed hands around $81.31, or about 8.4 percent above the stock's closing price the day before Lesar announced plans to publicly spin off the longtime engineering and construction business formerly known as Kellogg Brown & Root.
At midday on Feb. 1, the price remained north of $81, about 8.4 percent above the closing price the day Lesar executed his most recent sale.
But Lesar personally couldn't cash in on the extra boost Halliburton shares got from the KBR IPO news on the following day. Company policy restricts insiders from cashing in on material information that hasn't been made public knowledge.
The rule closed the trading window on Jan. 27 and forced Lesar to leave millions of dollars on the table.
At the stock's Feb. 1 perch above $81, shedding the same 353,981 shares that were sold in December and January transactions would have delivered Lesar an extra $4.5 million or so pretax.
Specifics for investors
The potentially plumper payout remains purely hypothetical.
A Halliburton representative points to the company's "Code of Business Conduct: Use and Public Disclosure Of Material Nonpublic Information."
This stodgy-sounding corporate policy, which reflects U.S. Securities and Exchange Commission regulations, states that it is a violation of federal laws "for any person to buy or sell securities if he or she is in possession of material nonpublic information relating to those securities."
The KBR IPO details publicly disclosed by Lesar on Jan. 27 appear to fall into the "material nonpublic information" category.
Last year, Halliburton reported an intent to sell or spin off KBR, with an IPO as one possible option. Timing remained unclear.
The specific course of action for KBR wasn't announced until Lesar's Jan. 27 disclosure that Halliburton would pursue a KBR IPO filing.
Wall Street already expected that Halliburton would do an IPO instead of pursuing another option. But Lesar on Jan. 27 offered specifics that investors have been awaiting, according to Citigroup Investment Research analyst Geoff Kieburtz.
Immediately after filing a 10K, the annual report due by mid-March, Halliburton expects to file KBR IPO documents, Kieburtz adds.
So various details on the planned IPO, including proceeds Halliburton could receive, aren't likely to emerge until next month, at the earliest.
But today, "the substantial proceeds expected from the IPO are already fueling rumors" of future acquisitions that Halliburton will make, according to a Jan. 30 report from equity analyst David Rewcastle of Argus Research Co.
Even ahead of the KBR stock offering, Halliburton is awash in cash.
Argus Research on Jan. 30 raised the 2006 earnings per share projection for Halliburton by $1.05 to $5.25. At the same time, Argus unveiled a preliminary estimate that envisions Halliburton earning $6.55 per share for 2007.
Halliburton is the world's second-largest energy services company.
Late in the day on Jan. 26, Halliburton announced robust financial results for the fourth quarter and full year of 2005.
"The best (year) in our 86-year history," Lesar said in the Jan. 26 news release.
Halliburton's announcement of the banner year, including fourth-quarter earnings that beat analyst expectations, came out only hours after Lesar made the last of his most recent stock sales.
So the earnings news, like the KBR details, also had qualified as material nonpublic information. One more reason Lesar wouldn't have been able to cash in his stock at the new highs set this week.
Still, Lesar's selling of Halliburton shares at prices well below previous levels points up the fact that insiders aren't necessarily the best traders. Indeed. Lesar also shed stock in the oilfield services giant before December last year, again leaving millions of dollars on the table.
"His track record's actually quite bad," says Jonathan Moreland, editor of Insider Insights. "He sells and it goes up."
But Lesar still has ample ammunition for future trading.
According to a Jan. 26 filing with the Securities and Exchange Commission, Lesar still beneficially owns nearly 700,000 shares of Halliburton.
Tuesday, January 31, 2006
Inner City Press --Halliburton Repays $9 Million, While Iraq’s Oil Remains Unmetered
Byline: Matthew Russell Lee, Inner City Press U.N. Correspondent
January 31, NEW YORK – The U.S. government has required Halliburton subsidiary Kellogg, Brown & Root to repay only $9 million on a controversial contract, and promised information about the metering of Iraq’s oil output has still not been provided, in the stealth January 30 release by the International Advisory and Monitoring Board for Iraq.
The IAMB last took question from the media, including Inner City Press, on December 28 at the United Nations in New York. At that time, IAMB stated that an oil metering contract had recently been let. It promised to provide more information shortly. Inner City Press twice asked the IMF for this additional information, but none was provided. Then on January 30 a summary of a January 23 meeting in Paris was placed online. The release tersely states that at the meeting, the IAMB
“reiterated its concern that key actions, especially the installation of an oil metering system, were taking a long time to implement. The IAMB urged the Government of Iraq to implement all IAMB recommendations promptly."
Apparently, the December 28 statement that the oil metering contract was in place was incorrect. No one has apologized, and the (unmetered) oil continues to flow. The Jan. 30 release also states, in the nature of disclosure:
“The U.S. Government informed the IAMB that a global settlement of all six DFI funded task orders under the KBR contract was reached between the U.S. Government and KBR on December 22, 2005. The settlement provided for a reduction of contract costs of US$9 million.”
This is much less than had been contested, and previously reported. Given the costs, most importantly in lives, of this Iraq war, what kind of transparency is this? It also raises questions, on timing and other issues, in light of Halliburton's January 27 announcement that it intends to sell off a stake in Kellogg, Brown & Root in an initial public offering of stock. Developing...
Inner City Press's last report on this topic:
More Questions than Answers about the Development Fund for Iraq: Representatives of Iraq Absent from UN Meeting and Press Conference, Purportedly Due to Visa Problems
On December 28, four of the five members of the oversight board of the Development Fund for Iraq answered reporters’ questions for an hour at the United Nations in New York. Missing was the representative of Iraq on the International Advisory and Monitoring Board. The explanation offered by the IAMB’s chairman Jean-Pierre Halbwachs was that the Iraqi representatives had not been able to obtain U.S. visas in time. Their absence proved convenient, as questions soon arose about a line in Mr. Halbwachs prepared remarks, regarding the ongoing lack of metering on oil production in Iraq. Mr. Halbwachs read out: “we understand that a recent agreement has been reached between the Government of Iraq and a U.S. company to undertake the task” of oil metering.
When asked for the name of the U.S. company, the IAMB chairman’s response was that only the Iraqi representatives would have that information. When a question arose about the Iraqi representative’s written reference to the cost of metering being covered by “donations,” no answer was forthcoming. When asked why it has taken two years to make even this gesture toward metering, the representative of the Arab Fund for Economic and Social Development Khalifa Ali Dau shrugged and smiled. Finally, the IMF’s deputy press secretary said he will be providing follow-up information about the metering contract (presumably on the IAMB’s web site, www.iamb.info).
There were questions about KPMG’s partial audit, and Halliburton’s subsidiary Kellogg, Brown & Root. The IMF’s representative Bert Keuppens confirmed reports of oil smuggling out of, and in some cases back into, Iraq. (For another report, which puts the Iraqi absence last, see CNN. The UN’s own write-up is here).
-- Jean-Pierre Halbwachs briefing reporters on Dec. 28
When asked in conclusion to assign a grade to the transparency of the spending process at the Development Fund for Iraq, the World Bank’s representative Fayezul Choudhury declined to assign a grade, and pointed out that even most European Union countries, and also the United States, have only qualified opinions from their auditors. The press conference ended with many questions unanswered. The IMF’s Bert Keuppens rushed out of the briefing room. He returned a few minutes later and handed out two business cards. It would have made sense, one wag said, to provide contact information for the representatives to the IAMB from Iraq. And to have thought more deeply about this question of their visas. The IAMB's online self-description:
"The IAMB shall consist of duly qualified representatives of each of the Secretary-General of the United Nations, the Managing Director of the International Monetary Fund, the Director-General of the Arab Fund for Economic and Social Development and the President of the International Bank for Reconstruction and Development and a duly qualified individual designated by the Government of Iraq.
"B. The IAMB, after consulting with the Government of Iraq, may appoint up to 5 observers to the IAMB from a list of independent, qualified candidates, which should include Iraqi nationals nominated by the Government of Iraq.
"C. At any meeting of the IAMB, each member may be accompanied by an alternate, designated in a way identical to the designation of each member, and up to two advisors."
Neither the Iraqi representative nor his alternate / deputy nor even advisors were present, for the meeting or to answer questions.
January 31, NEW YORK – The U.S. government has required Halliburton subsidiary Kellogg, Brown & Root to repay only $9 million on a controversial contract, and promised information about the metering of Iraq’s oil output has still not been provided, in the stealth January 30 release by the International Advisory and Monitoring Board for Iraq.
The IAMB last took question from the media, including Inner City Press, on December 28 at the United Nations in New York. At that time, IAMB stated that an oil metering contract had recently been let. It promised to provide more information shortly. Inner City Press twice asked the IMF for this additional information, but none was provided. Then on January 30 a summary of a January 23 meeting in Paris was placed online. The release tersely states that at the meeting, the IAMB
“reiterated its concern that key actions, especially the installation of an oil metering system, were taking a long time to implement. The IAMB urged the Government of Iraq to implement all IAMB recommendations promptly."
Apparently, the December 28 statement that the oil metering contract was in place was incorrect. No one has apologized, and the (unmetered) oil continues to flow. The Jan. 30 release also states, in the nature of disclosure:
“The U.S. Government informed the IAMB that a global settlement of all six DFI funded task orders under the KBR contract was reached between the U.S. Government and KBR on December 22, 2005. The settlement provided for a reduction of contract costs of US$9 million.”
This is much less than had been contested, and previously reported. Given the costs, most importantly in lives, of this Iraq war, what kind of transparency is this? It also raises questions, on timing and other issues, in light of Halliburton's January 27 announcement that it intends to sell off a stake in Kellogg, Brown & Root in an initial public offering of stock. Developing...
Inner City Press's last report on this topic:
More Questions than Answers about the Development Fund for Iraq: Representatives of Iraq Absent from UN Meeting and Press Conference, Purportedly Due to Visa Problems
On December 28, four of the five members of the oversight board of the Development Fund for Iraq answered reporters’ questions for an hour at the United Nations in New York. Missing was the representative of Iraq on the International Advisory and Monitoring Board. The explanation offered by the IAMB’s chairman Jean-Pierre Halbwachs was that the Iraqi representatives had not been able to obtain U.S. visas in time. Their absence proved convenient, as questions soon arose about a line in Mr. Halbwachs prepared remarks, regarding the ongoing lack of metering on oil production in Iraq. Mr. Halbwachs read out: “we understand that a recent agreement has been reached between the Government of Iraq and a U.S. company to undertake the task” of oil metering.
When asked for the name of the U.S. company, the IAMB chairman’s response was that only the Iraqi representatives would have that information. When a question arose about the Iraqi representative’s written reference to the cost of metering being covered by “donations,” no answer was forthcoming. When asked why it has taken two years to make even this gesture toward metering, the representative of the Arab Fund for Economic and Social Development Khalifa Ali Dau shrugged and smiled. Finally, the IMF’s deputy press secretary said he will be providing follow-up information about the metering contract (presumably on the IAMB’s web site, www.iamb.info).
There were questions about KPMG’s partial audit, and Halliburton’s subsidiary Kellogg, Brown & Root. The IMF’s representative Bert Keuppens confirmed reports of oil smuggling out of, and in some cases back into, Iraq. (For another report, which puts the Iraqi absence last, see CNN. The UN’s own write-up is here).
-- Jean-Pierre Halbwachs briefing reporters on Dec. 28
When asked in conclusion to assign a grade to the transparency of the spending process at the Development Fund for Iraq, the World Bank’s representative Fayezul Choudhury declined to assign a grade, and pointed out that even most European Union countries, and also the United States, have only qualified opinions from their auditors. The press conference ended with many questions unanswered. The IMF’s Bert Keuppens rushed out of the briefing room. He returned a few minutes later and handed out two business cards. It would have made sense, one wag said, to provide contact information for the representatives to the IAMB from Iraq. And to have thought more deeply about this question of their visas. The IAMB's online self-description:
"The IAMB shall consist of duly qualified representatives of each of the Secretary-General of the United Nations, the Managing Director of the International Monetary Fund, the Director-General of the Arab Fund for Economic and Social Development and the President of the International Bank for Reconstruction and Development and a duly qualified individual designated by the Government of Iraq.
"B. The IAMB, after consulting with the Government of Iraq, may appoint up to 5 observers to the IAMB from a list of independent, qualified candidates, which should include Iraqi nationals nominated by the Government of Iraq.
"C. At any meeting of the IAMB, each member may be accompanied by an alternate, designated in a way identical to the designation of each member, and up to two advisors."
Neither the Iraqi representative nor his alternate / deputy nor even advisors were present, for the meeting or to answer questions.
Saturday, January 28, 2006
Halliburton prepares to spin off KBR unit - Financial Times - MSNBC.com
By Sheila McNulty in Houston
Financial Times
Updated: 12:43 a.m. ET Jan. 28, 2006
Halliburton, the world's largest diversified energy services, engineering and construction company, on Friday said it was ready to spin off and list its KBR unit, which is the US's biggest private contractor in Iraq, and might also consider selling "some pieces of KBR" outright.
The decision to list 20 per cent of KBR, which had been expected, comes as Halliburton reported the best annual figures in its 86-year history – it earned $2.4bn, or $4.54 per share, in 2005, compared with a full-year net loss of $1bn, or $2.22 per share, in 2004.
Its overall gains were driven not only by KBR but also its Energy Services Group, which has benefited from increased use of its crews and assets amid an industry scramble for oil and gas resources in the high-priced environment.
Halliburton is eager to separate itself from KBR, which, despite bringing in billions of dollars from US military contracts in Iraq, has plagued the parent company with controversy since the war began. Not only was KBR accused of overcharging for services, but critics said KBR was being favoured by the US government for contracts because US vice president Dick Cheney used to run Halliburton. Even though Halliburton has denied any wrong-doing, the controversy has dogged it.
The company had to wait to hive off KBR because the unit was caught up in a bankruptcy restructuring as part of the company's $4bn asbestos settlement.
Dave Lesar, Halliburton president, chairman and chief executive, said Halliburton planned to file for an initial public offering for KBR soon after filing its 10-K financial form with regulators, which should be a matter of months.
"We believe the IPO market in general, and the public market for engineering and construction companies in particular, is very attractive, and a public valuation of KBR would benefit Halliburton's stock price," Mr Lesar said.
"Valuation multiples of publicly traded engineering and construction firms are currently very favourable."
Copyright The Financial Times Ltd. All rights reserved.
Financial Times
Updated: 12:43 a.m. ET Jan. 28, 2006
Halliburton, the world's largest diversified energy services, engineering and construction company, on Friday said it was ready to spin off and list its KBR unit, which is the US's biggest private contractor in Iraq, and might also consider selling "some pieces of KBR" outright.
The decision to list 20 per cent of KBR, which had been expected, comes as Halliburton reported the best annual figures in its 86-year history – it earned $2.4bn, or $4.54 per share, in 2005, compared with a full-year net loss of $1bn, or $2.22 per share, in 2004.
Its overall gains were driven not only by KBR but also its Energy Services Group, which has benefited from increased use of its crews and assets amid an industry scramble for oil and gas resources in the high-priced environment.
Halliburton is eager to separate itself from KBR, which, despite bringing in billions of dollars from US military contracts in Iraq, has plagued the parent company with controversy since the war began. Not only was KBR accused of overcharging for services, but critics said KBR was being favoured by the US government for contracts because US vice president Dick Cheney used to run Halliburton. Even though Halliburton has denied any wrong-doing, the controversy has dogged it.
The company had to wait to hive off KBR because the unit was caught up in a bankruptcy restructuring as part of the company's $4bn asbestos settlement.
Dave Lesar, Halliburton president, chairman and chief executive, said Halliburton planned to file for an initial public offering for KBR soon after filing its 10-K financial form with regulators, which should be a matter of months.
"We believe the IPO market in general, and the public market for engineering and construction companies in particular, is very attractive, and a public valuation of KBR would benefit Halliburton's stock price," Mr Lesar said.
"Valuation multiples of publicly traded engineering and construction firms are currently very favourable."
Copyright The Financial Times Ltd. All rights reserved.
Monday, January 23, 2006
WKYT 27 NEWSFIRST & WYMT Mountain News - Contractor allegedly supplied tainted water to Iraq base
WASHINGTON -- Water supplied to a U.S. base in Iraq was contaminated and the contractor in charge, Halliburton, failed to tell troops and civilians at the facility, according to internal documents from the company and interviews with former Halliburton officials.
Although the allegations came from Halliburton's own water quality experts, the company once headed by Vice President Dick Cheney denied there was a contamination problem at Camp Junction City, in Ramadi.
"We exposed a base camp population (military and civilian) to a water source that was not treated," said a July 15, 2005, memo by William Granger, the official for Halliburton's KBR subsidiary who was in charge of water quality in Iraq and Kuwait.
"The level of contamination was roughly 2x the normal contamination of untreated water from the Euphrates River," Granger wrote in one of several documents.
The Associated Press obtained the documents from Senate Democrats who are holding a public inquiry into the allegations Monday.
Sen. Byron Dorgan, D-N.D., who will chair the session, held a number of similar inquiries last year on contracting abuses in Iraq. He said Democrats were acting on their own because they had not been able to persuade committee chairmen in the Republican-run Senate to investigate.
The company's former water treatment expert at Camp Junction City said he discovered the problem last March, a statement confirmed by his e-mail the day after he tested the water.
While bottled water was available for drinking, the contaminated water was used for virtually everything else, including handwashing, laundry, bathing and making coffee, said water expert Ben Carter of Cedar City, Utah.
Another former Halliburton employee who worked at the base, Ken May of Louisville, Ky., said there were numerous instances of diarrhea and stomach cramps _ problems he also suffered.
A spokeswoman for Halliburton, Melissa Norcross, said its own inspection found neither contaminated water nor medical evidence to substantiate reports of illnesses at the base. The company now operates its own water treatment plant there, she said.
A military medical unit that visited Camp Ramadi in mid-April found nothing out of the ordinary in terms of water quality, said Marine Corps Maj. Tim Keefe, a military spokesman. Water-quality testing records from May 23 show the water within normal parameters, he said.
"The allegations appear not to have merit," Keefe said.
Halliburton has contracts to provide a number of services to U.S. forces in Iraq and was responsible for the water quality at the Ramadi base.
Granger's July 15 memo said the exposure had gone on for "possibly a year" and added, "I am not sure if any attempt to notify the exposed population was ever made."
The first memo on the problem _ written by Carter to Halliburton officials on March 24, 2005 _ was an "incident report" from tests Carter performed the previous day.
"It is my opinion that the water source is without question contaminated with numerous micro-organisms, including Coliform bacteria," Carter wrote. "There is little doubt that raw sewage is routinely dumped upstream of intake much less than the required 2 mile distance.
"Therefore, it is my conclusion that chlorination of our water tanks while certainly beneficial is not sufficient protection from parasitic exposure."
Carter said he resigned in early April after Halliburton officials did not take any action to inform the camp population.
The water expert said he told company officials at the base that they would have to notify the military. "They told me it was none of my concern and to keep my mouth shut," he said.
On at least one occasion, Carter said, he spoke to the chief military surgeon at the base, asking him whether he was aware of stomach problems afflicting people. He said the surgeon told him he would look into it.
"They brushed it under the carpet," Carter said. "I told everyone, 'Don't take showers, use bottled water."
A July 14, 2005, memo showed that Halliburton's public relations department knew of the problem.
"I don't want to turn it into a big issue right now," staff member Jennifer Dellinger wrote in the memo, "but if we end up getting some media calls I want to make sure we have all the facts so we are ready to respond."
Halliburton's performance in Iraq has been criticized in a number of military audits, and congressional Democrats have contended that the Bush administration has favored the company with noncompetitive contracts.
Although the allegations came from Halliburton's own water quality experts, the company once headed by Vice President Dick Cheney denied there was a contamination problem at Camp Junction City, in Ramadi.
"We exposed a base camp population (military and civilian) to a water source that was not treated," said a July 15, 2005, memo by William Granger, the official for Halliburton's KBR subsidiary who was in charge of water quality in Iraq and Kuwait.
"The level of contamination was roughly 2x the normal contamination of untreated water from the Euphrates River," Granger wrote in one of several documents.
The Associated Press obtained the documents from Senate Democrats who are holding a public inquiry into the allegations Monday.
Sen. Byron Dorgan, D-N.D., who will chair the session, held a number of similar inquiries last year on contracting abuses in Iraq. He said Democrats were acting on their own because they had not been able to persuade committee chairmen in the Republican-run Senate to investigate.
The company's former water treatment expert at Camp Junction City said he discovered the problem last March, a statement confirmed by his e-mail the day after he tested the water.
While bottled water was available for drinking, the contaminated water was used for virtually everything else, including handwashing, laundry, bathing and making coffee, said water expert Ben Carter of Cedar City, Utah.
Another former Halliburton employee who worked at the base, Ken May of Louisville, Ky., said there were numerous instances of diarrhea and stomach cramps _ problems he also suffered.
A spokeswoman for Halliburton, Melissa Norcross, said its own inspection found neither contaminated water nor medical evidence to substantiate reports of illnesses at the base. The company now operates its own water treatment plant there, she said.
A military medical unit that visited Camp Ramadi in mid-April found nothing out of the ordinary in terms of water quality, said Marine Corps Maj. Tim Keefe, a military spokesman. Water-quality testing records from May 23 show the water within normal parameters, he said.
"The allegations appear not to have merit," Keefe said.
Halliburton has contracts to provide a number of services to U.S. forces in Iraq and was responsible for the water quality at the Ramadi base.
Granger's July 15 memo said the exposure had gone on for "possibly a year" and added, "I am not sure if any attempt to notify the exposed population was ever made."
The first memo on the problem _ written by Carter to Halliburton officials on March 24, 2005 _ was an "incident report" from tests Carter performed the previous day.
"It is my opinion that the water source is without question contaminated with numerous micro-organisms, including Coliform bacteria," Carter wrote. "There is little doubt that raw sewage is routinely dumped upstream of intake much less than the required 2 mile distance.
"Therefore, it is my conclusion that chlorination of our water tanks while certainly beneficial is not sufficient protection from parasitic exposure."
Carter said he resigned in early April after Halliburton officials did not take any action to inform the camp population.
The water expert said he told company officials at the base that they would have to notify the military. "They told me it was none of my concern and to keep my mouth shut," he said.
On at least one occasion, Carter said, he spoke to the chief military surgeon at the base, asking him whether he was aware of stomach problems afflicting people. He said the surgeon told him he would look into it.
"They brushed it under the carpet," Carter said. "I told everyone, 'Don't take showers, use bottled water."
A July 14, 2005, memo showed that Halliburton's public relations department knew of the problem.
"I don't want to turn it into a big issue right now," staff member Jennifer Dellinger wrote in the memo, "but if we end up getting some media calls I want to make sure we have all the facts so we are ready to respond."
Halliburton's performance in Iraq has been criticized in a number of military audits, and congressional Democrats have contended that the Bush administration has favored the company with noncompetitive contracts.
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