Wednesday, August 18, 2004

Army flip flops again regarding Halliburton

August 18, 2004

Army, in Shift, Will Pay Halliburton

WASHINGTON, Aug. 17 (Reuters) - The Army reversed a decision late Tuesday to withhold payment on 15 percent of future payments to the Halliburton Company on its contracts in Iraq and Kuwait, giving the company more time to resolve a billing dispute.

The Army had said earlier Tuesday that it had decided that starting Wednesday it would withhold 15 percent of payments on future bills from the Halliburton subsidiary Kellogg Brown & Root because it had not issued paperwork justifying its costs. But the Army later indicated it would continue to reimburse the company in full.

Government contractors normally cannot be paid more than 85 percent of their invoices until they fully account for their costs. Twice this year, the Army set this rule aside for Halliburton as the company cataloged its costs and explained how it was billing the government. The most recent reprieve expired Sunday.

The waivers granted to Halliburton have annoyed several members of Congress, who say the company has had undue privileges because of its former ties to Vice President Dick Cheney. Mr. Cheney led the company from 1995 until he became the Republican vice presidential candidate in 2000. (Note: Cheney still has a vested interest in the firm being profitable -- he collects $150,000 a year from Halliburton.)

Halliburton, an oil services and construction company that has more than $8 billion in Iraq-related contracts, said shifting needs and the intricacies of providing logistical support to American troops made it difficult to account for its many costs quickly.

"Because of the size and scope of the tasks in Iraq and the fact that the process is complex and constantly changing," the Army Matériel Command and Kellogg Brown & Root "have agreed to work closely together to produce the final results," Wendy Hall, a Halliburton spokeswoman, said Monday in an e-mail message.

There have been confusing signals from both the military and the company in recent days over the billing dispute and whether the Army would take any action.

The company put out a statement on Monday that money would not be withheld, but then announced Tuesday along with the Army that it had been told payment of 15 percent of future invoices would be withheld starting Wednesday.

So far, Halliburton has been paid more than $4.3 billion under its logistics contract in Iraq.