WASHINGTON, Dec. 2 (HalliburtonWatch.org) -- The Army Corps of Engineers paid profits and bonuses to Halliburton for oil transport and repair in Iraq even though the Pentagon's own auditors declared $169 million in costs for the work to be "unreasonable" and "unsupported," a congressman disclosed today.

In a letter to the chairman of the House Government Reform Committee, Rep. Henry Waxman (D-CA) requested hearings on how Halliburton could have been awarded $38 million in bonus payments for contract work plagued by overcharges.

The disputed costs were paid to Halliburton's KBR subsidiary under its no-bid Iraqi oil contract, known as Restore Iraqi Oil (RIO), awarded in March 2003.

Typically, between 60 percent and 70 percent of costs challenged by Pentagon auditors are ultimately denied to contractors by the contracting authority. But under six of 10 task orders of the RIO contract, only 27 percent of the costs challenged by auditors was ultimately denied to Halliburton by the Corps of Engineers.

Specifically, Pentagon auditors said Halliburton overcharged the military by $169 million, but the Corps of Engineers repaid $124 million of the cost to the company anyway. The Corps denied repayment of $45 million, or 27 percent of the overcharges.

"The [Bush] administration has offered no explanation for this decision to pay three-quarters of Halliburton's challenged costs," Waxman said.

Auditors from the Pentagon's Defense Contract Audit Agency had asked the Corps of Engineers to refuse repayment for all of the $169 million.

Waxman said "the Corps of Engineers appears to have ignored auditor findings in three ways: by reimbursing Halliburton for costs determined to be unreasonable or unsupported, by permitting Halliburton to collect profits on these challenged costs, and by giving Halliburton unwarranted bonuses."

The congressman also requested the Corps disclose the documentation on how it came to the conclusion that Halliburton deserved to be paid profits and bonuses on the disputed costs.

Under the RIO contract, the Corps of Engineers assigned Halliburton 10 task orders involving oil transport and infrastructure repair in Iraq. It was paid $2.5 billion for the work, which was completed in early 2005.

The $169 million in disputed costs occurred under six of those 10 task orders.

"With reimbursement and fee decisions still pending on four other RIO task orders, it is important that we receive prompt answers," Waxman said in calling for a congressional hearing.

For a summary of auditor reports on Halliburton, click here.

For a summary of the Pentagon's favoritism toward Halliburton, click here.

For a description on how the Bush administration can suspend Halliburton from new contracts, click here.

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