NEWS

Official cites Hilton Kuwait expenditures

By DAVID IVANOVICH

Houston Chronicle Washington Bureau

WASHINGTON (Summary of Houston Chronicle Article) May 6, 2004 � The inspector general for the Coalition Provisional Authority is questioning the bills submitted by Halliburton's KBR unit for its use of a five-star beachfront hotel near Kuwait City, Kuwait. The CPA is questioning the "level of expenditure" at the Hilton Kuwait Resort. KBR employees have stayed at the hotel since the company was ordered to Kuwait around the start of the Iraq war. The CPA is also investigating the purchase of trucks. A broad audit is expected to be released soon. Halliburton blames high costs on the dangerous environment in Iraq. Over 30 Halliburton employees and subcontractors have been killed in Iraq and Kuwait. Two remain unaccounted for. The CPA said not all of KBR's exorbitant expenditures can be blamed on the dangerous conditions. The Defense Contract Audit Agency had raised concerns Halliburton might have overcharged the government by as much as $61 million. Pentagon auditors also questioned bills generated by Saudi subcontractor Tamimi Global Co., which last July billed the military for 42,042 meals a day at a U.S. base outside Kuwait City, while only serving only 14,053 meals a day. Halliburton agreed to credit the military $36 million and then suspended billing on another $141 million until questions about the invoices could be resolved. Last week, Halliburton decided to proceed with the $141 million billing. The Pentagon has previously criticized Halliburton for failing to comply with regulations that forbid contractors from charging more than 85 percent of a task order's costs until the company and the military have reached a consensus on a fair price. But Halliburton says the 85 percent requirement does not apply to their logistical support contract. In response, the Pentagon decided to delay paying $300 million worth of future reimbursements to the company. However, the Army Materiel Command has granted Halliburton repeated reprieves.