NEWS

WASHINGTON, June 11 (Summary of Bloomberg News Article) -- In January 2004, three days before the military awarded Halliburton a $1.2 billion contract to refurbish Iraq's southern oil fields, the auditing arm of the Pentagon warned officials of billing and other administrative flaws at the company. "They [the Pentagon] got a warning three days before they awarded the contract, and as far as I'm concerned, they ignored it," Michigan Senator Carl Levin, the ranking Democrat on the Senate Armed Services Committee, said in an interview. "I can't imagine why they would just make the award given that kind of warning." The Army Corps of Engineers rated Halliburton's cost controls as "excellent," but the Defense Contract Audit Agency (DCAA) in a January 13 report said Halliburton's KBR division had "several deficiencies" in its billing system, including a lack of written billing policies and procedures and inadequate controls over subcontractor billings. The Pentagon's award to Halliburton of the Iraq oil contract will be discussed during a June 15 hearing of the House Government Reform Committee. The hearing will coincide with the release of a General Accounting Office (GAO) report on the same issue. Officials from the GAO, Defense Contract Audit Agency and Army Corps of Engineers are expected to testify.