home click for info

GAO calls for greater oversight of Halliburton's biggest contract
22 March 2005

WASHINGTON, March 22 (HalliburtonWatch.org) -- A report released today by a nonpartisan auditing agency of Congress called for greater oversight of Halliburton's most expensive and scandal-plagued contract, known as Logistics Civil Augmentation Program (or LOGCAP). The report, issued by the Government Accountability Office (GAO), said the military must create "teams" of "experts" to "regularly" review whether Halliburton and military officials are carrying out the LOGCAP in an economic and efficient manner.

The government has good reason to call for teams of experts to review Halliburton's contract since military auditors have supplied at least ten audit reports describing gross mismanagement. At one point in 2004, the Pentagon determined that 43 percent of Halliburton's bills under LOGCAP could not be verified under normal accounting procedures. Military officials spent months debating whether to take action against the company for the shoddy accounting. Ultimately, no action was taken and the Army paid Halliburton for the suspicious expenses.

Duties under the LOGCAP contract are carried out by Halliburton's KBR subsidiary and include feeding the troops in Iraq, maintaining their laundry facilities and constructing military housing and offices. Since the start of the U.S.-led invasion of Iraq, KBR has accrued $15 billion in revenues from LOGCAP and expects to obtain another $6.8 billion in 2005.

Various departments of the Pentagon are involved in carrying out the LOGCAP, including combat commanders and deployed soldiers, but no one is responsible for overall leadership. The lack of a central authority over the contract helps create mismanagement and waste, says the GAO. So, the Pentagon recently created the position of Defense Logistics Executive who will be responsible for military logistics and global supply chain management, including oversight of the LOGCAP contract.

The GAO's report is the third since 1997 which criticizes the handling of the LOGCAP. In 1997, the GAO issued a critical report of operations in Bosnia (with a followup report in 2000). Another report was issued in 2004 focusing on work in Iraq.

Today's report by the GAO recommended the Pentagon (1) completely rewrite its field manual for using private contractors on the battlefield and its primary regulation for obtaining contractor support in wartime operations; (2) provide training to commanders on carrying out the LOGCAP; (3) restructure the LOGCAP contracting office to provide additional personnel resources in key areas; and (4) take steps to eliminate the backlog of contract task orders requiring definitization, i.e. - come to an agreement on the final terms and price of the contract task orders.

The GAO also called for regular reviews of the LOGCAP for economy and efficiency since "Our prior reviews have shown that when commanders look for savings in contract activities, they generally find them." For example, the GAO found in 1997 that Halliburton billed the Army for questionable expenses for work in the Balkans, including charges of $85.98 per sheet of plywood that cost $14.06. A follow-up report found even more inflated costs by Halliburton, including charges for cleaning military offices up to four times a day.

More Information:

Full report from GAO

One page summary of GAO report

Summary of government audits against Halliburton

Pentagon says 43% of Halliburton's Iraq expenses are not verifiable