[Mb-civic] US army 'to axe Halliburton deal' BBC

[Michael Butler]

 US army 'to axe Halliburton deal'
 The US army plans to end a contract given to Halliburton to provide its
troops in Iraq with logistical support, the Wall Street Journal reports.

 The army will put the work out to contract, the newspaper says, quoting an
army memorandum which estimates the contract to be worth $13bn (£7.3bn).

 Halliburton has been accused of overcharging since it was handed the no-bid
contract last year.

 US Vice-President Dick Cheney headed the firm until he took office in 2001.

 He has, however, denied that this has led to preferential treatment for the
firm.

 The US army had no immediate comment to make to BBC News Online on the Wall
Street Journal report.

 Move 'expected' 

 US defence officials say the intention to break the contract with
Halliburton was not intended to penalise its Kellogg Brown & Root (KBR) unit
which handles the Iraq operation, the newspaper says.

 KBR provides troops in Kuwait and Iraq with housing, dining halls,
transportation and laundry services.

 Rather, the intention was to find greater efficiency by parcelling the work
out to a greater number of firms.

 Halliburton spokeswoman Wendy Hall told the newspaper that the move was
expected but that KBR would consider bidding for parts of the work.

 In the memo dated 25 August, the newspaper says, the army's chief of
procurement policy, Tina Balard, directed top officials to "immediately
begin the transition to competitively awarded sustainment contracts for
support of US military forces in Iraq".

 The memo also addresses the army's increasing frustration with efforts to
devise a final estimated cost of the work, the Journal continues.

 One option considered was for the army to come up with its own estimation
of costs.

 The newspaper pointed out that such a move could make it more difficult for
KBR to stay within estimated costs which would make it harder for it to
qualify for its 2% bonus.

 Ms Hall told the newspaper that this could have financial implications for
the firm as "the award fee is where you make your money".

 Story from BBC NEWS:
 http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/3633750.stm

 Published: 2004/09/07 15:10:25 GMT

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