WASHINGTON – The Army is discontinuing a controversial multibillion-dollar deal with oil services giant Halliburton Co. to provide logistical support to U.S. troops worldwide, a decision that could cut deeply into the firm’s dominance of government contracting in Iraq.
Under the deal, Halliburton had exclusive rights to provide the military with a wide range of work that included keeping soldiers around the globe fed, sheltered, and in communication with friends and family back home.
Government audits turned up more than $1 billion in questionable costs. Whistle-blowers told how the company charged $45 per case of soda, double-billed on meals and allowed troops to bathe in contaminated water. Halliburton officials have denied the allegations strenuously.
Army officials Tuesday defended the company’s performance but also acknowledged that reliance on a single contractor left the government vulnerable. The Pentagon’s new plan will split the work among three companies, to be chosen this fall, with a fourth firm hired to help monitor the performance of the other three.
Halliburton will be eligible to bid on the work.
The decision on Halliburton comes as the U.S. contribution to Iraq’s reconstruction begins to wane.
Of the more than $18 billion Congress allocated for reconstruction in late 2003, more than two-thirds has been spent and more than 90 percent has been contractually obligated, according to the inspector general’s office overseeing reconstruction work.
The rest of the money needs to be obligated by the end of September. Army spokesman Dave Foster said in a written response to questions that while contractors will be allowed to finish any work previously requested, no new work can be ordered after September.
Instead, the Iraqi government will have to find its own contractors to do the work, which includes tackling a large number of projects left undone by the United States.
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