WASHINGTON — The Pentagon said Tuesday that it will end an arrangement with Halliburton Corp. to import fuel to Iraq, a contract that had come under fire from government auditors and Democratic members of Congress.
A military unit that already supplies fuel to the armed forces in Iraq will assume control of the overall importation and distribution of gasoline, kerosene and cooking gas into the country and will find new private contractors through competitive bidding, the Defense Energy Support Center announced.
Pentagon officials said that the change had been under discussion for months and that the timing was not related to allegations that KBR, the Halliburton subsidiary that held the contract, had overcharged the government at least $61 million.
KBR’s fuel arrangement was part of a much larger emergency contract with the Army Corps of Engineers to repair Iraq’s oil infrastructure. That contract was not affected by Tuesday’s announcement.
The military energy group that will take over the fuel contracting plans to solicit and award the new contracts in 60 to 90 days, officials said. KBR theoretically could reapply but that is considered unlikely because company officials have said they did not want to continue the task.
According to the findings of a preliminary Defense Department audit, KBR has been charging $2.27 a gallon to deliver gasoline from Kuwait, while a similar contract for gasoline from Turkey sets the price at $1.18.
KBR denied gouging the government, saying that the Corps had directed it to buy all its fuel from Kuwait and that it found its supplier through a competitive selection. It said it actually saved the U.S. government $164 million by not relying on a sole source of supply.
The Corps has said its own audits found nothing improper about KBR’s performance. Pentagon officials have said it did not appear that KBR profited from any overcharge.
Still, the preliminary audit created a fresh firestorm for Halliburton, which was headed by Dick Cheney from 1995 until 2000, before he became vice president. KBR has been under constant attack from senior Democrats in Congress since the Corps awarded the company the no-bid emergency contract in March to repair Iraq’s oil infrastructure.
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