KBR billed the Pentagon US$4.18 billion for feeding and housing Coalition troops in Iraq.

According to the WSJ report, the Pentagon audit said KBR’s “internal control policies” were “inadequate for providing verifiable, supportable and documented cost estimates that are acceptable for negotiating a fair and reasonable price”. The auditors also believed more than a third of the US$900 million KBR charged for feeding the Coalition forces is unjustified and the US$180 million KBR charged for delivering fuel from Kuwait to Iraq is also under investigation.

If the Pentagon finds it has been overcharged, it could withhold payments to the firm.

In a statement published in the WSJ, KBR said, “The company has done nothing wrong and we are confident the issue will be resolved. The fact that we have negotiated and continue to negotiate proposals proves that our estimating system is valid.”

“This is the same system that the company has used for more than 10 years,” added the firm, which last year had to file for bankruptcy protection to resolve billions of dollars in pending asbestos claims.

Parent company Halliburton, also does not agree with the findings of the report.

“This audit has nothing to do with the amounts we have billed the government or which costs will ultimately be determined allowable for our work in Iraq. This report alleges that Halliburton does not have a system which is adequate to produce proposals upon which to negotiate final price and this allegation is simply not true,” said Halliburton spokeswoman Wendy Hall in a statement.