As reported earlier by EnergyReview.net, the Army is dithering on whether it should hold back the remaining 15% for payments to Halliburton subsidiary KBR for providing logistical support to troops in Iraq and Afghanistan.

In the memo to the Army Field Support Command, the Defence Contract Audit Agency said, “It is clear to us KBR will not provide an adequate proposal until there is a consequence. The Army should decide whether to proceed with the penalties, estimated at US$60 million, within the next two weeks, according to the Army’s latest estimates.”

“There are systemic issues with KBR’s cost estimates. In the case of one US$4 billion order, each successive update continues to be significantly deficient. Halliburton’s subsidiary submitted about US$13 billion in price proposals to the government between March 2003 and May 2004 and an audit of US$4.3 billion in specific logistics program orders found that unsupported costs made up almost half of the total amount.

“We have tried to work with KBR staff, but have met with resistance. KBR intends to provide supporting data during negotiations, rather than earlier in the process. We believe this approach is unacceptable,” added the memo.

Waxman blames the Pentagon for not reacting properly to Halliburton’s “poor billing practices”.

“I urge the Defense Department to end its special treatment of the firm. Despite the company’s record of over-billing and shoddy accounting, the Defense Department has awarded Halliburton large new contracts and repeatedly waived the application of federal procurement regulations,” said Waxman.

Federal acquisition regulations permit the sanctions on contracts that do not have properly supported billing estimates. The Army Corps of Engineers is already withholding payments on a smaller contract regarding Iraqi oil fields.