Army dumps Halliburton

The U.S. Army will discontinue its multi-billion dollar contract with oil services giant Halliburton Co. to provide logistical support to U.S. troops worldwide, The Washington Post reported on Wednesday.

Halliburton, formerly run by Vice President Dick Cheney, has drawn scrutiny for its work in Iraq from auditors, congressional Democrats and the Justice Department, which is investigating potential overcharges for fuel, dining and laundry services.

Texas-based Halliburton is the world’s second-largest oil services company and the U.S. military’s biggest contractor in Iraq. The logistical support is performed by Halliburton engineering and construction unit Kellogg Brown & Root. Last year, the Army paid the company more than $7 billion under the contract, the Post said.

Army officials defended the company’s performance but said Pentagon leaders decided multiple contractors would give them better prices, more accountability and greater protection if a one contractor fails to perform, the newspaper said.

Halliburton maintains that its billing disputes with Defense Department auditors have been resolved and that its work has received rave reviews from the military, the Post reported.

The Pentagon’s decision on Halliburton comes as the U.S. contribution to Iraq’s reconstruction begins to wane, reducing opportunities for U.S. companies after nearly four years of massive payouts to the private sector, the newspaper said.

According to the report, the Pentagon plans to split the Iraq work among three companies to be chosen this fall and Halliburton would be eligible to make a bid.

A fourth firm would be hired to help monitor the performance of the three contractors selected, the newspaper said.

Rep. Henry Waxman of California, the top Democrat on the House Government Reform Committee and a frequent Halliburton critic, welcomed the move away from the exclusive contract with Halliburton as a good first step, the Post said.

“When you have a single contractor, that company has the government over a barrel,” Waxman said. “One needs multiple contractors in order to have real price competition. Real competition saves the taxpayer money.”

© 2006 Reuters