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Army Gives Halliburton $72m Bonus

SUE PLEMING / Reuters 11may2005

 

WASHINGTON The US Army said yesterday that it had awarded $72 million in bonuses to Halliburton Co. for logistics work in Iraq but had not decided whether to give the Texas company bonuses for disputed dining services to troops.

Army Field Support Command in Rock Island, Ill., said in a statement that it had given Halliburton unit Kellogg Brown & Root ratings from ''excellent" to ''very good" for six task orders for work supporting US troops in Iraq.

The Army said its Award Fee Board in Iraq had met in March and had agreed to pay KBR bonuses for work it did in support of US forces there.

The Army said in a statement later that while it had given the company an additional $72 million, it had denied KBR $10.1 million in bonuses and not paid the maximum allowed on any of the task orders.

''We have protected the taxpayer FIRST," said the Army in a statement released later, pointing out this paragraph had been ''inadvertently left off" the original news release. The Army said dining facility costs questioned by auditors from the Defense Contract Audit Agency had not yet been considered by the military Award Fee Board. No details were available as to when this dining fee bonus would be resolved.

Much of Halliburton's work for the US military, ranging from building bases to delivering mail, is on a cost-plus basis, which means the company can earn up to 2 percent extra depending on its performance.

Bonuses are awarded based on, among other factors, how efficient and how responsible the company is to requests from the Army and are an indicator of how the Army views KBR's performance in the field.

Senator Frank Lautenberg, a New Jersey Democrat who is a vocal critic of Halliburton's performance in Iraq, said Halliburton did not deserve a bonus.

''It is outrageous that the Bush Administration would give Halliburton a bonus after we have seen its overcharges, sloppy accounting, and kick-back schemes in Iraq," Lautenberg said. ''Giving Halliburton a bonus is like giving your worst employee a raise."

KBR's logistics deal with the US military has been in the spotlight from the outset in Iraq, with allegations by auditors that it overcharged for some work, including dining services.

In addition, investigators are looking into whether the Texas-based firm charged too much to supply fuel to Iraqi civilians, a contention the firm says is not justified.

Halliburton, which was run by Vice President Dick Cheney until he joined the 2000 race for the White House, has earned more than $7 billion under its 2001 logistics contract with the US military.

source: http://www.reuters.com/newsArticle.jhtml?type=politicsNews&storyID=8447114 30may2005


Army Gives Halliburton
Bonus of $72.2 Million

RUSSELL GOLD / Wall Street Journal 10may2005

 

The U.S. Army approved $72.2 million in performance bonuses to Halliburton Co. for its work supporting the military in Iraq. The bonus, which was approved Tuesday, is the largest received to date by the Houston-based company.

Halliburton has already accrued "more than half" of the $72.2 million in anticipation of these awards, a company spokeswoman said. The balance will flow through to the company's second-quarter net income.

Halliburton has billed the government $10.5 billion so far under a contract to provide logistical support for the military in Iraq, Afghanistan and elsewhere in the region.

The company has received good marks from the military for its work. In the bonuses announced Tuesday, Halliburton received 88% of the potential award of $82.3 million. So far, it has received the top ratings of "excellent" and "very good" for all of its work. Under Halliburton's wide-ranging contract, it receives an automatic 1% profit margin and can get an additional 2% bonus, depending on how well it meets military expectations.

The military has finalized less than half of the $10.5 billion that Halliburton has billed under the Logistics Civil Augmentation Program, or Logcap, contract. The military is continuing to evaluate Halliburton's work and is expected to continue issuing performance bonuses.

The bonuses should help Halliburton, which said earlier this year it wants to establish a track record of profitable quarters for its Kellogg Brown & Root division before separating it through a sale, spinoff or public offering. The division reported $105 million in operating income in the first quarter, including $12 million from military bonuses.


Related

US Army Pays Halliburton Big Bonus

Aljazeera 24feb2005

 

The US Army has awarded defence contractor Halliburton more than $9 million in bonuses for some of its work supporting the military in Kuwait and Afghanistan.

But the Army said performance-based bonuses had not been paid yet to Halliburton's Kellogg Brown and Root (KBR) unit for dining services for US troops in those countries.

Military auditors have criticised those services as too costly and have asked the Texas-based company to justify its billing.

Halliburton and its subsidiaries have particularly been under scrutiny for over-billing some of its military contracts in Iraq.

The Pentagon has also been criticised for extending undue favours to the firm, once headed by US Vice-President Dick Cheney.

"Dining facilities costs questioned by the Defence Contract Audit Agency have not been included in Award Fee Boards but are scheduled to be addressed later," an army statement said on Thursday.

Rated highly

Army Field Support Command in Rock Island, Illinois, said award fee boards held over recent months rated KBR's performance as "excellent" to "very good" for more than a dozen "task orders" in Kuwait and Afghanistan supporting troops.

Much of Halliburton's work for the US military is on a cost-plus basis, which means the company can earn up to 2% extra depending on their performance.

A US Army spokesman said KBR had been awarded $9.4 million in bonus payments from its work in Kuwait and Afghanistan.

Overall, KBR has earned $7.2 billion under a massive 2001 logistics contract with the US military and is set to earn more than $10 billion under that deal. It has separate deals with the government for reconstruction work in Iraq.

The bulk of money paid out so far under the logistics deal - about $6.6 billion - is for work in Iraq which still must be assessed for bonuses that could amount to hundreds of millions of dollars.

Army contracting officer Sylvia Youngman said the first military award fee board for KBR's Iraq task orders would begin on 28 February and would likely take many weeks.

Bonuses are awarded based on, among other factors, how efficient and responsive the company is to requests from the army, Youngman said.

source: http://english.aljazeera.net/NR/exeres/F1C74716-CF50-4F46-90A7-B8F06235A5A1.htm 30may2005

 

 

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