Iraq Contracts

KBR, Halliburton's engineering and construction subsidiary, has been asked to perform nearly $12 billion worth of services in Iraq, where it is the military's main supplier. The company, which operates over 60 sites throughout Iraq and Kuwait, has shipped and delivered 500 million gallons of fuel and 100 million pounds of mail. KBR employs 50,000 in the region, including 13,000 Americans as well as lower-paid workers from the Philippines, India, Bangladesh and Sri Lanka. Sixty-five KBR employees, including 16 truckers, have been killed since the beginning of the war.

The company has performed most of its nearly $12 billion worth of work in Iraq under two military contracts: the Logistics Civil Augmentation Program (LOGCAP) contract valued at an estimated $8.5 billion so far, and the $2.5 billion Restore Iraqi Oil (RIO) contract.

Under the terms of the 10-year LOGCAP contract, which KBR won in December 2001, KBR provides logistics and infrastructure support for U.S. forces worldwide, including building U.S. Army camps and providing services including food service, laundry, sanitation and utilities.

In July 2004, the non-partisan Government Accountability Office released an audit of the LOGCAP contract which investigated a dispute between KBR and Pentagon auditors regarding $88 million in charges for food in KBR dining facilities that was never served. A Halliburton spokesperson says the dispute was due to "interpretive differences in billing approaches," and that KBR was contractually required to be ready to feed a specified minimum number of soldiers. In April 2005, Halliburton announced that it had reached an agreement with the Army over the billing charges: The Army would pay KBR $1.176 billion while retaining $55.1 million of the $200 million it had withheld during the dispute. KBR agreed to negotiate adjustments to its contracts with subcontractors, and the Army changed portions of KBR's contracts to "firm fixed price," as opposed to the previous "cost-plus"