- The Washington Times - Wednesday, December 31, 2003

ASSOCIATED PRESS

Just weeks after Pentagon auditors said Halliburton may have overcharged taxpayers to import oil to Iraq, the Defense Department is removing the Army Corps of Engineers from its role in supervising the program.

The Defense Energy Support Center, which buys fuel for the U.S. military throughout the world, will supervise the shipments and choose new contractors to replace Halliburton, Vice President Dick Cheney’s former company.

“We’re taking over the mission,” the center’s spokeswoman, Lynette Ebberts, said.

Democratic lawmakers have criticized the prices charged to the U.S. government by Halliburton subsidiary Kellogg Brown and Root, which has been importing refined petroleum products into Iraq under a contract awarded without competitive bids. Mr. Cheney led Halliburton before running for vice president.

Earlier this month, the Defense Department’s auditing agency found that the company may have charged up to $61 million too much for delivering gasoline to Iraqi citizens.

Miss Ebberts would not comment on whether the audit prompted the change, which was ordered Tuesday last week.

President Bush tried to calm the furor, saying Halliburton should repay the government if it overcharged for fuel, which was imported from Iraq’s neighbors.

Halliburton has said that it expected to be cleared by the Defense Department. The company said its pricing resulted from a contract with a Kuwaiti firm, the only company approved as a supplier by the Army Corps of Engineers.

Halliburton got its contract to rebuild Iraq’s dilapidated oil industry as an outgrowth of a contract with the Army to provide emergency logistical help for situations such as the Iraq war. The Army Corps of Engineers opened the oil rebuilding process to competitive bidding earlier last year and was preparing to award up to $2 billion in replacement contracts.

Those contracts stillwill be awarded for rebuilding Iraq’s oil industry, but will no longer include oil imports, the corps said.

Richard J. Connelly, director of the support center, said the existing contract would remain in place for now, so that fuel deliveries will not be interrupted.


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