Pentagon reviews KBR contract

10 September 2004
The Pentagon is reviewing its contract with the US' Halliburton KBRto provide logistical support to the US military in Iraq. The review will decide which elements of work being carried out under the 10-year Logcap III contract can be considered 'sustainable' and can be competitively tendered under new contracts.

The Logcap III contract, which was awarded to KBR in 2001, is a task order-based contract that provides the US military with contingency resources it can call on in a crisis without having to put the work out to competitive tender. Under the terms of the Logcap III contract, KBR is required to be able to deploy anywhere in the world within 72 hours and deliver combat support services for 25,000 troops within 15 days. In 2002, KBR was also tasked with restoring Iraq's oil infrastructure during the build-up to the US-led invasion of Iraq.

KBR has been accused of overcharging for its work in Iraq. The US Army is said to be becoming frustrated that it cannot agree with KBR a final cost for the contract, which is reported to have reached about $13,000 million. KBR's role in Iraq has also been challenged because of its links with US vice-president Dick Cheney, who headed the firm.

However, US defence officials say the review of the contract is not connected with the controversies in Iraq. 'We are at the early stages of planning to identify tasks that can be moved from contingency operations to sustainable operations,' says a US Army spokesman. 'This is a normal part of the process.'

KBR said it is comfortable with the review. 'This has nothing to do with withholds, suspensions of paymentsor the reimbursability of costs,' said a KBR spokeswoman. 'This is about moving from war time/contingency contracts to sustainment contracts. The emergency war time contract to help repair and restore Iraqi oil production has already been rebid. This is a normal and expected part of government contracting.

'With regard to KBR bidding on one or more of the sustainment contracts, we will review each sustainment request for proposal (RFP) and make a bid/no-bid decision on these just the same as we normally do for all business opportunities we consider pursuing,' she said.

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