Army to reimburse Halliburton $2.41 billion no-bid contract

The Army has decided to reimburse a Halliburton subsidiary for nearly all of its disputed costs on a $2.41 billion no-bid contract to deliver fuel and repair oil equipment in Iraq, even though the Pentagon's own auditors had identified more than $250 million in charges as potentially excessive or unjustified.

The Army said in response to questions on Friday that questionable business practices by the subsidiary, Kellogg Brown & Root, had in some cases driven up the company's costs. But in the haste and peril of war, it had largely done as well as could be expected, the Army said, and aside from a few penalties, the government was compelled to reimburse the company for its costs...

The contract has been the subject of intense scrutiny after disclosures in 2003 that it had been awarded without competitive bidding. That produced criticism from Congressional Democrats and others that the company had benefited from its connection with Dick Cheney, who was Halliburton's chief executive before becoming vice president.

Later that year auditors began focusing on the fuel deliveries under the contract, finding that the fuel transportation costs that the company was charging the Army were in some cases nearly triple what others were charging to do the same job...

That means the Army is withholding payment on just 3.8 percent of the charges questioned by the Pentagon audit agency, which is far below the rate at which the agency's recommendation is usually followed or sustained by the military — the so-called "sustention rate."...

In 2003, the agency's figures show, the military withheld an average of 66.4 percent of what the auditors had recommended, while in 2004 the figure was 75.2 percent and in 2005 it was 56.4 percent...

From columnist Richard Reeves

As the admitted direct cost of the war reached $250 billion -- and the White House asked for $120 billion more [earlier this month] -- new analyses estimate that the invasion of Iraq could end up costing $2 trillion before it is over.

If you remember, the White House's own economic adviser, Lawrence Lindsey, was fired for predicting, in September 2002, six months before the invasion, that the total cost of the war might reach between $100 billion and $200 billion...

Estimate that the war's cost per citizen has reached $727 -- or close to $3,000 for a family of four. By the end of this year, those figures should reach about $1,300 per citizen, or more than $5,000 for that family of four.