Army to pay KBR for most disputed Iraq costs-NYT

NEW YORK, Feb 27 (Reuters) The U.S. Army has decided to reimburse a Halliburton Co. subsidiary for nearly all of the 3 million in disputed costs over a contract to deliver fuel and repair oil equipment in Iraq, the New York Times reported on Monday.

Citing Army officials, the Times said the military had decided to pay Halliburton engineering and construction unit Kellogg Brown&Root (KBR) all but million of the costs which Pentagon auditors had identified as potentially inflated or unsupported by documentation.

Halliburton, formerly led by Vice President Dick Cheney, has been criticized for its work in Iraq, particularly for some contracts awarded on a ''no-bid'' or noncompetitive basis.

The disputed costs reported by the Times were part of a NEW YORK, Feb 27 (Reuters) The U.S. Army has decided to reimburse a Halliburton Co. subsidiary for nearly all of the $263 million in disputed costs over a contract to deliver fuel and repair oil equipment in Iraq, the New York Times reported on Monday.

Citing Army officials, the Times said the military had decided to pay Halliburton engineering and construction unit Kellogg Brown&Root (KBR) all but $10 million of the costs which Pentagon auditors had identified as potentially inflated or unsupported by documentation.

Halliburton, formerly led by Vice President Dick Cheney, has been criticized for its work in Iraq, particularly for some contracts awarded on a ''no-bid'' or noncompetitive basis.

The disputed costs reported by the Times were part of a $2.4 billion no-bid contract in Iraq. Army officials said that while some actions by KBR had driven up costs, the company had done as well as could be expected under the chaotic conditions of war, according to the Times report.

Under the type of contract awarded to KBR, ''the contractor is not required to perform perfectly to be entitled to reimbursement,'' Rhonda James, a spokeswoman for the U.S. Army Corps of Engineers, was quoted in the report as saying.

Halliburton said in January that audits on potential overcharges for KBR's dining services and fuel supply costs had been wrapped up in 2005, resulting in additional income from fees. The company did not specify how much income it had received.

In total, KBR has reported about $15.4 billion in revenues from its operations in Iraq since the U.S. invasion in 2003.

James and Pentagon officials were not immediately available for comment.

REUTERS CH SSC1214 .4 billion no-bid contract in Iraq. Army officials said that while some actions by KBR had driven up costs, the company had done as well as could be expected under the chaotic conditions of war, according to the Times report.

Under the type of contract awarded to KBR, ''the contractor is not required to perform perfectly to be entitled to reimbursement,'' Rhonda James, a spokeswoman for the U.S. Army Corps of Engineers, was quoted in the report as saying.

Halliburton said in January that audits on potential overcharges for KBR's dining services and fuel supply costs had been wrapped up in 2005, resulting in additional income from fees. The company did not specify how much income it had received.

In total, KBR has reported about .4 billion in revenues from its operations in Iraq since the U.S. invasion in 2003.

James and Pentagon officials were not immediately available for comment.

REUTERS CH SSC1214