The Wall Street Journal reported this morning the Army has settled a billing dispute with Halliburton despite

numerous concerns by Pentagon auditors that the company couldn’t provide adequate documentation to justify its expenses. The favorable settlement is an indication the military brass is willing to treat Halliburton leniently since a large portion of the disputed services were performed in a theater of war.

Why, if the private sector is more efficient than the military in force provisions, can Halliburton not seem capable of keeping track of their war expenditures? I understand the instability of the region will create unforeseen problems, but this is not an excuse for not being able to properly bill your client.

$55 million was held back from the $1.2 billion paid out.

To settle the dining bill, which auditors for the Pentagon had initially been concerned was 40% higher than KBR could make sense of

the Army team agreed to a formula under which each time a person ate a meal, the Army would pay for 1.3 meals. Army officials said the logic was that most people ate more than their allotted portion.

That makes some sense. I still don’t understand why KBR continued to prepare more food than soldiers. A little overprepared is one thing, but 40% over is bogus. And I wonder what they did with all that uneaten food. I hope it wasn’t trashed. Like the trucks left on the side of the road after their tires get blown out.

The Army also agreed to give the company a no-fault grace period for the first three months of the contract in early 2003, during which the largest allegations of overcharging occurred, Army officials said.

In another break, the Army agreed to pay a fixed-price for the majority of the dining bills, instead of a reimbursement for actual expenditures. This increased Halliburton’s profit to 3% from 1%, Army officials said, generating an extra $26 million for the company.

Sweeeet. So $55 million minus $26 million equals $29 million. So did the Army hold back $55 million or $29 million? Did they include this in their report?

That sum was not mentioned in the Army news release announcing the dining payments.

Of course not. But it seems that Halliburton will not get hit anyway, as spokesperson Beverly Scippa noted that the $55 million

would be withheld from Halliburton’s subcontractors so the company “anticipates absolutely no negative financial impact.”

Well, its a win-win situation for Halliburton. The Army cares more about their war than how much its going to cost, because really, we are paying for it. And as far as the subcontractors go, the ones getting stiffed, I do not claim to know, I am curious… I just wonder if they were doing what everyone was doing, and when the music stopped, they didn’t have a chair, or if these contractors actually did something beyond the pale of others and really deserve to get stiffed. Either way, the change to a fixed-payment is a bonus, so who ever screwed up should get a golden toilet.

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