Halliburton's Performance Worsens Under Second Iraqi Oil Contract

By Representative Henry Waxman's Office
t r u t h o u t Press Release

Tuesday 28 March 2006

Washington, D.C. - Today Rep. Waxman released the first analysis of Halliburton's RIO 2 contract to restore Iraq's southern oil fields. The examination of previously undisclosed correspondence, evaluations, and audits reveals that government officials and investigators have harshly criticized Halliburton's performance under RIO 2. The documents disclose an "overwhelmingly negative" performance, including:

Intentional Overcharging: Halliburton repeatedly overcharged the taxpayer, apparently intentionally. In one case, "[c]ost estimates had hidden rate factors to increase cost of project without informing the Government." In another instance, Halliburton "tried to inflate cost estimate by $26M." In a third example, Halliburton claimed costs for laying concrete pads and footings that the Iraqi Oil Ministry had "already put in place."

Exorbitant Costs: Halliburton was "accruing exorbitant indirect costs at a rapid rate." Government officials concluded that Halliburton's "lack of cost containment and funds management is the single biggest detriment to this program." They found a "lack of cost control ... in Houston, Kuwait, and Iraq." In a partial review of the RIO 2 contract, DCAA auditors challenged $45 million in costs as unreasonable or unsupported.

Inadequate Cost Reporting: Halliburton "universally failed to provide adequate cost information," had "profound systemic problems," provided "substandard" cost reports that did "not meet minimum standards," and submitted reports that had been "vetted of any information that would allow tracking of details." Halliburton produced "unacceptable unchecked cost reports."

Schedule Delays: Halliburton's work under RIO 2 was continually plagued by delays. Halliburton had a "50% late completion" rate for RIO 2 projects. Evaluations noted "untimely work" and "schedule slippage."

Refusal to Cooperate: Evaluations described Halliburton as "obstructive" with oversight officials. Despite the billions in taxpayer funds Halliburton has been paid, the company's "leadership demonstrated minimal cooperative attitude resolving problems."