Corps of Engineers changes explanation of Halliburton award

WASHINGTON -- Army engineering officials have changed their response to price gouging allegations against Vice President Dick Cheney's former company, acknowledging they alone awarded Halliburton new business in Iraq after initially suggesting experts from other agencies played an important role.

The Army Corps of Engineers told The Associated Press that the Corps -- not an evaluation team cited on its Internet site -- chose Halliburton for a contract worth up to $1.2 billion. The Corps is refusing to release records showing on what merits it made the decision.

Two of the evaluation team members, the Air Force and the Small Business Administration, said they were not even part of the group and shouldn't have been listed at all.

The Jan. 17 Halliburton award, to restore the oil industry in southern Iraq, was controversial from the start. A Pentagon draft audit report the previous month said the company may have overcharged taxpayers up to $61 million in its importation of oil to Iraq.

The Corps said it considered Halliburton's past performance in Iraq, but added, "We cannot discuss or release any of the conclusions, as that is part of the evaluation process not releasable" under federal contracting rules.

The Corps also said it wouldn't discuss the draft audit because the final version could change significantly.

Cheney's office says he severed relations with Halliburton when he ran for vice president in 2000. Halliburton said its KBR subsidiary, also known as Kellogg, Brown & Root, delivered fuel to Iraq at the best possible price and has denied any wrongdoing.

One of the five evaluating agencies identified by the Corps was the Defense Contract Audit Agency, the Pentagon entity that reported the preliminary findings of overcharges.

"At no time did DCAA make any recommendations on the contract award" to Halliburton, the agency said in a written statement.

The agency said its help to the Corps "was advisory in nature," focusing on gathering cost information and reviewing the evaluation system.

David Levingston, a spokesman for the Air Force Materiel Command in Ohio, said, "The Air Force did not have any involvement in or review that contract."

He said the Corps asked an Air Force civilian in the command, who was acting as an individual, to help review the contracting procedures.

The Small Business Administration, the only nonmilitary agency listed, "was not involved in the contracting process," spokeswoman Sue Hensley said.

'Very sensitive'

Don Jarosz, a spokesman for the Army's Tank-automotive and Armaments Command, said his agency would not comment on its role because the evaluation team's task was "very sensitive."

The Defense Contract Management agency would not comment on its role.

The Corps told the Associated Press in a written statement, "The one person that made the selection was the source selection authority" in the Corps of Engineers, in accordance with federal contracting rules.

As for the evaluating team, the Corps said, "Cost data and small-business plans were analyzed by experts in their fields. They were from both the COE (Corps of Engineers) and outside agencies, who analyzed the proposals for realism. They had nothing to do with the actual selection."

The Corps also told the AP it would have been unfair to disqualify Halliburton as the result of a preliminary audit, adding, "Fairness requires that we recognize that allegations or 'clouds of suspicion' are not necessarily facts, and that we act accordingly."

"If we disqualified firms based merely on anonymous allegations, or thinly supported calculations, the procurement process would be subject to manipulation and 'gaming' by those with vested interests. The process is working like it should."

Disputed amounts, if proved, could be recovered later, the Corps said.

Steven Kelman, a Harvard University professor and the top White House contracting official in President Clinton's first term, said the fairness consideration should not be the only issue.

"The question is whether that past poor performance has been substantiated," he said.

Halliburton's KBR subsidiary has received $2.2 billion under a current, no-bid contract to rebuild Iraq's oil industry and deliver petroleum from nearby countries to alleviate shortages.

In January, the Corps of Engineers fulfilled its promise to replace the contract by splitting Iraq into two geographical sections and awarding competitive, oil restoration contracts for the northern and southern parts of the country.

The gasoline imports were deleted from the new contracts and transferred to another Pentagon agency.