Halliburton unit Kellogg Brown and Root, the U.S. military's biggest contractor in Iraq, could not account for over a third of the items it handled in Kuwait under a work order for the U.S. occupation authority in Iraq, said an audit released Thursday.
The audit by the Inspector General for the Coalition Provisional Authority, said a random sample of 3,032 records of items valued at more than $3.7 million, projected KBR could not account for 42.8 percent, or 1,297, of these goods.
Items that could not be accounted for included three generators valued at more than $172,000 and seven vehicles valued at over $219,000, the audit found.
The auditors recommended the military's Defense Contract Management Agency (DCMA), which disagreed with the finding as did KBR, should reevaluate KBR'S property control system.
While the numbers are small in the context of billions of dollars of work being done by KBR in Iraq, they add to criticism of the company run by Vice President Dick Cheney until he joined the race for the White House in 2000.
KBR is bogged down in a billing dispute with the U.S. military over its logistics contract in Iraq and the company's lucrative work there has become a focus by the Democrats in the buildup to next Tuesday's election.
Halliburton spokeswoman Wendy Hall disputed the audit's findings and said the facts showed KBR had done a good job.
"KBR disagrees with both the methods and conclusions of the CPA audit," she said, calling these old allegations that were being recycled just one week before the election.
"KBR operates an approved government property control system that has stood the test of time, even under the stresses of supporting the U.S. troops in Iraq and Kuwait, and the challenges of property control in a war zone," said Hall.
Military disagrees
The audit looked at one work order given to KBR on March 6, 2003, to provide logistics and support for the CPA's offices in Iraq. Kuwait was the central location for receiving items subsequently forwarded to Iraq.
"KBR did not properly control CPA property items. Further, the KBR property records were not sufficiently accurate or available to properly account for CPA property items," said the audit.
The Defense Contract Management Agency said in a response attached to the audit the sample size was not representative of the work KBR was doing. "KBR's Property Control System meets contract requirements and is in compliance," said DCMA.
DCMA also said it had sent specialists to Iraq and Kuwait to track down missing items and had found them.
However, the auditors said they disagreed with these comments and said its sample of randomly selected property records was representative, adding the DCMA did not provide any information or documentation to back their claims.
"We continue to believe that the KBR property control system should be reevaluated and that an accurate property control system should be performed."
KBR's Iraq contracts have brought in $5.2 billion in revenues so far this year and about $8.8 billion since the start of the war last year.