WASHINGTON, 7 November 2003 — The Army said Wednesday it is negotiating to replace Vice President Dick Cheney’s former company as an importer of oil products into Iraq, but denied that the talks were related to Democratic allegations of price gouging by Halliburton.
Robert Faletti, a spokesman for the Army Corps of Engineers, said the Army needs to find a long-term importer to serve the Iraqi population and is talking with the US military’s fuel delivery agency.
Faletti confirmed the negotiations after they were disclosed by Reps. Henry Waxman of California and John Dingell of Michigan, two Democratic critics of the company that Cheney led before he ran for the vice presidency. The corps spokesman said the imports will be needed through the winter because of pipeline sabotage in Iraq.
The lawmakers said the Pentagon’s Defense Energy Support Center imports military fuel from Kuwait to Iraq for $1.08 to $1.19 per gallon, compared with the $2.65 per gallon that Halliburton charges the US government under a no-bid Army contract.
Waxman and Dingell said Jeffrey Jones, the recently retired head of the fuel support center, agreed with them that Halliburton’s price was too high.
Jones, in an interview, said he did not know how Halliburton calculated the price it charges US taxpayers. He said the fuel purchases should cost about 90 cents a gallon in Kuwait and transportation could add 10-to-20 cents more.
“I can’t construct a price that high,” he said of Halliburton’s price.
Halliburton has said its price is controlled by the need for more expensive, short-term contracts and the high cost of transportation in a war zone. The company has denied gouging US taxpayers.
The corps has said Halliburton’s no-bid contract would be replaced by two separate competitive contracts, but the selection of new contractors - originally scheduled for October - would be delayed until December or January. The corps said it needed time to revise the contract proposal to reflect higher costs, resulting from the pipeline damage.
Faletti said arrangements have not been completed with the defense support center.
He said the talks are “an admission that we know for sure this (the need for imports) will last through the winter because production in Iraq will not meet the needs.”
Faletti contended that every aspect of the Halliburton contract is audited and no irregularities have been found in the oil import program.
Lynette Ebberts, spokeswoman for the Defense Energy Support Center, said the corps has approached the center and “we are evaluating the scope of the tasks and exploring our ability to respond to their request.”
One Democratic critic, presidential hopeful Joseph Lieberman, said the Pentagon should seek reimbursement from Halliburton “for the amounts it has overcharged” the government.
