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They'll Pay Me, They'll Pay Me Not

In Yukos-like fashion the Army can't make up its mind about whether Halliburton should be paid. Late Tuesday the Army reversed a decision to withhold 15% of its future payments to the company. The payments were going to be withheld because Kellogg Brown & Root, a subsidiary of Halliburton had failed to file the necessary paperwork to justify its costs.

Usually, government contractors can't be paid more than 85% of their invoices without fully accounting for costs. This is the second time this year the Army has cut the company slack. No surprise, this is Halliburton and it seems the rules don't apply. Isn't it nice to have friends in high places.

Shortly after saying it would pay Halliburton in full it was reported in the Wall Street Journal the Army would withhold about $60 million a month. It gave the company until later this week to prove the withholding would impact its ability to continue to perform its job.

All the controversy stems from a report that claims $1.8 billion in billings for $4.18 billion in work in Iraq and Kuwait was not supported by documentation.

"The fact that we have negotiated and continue to negotiate proposals proves that our estimating system is valid," said a KBR official. "This is the same system that the company has used for more than 10 years."

That's encouraging isn't it? No wonder why the contracts were awarded to Halliburton without competitive bids. Their vast experience in this area is clearly being demonstrated. Imagine the problems a novice firm might have encountered. They would have never been able to keep it straight. Maybe the CIA ought to review the paperwork. I bet they would find everything is just peachy.
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