NEW YORK, Sept 9 (Reuters) - Halliburton Co. , the U.S. oil services company under attack for its business practices in Iraq, fired back on Thursday by saying a U.S. government review had approved the purchasing system it used for running up a tab of billions of dollars.
Halliburton, accused of overcharging and of obtaining U.S. government contracts through political pull, said a letter sent earlier this week by the federal Defense Contract Management Agency called its purchasing system "effective and efficient," providing "adequate protection of the government's interest."
The world's No. 2 oilfield services company, headed by U.S. Vice President Dick Cheney from 1995-2000, declined to release a full copy of the letter but said the approval applies to all government contracts for its KBR engineering and construction unit.
The Pentagon did not immediately respond to a request for comment.
The KBR purchasing system approved by the government deals with procuring items from subcontractors and handles price analysis and demonstrating proper competition, Halliburton spokeswoman Wendy Hall said in an e-mail. It does not involve cost estimates and billing under contracts, she said.
KBR has been criticized by the Pentagon for failing to justify its bills.
Last month, Pentagon auditors urged the Army to withhold 15 percent of payments to Halliburton for more than $4 billion in logistical work because of problems with the cost estimates.
On Wednesday, the U.N.-mandated International Advisory and Monitoring Board said its task of watching over Iraq's oil money was being hampered by the Bush administration's failure to hand over audits of Iraq contracts awarded without competitive bids, including to Halliburton.
In addition, Democrats charge Halliburton has been given special treatment because of its ties to Cheney, a Republican.
In a letter to Defense Secretary Donald Rumsfeld, California Democrat Rep. Henry Waxman said despite KBR's "record of overbilling and shoddy accounting," the Defense Department had awarded Halliburton large new contracts and repeatedly waived procurement regulations.
Halliburton declined to specify whether the Defense Contract Management Agency in its letter offered any criticism of its purchasing system or suggested any improvements or remedies, except to say that the letter said the system is adequate and efficient.
The company said the purchasing system had been approved by the government in June last year and was reviewed again by the government this year because of the large amount of work KBR does in Iraq and Kuwait.
Halliburton has said it may decide not to submit new bids for its Iraq business if the U.S. military divides up the work too deeply. The Army said this week it was beginning to consider which parts of a multibillion-dollar logistics contract awarded to Halliburton to feed, house and provide services for U.S. troops in Iraq could be competitively bid.
Halliburton shares closed up 1.5 percent to $30.37 on the New York Stock Exchange. End of Story
