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Report: Halliburton unit exploited rules
By ANNE PLUMMER FLAHERTY, Associated Press Writer
Fri Oct 27, 10:56 PM ET

The Halliburton subsidiary that provides food, shelter and other logistics
to U.S. troops in Iraq and Afghanistan exploited federal regulations to
hide details on its contract performance, according to a report released
Friday.

The special inspector general for Iraq reconstruction found that
Halliburton's Kellogg, Brown & Root Services routinely marked all
information it gave to the government as proprietary, whether it was or
not. The government promises not to disclose proprietary data so a
company's most valuable information is not divulged to its competitors.

By marking all information proprietary — including such normally
releasable data as labor rates — the company abused federal regulations,
the report says.

In effect, Kellogg, Brown & Root turned the regulations "into a mechanism
to prevent the government from releasing normally transparent information,
thus potentially hindering competition and oversight."

Halliburton spokeswoman Cathy Mann said that since the current contract is
being reviewed and may be divided among several contractors, "It is
clearly appropriate to mark data as proprietary that could potentially be
used for competitive purposes" as would be the case in any new contract.

She said such proprietary markings have been used on a majority of the
data for at least the last decade, and the company will work with the
military on matters outlined in the interim report as the final audit is
completed.

The Iraq reconstruction audits have routinely found significant problems
with contracting and rebuilding in the country, ranging from high costs
for security and overhead to alleged fraud and lack of oversight.

Sen. Byron Dorgan (news, bio, voting record) of North Dakota, chairman of
the Democratic Policy Committee, said that in 13 oversight hearings on the
war in Iraq the committee found more than $1 billion in waste, fraud,
abuse and what it called "shoddy work" by contractors.

"I'm convinced that this is the most significant waste, fraud and abuse in
the history of this country," Dorgan said.

If the Democrats take control of the Senate, he said, they will launch
oversight hearings on war matters ranging from faulty intelligence leading
up to the war to wrongdoing by contractors.

___

AP Writer Laurie Kellman contributed to this report.
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