Giant military contractor Halliburton Co. has hampered oversight of its work in Iraq by abusing rules designed to protect sensitive, proprietary information, a government inspector general said.
KBR, a Halliburton subsidiary, provides logistical support for operations in the Green Zone in Iraq.
In examining KBR's performance, Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction, blasted the Houston firm for using a regulation designed to ensure contractors don't learn the business secrets of their competitors, to keep much of its work for the government under wraps.
"In effect, KBR has turned (federal) provisions designed to protect truly proprietary information ... into a mechanism to prevent the government from releasing normally transparent information, thus potentially hindering competition and oversight," Bowen wrote in a report.
KBR would claim, for instance, that the daily head count at dining facilities or the amount of fuel issued to foreign embassies was proprietary, and should not be disclosed, the report said.
And those claims about proprietary information, Bowen said, have kept the government from releasing information that should have been made available to the public.
"KBR is not protecting its own data but is in many instances inappropriately restricting the government's use of information that KBR is required to gather," the report said.
May be 'systemic problem'
While Bowen's office only examined the task order related to providing basic support services such as serving food and washing clothes for the U.S. Embassy in Iraq, KBR's "inappropriate" use of the proprietary designation could be "a systemic problem" throughout the US $17 billion logistics contract with the Pentagon, the report said.
When asked by the Defense Contract Management Agency about the practice of marking so much information as "proprietary," the company argued, "KBR has encountered situations in the past where extremely competition sensitive data has found its way to the press and/or to the Internet."
Halliburton spokeswoman Cathy Mann, in an e-mail, said the logistics contract is "currently being reviewed to potentially be divided among several contractors. As (Bowen's) report ... states, it is clearly appropriate to mark data as proprietary that could potentially be used for competitive purposes, as would be the case in a potentially new (logistics) contract in the future."
Mann added that "KBR has included proprietary markings on the majority of its data and property in support of its government contracts for the U.S. Army for at least the last decade."
Bowen sought out an opinion from the Army Logistics Management College, which said information such as contractor bids, pricing data, direct labor costs and specialized manufacturing processes could legitimately be described as "proprietary" data.
Data in difficult form
The inspector general also accused KBR officials of trying to impede his office's effort to analyze data.
The company, for instance, was asked to turn over information pertaining to the amount of fuel KBR provided to foreign embassies.
Instead of providing the data in its original Excel spreadsheet format, the inspector general said, the company turned over a 50-page, Acrobat PDF file, which could not be converted back into a spreadsheet.
Auditors would have had to "reenter the data into a spreadsheet, a time consuming process, to perform any meaningful analysis of the data."
In another instance, the inspector general's office asked for a copy of the database KBR used to track retail vehicle fuel issues.
At first, the company refused to provide the database, offering only to pull the information itself for auditors.
The company informed the inspector general's office: "There is no contractural requirement to submit the databases that constitute KBR's competitive edge in performing the required services. The actual databases created by KBR provide specific proprietary information related to how KBR conducts its business."
A contracting officer refused to accept that response and ordered the company to provide the data.
A few days later, KBR complied.
The special inspector general called on the Pentagon to consider KBR's propensity to claim proprietary information and its responsiveness when questioned by auditors when deciding what kind of bonuses KBR receives for its performance.
Democrats weigh in
Mann noted that Bowen's assessment is "an interim — not final — audit report."
Democrats on Capitol Hill have long been suspicious about the contracts of Halliburton, which was once headed by Vice President Dick Cheney, and critical of its performance.
Sen. Byron Dorgan, D-N.D., as head of the Democratic Policy Committee, a Democrats-only panel, has held a series of hearings on Halliburton's performance in Iraq.
"Our committee has been denied information we sought in our attempt to conduct oversight, specifically because KBR invoked these rules, something that the special inspector general now concludes to have been bogus," Dorgan said in a statement.
'Oversight outrages'
In October, the Democratic Policy Committee issued a Top 20 list of "oversight outrages" the panel had investigated.
Fifteen related to Halliburton.
"Clearly, there is an urgent and compelling case for taking a close look at what is going on with these contracts," Dorgan said.
California Rep. Henry Waxman, ranking Democrat on the House Government Reform Committee, called Halliburton "a case study in corporate profiteering during wartime.
"Halliburton billed the taxpayer for millions of meals it never served and charged the government vastly inflated prices for fuel," Waxman said. "The company has now tried to conceal key information about these abuses from the inspector general and the public."
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