By OGJ editors
WASHINGTON, DC, Jan. 15 -- The Defense Energy Support Center (DESC) said Thursday it plans to revise an upcoming bid for fuel imports into Iraq.
In a second presolicitation notice, DESC said it plans to solicit a company to oversee the fuel contracts. There also will be seperate bids for the actual fuel supplies. Management contract terms will be from Apr. 1 through Oct. 31, instead of through June as first announced Dec. 31 (OGJ Online, Dec. 31, 2003).
And instead of three, 3-month options to renew, there will be six, 1-month extensions. The procurement will remain unrestricted.
DESC said it will issue bids next week; it said the changes in the solicitations reflect fuel needs cited by the Iraq Oil Ministry and US Army advisors. Fuel suppliers meanwhile theorized that the contract revision is more a reflection of DESC's intention to carefully monitor fuel costs in light of growing public scrutiny, especially on Capitol Hill, over reconstruction costs.
DESC said pricing did not play a role in the decision to change the contract terms.
The US Army Corps of Engineers, instead of DESC, originally controlled fuel supply contracts. The imports were included under a sweeping USACE's sole-source contract given to Halliburton Co. subsidiary KBR in spring 2003.
Halliburton woes
KBR's fuel costs later came under scrutiny by US lawmakers and in an internal Pentagon audit.
KBR denied wrongdoing, and USACE allowed the shipments to continue. A draft audit by the Defense Contract Audit Agency (DCAA) suggested possible evidence of overcharging by KBR's subcontractor, Kuwaiti supplier Altanmia Commercial Marketing Co.
KBR has said that USACE approved that the fuel be delivered from Kuwait, even though it was at a higher cost than Turkey.
"It's unfair to accuse Halliburton of paying too much for Kuwaiti fuel when we were told to buy the fuel and given approval to purchase it from a specific supplier," said a KBR spokesperson. "Working for the government means that the process and paperwork must be followed perfectly under urgent conditions."
DCAA and US lawmakers are now calling for the Pentagon's Inspector General to review the matter. It remains unclear whether the Pentagon IG will review the case or not. But the request comes as Congress enters into an election year and tight budget constraints.
KBR said it has not received any notification of the DCAA request, but it stressed the referral by DCAA did not mean the company was guilty of anything.
"KBR delivered fuel to Iraq at the best value, the best price and the best terms. It is important to understand that the referral is a method of further studying the issue and not a condemnation of KBR processes," said a company spokesperson. "It is also important to understand the difference between fact and allegations. It is not fact that KBR has overcharged. We will work with all government agencies to establish that our contracts are not only good for the United States, but also the company is the best and most qualified contractor to perform these difficult and dangerous tasks.
"We welcome a thorough review of any and all of our government contracts. We have followed all government-approved processes. KBR did not ask to be in the fuel shipping business. In fact, we have tried to hand it off to various local suppliers. However, we have had to keep control of the mission until others prove they are capable of performing the task."
