In a move that has stirred further controversy, the Army Corps of Engineers has awarded Halliburton Co.'s KBR unit a contract valued at up to $1.2 billion to continue rebuilding Iraq's damaged oil infrastructure. KBR's new contract, announced Jan.16, encompasses southern Iraq. At the same time, the Corps also awarded a contract valued at up to $800 million for similar work in the northern part of the country to a joint venture of Parsons Corp. and Worley Group of Australia.

The indefinite delivery-indefinite quantity contracts are to be done on a cost-plus-award-fee basis. Carol Sanders, a Corps spokesperson, said six companies had made proposals for the contracts. She would not disclose the names of the unsuccessful contenders, saying that federal acquisition law "doesn't permit us to release that."

KBR has been working under a Corps contract on Iraqi oil projects since March. Halliburton Chairman and CEO Dave Lesar said, "This decision is an endorsement of the courageous work being done by Halliburton's employees in Iraq." KBR says that three of its employees and 25 contractors on the LOGCAP III project have been killed in action and four KBR workers and 29 subcontractors have been wounded in action.

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"Of course, we believe the award of this contract validates the decision of the Army Corps of Engineers last year," Lesar added. The Corps said the contract competition "was full and open in accordance with the Federal Acquisition Regulation."

Jim McNulty, Parsons' chairman and CEO, said, "We are committed to helping the Iraqi people rebuild their infrastructure and improve their way of life in the years to come." The company says it began working on oil, water and transportation projects in the 1950s and continued there through the mid-1980s.

KBR has drawn criticism for its handling of one part of the job--providing fuel to Iraq from outside the country. On Jan. 13, the Defense Contract Audit Agency referred the KBR-Iraqi oil issue to the Dept. of Defense's Inspector General, citing "a suspected irregularity" it found during a routine audit of the contract.

After the second award, Rep. Henry Waxman (D-Calif.), a leading critic of the KBR contract, issued a statement, saying, "The decision to award another billion-dollar contract to Halliburton is mind boggling." Waxman and Rep. John Dingell (D-Mich.) have charged that KBR has been overbilling the Dept. of Defense for the fuel it has been importing from Kuwait. Halliburton, KBR's parent, has strongly defended its work, saying in a Jan. 14 statement, "KBR delivered fuel to Iraq at the best value, the best price and the best terms."

On Jan. 14, two KBR subcontractor employees were killed when their vehicle convoy was attacked by small arms fire near Tikrit. One KBR employee was injured in the same attack, according to a KBR statement. The wounded KBR worker underwent surgery at a combat support hospital. The three workers were on the company's team for the Army Materiel Command's Logistics Civil Augmentation Program III, which is separate from KBR's oil infrastructure contract.