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US Audit: Administrative Costs Swallow 50 Percent of Iraq Reconstruction Funds


A report on reconstruction in Iraq says up to half of the money paid to U.S. government contractors goes to administrative costs rather than actual building work.

An audit released by the government's special inspector general examines spending patterns on reconstruction projects. Together they account for more than $1 billion ($1.3 billion) of an $18.4 billion Iraq aid package approved by Congress.

In one case, the report says, KBR Incorporated, a subsidiary of the giant U.S. corporation Halliburton billed the federal government $163 million for its overhead costs in Iraq - more than 55 percent of the amount budgeted ($296 million) for the full rebuilding project.

A spokesman for the inspector general, Jim Mitchell, says bureaucratic flaws caused the high administrative costs. The audit notes there were long delays between contract staff being mobilized in Iraq and the start of reconstruction, with some workers staying idle for up to nine months.

The audit says the full cost of many projects may be even higher than preliminary government forecasts, because U.S. officials have not properly tracked expenses.

The report analyzed several U.S. reconstruction contracts worth one-point-three billion dollars. The money is part of an aid package of $18.4 billion approved by Congress.

U.S. Representative Henry A. Waxman, a Democrat, responded to the report by criticizing Halliburton for wasting taxpayers' money.

A Halliburton spokesman, Melissa Norcross, defended the company's administrative costs, saying they were extensively audited and deemed legitimate.

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