A company whose construction subsidiary stands to gain millions in additional profits because of higher costs for housing and other facilities for U.S. troops in Bosnia is headed by former Defense Secretary Dick Cheney.
Houston-based Brown and Root, a subsidiary of Halliburton Co., is expected to collect $500 million for contracting services in Bosnia under the latest Army estimate - $308 million more than the Pentagon's original estimate.Cheney, Halliburton's president and chief executive officer since last August, recently told a senior House member that the rising costs stemmed from the Army's frequent revisions in construction orders.
A General Accounting Office report released last week cites a contract awarded under the Logistics Civil Augmentation Program as the primary source of $327 million in budget overruns for the Bosnia operation.
Although the GAO did not name Brown and Root, the company holds the five-year contract, awarded by the Army through competitive bidding in 1992, while Cheney was defense secretary. Brown and Root is paid for its costs plus 1 percent profit. The Army has not decided whether to award up to 8 percent more in profit under contract incentive clauses.
The Pentagon estimated the costs for barracks construction, camp maintenance and other services for the one-year Bosnia deployment would be $192 million. Army officials in Bosnia now estimate the costs will reach $500 million, the GAO said.
"The problem is that almost any officer can ask Brown and Root to do new things," one senior defense official said. "A local battalion commander can say, `I want wooden huts for my guys, not tents.' The costs are exploding on these things."
Since 1992, Brown and Root has earned about $260 million for construction and maintenance work supporting U.S. military missions in Somalia, Rwanda, Haiti and Italy. So far, the Army has paid Brown and Root $247.3 million for services in Bosnia, the GAO said.