WASHINGTON, Aug. 11 (HalliburtonWatch.org) -- Halliburton cannot justify why it billed the Pentagon for $1.8 billion of work in Iraq and Kuwait, the Wall Street Journal reported today, citing a new Pentagon report. Pentagon accountants said they are uncertain as to why Halliburton's KBR unit billed the Pentagon $1.8 billion for the expenses, which represent 43 percent of the $4.18 billion the company billed the Pentagon for logistics work in the Middle East, the Journal said. The Pentagon's audit report obtained by the Journal, dated Aug. 4, has not officially been released to the public. It found KBR's "internal control policies" are "inadequate for providing verifiable, supportable, and documented cost estimates that are acceptable for negotiating a fair and reasonable price." Pentagon officials told the Journal that no defense contractor has had its estimating system ruled "inadequate" in years.

The billings involve more than $900 million in payments by KBR for dozens of dining facilities in the Middle East where it is responsible for feeding the troops. KBR feeds the troops under its LOGCAP contract awarded by the U.S. Army and is reimbursed by the government for all expenses, then paid a fee of 2 or 3 percent of those expenses. As Halliburton's expenses in Iraq go higher, its fee paid by the Pentagon goes higher, too. Critics say the company artificially inflates expenses in order to obtain a higher fee. One former employee said the company's motto in government contracting is "Don't worry about price. It's cost-plus," referring to the fact that Halliburton is paid a higher fee if it can find a way to inflate its expenses paid by the Pentagon.