Halliburton's KBR unit hid contract info-US report

By Susan Cornwell

WASHINGTON, Oct 27 (Reuters) - The Pentagon's largest contractor in Iraq, Halliburton Co. (HAL.N) subsidiary Kellogg, Brown and Root, routinely hid information about its work from the public by marking the data as proprietary when it wasn't, a U.S. government report said on Friday.

The company's actions were an abuse of federal contracting rules designed to protect truly proprietary information, said the report by the Special Inspector General for Iraq Reconstruction.

Information as fundamental as the daily number of meals being served to U.S. soldiers at a dining facility was labeled "not releasable to the public," the report said.

Under a multibillion-dollar contract awarded in December 2001 to KBR, the company has been feeding, housing and providing other services to U.S. troops worldwide. KBR's giant corporate parent company Halliburton formerly was headed by Vice President Dick Cheney.

A Democratic senator said the new report illuminated why lawmakers were having trouble finding out basic information about how taxpayer money is spent in Iraq.

"In order to prevent us from really understanding how money is being spent, they have decided information such as the number of people being served meals is 'proprietary,' not releasable," North Dakota Democrat Byron Dorgan said.

"They are doing that for all kinds of information in order to prevent facts getting out," he said.

Nonetheless, the Senate Democratic Policy Committee headed by Dorgan, relying on whistle-blowers, has found evidence of over $1 billion in waste in Iraq contracting, Dorgan said. That may be only a fraction of the total waste, he said.

A Halliburton spokeswoman, Cathy Mann, said KBR had used proprietary markings "on the majority of its data and property in support of its government contracts for the U.S. Army for at least the last decade."

Since the logistics work was to be broken up between several contractors in the future, it was necessary to keep some data proprietary, she added. The report was only an interim one, she added.

Texas-based Halliburton is the world's second-largest oil services company. Kellogg, Brown & Root, its engineering and construction unit, has drawn scrutiny from auditors, congressional Democrats and the U.S. Justice Department for the quality and pricing of its work in Iraq.

Another report by the special inspector general said earlier this week that overhead costs have consumed more than half the budget of some reconstruction projects in Iraq. (Additional reporting by Jim Wolf)