KBR faces hearings on war contracts

Executives from government contractors in Iraq and Afghanistan, including KBR and Compass of the UK, face a rocky ride in Washington this week as Henry Waxman, the congressman, begins hearings on allegations of "waste, fraud and abuse".

The hearings, which begin on Tuesday, are expected to mark the beginning of a new phase in which contracting practices are subject to tougher oversight.

Mr Waxman chairs the chief investigative committee in the House of Representatives. He has been a dogged critic of the Bush administration's handling of billions of dollars of US taxpayers' money in Iraq re­construction contracts.

The committee has called on the chief executives of Blackwater, a security contractor, KBR, a subsidiary of Halliburton, and Compass, food services group, among others, to answer questions.

The hearing will feature testimony of family members of four Blackwater employees who were killed in Falluja in 2004, and whose bodies were burned and dragged through the streets. The families are suing Blackwater for wrongful death.

Mr Waxman is likely to focus his line of inquiry on allegations that Halliburton wrongly entered into a subcontracting arrangement with ESS, a division of Compass that ran a dining facility in Iraq, which in turn used Blackwater to provide it with security services.

Halliburton controls a $16bn contract in Iraq, known as Logcap, which provides logistical support to US troops.

Under provisions of the contract, Halliburton can only rely on US military – not private security companies such as Blackwater – to provide armed protection.

In response to questions from Congress, the Department of Defense in July said that KBR had "no knowledge" of Blackwater having been hired by any of its ­subcontractors.

But in a memo Mr Waxman subsequently received from Compass, the company admitted that ESS had used Blackwater and that the US security group had been deployed by other subcontractors.

Mr Waxman said in a letter to Donald Rumsfeld, former defence secretary, in December that the security subcontract raised "serious questions" about the oversight exercised by Halliburton and the Pentagon regarding the tiering of subcontractors, and whether it was "proper" for Halliburton to bill the government for the services.

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