SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (date of earliest event reported)
January 22, 2004
Halliburton Company
(Exact name of registrant as specified in its charter)
State or other Commission IRS Employer
jurisdiction File Number Identification
of incorporation Number
Delaware 1-3492 No. 75-2677995
1401 McKinney, Suite 2400
Houston, Texas 77010
(Address of principal executive offices)
Registrant's telephone number,
including area code - 713-759-2600
INFORMATION TO BE INCLUDED IN REPORT
Item 9. Regulation FD Disclosure
On January 22, 2004 registrant issued a press release entitled "KBR
reviews terms and conditions of major contracts in support of U.S. troops."
The text of the press release is as follows:
KBR REVIEWS TERMS AND CONDITIONS OF MAJOR CONTRACTS
IN SUPPORT OF U.S. TROOPS
HOUSTON, Texas - Last week Halliburton announced the award of two contracts
through a full and fair competitive bidding process from the U.S. government.
These competitively bid contracts are to support U.S. troops in the Middle East
and, combined with the existing support contracts, mark an unprecedented service
contract mix and value exceeding $9 billion. KBR is the engineering and
construction subsidiary of Halliburton (NYSE:HAL).
This news release reviews the terms and conditions of these competitively bid
contracts and highlights Halliburton's internal control systems that ensure
these critical support contracts comply with all government regulations.
The first competitively bid award last week was from the U.S. Army Corps of
Engineers' Transatlantic Programs Center (CENTCOM) for an ID/IQ contract which
has a monetary ceiling set at $500 million for the first year of the contract.
The contract will have four one-year options, and the option years will have a
yearly ceiling of $250 million on each contract. An ID/IQ contract is designed
to provide a quick response contracting capability to rapidly changing
environments within the CENTCOM's areas of operation, which encompass 25 nations
from the Horn of Africa into Central Asia. The contracts will be used to support
U.S. military operations, other U.S. government agencies, or friendly foreign
governments under established agreements. KBR will be called upon to provide a
full range of engineering services such as construction, including new work,
restoration, renovation or repair; combined design-build activities; and
temporary base operations and short-term operations and maintenance services.
The second competitively bid award was also from the US Army Corps of Engineers
for another ID/IQ contract to continue its operations for the Restore Iraqi Oil
(RIO) program in the southern section of Iraq. The contract, which was awarded
through a full and fair competitive bidding process, completes the pre-war
acquisition plan to replace the original war time emergency contract. It
involves the rebuilding of Iraq, one of the largest and most complex
reconstruction undertakings of the past half century. Under this contract, KBR's
major centers of operation include Baghdad, Basrah and Kirkuk, Iraq, as well as
Kuwait City.
The company believes the award of this contract validates the decision of the
Army Corps of Engineers last year. KBR was chosen because it is the best
qualified company with a proven track record of the ability to perform.
This 24-month competitively bid contract is a cost-plus award fee with three
one-year options. The maximum value for the life of the competitively bid
contract for the southern oil fields will be $1.2 billion. The actual amount of
the competitively bid contract capacity will depend on requirements that are
based on conditions on the ground at the time.
Current support competitively bid contract activity includes a 10-year Task
Order contract known as LOGCAP III, with a one-year base period and nine
one-year options with a current contract value of $3.6 billion. The cost-plus
fee is 1% with a possible award fee of 2%. Of the $3.6 billion, KBR has
completed approximately 60% of the contract. Established by the U.S. Army
Materiel (AMC) to fulfill the Department of Defense's global mission during
contingency events, LOGCAP III provides the military with additional
capabilities to rapidly support and augment the logistic requirements of its
deployed forces through use of a civilian contract. KBR has hired workers from
more than 38 nations to work on the LOGCAP contract. They must be ready to
furnish these warfighter services 24 hours a day, 7 days a week, and 365 days a
year under any condition and at any location around the globe.
Under the competitively bid contract, KBR provides for the construction of
facilities and infrastructure of base camps including billeting, mess hall, food
preparation, potable water, sanitation, showers, laundry, transportation,
utilities, warehousing and other logistical support. Also included is support of
the Reception, Staging, Onward Movement, and Integration (RSOI) process of U.S.
Forces as they enter or depart their theater of operation by sea, air or rail.
Another existing competitively bid contract to support US troops overseas is the
Balkans Support Contract which is a logistics support contract awarded on behalf
of U.S. Army Europe, headquartered in Germany. The competitively bid contract
was awarded in 1999 for a period of up to five years. The current competitively
bid contract value is estimated at $1.8 billion and is approximately 92%
complete. Under the competitively bid contract, KBR provides full logistic
services to U.S. troops in the Balkans including quality of life services, base
camp support, transportation and maintenance services, USAF base support
operations, as well as construction of temporary facilities for the U.S. forces
deployed in Hungary, Croatia and Bosnia in support of Operation Joint Forge.
An integral part of performing these critical support contracts is complying
with the government contract regulations prescribed in the contracts and
governed by the Federal Acquisition Regulation (FAR). KBR consistently complies
with these requirements and maintains a system of internal controls which assure
compliance with these rules. While KBR receives oversight by many government
audit agencies, it is the integrity of the company's own audit practices which
provide the most diligent compliance.
"KBR implements strict internal compliance and oversight practices which allow
us to correct any irregularities and replenish, if necessary, any client for any
possible irregular overcharge on any of these contracts," said Randy Harl
president and chief executive officer, KBR. "We take seriously our commitment to
represent the American taxpayer and implement employ strict internal controls
through a continuous effort of oversight."
A recent example of this diligence is the identification and disclosure of a
potential over billing of approximately $6 million by a subcontractor under the
LOGCAP contract in Iraq. Halliburton Audit Services is the internal audit
function of the company and has a direct reporting relationship to the Audit
Committee of Halliburton's Board of Directors. This internal audit function,
which continually audits all financial aspects of the company operations,
detected this potential over billing.
In accordance with company policy and government regulation, this potential
overcharge was reported to the Department of Defense Inspector General's office
as well as to the contract customer.
This is one of many ways that KBR ensures that our contract practices are
compliant with internal procedures and government contract regulations. KBR will
ensure that questionable charges will be credited to the government and will
seek recovery from the offending subcontractor. If any employees or former
employees are suspected of illegal activity, the matter will be referred to the
appropriate legal authorities.
"It is the combination of these audit services that provides our customers the
confidence to award and re-award such significant government contracts to our
firm," added Harl.
"As a company with a successful history of government contracting, as well as a
dedicated set of corporate values and ethics, we continue to uphold honesty and
integrity throughout our business practices."
Halliburton is proud to serve the US military in the middle east and
appreciative of the continued confidence of our customers evidenced by these
significant contract awards.
For more than 60 years, during both Democrat and Republican administrations,
Halliburton has a record of service to the defense to the United States. We
built war ships for the Navy in World War II, and we have supported troops in
Somalia, Rwanda Haiti, the Balkans and Afghanistan. In the first Gulf War, we
helped bring under control half the oil wells in Kuwait. Halliburton employees
are prepared to meet the challenge regardless of the difficulties and risks
involved.
Halliburton, founded in 1919, is one of the world's largest providers of
products and services to the petroleum and energy industries. The company serves
its customers with a broad range of products and services through its Energy
Services and Engineering and Construction Groups. The company's World Wide Web
site can be accessed at www.halliburton.com.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
HALLIBURTON COMPANY
Date: January 22, 2004 By: /s/ Michael A. Weberpal
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Michael A. Weberpal
Assistant Secretary and
Assistant General Counsel