Halliburton unit poised for

An arm of the controversial Halliburton group, led until recently by US vice-president Dick Cheney and already profiting from Iraqi reconstruction deals, has been made preferred bidder for a £4bn Ministry of Defence contract in Britain.

Kellogg Brown & Root – in partnership with UK construction group Mowlem – is in pole position for the private finance initiative contract to upgrade and provide services to British Army garrisons at Aldershot and around Salisbury Plain.

Shares in Mowlem rose 6% to 187.5p as a bullish spokesman at Kellogg Brown & Root’s Houston headquarters predicted “for all intents and purposes … it’s a done deal”. The move is a blow to Bovis Lend Lease and Amey, which were also in the running, and is a reminder that most companies who win the right to final negotiations usually land PFI deals.

The long-awaited contract involves construction work worth £1bn with additional services being provided over 30 years worth an extra £3bn. The MoD shortlisted three bidders exactly one year ago and last month said it needed more time before making its final decision on a preferred bidder.

There are 18,000 servicemen and women plus support staff based at Aldershot, the biggest single barracks in the country, and at various locations around Salisbury. The work involves refurbishing and maintaining buildings as well as catering, cleaning and transport.

The choice of Halliburton is likely to provoke political concern given the Texan company has been through a turbulent period with a securities & exchange commission investigation into its finances, criticism for its close links to Washington and its connection to projects such as building the Guantanamo Bay prison in Cuba where Taliban fighters are held.

On Tuesday the group was given more time by a federal bankruptcy court in Pittsburgh to review thousands of pending asbestos claims. The company inherited most of the claims when it took over Dresser Industries.

Mr Cheney, chairman and chief executive of Halliburton between 1995 and 2000, still receives $1m annual “deferred compensation” from the group, which is best known for its oil services work. Mr Cheney was an under-secretary of defence at the Pentagon before he joined Halliburton.

Mowlem shrugged off criticism of its partner in the Aspire Defence 50-50 joint venture saying “they are controversial if that’s how you define it” and pointing out that the UK firm had a long-standing relationship with the Americans.

A Halliburton subsidiary is involved in an ambitious construction contract with Mowlem for a rail link across the desert in Australia from Alice Springs to Darwin.

The £4bn deal would be the biggest contract ever won by Mowlem, which has been involved in a range of PFI deals including building law courts on Humberside and south Tees acute hospital.

Tags: $4bn, Deal, garrisons, Halliburton, poised, unit