To the Corps’s top brass and their cronies at KBR, Greenhouse may not be the irritant she was, but other government bureaucrats are asking them pointed questions, too. Last year, a Pentagon audit found that KBR could not document more than $l.8 billion worth of work done under its LOGCAP contract in Iraq. At first the army considered withholding payments, but the prospect of bitter court battles led it to try to negotiate a settlement. Ordinarily, a contractor would be asked to come up with documentation for its claim—to date, Halliburton has charged the government $9.5 billion for LOGCAP work in Iraq. The government would then respond with its own documentation, and the two parties would reach a compromise figure. Not here: strangely, an outside auditor was hired to help decide what Halliburton would be owed if it could come up with the paperwork—and the government would then pay that amount. Whatever the final number, hundreds of millions of dollars will simply go unaccounted for—the waste of war, or the spoils of war, depending on how one looks at it. An army spokesman says the settlement will be reached this month. Meanwhile, in early February the army announced that it would not withhold any percentage of future payments to Halliburton—a precedent-setting waiver.

After all this, the lucrative LOGCAP contract for troop support in Iraq may be put out for competitive bid at last. But that’s not to say that if that happens KBR won’t win it back. Last year, when the RIO contract was finally put out for bid—as Greenhouse had called for it to be from the start—six companies vied for the new prize of $2 billion to repair Iraqi oil fields. KBR bid to fix the fields in the South—the larger chunk of the contract, valued at up to $l.2 billion—and won. Parsons won the balance, $800,000, to fix those up North. This new work is in addition to KBR’s first RIO contract, under which $2.51 billion of its potential $7 billion was actually spent before the contract was yanked. It is also not included in the current overall figure of $12 billion for Halliburton in Iraq. (That total consists of the $2.51 billion plus $9.5 billion in LOGCAP troop-support work.) So, adding the new $1.2 billion RIO contract along with future spending under LOGCAP will push the total billions higher.

Just how much Halliburton has profited from these huge Iraq contracts is a matter of some debate. David Lesar, Halliburton’s C.E.O., told analysts last fall that Halliburton’s Iraq contracts have yielded $1.4 billion, with a profit of merely $4 million after taxes and expenses. KBR, which handled most of those, actually incurred an operating loss in 2003 of $36 million on revenues of $9.3 billion, even as the rest of Halliburton increased operating profits by about $200 million to $826 million. If the company bids for more Iraq contracts, Lesar groused, it will probably “jack the margins up significantly.”

But there’s another way to look at KBR’s work in Iraq. Without it, the company would be in truly bad shape. In fact, the Iraq work accounts for nearly all of KBR’s growth at a time when it has staggered under $4.2 billion in asbestos claims—thanks in large part to Halliburton’s former C.E.O. Dick Cheney.

Back in 1998, Cheney decided to merge Halliburton with Dresser Industries, a Texas-based energy company. Unfortunately, he failed to do his homework on Dresser: a mountain of lawsuits over asbestos-contamination claims were about to be filed against it. KBR, formed from the merger, bore the brunt of those. By late 2003, Dresser was forced into bankruptcy and began organizing a court-ordered settlement plan. KBR incurred huge liabilities—handily offset by those contracts in Iraq.

Now that painful ordeal is over: in December a federal judge approved Dresser’s $4.2 billion asbestos settlement. That means the company can come out of bankruptcy, and analysts seem to agree on what will happen, as a result, in the next months.

Halliburton will sell KBR.

As for learning the real extent of malfeasance in Iraq, that may never happen. The Republican majority in both houses of Congress seems disinclined to hold more hearings—or to exercise the subpoena power that only the majority wields. All the Democrats can do is shake their fists.

“If the administration shares our concern about not wasting taxpayers’ money, you would think they would want to learn from the auditors and whistle-blowers what has gone wrong,” Congressman Waxman says. Instead, the government has ignored its own auditors—both at the Pentagon and at the G.A.O.—who found glaring irregularities in KBR’s books on Iraq. “Why has the administration turned away?” Waxman says. “I don’t know as I have an answer to that question.”

A postscript to this story appeared in the November 2006 issue.

Michael Shnayerson is a Vanity Fair contributing editor.