Iraq's grade inflation

Restrain your rage as you read via the Wall Street Journal (subs. req'd) that:

The U.S. Army approved $72.2 million in performance bonuses to Halliburton Co. for its work supporting the military in Iraq. The bonus, which was approved Tuesday, is the largest received to date by the Houston-based company ... Halliburton has already accrued "more than half" of the $72.2 million in anticipation of these awards, a company spokeswoman said ... Halliburton has billed the government $10.5 billion so far under a contract to provide logistical support for the military in Iraq, Afghanistan and elsewhere in the region ...

So far, it has received the top ratings of "excellent" and "very good" for all of its work. Under Halliburton's wide-ranging contract, it receives an automatic 1% profit margin and can get an additional 2% bonus, depending on how well it meets military expectations.

Our amateur reading of federal procurement regulations leads us to the paradox that if Halliburton was a not-for-profit operation, this type of contract -- which is aninvitation to pad costs -- would not be legal:

Office and Management & Budget Uniform Administrative Requirements for Grants and Agreements With Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations ...[recent link here]

(c) The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable contracts, purchase orders, and incentive contracts) shall be determined by the recipient but shall be appropriate for the particular procurement and for promoting the best interest of the program or project involved. The "cost-plus-a-percentage-of-cost" or "percentage of construction cost" methods of contracting shall not be used.