DCMA issued an approval letter on December 27, 2004, stating that KBR's estimating system is acceptable with corrective actions that are in the process of being implemented by the Company.

"While expected, this is clearly good news. KBR's estimating system works, and the fact that we have continued to negotiate proposals with our customers proves that it is valid," said Bruce Stanski, senior vice president, KBR's Government & Infrastructure Division.

"This approval of our estimating system by the Government underscores the fact that our business systems are getting the job done."

Based on the unprecedented level of support KBR is currently providing to the military in Iraq, Kuwait and Afghanistan, the Company recently adapted its estimating policies and procedures to make them better suited to contingency situations.

KBR is also developing a detailed training program that will be made available to all estimating personnel to ensure that these employees are adequately prepared to deal with the challenges and unique circumstances that operating in a war zone presents.

"Meeting our customers' constantly changing needs in such a hostile environment has indeed stretched our systems, but KBR continues to comply with Government regulations and we constantly seek out and implement improvements to our systems," Stanski added.

KBR's priority remains providing the troops with the best possible food, shelter and living conditions while fighting the war in Iraq. KBR will continue to work with all Government agencies to ensure that the Company is the best and most qualified contractor to perform these difficult and dangerous tasks.

Halliburton has a 60-year history of working with the government. KBR helped build U.S. warships in World War II, and has supported the military in Somalia, Rwanda, and the Balkans. We are proud to serve the troops, making them feel a little closer to home.

KBR is a global engineering, construction, technology and services company. Whether designing an LNG facility, serving as a defense industry contractor, or providing small capital construction, KBR delivers world-class service and performance. KBR employs more than 60,000 people in 43 countries around the world.

Halliburton