The US military on Friday awarded the two-year contracts worth up to $1.2 billion to Kellogg Brown and Root (KBR), a subsidiary of Halliburton.

The fresh contracts came even as Pentagon's inspector-general was considering whether to launch an investigation into an earlier Iraq oil contract awarded to KBR.

The fresh contracts entrust the subsidiary with the task of restoring oil fields and installations in southern Iraq to pre-war levels.

"The competition for the two contracts was full and open in accordance with the Federal Acquisition Regulations," the Army Corps of Engineers said in a statement.

"This process provides for a fair and impartial evaluation of the offerers proposals. The contractors were selected on the basis on best value to the government and qualifications to do the work described in the solicitation."

"The competition for the two contracts was full and open in accordance with the Federal Acquisition Regulations"

US Army Corps of Engineers

The contracts cover a full range of services, ranging from putting out oil fires to environmental cleanups, restoring installations to safe operating conditions, maintaining oil fields, pipelines, buying and importing fuel, distributing fuel inside Iraq and providing technical assistance.

The new contracts replace a previous contract awarded to KBR in March without competitive bidding to restore Iraq's war-ravaged oil industry.

Contract scrutiny

The earlier contract is under scrutiny by Pentagon auditors, who earlier this week found "suspected irregularities."

A draft audit found that KBR overcharged the government by some $61 million for fuel purchased through a Kuwait contractor, Altanmia.

It raised a stink in the US.  Critics of the Bush administration alleged that Halliburton was being favoured since Vice President Dick Cheney was the company's former chief executive.