A US government auditor has backed a Pentagon recommendation to withhold payments to controversial US giant Halliburton over its work in Iraq.
Kellogg Brown & Root provides logistics and construction services
Stuart Bowen, who is reviewing US spending in Iraq, says he supports proposals for the army to hold back 15% of monthly payments on future invoices.
It follows a dispute over bills which officials say lack proper records.
The move could cost Halliburton, the largest US civilian contractor in Iraq, up to $60m (£32m) a month.
"We agree with US Army Materiel Command and DCAA
[Defense Contract Audit Agency] positions," Mr Bowen said in a memo, referring to an audit by the DCAA in August.
That recommended cuts of 15% after finding flaws in the accounting system used by Halliburton subsidiary Kellogg Brown & Root.
Halliburton, once run by US Vice-President Dick Cheney, said it was not aware of any plan to implement the cuts.
"We will continue to work directly with our client regarding resolution for this issue," spokeswoman Cathy Gist said.
The company has said it would pass on any cutbacks to its suppliers.
Part of the dispute is believed to centre on the way KBR bills for meals.
The Pentagon wants to be charged for exactly how many meals are actually eaten, while Halliburton's systems are said to be based on estimates.
The army has not yet implemented the cuts.
It has opted to give Halliburton more time to resolve the ongoing dispute, fearing punitive action could disrupt supplies to US troops.