The decision comes just weeks after a Pentagon audit questioned whether Halliburton overcharged the government for the contract, CNN reported Wednesday.

To accomplish the change the Defense Department ordered the U.S. Army Corp of Engineers -- which had given the work to Halliburton -- to be replaced by the Defense Energy Support Center.

The DESC currently buys fuel for military services, but the Defense Department order charges it to buy and prepare LPG -- a type of fuel used mainly for cooking -- for the Iraqi people.

"DESC will work with the Iraqi Ministry of Oil and its marketing arm, the State Owned Marketing Organization, to assist them in meeting the country's imported petroleum product requirements, such as diesel, gasoline, kerosene and liquefied petroleum gas," said a statement from the DESC.

A Pentagon audit in early December questioned whether the company had overcharged the government as much as $61 million for its services.