After numerous denials, the Pentagon has confirmed that a North Carolina company provided armed security guards in Iraq under a sub-contract that was buried so deeply the government could not find it.

The secretary of the Army yesterday wrote to two Democratic lawmakers that the Blackwater USA contract was part of a huge military support operation run by Halliburton subsidiary KBR. Vice President Dick Cheney ran Halliburton before he became Vice President.

Several times last year, Pentagon officials told inquiring lawmakers they could find no evidence of the Blackwater contract. Blackwater, of Moyock, North Carolina, did not respond to several requests for comment.

The discovery shows the dense world of Iraq contracting, where the main contractor hires sub-contractors who then hire additional sub-contractors. Each company tacks on a charge for overhead, a cost that works its way up to US taxpayers.

“This ongoing episode demonstrates the Pentagon’s complete failure to safeguard taxpayer dollars,” said Democratic Rep. Chris Van Hollen, one of the lawmakers who had asked about the Blackwater contract and received denials.

“They continue to look the other way in the face of overwhelming evidence that Halliburton was charging taxpayers for unauthorised security services,” Van Hollen said.