The Defense Department has failed to provide adequate oversight over tens of billions of dollars in contracts to support military operations in Iraq and Afghanistan, says a new report by an independent commission investigating waste and fraud in wartime spending.
U.S. reliance on private sector employees has grown to "unprecedented proportions," yet the government has no central database of who all these contractors are, what they do or how much they’re paid, the bipartisan commission found.
In its first report to Congress, the Wartime Contracting Commission presents a bleak assessment of how taxpayer dollars have been spent since 2001. The 111-page report, obtained by The Associated Press, documents poor management, weak oversight, and a failure to learn from past mistakes as recurring themes in wartime contracting.
The commission’s report is scheduled to be made public Wednesday at a hearing held by the House Oversight and Government Reform’s national security subcommittee.
One example of wasted money cited by the commission involves construction of a $30 million dining facility at a U.S. base in Iraq scheduled to be completed Dec. 25. The decision to build it was based on bad planning and botched paperwork. Yet the project is too far along to stop, making the mess hall a future monument to the waste and inefficiency plaguing the war effort.
The commission, established by Congress last year, says more than 240,000 private sector employees are supporting military operations in Iraq and Afghanistan. Thousands more work for the State Department and U.S. Agency for International Development.
In Iraq, the panel worries that as U.S. troops depart in larger numbers, too few government eyes will be on the contractors left to oversee the closing of hundreds of bases and disposal of mountains of federal property.
At Rustamiyah, a seven-acre forward operating base turned over to the Iraqis in March, the military population plunged from 1,490 to 62 in just three months. During the same period, the contractor population dropped from 928 to 338, leaving more than five contractors for every service member.
In Afghanistan, where President Barack Obama has ordered a large increase of U.S. troops, existing bases will have to expand and new ones will be built — without proper oversight unless the Pentagon rapidly changes course.
Defense Secretary Robert Gates wants to reduce the military’s reliance on contractors and hire more government employees and acquisition staff. These steps will begin a badly needed overhaul of the military’s approach to contract management, the commission says.
One commander in Afghanistan told the commission he had no idea how many contractors were on and off his base on a daily basis. Another officer said he had property all over his installation but didn’t know who owned it or what kind of shape it was in.
There are questionable construction projects in Afghanistan, too. The commission visited the New Kabul Compound, a building intended to serve as headquarters for U.S. forces in Afghanistan. But members saw cracks in the structure, broken and leaking pipes, sinking sidewalks and other defects.
"The Army should not have accepted a building in such condition," the report says.
The commission cites concerns with a massive support contract known as "LOGCAP" that provides troops with essential services, including housing, meals, mail delivery and laundry.
Despite the huge size and importance of the contract, the main program office managing the work for both Afghanistan and Iraq has only 13 government employees. For administrative help, it relies on a contractor.
KBR Inc., the primary LOGCAP contractor in Iraq, has been paid nearly $32 billion since 2001. The commission says billions of dollars of that amount ended up wasted due to poorly defined work orders, inadequate oversight and contractor inefficiencies.
In one example, defense auditors challenged KBR after it billed the government for $100 million in costs for private security even though the contract prohibited the use of for-hire guards.
KBR has defended its performance and criticized the commission for making "biased" statements against the company.
"As we look back on what we’ve done, we’re real proud of being able to go into a war theater like that as a private contractor and support 200,000 troops," William P. Utt, chairman of the Houston-based KBR, said in May in an interview with AP reporters and editors.
KBR is also linked to the dining hall construction snafu, although the commission faults the military’s planning and not the contractor. With American forces scheduled to leave Iraq by the end of 2011, the U.S. will use the new facility for two years at most.
In July 2008, the Army said a new dining facility was badly needed at the Camp Delta forward operating base because the existing one was too small, had a saggy ceiling, poor lighting and an unsanitary wooden floor.
KBR was awarded a contract in September. Work began in late October as American and Iraqi officials negotiated the agreement setting the dates for the U.S. troop withdrawal.
But during an April visit to Camp Delta, the commission learned that the existing mess hall had just been renovated. The $3.36 million job was done by KBR and completed in June 2008. Commission staff toured the renovated hall "without seeing or hearing of any problems or shortfalls," the report says.
The decision to push ahead with the new hall was based on paperwork that was never updated and a failure to review the need for the project after the security agreement was signed. Most of the materials have been ordered and construction is well under way. That means canceling the project would save little money because KBR would have a legitimate claim for payment based on the investment it has already made.
On the Net:
Wartime Contracting Commission: http://www.wartimecontracting.gov/