How Was $100B In Iraq War Contracts Spent?

A new commission examining waste and corruption in wartime contracts is getting a grim report from government watchdogs who say poor planning, weak oversight and greed combined to soak U.S. taxpayers and undermine American forces in Iraq and Afghanistan.

Stuart Bowen, the special inspector general for Iraq reconstruction, says U.S. taxpayers have paid nearly $51 billion for a wide array of projects in Iraq — from training the Iraqi army and police to rebuilding the country's oil, electric, justice, health and transportation sectors.

Some of these projects succeeded, Bowen informed the Wartime Contracting Commission at its first public hearing, according to his written testimony, but many did not. Violence in Iraq along with constant friction between U.S. officials in Washington and Baghdad were also major factors that undercut progress.

The U.S. government "was neither prepared for nor able to respond quickly to the ever-changing demands" of stabilizing Iraq and then rebuilding it, Bowen said in his written testimony. "For the last six years we have been on a steep learning curve."

A lengthy study by Bowen's office, "Hard Lessons: The Iraq Reconstruction Experience," reviews the problems in an effort the Bush administration initially thought would cost $2.4 billion.

Overall, the Pentagon, State Department and U.S. Agency for International Development have paid contractors more than $100 billion since 2003 for goods and services to support war operations and rebuilding projects in Iraq and Afghanistan.

Congress created the bipartisan panel a year ago over the objections of the Bush White House, which complained the Justice Department might be forced to disclose sensitive information about investigations.

There are 154 open criminal investigations into allegations of bribery, conflicts of interest, defective products, bid rigging and theft stemming from the wars, Thomas Gimble, the Pentagon's principal deputy inspector general, said in his testimony.

Gimble noted that contracting scandals have gone on since the late 1700s when vendors swindled George Washington's army.

"Today, instead of empty barrels of meat, contractors produced inadequate or unusable facilities that required extensive rework," Gimble says. "Like the Continental Forces who encountered fraud, the (Defense Department) also encounters fraud."

Gimble's office found that a small number of inexperienced civilian or military personnel "were assigned far-reaching responsibilities for an unreasonably large number of contracts."

He cites an account tapped frequently by U.S. military commanders in Iraq and Afghanistan to build schools, roads and hospitals. More than $3 billion was spent on these projects, which were not always properly managed.

"In some instances, there appeared to be scant, if any, oversight of the manner in which funds were expended," Gimble says. "Complicating matters further is the fact that payment of bribes and gratuities to government officials is a common business practice in some Southwest Asia nations."

In an advance copy of the "Hard Lessons" report, Bowen says his office found fraud to be less of a problem than persistent inefficiencies and hefty contractor fees that "all contributed to a significant waste of taxpayer dollars."

Styled after the Truman Committee, which examined World War II spending six decades ago, the eight-member panel has broad authority to examine military support contracts, reconstruction projects and private security companies.

The leaders are Mike Thibault, a former deputy director at the Defense Contract Audit Agency, and Grant Green, a former official at both the State and Defense departments.

The panel has until August 2010 to produce a final report. Along the way, it can refer to the Justice Department any violations of the law it finds.

The inspectors general at the State Department and USAID were also testifying at Monday's hearing.

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