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The New York Times has an article up detailing the Army's lack of oversight and accountability regarding both taxpayer dollars and Iraqi funds used to pay contracts in Iraq.  Rep. Waxman, and the Committee on Oversight and Government Reform had a hearing today regarding an internal Pentagon audit.

A Pentagon audit of $8.2 billion in American taxpayer money spent by the United States Army on contractors in Iraq has found that almost none of the payments followed federal rules and that in some cases, contracts worth millions of dollars were paid for despite little or no record of what, if anything, was received.

...almost none of the payments [made by the Army] followed federal rules and ... in some cases, contracts worth millions of dollars were paid for despite little or no record of what, if anything, was received.

... not exactly chump change.  More over the flip.

The hearing today was entitled Accountability Lapses in Multiple Funds for Iraq.

According to the NYT:

In one case ... a cash payment of $320.8 million in Iraqi money was authorized on the basis of a single signature and the words "Iraqi Salary Payment" on an invoice. In another, $11.1 million of taxpayer money was paid to IAP, an American contractor, on the basis of a voucher with no indication of what was delivered.

Now Kossacks are likely familiar with some of the shenanigans involving private contractors in Iraq, and also may remember that Rep Waxman has consistently led the fight for oversight in these matters even back when he was the ranking minority member on the committee in 2005 (pdf).  However, this is the first time the Pentagon itself has come clean with the scope of the problem:

The new report is especially significant because while other federal auditors have severely criticized the way the United States has handled payments to contractors in Iraq, this is the first time that the Pentagon itself has acknowledged the mismanagement on anything resembling this scale.

So how much money are we talking about here anyway?

The disclosure that $1.8 billion in Iraqi assets was mishandled comes on top of an earlier finding ... that United States occupation authorities early in the conflict could not account for the disbursement of $8.8 billion in Iraqi oil money and seized assets.

So, over $10 billion dollars in "Iraqi assets" has been "mishandled."  One can only guess how much of that $10 billion ended up actually going to support folks presently fighting a civil war that has American soldiers caught in the crossfire.  But at least it's not good ol' hard-earned American tax dollars unaccounted for, right?

In another [case], $11.1 million of taxpayer money was paid to IAP, an American contractor, on the basis of a voucher with no indication of what was delivered.

The Pentagon report ... also notes that auditors were unable to find a comprehensible set of records to explain $134.8 million in payments by the American military to its allies in the Iraq war.

Millions here, billions there.  Hey, it's not like we really care where and what money goes for these days, right?  Actually, Rep. Waxman apparently does, he...

introduced what he called a "clean contracting" amendment to a defense authorization bill being debated on the House floor. The amendment, which was accepted by voice vote, would institute a number of reforms, including new whistleblower protections and requirements on competitive bidding.


That's definitely a good start, though it is frustratingly late now that we're more than five years in.  According to the article, about $1.4 billion in payments lacked any documentation regarding what had been paid for.  Another $6.3 billion in payments did not follow federal regulations, meaning that

95 percent of the payments had not been properly documented.

So 5% of payments by the Pentagon to contractors in Iraq actually followed federal regulations?  Didn't someone explain to the officials who dispensed payments and actually, and rather quaintly, followed regulations that pesky things like procedures and accountability didn't matter?  Or was that 5% just for appearance's sake?

Actually, to take a step back, part of the problem is that even the Congressional Research Service (pdf) couldn't tell exactly who or what governed the Coalition Provisional Authority, or whether it was even an American agency for purposes of federal rules on contracts and procurement.  And, this little mystery actually got our friends at Custer Battles, a private security contractor in Iraq who was found liable for over href="0 million in damages and penalties for defrauding the CPA, off the hook because a federal judge determined that the CPA was an "international" agency not subject to federal laws -- despite the fact that most of the CPA was run by Americans.  To quote Kagro X,

That's right. If you defrauded American taxpayers through the cut-out of the Coalition Provisional Authority -- and let's face it, just about everyone did -- you're off the hook. Because although the CPA paid you with money provided by the American government, and was almost entirely staffed by the American government, and acted at the behest of the American government, technically speaking it wasn't the American government. So those bricks of taxpayer cash are yours to keep. Hooray for you!

And for those of you looking to support a step in the right direction on this rather weird situation, bills have been introduced in the Senate and House to somewhat close this loophole (pdf) -- making it so that when an American contractor defrauds U.S. government officials (even those working in so-called international agencies) out of funds they manage or possess (whether taxpayer dollars, Iraqi assets, or other) then those contractors would be subject to federal rules and private causes of action.  This broadening of the scope of the statutes in place would be a welcome change allowing for more oversight and greater liability for fraudulent contractors.  And, strange to say, but kudos are in order to a Repub -- Iowa Sen. Chuck Grassley is pushing this (actual) bipartisan effort.  Sens. Durbin, Leahy, Specter, and Whitehouse are cosponsors.

It appears the bill is now out of the Senate Judiciary Committee, and will come up for a floor vote soon.  Contact your Senator or Representative and urge them to support a strengthening of what's called the "False Claims Act" -- the bills are S.2041 and H.R. 4854.

Thanks for reading.

Originally posted to gatorbot on Thu May 22, 2008 at 10:15 PM PDT.

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