Auditors: Billions wasted in Iraq

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By HOPE YEN, Associated Press Writer

The U.S. government is at risk of squandering significantly more money in an Iraq war and reconstruction effort that has already wasted or otherwise overcharged taxpayers billions of dollars, federal investigators said Thursday.

The three top auditors overseeing contract work in Iraq told a House committee that $10 billion in spending was wasteful or poorly tracked. They pointed to numerous instances in which Defense and State department officials condoned or otherwise allowed poor accounting, repeated work delays, bloated expenses and payments for work shoddily or never done by U.S. contractors.

That problem could worsen, the Government Accountability Office said, given limited improvement so far by the Department of Defense even as the Bush administration prepares to boost the U.S. presence in Iraq.

David M. Walker, comptroller general of the GAO, Congress' auditing arm, said his agency has been pointing out problems for years, only to be largely ignored or given lip service with little result.

"There is no accountability," Walker said. "Organizations charged with overseeing contracts are not held accountable. Contractors are not held accountable. The individuals responsible are not held accountable."

"People should be rewarded when they do a good job. But when things don't go right, there have to be consequences," he said.

A spokeswoman for the Army, which handles most of the Iraq contracting, did not have immediate comment.

Senate Democrats, calling recently cited cases of waste "outrageous rip-offs of the American taxpayer," quickly moved to introduce legislation Thursday to stiffen punishment for war profiteers and cut down on cronyism in contracting.

The bill, sponsored by Sen. Byron Dorgan (news, bio, voting record), D-N.D., and 22 other senators, would impose penalties of up to 20 years in prison and fines of up to $1 million for war profiteering and restore a rule that prohibits awarding federal contracts to companies exhibiting a pattern of breaking the law in performance of government contracts.

That rule, put in place by President Clinton, was dropped by the Bush administration upon taking office, Dorgan said.

The auditors' joint appearance before the House Oversight and Government Reform Committee comes as Congress is preparing for a showdown with President Bush next month over his budget request of nearly $100 billion to pay for more U.S. troops in Iraq.

Also testifying Thursday were Stuart Bowen, the special inspector general for Iraq reconstruction, and William Reed, director of the Defense Contract Audit Agency.

According to their testimony, the investigators:

_Found overpricing and waste in Iraq contracts amounting to $4.9 billion since the Defense Contract Audit Agency began its work in 2003, although some of that money has since been recovered. Another $5.1 billion in expenses were charged without proper documentation.

_Urged the Pentagon to reconsider its growing reliance on outside contractors to run the nation's wars and reconstruction efforts. Layers of subcontractors, poor documentation and lack of strong contract management are rampant and promote waste even after the GAO first warned of problems 15 years ago.

_Pointed to growing Iraqi sectarian violence as a significant factor behind wasted U.S. dollars. Iraqi officials must begin to take primary responsibility for reconstruction efforts, an uncertain goal given widespread corruption in Iraq and the local government's inability to fund projects.

Rep. Henry Waxman (news, bio, voting record), D-Calif., who chairs the panel, has pledged scores of investigations of fraud, waste and abuse — with subpoenas if necessary — on the Bush administration's watch. He decried the overpricing identified by the DCAA, a figure that has tripled since last fall.

Of the $10 billion in overpriced contracts or undocumented costs, more than $2.7 billion were charged by Halliburton Co., the oil-field services firm once headed by Vice President ####### Cheney.

"According to the Pentagon auditors, more than one in six dollars they have audited in Iraq is suspect," Waxman said.

Rep. Tom Davis, R-Va., the top Republican on the panel, pointed to ongoing, "systemic" problems in Iraq contracting.

"This much is clear: Poor security, an arcane, ill-suited management structure, and frequent management changes have produced a succession of troubled acquisitions," he said.

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