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Project on Government Oversight

Pentagon Audit Reveals Widespread Problems in Iraq Contracting

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May 23, 2008

From POGO's blog:

When one of the preferred methods of transferring funds into the country is loading 363 tons of shrink-wrapped wads of cash onto pallets, you can't be too surprised when the U.S. Army's contracting practices in Iraq are found deficient by government auditors.

A report released Thursday by the Department of Defense Office of Inspector General (DoD IG) found that the Army's disbursement of $8.2 billion in taxpayer money on contractors in Iraq lacked adequate internal controls designed to prevent fraud, waste and abuse. The audit found a similar lack of accountability in the Army's handling of $1.8 billion in seized or frozen Iraqi assets. The report is rife with examples of millions of dollars being handed out on the basis of a few hastily scribbled words on slips of paper with no indication of what was being purchased, why it was being purchased, or if the good or service was ever delivered or performed.

Rep. Henry Waxman's (D-CA) Clean Contracting Act of 2008, which passed the House the same day the DoD IG report came out, contains a number of contracting reforms, such as new whistleblower protections, increased competitive bidding, and tighter controls on cost-reimbursement and lead systems integrator contracts. However, due to the unique challenges of contracting in a war zone like Iraq, where conditions sometimes require large disbursements to be made on the fly with a minimum of paperwork or oversight, it is unclear if Waxman's bill will solve the problems identified in the DoD IG's report.

Founded in 1981, the Project On Government Oversight (POGO) is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government.

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