Congress eyes lost billions sent to Iraq

The swimming pool at the new Iraq police academy in the Baghdad Green Zone is an impressive, Olympic-size facility. It might be a good place to relax after a day spent training to face Iraq's dangers.

The problem is, the US Department of State – which paid for the academy and an adjacent residential camp – never authorized construction of the pool. Nor did it OK the purchase of 20 extra VIP trailers for the camp.

In total, about $4.2 million of the $43.8 million in US funds spent on the camp went to work that wasn't properly approved, according to a January report by the Special Inspector General for Iraq Reconstruction (SIGIR).

Because of this and other examples of alleged contractor waste or abuse in Iraq, Congress is now considering reforms to the US reconstruction spending process.

On March 15, the House voted to place new limits on no-bid US government contracts. And on March 20 the Senate Judiciary Committee is scheduled to hold a hearing on whether the US is doing enough to combat war profiteering.

Judiciary Committee chairman Sen. Patrick Leahy (D) of Vermont introduced antiprofiteering legislation in January, soon after ascending to the post.

"Our government cannot in good faith ask its people to sacrifice for reconstruction efforts that allow some to profit unfairly," Mr. Leahy said at the time.

The swimming pool from nowhere is one documented example of the kinds of things that have gone wrong with US spending in Iraq, according to government auditors.

During construction of the police training facilities, Iraqi Ministry of Interior officials asked for the swimming pool and the extra VIP housing, and the contractors complied, said the SIGIR study. But the US State Department, which was paying the bills for the academy's construction, was not consulted.

In fact the pool was built twice. The first time, the job was done poorly and the walls collapsed. "Weak and sometimes nonexistent contract administration was the root cause of the problems," concluded the SIGIR audit.

Overall, the Defense Contract Audit Agency has found $4.9 billion in overpricing and waste in Iraq contracts since 2003. US auditors have identified another $5.1 billion in expenses charged without documentation.

Of projects scrutinized by SIGIR, about 20 percent have shown major problems.

"Clearly there has been some significant level of corruption," says Steven Kosiak, director of budget studies at the Center for Strategic and Budgetary Assessments.

But the biggest problem may be the waste that results from doing big-budget projects quickly, with little oversight, in a war-torn country.

"Fraud has not been a significant component of the US experience in Iraq ... waste is another matter," said Stuart Bowen, special inspector general for Iraq, at a House hearing on February 15.

No-bid contracts awarded to get reconstruction under way quickly may be one significant source of this waste. Halliburton, the giant oil services firm once headed by Vice President Dick Cheney, has been a particular target of criticism by Congressional Democrats for its performance on noncompetitive contracts to restore Iraq's oil production.

On March 15, the House by a vote of 347-73 passed legislation that would limit the awarding of no-bid contracts for emergencies to one year.

The Accountability in Contracting Act would also require agencies that issue more than $1 billion of no-bid contracts annually to take steps to minimize their use, and require that contract overcharges in excess of $10 million be disclosed to Congress.

The Bush administration has opposed the legislation, saying it would complicate its own efforts to make contracting more competitive and efficient.

Leahy's profiteering measure is one he has pushed since 2003. Prior to this year, however, he was in the minority; now he is the powerful Judiciary Committee chairman.

His bill would specifically outlaw war profiteering, which it defines as "materially overvaluing any good or service with the specific intent to excessively profit from the war and relief or reconstruction activities."

Violators could be sentenced to up to 20 years in jail, with fines of up to twice the amount of any illegal profits.

Officials involved in the Iraq rebuilding process admit that it is challenging. But they claim that rebuilding is proceeding as well as possible, considering the security circumstances.

On any given day in Iraq the US Army Corps of Engineers is working on approximately 1,100 projects, said Brig. Gen. Michael Walsh, commander of the Army Corps Gulf Region Division, at a March 1 news briefing.

Yet if only 1 percent of these projects have problems, it is that 1 percent – or 11 projects – that end up in the headlines, said General Walsh.

"We have lost good people and had setbacks through the insurgency, and the security is difficult," said Walsh. "But we still have completed more than 3,000 projects to help the country of Iraq jump-start its economy and solidify its infrastructure."