US Wasted $31bn on Iraq-Afghanistan Contracts

The Financial Times05.09.2011 North America
US Wasted $31bn on Iraq-Afghanistan Contracts

US Wasted $31bn on Iraq-Afghanistan Contracts

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Defense contractors have wasted or lost to fraud as much as $60bn over the past 10 years, according to a report by the Commission on Wartime Contracting in Iraq and Afghanistan.

It found that at least $31bn had been wasted through poor planning and management - the equivalent of $12m a day since the invasion of Afghanistan.

The 240-page report, sent to Congress last week, found that the US military needed "heavy support" from contractors during military or emergency operations as a result of large-scale reductions in the federal acquisition workforce and in support units within the military during the 1990s. More than 260,000 contractor employees have been used in Iraq and Afghanistan, at times outnumbering the military they support.

The top contractor in Iraq and Afghanistan during the decade surveyed was Kellogg, Brown & Root, an engineering and construction services company.

It earned $40.8bn during the decade, while Agility and DynCorp earned $9bn and $7.4bn, respectively.

As an example of waste, the report cites $38.6bn that Congress allocated between 2006 and 2011 for training the Afghan national security force, saying that such a project was "unsustainable" and far exceed what the Kabul government could absorb.

The commission found inadequate competition for contracts, such as a $36.3bn army logistics contract awarded to KBR in 2001 as the sole provider.

The report also noted that US funds had been diverted to warlords and insurgents in both Iraq and Afghanistan as a cost of doing business in the countries, adding that while there was no official estimate of how much was diverted, it was a "significant percentage" of a project's cost.

During a trip to Afghanistan in March this year, the commission found that extortion of funds from US construction and transportation projects was the second-biggest funding source for insurgent groups.

The findings will probably alarm members of Congress, as the federal budget comes under intense scrutiny. The Pentagon has the task of finding $400bn in budget cuts over the next 12 years, but could have to save an additional $600bn if lawmakers cannot agree on cuts as part of a budget deal.

The commission recommended that the government should phase out the use of private security contractors for certain functions, improve inter-agency co-ordination and expand the authority of civilian and military officials responsible for contingency contracting.

The report comes on the heels of a study by the non-profit Center for Public Integrity that found that the value of Pentagon contracts awarded without competitive bidding almost tripled over the same time period, from $50bn in 2001 to more than $140bn last year.


Source: The Financial Times


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