Pentagon Waste in Iraq May Total Billions, Investigators Say

The Pentagon may have wasted billions of dollars in Iraq because of a lack of planning and poor oversight, top congressional and Defense Department investigators said Tuesday.

David M. Walker, head of the General Accounting Office, told a congressional panel that Defense Department planners had failed to adequately determine the needs of U.S. soldiers in Iraq and to effectively oversee the billions of dollars’ worth of contracts issued.

Though Pentagon officials blame any mistakes on the pressure of the war’s early days, the investigators said they had found ongoing waste in the contracting process a year after the invasion was launched in March 2003. In remarks to reporters, Walker speculated that the total losses from waste could amount to “billions.”

“There are serious problems, they still exist and they are exacerbated in a wartime climate,” Walker told members of the House Government Reform Committee, which is charged with preventing waste, fraud and abuse in the government.

Tuesday’s testimony by the GAO, Congress’ investigative arm, and the Defense Contract Audit Agency, the Pentagon’s auditor, presented the most complete picture to date of the U.S. military’s decision to pay private contractors billions of dollars to help wage the war and rebuild Iraq.

Though much of the contracting was done well, the agencies said, military contract managers and the companies they oversaw were frequently overwhelmed by the magnitude of the tasks in Iraq.

The agencies singled out a contract awarded to Halliburton Co. -- a Houston-based oil services giant that supplies food, housing and other logistics services to the military -- as a particularly egregious example of both poor oversight by the government and overcharging by the company.

For example, a GAO report says, the military did not develop adequate plans to support its troops in Iraq until May 2003, two months after the invasion, when Halliburton was ordered to supply more dining facilities and housing. Since then, Halliburton’s contract to supply the troops in Kuwait and Iraq has been adjusted by the Army more than 176 times, or more than once every two days.

In addition, reservists with no more than two weeks’ training were overseeing the contract at one point, said Neal Curtin, the GAO director charged with investigating Halliburton and other companies with logistics contracts. Even now, the Pentagon has only twice as many overseers monitoring contracts in Iraq as it did in Bosnia-Herzegovina, although it is spending 15 times as much money.

Other U.S. government actions also came under fire Tuesday.

The GAO found that most of the biggest contracts awarded without bidding in the early days of the war were justified by their emergency nature. But in some instances, the investigators said, Pentagon officers overstepped their authority by issuing billion-dollar jobs under existing contracts without putting the work out to bid, as required by law.

Pentagon procurement officials said significant progress had been made in Iraq, with new bridges, water systems and power stations up and running. But they acknowledged that mistakes were made, especially in the aftermath of the invasion.

“Have we accomplished this tremendous mission without missteps? No, we have not,” said Tina Ballard, the Army’s head of contracting.

As for Halliburton, which has Iraq contracts worth up to a total of $18.2 billion, Pentagon auditors believe the company has been billing taxpayers for millions of meals never served to U.S. troops. The auditors have recommended that the government withhold nearly $200 million in payments until the dispute is settled.

In a related development, the Army recently renegotiated a contract Halliburton had with a Kuwaiti company to provide meals. By contracting directly with the Kuwaiti company, the Army cut 40% off the cost.

“Halliburton is a company whose business base expanded extremely rapidly” after it won contracts for work in Iraq, said Bill Reed, the head of the audit agency. “They were not adequately prepared to keep pace.”

The findings by unbiased sources add fuel to Democrats’ efforts to draw attention to Halliburton, which was run by Vice President Dick Cheney from 1995 to 2000.

Rep. Henry A. Waxman (D-Los Angeles), one of Halliburton’s fiercest critics, demanded that the committee probe more deeply into the links between Halliburton and Cheney.

Investigators testified that there had been no evidence that Cheney influenced the award of any contract to his former company, but Waxman said more investigation was necessary.

He cited recent revelations that a Pentagon political appointee had informed Cheney’s chief of staff about a decision that led to a Halliburton subsidiary, KBR, winning a $7-billion contract to restore Iraq’s oil infrastructure.

“Halliburton is gouging the taxpayer, and the Bush administration doesn’t seem to care,” Waxman said.

But Halliburton officials defended their actions in Iraq, saying they strongly disagreed with the auditors’ contention on overbilling for meals.

“We expected there would be attempts before the end of June to deflect attention from the progress being made in Iraq, but we didn’t think so much of it would originate here at home,” Wendy Hall, a Halliburton spokeswoman, said in a statement. “It is one thing to learn through experience, as we have, that war is difficult, but another to find that critics are using the war for purely political purposes.”

San Diego-based Titan Corp., which employed two people identified in the investigation into the Abu Ghraib prison scandal, also came under fire.

Auditors found that Titan was failing to keep track of its workers’ hours, and they recommended withholding up to $4.9 million from the company’s contract to supply translators to occupation forces in Iraq.

Titan also recently refunded the government $178,000 paid for the services of two workers named in the prison scandal. Titan officials said that although the company had yet to be informed of employee wrongdoing, it made the refund in case the government made that finding.

“We don’t know what the investigation will entail, so we took the measure to be conservative,” said Ralph “Wil” Williams, a Titan spokesman.