Bills Tackle Contractor Oversight

Growing worries over the rebuilding of Iraq erupted across Capitol Hill on Tuesday as congressional Democrats questioned whether the Pentagon had adequate control over private contractors.

Democrats introduced two measures to improve oversight of contractors: one to tighten control over the spending of billions of taxpayer dollars in Iraq and a second to better hold contractors accountable for their actions.

At the same time, Democrats sharply questioned top officials from the State and Defense departments about control of the tens of thousands of contractors who are working in Iraq.

Officials with the U.S.-led Coalition Provisional Authority defended their oversight of the rebuilding process, which has been stalled by bureaucratic delays and Iraq’s deteriorating security situation

So far, work has begun on just 73 of more than 2,300 proposed projects, leaving thousands of schools, electricity towers and sewage systems unbuilt with about six weeks before the coalition transfers control to an interim Iraqi government.

“There is oversight,” said Steven Susens, a spokesman for the CPA’s Program Management Office. “We have lots of eyes and lots of people checking on the contracts.”

The criticizing began when four Democrats demanded that the Pentagon cancel seven new contracts to manage the reconstruction effort, saying the companies had conflicts of interest that invited abuse.

“The Defense Department is contracting out the oversight of the henhouse to the foxes,” said one of the four, Sen. Ron Wyden (D-Ore.). “That’s completely unacceptable.”

Legislation from the group -- which also includes Rep. Henry A. Waxman of Los Angeles, Rep. John D. Dingell of Michigan and Sen. Byron L. Dorgan of North Dakota -- asks the Pentagon to take control of oversight responsibility.

They said two of the companies -- Parsons Corp. of Pasadena and CH2M Hill of Englewood, Colo. -- had won management contracts to oversee the work of firms with which they have partnered in ventures outside Iraq.

“There isn’t any way on Earth with these kinds of conflicts of interest that you can have adequate oversight of taxpayer funds,” Dorgan said. “They’re going to ask Larry and Curly to take a look and see what Moe’s doing. I’m sorry, that doesn’t work.”

Parsons and CH2M Hill strongly denied any conflict.

For instance, the Democrats criticized Parsons for overseeing a water infrastructure contract in Iraq won by Aliso Viejo-based Fluor Corp. while partnering with Fluor on an oil project in Kazakhstan.

But Fluor’s partner in the $2.6-billion venture in Kazakhstan is not Parsons Corp., but Parsons E&C;, a separate company spun off three years ago, said Erin Kuhlman, a Parsons Corp. spokeswoman.

Kuhlman noted that the management contracts were not designed to detect waste, fraud or abuse -- functions still carried out by government agencies.

“We provide program-management help to the government. But we aren’t the watchdogs on the contract,” she said.

In an extraordinary exchange during a hearing of the Senate Foreign Relations Committee, Democrats sharply quizzed Deputy Secretary of State Richard L. Armitage and Deputy Defense Secretary Paul D. Wolfowitz about the legal status of contractors after the scheduled hand-over of power to an interim Iraqi government.

“What will be the status of the private contractors after June 30, when sovereignty is transferred?” asked Sen. Paul S. Sarbanes of Maryland.

“I’ve got to take it for the record, Sen. Sarbanes. I don’t know,” Armitage replied.

“That could be quite a problem, could it not?” Sarbanes asked.

Later, Rep. Martin T. Meehan (D-Mass.) introduced legislation to hold accountable contractors who violate laws while working abroad.

The Abu Ghraib prison scandal has highlighted the issue, since private contractors who worked as prison interrogators have been accused of knowingly using abusive techniques.

Laws exist to hold contractors responsible for their actions, but legal confusion surrounds their application.