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Iraq Contract Fraud: Senators Call For Arrests, Recovery of Funds

This morning, the Senate Appropriations Committee, chaired by West Virginia Democrat Robert Byrd, heard testimony from Pentagon officials about their efforts to counter waste and fraud in federal contracts related to the ongoing wars in Iraq and Afghanistan. Byrd expressed outrage at the "appalling" mismanagement of funds. "Tens of billions of taxpayer dollars are lost, ... gone!" he cried, his outrage visibly building as he spoke. "How many minutes have passed since Jesus Christ was born? A billion! So, that's a lot of money! ... This is a failure of leadership. Individuals think they can get away with bilking—they're not just milking—bilking the U.S. and Iraqi governments... taking bribes, substituting inferior workmanship, or plain, old-fashioned stealing! Stealing!" he exclaimed.

Byrd cited a April 2007 GAO report (.pdf) that concluded, among other things, that the Pentagon "lacks clear and comprehensive guidance and leadership for managing and overseeing contractors" and "does not have a sufficient number of oversight personnel to ensure that contracts that are in place are carried out efficiently and according to contract requirements." To illustrate the scale of the waste and fraud, the report estimates that the Army Material Command loses about $43 million each year solely on the provision of free meals to contractors who also get per diem food allowances. Another GAO report (.pdf), released in May 2007, found that the amount of money obligated in DOD contracts for support services "exceeded the amount the department spent on supplies and equipment, including major weapons systems." [Emphasis added.] And with all this money being spent, often under cost-plus arrangements (the more a contractor spends on expenses, the more it collects in fees), the scale of abuse, fraud, and "plain, old-fashioned stealing" has been historic. We still do not know exactly how much money has been lost, and we may never know. But last year, the Defense Contract Audit Agency identified $4.9 billion wasted on overcharging or fraud, and an additional $5.1 billion spent without any documentation. Since only a sampling of contracts have yet been audited, the murky waters of corruption remain largely undisturbed.

This is something neither Byrd nor his Appropriations Committee colleague, Vermont Democrat Patrick Leahy, will abide. Leahy, in particular, told the witnesses that he's interested in "seeing some people go to jail" for the contract abuses in Iraq. Only then, he argued, is there likely to be a chilling effect on contractor fraud and corruption.

So far, though, given the scale of the problem, the penalties imposed for such abuses can be described as modest at best. The Pentagon's new acting inspector general, Gordon Heddell, took office just a few days ago. But in this morning's testimony, he was predictably sanguine about his department's prospects at reigning things in, proudly enumerating its past successes to the committee. Watching it, one got the feeling that his statistics-laden monotone was designed to put the senators to sleep so they wouldn't take notice of how laughably inadequate enforcement efforts have been. Remember now, the amount of taxpayer dollars lost or stolen is somewhere in the tens of billions. That being noted, Heddell told the committee that Defense Criminal Investigative Service has targeted 286 people in 124 separate investigations related to U.S. military operations in southwest Asia, and 32 cases have already reached the courts. So far, so good, right? Well, since the wars began only 22 people have been indicted on contract fraud, resulting in only 32 felony convictions. And wait, it gets better: those convictions have resulted in a combined total of just 54 years in prison, 44 years of probation, 10 debarments at four companies, and 28 suspensions. All told, the federal government has received $13.5 million in restitution, $1.76 million in forfeitures, and seized an additional $2.65 million in assets. Fines and penalties imposed amount to just shy of $350,000. So, for the tens of billions (with a "b") that have vanished into the sinkhole, the federal government has recovered a total of just $17 million and sentenced violators to minimal prison terms.

Still, Heddell told senators, his office "is on a firm footing to provide the necessary oversight." The numbers speak for themselves.

Comments

Ah the feigned outrage of the pig scolding other pigs for eating at his trough. If the actions of these 'people' in the Senate wasn't killing hundreds of humans every day, it would be kind of funny. Pigs, every last Senator in that chamber. Disgusting.

Posted by: David on 07/23/08 at 12:25 PM Respond

Pigs, every last Senator in that chamber.

You're not supposed to notice that.

You are supposed to buy into the idea that only the Senators from 'That Other Party' are scumbags.

We're going to have to send you in for re-grooving.

Posted by: DemoPublicans One And All on 07/23/08 at 12:34 PM Respond

As I remember it rite in the first iraq funding bill the dems put up an amendment that said there would be sever criminal and civil penalties for war proffiteering.. and guess what the white house had the republican house strip those amendments out remember kerry well thats the reason he voted against it and the rethugs went to town on him for that and he did the right thing yes the dems have been null and void but at least some have been tryin to do there job you wont see the rethugs look to hard atthis

Posted by: cwazycajun on 07/23/08 at 12:40 PM Respond

Well I certainly hope that they follow through on this. Many people (including those in the DOD, and potentially higher, who make it possible) deserve severe prison sentences. And definitely the money should all be paid back, even if that means bankruptcy for those companies responsible.

How many billions was it (4 or 5) that Bush said we couldn't afford over a 5 year period for health care for children? And McCain want a freeze on federal spending, but not on 'defense' spending. What a joke! 'Defense' spending is the biggest boondoggle, the biggest sinkhole, the biggest fraud,and the biggest waste of taxpayer dollars! That's where he should be starting.

Posted by: DaveD on 07/24/08 at 4:27 AM Respond

if we don't get the [mic]out the loop this nation is finished.

Posted by: joe on 07/24/08 at 6:40 AM Respond

AMERICAN CONGRESS SCHEDULED FOR MAJOR HEAD SURGERY

Congressional health being at an all time low indicates that the Kennedy Liberals and Reagan Conservatives have set a date with the guillotine for the desperately united Leiberman Neo-Libs and Podhoretz Neo-Cons, for the their notorious subversive Neo-Marxist contempt of Christian Culture and Constitutional Law.

For the illegal Iraq War for Israel, for the illegal Mexican occupation, for the sacrificial killing of children, for the outsourcing of jobs and technology to China, for the subprime loans and stock trading scam, for dependence on fossil fuel, and for the blooming recession and inflation; the rallying cry shall be, “Off with their heads!”.

Posted by: Jeugenen on 07/24/08 at 1:59 PM Respond

". . . report estimates that the Army Material Command loses about $43 million each year solely on the provision of free meals to contractors who also get per diem food allowances. . . ."
". . . under cost-plus arrangements (the more a contractor spends on expenses, the more it collects in fees). . ."
Add the two together, and how much you wanna bet those per diem food allowances are added into the contractor's expenses that he gets not only reimbursed for, but evidently can also charge a fee for, I suppose for the inconvenience. And these are the people who tell me I can't have a security clearance? We are so scrood.

Posted by: smitisan on 07/24/08 at 3:18 PM Respond

When a major league sports team ain't doing' so well, they leave town in the middle of the night. I think we should do the same to our Washington elite. Close up business on them, leave town, and hire people with a sincere willingness to serve the people rather than their selfish compatriots.

Posted by: AFriedman on 07/24/08 at 6:51 PM Respond

Leahy, in particular, told the witnesses that he's interested in "seeing some people go to jail" for the contract abuses
Good! Start with that moron Bush in the White House and Dick Cheney. Then go after DynCorp, LLC,Blackwater,KBR, etc.

Posted by: willy Scanlon on 07/25/08 at 12:33 PM Respond

Oops - not all are pigs. RON PAUL is the one honest one.

Posted by: Andrew on 07/25/08 at 1:25 PM Respond

Andrew, Ron Paul is in the House of Representatives and not the Senate, so it's still safe to say all 100 SENATE seats are occupied by Porky Pigs.

Posted by: DemoPublicans One And All on 07/25/08 at 1:33 PM Respond

Stuff like this has been going on and on for years and years and nothing ever gets done about it. Every so often we hear about it, and how things are going to change, but as always, it will continue to go on. After all, the government has the best politicians money can buy!!!

Posted by: Karney on 07/25/08 at 6:19 PM Respond

So byrd is running his fat mouth. What is he actually going to do about this??????? I say NOTHING!!!!!!!!!!!!!!!!! TFL, Ken

Posted by: Ken on 07/25/08 at 7:44 PM Respond

Stuff like this has been going on and on for years and years and nothing ever gets done about it.

Posted by: Oyun on 07/25/08 at 10:42 PM Respond

Companion questions for this issue: How do you lose 15 billion dollars? Why does the United States go another 3 billion in the hole DAILY?

Posted by: Bert on 07/27/08 at 11:13 PM Respond