Iraq War Funds Mishandled

by on April 30th, 2007

An AP article appeared on April 30 with the title, “Bush seeks cooperation on U.S. war funds.” The story mentioned the House and Senate bills approved last week which approved an additional $124.2 billion.” The story failed to mention the bills provide more money than Bush originally sought to fund the military in Iraq. Also absent from the story was the amount of money already spent on the Iraq war.

The National Priorities Project (NPP) created an online “Cost of Iraq War Calculator.” In February 2007 NPP stated the calculator is set to reach $456 billion by September 30, 2007, the end of the fiscal year. Last week Speaker of the House Nancy Pelosi warned the Iraq war could cost over $1 trillion even if the military pulled out now.

The 2008 defense budget request of $650 billion, with $140-$160 for Iraq and Afghanistan, will be more than the combined defense spending of the entire planet.

Private contractors in Iraq

On January 30, 2007 the Comptroller General David Walker spoke to the House’s Committee on Appropriations Subcommittee on Defense in a closed session. The Government Accountability Office (GAO) released transcripts of the meeting. Walker told the Subcommittee that the Department of Defense (DOD) reported costs of $257.5 billion for the military in Iraq since 2003, which increased from $38.8 billion in 2003 to $83.4 billion in 2006.

There are 100,000 government contractors operating in Iraq, almost the number of U.S. forces, according to a military census conducted by Central Command. The Pentagon’s previous estimate was 25,000. The number of contractors currently in Iraq is ten times the number in Kuwait during the Gulf War in 1991, which was estimated to be 9,200. The corporations with the most lucrative contracts are the biggest contributors to the Republican National Committee (RNC).

General Electric (GE) serves as a good example of government contracts in Iraq. As of 2003 GE had a government contract in Iraq worth $10,600,007,101. In a list of the 100 biggest defense contractors the company is ranked number seven. Throughout the 1990s GE was involved in so many fraud cases that the government set up a special investigations office specifically for the company in the Pentagon’s Defense Contract Management Agency. GE was indicted on 22 criminal counts.

The CEO of GE, Jeffrey Immelt, gave $4,000 for President Bush’s 2004 campaign, and $1,000 for Bush’s 2000 campaign. He also gave $15,000 to the RNC from 2001 to 2005. “DOD’s heavy reliance on contractors in Iraq, its long-standing contract and contract management problems, and poor security conditions provide opportunities for fraud, waste, and abuse,” Walker declared. He cited a lack of guidance by the DOD over contractors as the root of the problem.Walker mentioned a 2006 meeting with the contractor accountability task force where an Army

Material Command official noted “that an Army official estimated…about $43 million is lost every year on free meals provided to contractor employees who also receive per diem.”

Contracts with DOD are frequently “cost-reimbursable contracts” which allow the contractor to be reimbursed for “reasonable, allowable, and allocable costs to the extent prescribed in the contracts.” Walker cited a DOD contract with the Logistics Civil Augmentation Program which reduced the cost by $108 million through either reducing or eliminating dining facilities and laundries.

The GAO’s December 2006 review of DOD’s use of private contractors in Iraq found the use of contractors increased cost to the government, particularly because there is not oversight.

The GAO’s September 2006 report on Iraq contract costs discovered “$2.1 billion in questioned costs and $1.4 billion in unsupported costs” on Iraq contracts.

Accountability in Contracting Act

The House passed the Accountability in Contracting Act on March 15, 2007 which would limit no-bid federal contracts. The Act passed 347-73. The Bush administration is opposed to the bill, stating it would make federal contracts less competitive, despite the fact that many of the contracts have been no-bid. Congressional members in support of the Act pointed out that there have been twice as many federal contracts during Bush’s tenure, totaling almost $400 billion. No-bid contracts have grown from $67 billion in 2000 to $145 billion in 2006.

The bill went to the Senate, and was referred to the Committee on Homeland Security and Governmental Affairs. If the Senate passes it, President Bush will likely veto it.

Gina-Marie Cheeseman