Warning That Scandals Involving Iraq Contractors Soon To Break

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WASHINGTON – The coming months will bring a series of damning reports about the behavior of non-military contractors in Iraq, according to John Hamre, a former deputy secretary of defense.

“I fear that we are going to see, over the next months, a terrible, terrible set of scandalous reports about how we have been doing things in Iraq. It is going to poison the well,” Mr. Hamre told a meeting at the American Enterprise Institute yesterday.

Mr. Hamre, a deputy secretary of defense in the Clinton administration, is working with the Office of the Special Inspector General for Iraq Reconstruction, which he said will publish five or six reports over the next nine months.

He declined to comment on what they might contain, but the most recent report, issued on April 30, indicates that the office has “72 open investigations into alleged fraud and corruption.”

Robert Stein, the regional Coalition Provisional Authority comptroller, and Philip Bloom, a contractor, pleaded guilty last month to attempting to defraud the CPA of more than $8.6 million. Stein admitted he stole $2 million and took bribes to award contracts to Bloom.

A spokeswoman for Sigir, Kristine Belisle, said the reporting process was ongoing and that “they don’t even operate on a timeline” because they need to allow contractors time to respond to the findings. Audits “usually come out right before our quarterly reports,” she said, “and the next one will be out July 30.”

Mr. Hamre is currently involved with Sigir’s Lessons Learned Initiative, which will put out its second report, on contracting, in June, and its third, on program management, around September.

A Pentagon comptroller between 2001 and 2004, Dov Zakheim, also spoke at the event yesterday, and declined to speculate about the contents of the reports.

Both Mr. Zakheim and Mr. Hamre articulated the need for contractors in postwar reconstruction and peacekeeping efforts.

Mr. Hamre remarked that although the $450 billion defense budget for 2006 was roughly equivalent in real terms to the budget at the height of the Reagan defense buildup in 1986, the funding now buys substantially less due to the increased cost of labor, and the active military now numbers 1.36 million, compared to 2.2 million two decades ago.

As a result, “military operations will not succeed without contractors on the battlefield. I’m stating that as a fact,” Mr. Zakheim said. “I cannot see how we can succeed, given our lower numbers, given the greater scope, given the commitments we’ve got, given where the [2004 Quadrennial Defense Review] says we’re headed, and the reality that’s on the ground … without contractors.”

A professor at George Washington University, Deborah Avant, said 20,000 private support personnel are in Iraq, making them the second largest part of the coalition of the willing.

A military source, who spoke on condition of anonymity, said the Pentagon had to contract out for services in order to get them quickly because ordinary procurement processes are ponderous.

“Ergonomic chairs,” he said. “It takes 45 days from the day the contract is signed to get the chair … that’s the price you pay for government bureaucracy.”

The source maintained that contractors are necessary and that many of those he encountered in Iraq were highly professional. In his view, financial improprieties were exceptions rather than the rule, and the worst abusers were being caught.

“None are without some degree of, ‘Okay, yeah, we overcharge for this.’… One guy I used to know … completely ripped off the government, and [his firm ended up] before Congress.”

“It’s all about perspective,” the source said. “Is it deplorable? Yes. Is it expected in something as chaotic as Iraq? Yes. It would be more chaotic probably if you had all of the accountability mechanisms in place at the same time as you tried to dole out contracts.”


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