[Congressional Record Volume 150, Number 89 (Thursday, June 24, 2004)]
[Senate]
[Pages S7418-S7419]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    ABUSE OF CONTRACT FUNDS IN IRAQ

  Mr. AKAKA. Mr. President, I rise today to discuss the alarming 
incidence of U.S. contract funds being abused in Iraq. These violations 
range from the abandonment of vehicles, each worth $85,000, to 
significant project overruns involving tens of millions of tax dollars. 
The scope of these wasteful and fraudulent activities is both 
disturbing and unacceptable.
  At this critical juncture in Iraq's rehabilitation, contractors and 
their administrators should be providing contracted services and goods 
with maximum efficiency.
  As an American, I am proud of and thankful of the men and women who 
have traveled to Iraq to help restore this country. They risk their 
lives and, sadly, some have given their lives. However, stories of 
outright waste and fraud involving contract funds are deeply 
disturbing.
  Three themes have emerged from the abuse of U.S. contracts in Iraq: 
task order violations, the absence of cost controls, and inconsistent 
oversight.
  Numerous contract officers have used existing procurement or task 
orders to obtain services and goods beyond the scope of approved 
contracts. For instance, during December 2003, the Army acquired 
interrogators for Iraqi prisons via a contract marked for the 
Department of Interior information technology purchases. Interior 
contract officers negotiated interrogation services through an open-
ended agreement laden with tenuous connections to technology. In such 
circumstances, new procurement items should only be obtained under open 
and fair competition.
  The absence of consistent cost controls has also attributed to the 
misuse of contract funds. The General Accounting Office reports that a 
significant portion of task orders, associated with defense logistical 
support contracts in Iraq, have been granted without concrete 
specifications, deadlines, and prices. The prevalence of open-ended 
contracts have fueled inefficiency and numerous project overruns 
exceeding 100 percent. Unfortunately, the absence of a well-trained 
procurement workforce in Iraq has impeded efforts to counter these 
adverse outcomes.
  In the presence of fragmented oversight, the misuse of contract funds 
has further escalated. Currently, the Coalition Provisional Authority, 
CPA, only has oversight of contracts associated with reconstruction and 
Task Order 44 of the U.S. Army's Logistical Operations Civil 
Acquisition Program, LOGCAP, which provides CPA logistical support, yet 
all other contractors in Iraq are audited by agency inspector General, 
IG, offices. It is anticipated that the challenges of fostering 
accountability will substantially increase after the handover of Iraq 
on June 30, 2004. The CPA IG reports that 60 days after the handover, 
CPA audit activities will be merged into the State Department's IG 
Office. This office will oversee all U.S. contracts in Iraq including 
those managed by the Department of Defense. Government officials 
forecast that this change

[[Page S7419]]

in audit authority will generate confusion at a time when consistent 
oversight is most needed.
  The widespread misuse of contract funds in Iraq warrants Senate 
attention. During these financially lean times, it is unacceptable to 
tolerate such outright abuse of U.S. tax dollars. It is imperative that 
we demand greater accountability and efficiency, and immediately focus 
on this critical issue. Senate hearings would help identify sources of 
misuse and assist in developing viable remedies. This war has cost 
hundreds of lives and billions of dollars. We should not ignore the 
price being paid, and the debt incurred, by this generation and future 
generations in this conflict.

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