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State Department Waste in Iraq Costs Billions, Audit Finds

WASHINGTON -- For nearly $4.5 million a year, the State Department assigned a 16-person security detail to protect six U.S. contractors in Iraq who already had a team of hired guards they didn't really need.

The expensive miscue is one of many described in an audit issued Monday of a $2.5 billion State Department contract with DynCorp International for training Iraq's police force.

The department repeatedly failed to oversee the contract properly, according to the audit by the special inspector general for Iraq reconstruction. The findings also suggest the department remains ill-equipped to watch over the vast amount of U.S. money flowing into Afghanistan.

"I think they need to act quickly to remedy this long-standing concern," the special inspector general, Stuart Bowen, said about the State Department's shortage of people and resources to oversee work done by the private sector.

In comments included in the report, Assistant Secretary of State David Johnson disputed the audit's central conclusion that weak oversight made the $2.5 billion vulnerable to waste and fraud. Johnson said payments are only made to a contractor after the invoices have been carefully checked.

But the report challenges that assertion.

Bowen said the Iraqi police training contract awarded to DynCorp of Falls Church, Virginia, in 2004 is the largest ever managed by the State Department. Yet for the few years of the arrangement, the department had a single contracting officer in Iraq to monitor invoices to ensure the government got what it was paying for.

Overwhelmed by the volume and complexity of the paperwork, the lone officer was approving all DynCorp invoices without questioning them. That means there is "no confidence in the accuracy of payments of more than $1 billion to DynCorp" during the early stages of the contract, the report says.

There are now three contracting officers in Iraq overseeing the work, but the audit says that's still too few. These officers also lack needed guidance on how to do the job.

The audit didn't assess DynCorp's performance of the work, Bowen said.

In a statement, DynCorp spokesman Douglas Ebner said the company has done well in a "difficult environment" and welcomes additional oversight personnel.

Among other problems listed in the audit:

--The State Department has paid $450,000 since 2006 to lease two power generators for houses at a camp in northern Iraq. Both generators could have been bought for $78,000.

--Leases for contractor lodgings reimbursed by the State Department ballooned - in one case from $12,000 a month to $20,000 a month. The lease agreements lacked price escalation clauses that would have limited the increases.