$1.2 Billion State Department-DynCorp Contract for Iraq Police Training in Disarray

The State Department so badly managed a $1.2 billion contract for Iraqi police training that it can't tell what it got for the money spent, a new report says.

Because of disarray in invoices and records on the project -- and because the government is trying to recoup money paid inappropriately to contractor DynCorp International, LLC -- auditors have temporarily suspended their effort to review the contract's implementation, said Special Inspector General for Iraq Reconstruction Stuart W. Bowen Jr.

Bowen had been trying to review a February 2004 contract to DynCorp awarded by the State Department's Bureau for International Narcotics and Law Enforcement Affairs (INL). The company was to provide housing, food, security, facilities, training support, law enforcement staff with various specialties as well as weapons and armor for personnel assigned to the program.

"I guess it's a familiar theme," Bowen said Monday, in that problems have previously been documented with both DynCorp and the agency overseeing the contract.

Although training has been conducted and equipment provided under the contract, the bureau is in the process of trying to organize and validate invoices and does not believe its records accurately show the reasons for most payments that were made, the report said.

"As a result, INL does not know specifically what it received for most of the $1.2 billion in expenditures under its DynCorp contract for the Iraqi Police Training Program," Bowen said in a new 18-page report.

The contract, now in its third year, is to support training programs in Iraq and Afghanistan -- to help stand up local forces that can take over from coalition forces and provide for their own security in each nation. Bowen focused on the Iraq program in the new report.

"Lack of controls" and "serious contract management issues" at the INL bureau made it "vulnerable to waste and fraud," Bowen said.

The management problems have been pointed out previously and a letter from the bureau was included in the new report outlining reforms that are under way. The bureau has added staff, is reviewing invoices and has demanded refunds and other reconciliation for some past questionable payments made to DynCorp, said Elizabeth Verville, acting assistant secretary for the bureau.

DynCorp spokesman Gregory Lagana told The New York Times on Monday: "There was no intentional misbilling. It could be just a documents problem." Lagana acknowledged "that we have some problems with invoicing. It's something we're working really hard to clean up."

Sen. Joe Lieberman, I-Conn., chairman of the Senate Committee on Homeland Security and Governmental Affairs, said Monday: "Once again, (the inspector general) has shown how vulnerable the federal government is to waste when it doesn't invest up front in proper contract oversight. It will now take the Department of State three to five years to review invoices and demand repayment from DynCorp for unjustified expenses. This scenario is far too frequent across the federal government."

Bowen reported in January that the State Department paid $43.8 million to DynCorp for a residential camp for police training personnel outside of Baghdad's Adnan Palace grounds. He said the camp had been empty for months; about $4.2 million of the money was improperly spent on 20 VIP trailers and an Olympic-size pool, all ordered by the Iraqi Ministry of Interior but never authorized by the U.S.

The new report also said DynCorp has twice been asked to improve its management of government-owned equipment in Iraq.

"According to INL officials, INL's most recent review of DynCorp's property management records found their accuracy had improved," Bowen said. "However, DynCorp's notifications of lost weapons were not done in a timely manner."

DynCorp has been mentioned as a possible replacement for Blackwater USA in the contract to provide armed security for diplomats in Iraq following a string of security incidents involving Blackwater guards, including a September shooting that left 17 Iraqis dead.

U.S. and Iraqi officials are negotiating Baghdad's demand that Blackwater be expelled from the country within six months, and American diplomats appear to be working on how to fill the security gap if the company is phased out.