US Military contracting swindles
After three years, the bipartisan Commission on Wartime Contracting completed its business this week. In its final report to Congress (PDF), it estimates that the federal government has lost between $31 and $60 billion to contractor fraud and waste since the wars in Afghanistan and Iraq started.
Its “greatest-hits list” of expensive bloopers make that famous $600 Pentagon toilet seat look like a bargain. In ascending order of egregiousness, here are the top 10 war-contractor boondoggles detailed in the report:
10. Welfare for warlords: When the Pentagon hired Afghan big-rig drivers to transport supplies as part of its Host Nation Trucking program, it forgot to guarantee the truckers’ safety. So the truckers spent as much as 20 percent of their contract money paying off local bad guys for protection.
9. The world’s most expensive road: In 2007, US planners decided to pave a 64-mile mountain road between the Afghan towns of Khost and Gardez. They figured it would take $69 million to complete, but the cost swelled to $176 million. ($2.75 million per mile!)
8. This old base: In the fall of 2007, the Air Force gave $18 million to contractor CH2M HILL for construction work at Camp Phoenix, an Army installation in Afghanistan. The firm hired a shady subcontractor who didn’t pay his workers and fled the country with $2 million, which he used to build himself some villas abroad. The unpaid workers walked off with a bunch of generators and other materials.
7. Rent-a-ripoff: A 2010 survey of US forces in Afghanistan found that the Army was spending $119 million annually to lease about 3,000 cars—roughly $40,000 a year per car.
6. The Kabul bank bust: Since 2003, the US Agency for International Development has paid $92 million to the accounting giant Deloitte to train executives of the Afghanistan Central Bank. The Central Bank oversaw Kabul Bank, Afghanistan’s largest private bank, which collapsed in 2010, taking the nascent Afghan financial system down with it.
5. Never leave a mandarin behind: In 2005, the Defense Logistics Agency awarded Swiss-based Supreme Foodservice a fat contract to ship “vitally needed” food to bases in Afghanistan. By the early 2011, the company had billed the government $4.2 billion, but Pentagon investigators found that sum had been padded with hundreds of millions in possible overcharges for things like providing “premium airlift” of fresh fruits and vegetables from the United Arab Emirates. Nevertheless, the company got a two-year extension on its contract, perhaps because the Army general who used to supervise Supreme’s DLA contract is now president of the company’s US division.
4. Soldiers of misfortune: To keep their profit margins fat, military contractors tend to subcontract on cheap labor from poor nations, a practice that’s led to “forced labor, slavery, and sexual exploitation,” the commission says. In a trip to Iraq in 2009, commissioners learned about the mostly African and South American guards hired by companies like Triple Canopy, SABRE, and EODT to provide security on big US bases. Among their discoveries: The government paid SABRE $1,700 per guard; in turn, SABRE paid its Ugandan recruits $700 a month and pocketed the difference.
3. KBR/ 2. KBR/ 1. KBR: Megacontractor KBR (a.k.a. the contractor formerly known as Halliburton) was paid at least $36.3 billion to provide base support in Iraq for the past eight years. That’s only slightly less than the government bailouts for Bank of America and Citigroup!
The commission report details numerous examples of waste by KBR. Where to begin? There’s the kickback from the subcontractors who were awarded a $700 million dining deal in Iraq. Then there’s the $5 million spent on 144 KBR mechanics who worked as little as 43 minutes a month, on average. Inspectors have found that KBR can’t account for $100 million worth of its government-furnished property in Iraq. Despite collecting $204 million for electrical work on Iraq bases, KBR’s shoddy wiring has been blamed in as many as 12 soldiers’ electrocution deaths.
Perhaps most troubling is the company’s links to purported human trafficking. In late 2008, reporters discovered a windowless warehouse on the Camp Victory complex outside Baghdad, where about 1,000 men from Bangladesh, India, Nepal, and Sri Lanka were being held in prison-like conditions. The men had been hired by a KBR subcontractor. Around the same time, another KBR subcontractor was sued for allegedly spiriting Asian workers into Iraq with false promises of high-paying jobs.
And the waste continues.