Army to examine Iraq contracts

Associate Press (2007-08-29) Richard Lardner

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By RICHARD LARDNER, Associated Press Writer Wed Aug 29, 7:47 PM ET

WASHINGTON - The Army will examine as many as 18,000 contracts awarded over the past four years to support U.S. forces in Iraq to determine how many are tainted by waste, fraud and abuse, service officials said Wednesday.

Overall, the contracts are worth close to $3 billion and represent every transaction made between 2003 and 2007 by a contracting office in Kuwait, which the Army has identified as a significant trouble spot.

Among the contracts to be reviewed are awards to former Halliburton subsidiary KBR, which has received billions of dollars since 2001 to be a major provider of food and shelter services to U.S. forces in Iraq and Afghanistan.

Democrats in Congress have claimed that KBR, formerly known as Kellogg, Brown and Root, benefited from ties to Vice President Dick Cheney, who once led Halliburton Co., the Houston-based oil services conglomerate, and congressional Republicans.

The officials did not specify which KBR contracts would be examined or their value.

The announcement, made by Army Secretary Pete Geren, comes as the number of criminal cases related to the acquisition of weapons and other supplies for forces in Iraq and Afghanistan has grown to 76. So far, 20 military and civilian Army employees have been indicted on charges of contract fraud.

"There have been reported cases of fraud, waste and abuse of contracting operations, with many of the worst cases originating out of Kuwait," Geren said.

Geren said the Army has been auditing the contracting operation in Kuwait for more than a year. He acknowledged the expanding list of criminal investigations was a factor in appointing a special task force headed by a three-star Army general.

"There is fraud," Geren said. "We have seen more cases lately and that's cause for concern."

Lt. Gen. N. Ross Thompson has been empowered to take whatever corrective actions he determines are necessary "to prevent any further abuse, fraud or waste," Geren said.

Thompson, the military deputy to the Army's top civilian acquisition official, said his task force will "make sure that we've identified anything that needs to be looked at that hasn't been already been picked up by an ongoing investigation."

By Sept. 30, Thompson plans to boost the number of personnel in the Kuwait office by 35, giving it a staff of 90.

"We already know from our internal looks over the last few months in Kuwait that the experience level of some of the people - not all of the people that we had in Kuwait - wasn't up to the challenge or the complexity of the contracts," Thompson said.

By Jan. 1, contracts worth more than $1 million will be handled by the Army Materiel Command at Fort Belvoir, Va., which has more staff able to deal with larger, more complex procurements, Thompson said.

In late 2005, the Army began audits and its Criminal Investigation Command accelerated its inquiries into contract fraud in Kuwait, according to an Army news release. The command first established an Iraq Fraud Detachment and then a Kuwait Fraud Office, both staffed with specially trained agents.

By early 2007, the Army had reorganized the Kuwait office, provided ethics training for employees and added a legal team.

Geren has also formed a special commission to examine long-term solutions to improve the Army's weapons and supply contracting process. That team will be headed by Jacques Gansler, a former under secretary of defense for acquisition, and its report is due in 45 days.

Separately, the Pentagon is sending a team of investigators led by Inspector General Claude M. Kicklighter to examine problems with "weapons and munitions purchased by the U.S. government and intended for use by Iraqi security forces," according to Chris Isleib, a Pentagon spokesman.