By Senior Investigative Producer, NBC News Investigative Unit
updated 9/29/2006 4:01:11 PM ET 2006-09-29T20:01:11

Contractor overbilling. Detainee abuses. Flagrant government corruption.

There's no shortage of work these days for the Pentagon's inspector general, the Department of Defense watchdog who oversees the Pentagon and its massive budget. And yet the position -- one of the most important oversight jobs in all of federal government -- has gone vacant for more than a year.

Now, sources tell NBC News, bureaucratic in-fighting and resistance from a prominent U.S. senator have stalled and possibly scuttled the confirmation of a hard-charging prosecutor who was nominated months ago for the top job.

What's going on?

In June, President Bush nominated a new Pentagon inspector general, choosing a federal prosecutor with a reputation for aggressively prosecuting terrorists. But congressional sources say his nomination is in peril, delayed by Sen. Carl Levin, D-Mich., and infighting by the acting Pentagon inspector general. The upshot, the sources say, is that the Pentagon will likely continue to operate without a top watchdog for months to come -- even as wars rage in Iraq and Afghanistan and the Pentagon's budget swells to more than $400 billion a year.

The nominee is David Laufman, an Assistant United States Attorney for the Eastern District of Virginia. Laufman is a former CIA analyst and Justice Department lawyer with a reputation for smarts. Laufman was the lead prosecutor for Ahmed Omar Abu Ali, an American citizen who was convicted of aiding al-Qaida and conspiring to assassinate President Bush. Laufman also helped to prosecute the controversial case of the so-called Virginia Jihadists, a group of Islamic radicals living in the suburbs of Washington, D.C., who trained with paintball guns and wanted to conduct violent jihad overseas.

But Levin, the ranking Democrat on the Senate Armed Services Committee, has publicly questioned Laufman's independence. And Levin's staff director confirms that the senator has helped stall any action on the nomination at least until November, when the lame-duck congressional session begins.

"We met with him and we still have concerns," says Richard DeBobes, the Democratic Staff Director of the Senate Armed Services Committee. DeBobes says the senator is concerned that Laufman could "cozy up to" the secretary of defense and consult with him before issuing an investigation or report that deals with national security matters.

"I don't believe it's been the practice of the IG's to consult with the Department of Defense or to feel obligated to consult with the Department of Defense relative to those findings," Levin said at Laufman's confirmation hearing in July. "To do so would be a real impingement on the independence of the inspector general... so that's why I'm very, very surprised by your answer."

Laufman protested, and said that the IG statute requires the inspector general to consult with the defense secretary on certain sensitive national security issues. He insisted, however, that he would never "trim the sails" of any Pentagon investigation. "I do not anticipate taking any course of action that infringes on the actual independence of the IG," Laufman testified.

Other inspectors general agree that Laufman is fiercely independent, and say that the Defense Department badly needs a watchdog with Laufman's persistence and integrity.

"He has a prosecutor's background and a prosecutor's demeanor, and that means pursuing the truth wherever it may lead," says Stuart Bowen, Jr., the Special Inspector General for Iraq Reconstruction.

Bowen says that the allegation that Laufman would be too cozy with the defense secretary is a "red herring." He adds that the DoD IG has been "largely absent" in reviewing massive military contracts in Iraq, and that Laufman would get the job done.

"What's missing is a robust presence from the DoD IG in Iraq," Bowen says. "David will take on this issue and do what's been needed for a long time."

DeBobes also tells NBC News that the Acting Inspector General for the Pentagon, Thomas Gimble, has played a role in derailing Laufman's nomination. The acting IG — whose job Laufman would replace — wrote to Congress and criticized Laufman's belief that sitting IGs must in some way consult with the defense secretary before issuing reports that deal with national security matters.

"They're [the acting IG and his staff] the ones who have provided information to us that is very unsettling," DeBobes says.

A spokesman for Gimble did not respond to an e-mail regarding the controversy. But he did defend Gimble's record over the past year, stating that the IGs office "recorded 316 indictments, 252 convictions and $2.46 billion in criminal investigative recoveries — its best ever; issued 110 audit reports and 94 draft audits, and established an office in Qatar as part of an overall OIG strategy to improve its oversight of the global war on terrorism."

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