updated 2/15/2007 3:09:39 PM ET 2007-02-15T20:09:39

The U.S. government is at risk of squandering significantly more money in an Iraq war and reconstruction effort that has already wasted or otherwise overcharged taxpayers billions of dollars, federal investigators said Thursday.

The three top auditors overseeing contract work in Iraq told a House committee of $10 billion in spending that was wasteful or poorly tracked. They pointed to numerous instances in which Defense and State department officials condoned or otherwise allowed poor accounting, repeated work delays, bloated expenses and payments for work shoddily or never done by U.S. contractors.

That problem could worsen, the Government Accountability Office said, given limited improvement so far by the Department of Defense even as the Bush administration prepares to boost the U.S. presence in Iraq.

Given "the need for continued support for deployed forces, it is essential for DOD to address these shortcomings if the department is to increase its return on its investment in Iraq," said David M. Walker, comptroller general of the GAO, Congress' auditing arm, in prepared testimony.

The auditors' joint appearance before the House Oversight and Government Reform Committee comes as Congress is preparing for a showdown with President Bush next month over his budget request of nearly $100 billion to pay for more U.S. troops in Iraq.

Also testifying Thursday were Stuart Bowen, the special inspector general for Iraq reconstruction, and William Reed, director of the Defense Contract Audit Agency.

$5 billion in bad paperwork
According to their testimony, the investigators:

  • Found overpricing and waste in Iraq contracts amounting to $4.9 billion since the Defense Contract Audit Agency began its work in 2003, although some of that money has since been recovered. Another $5.1 billion in expenses were charged without proper documentation.
  • Urged the Pentagon to reconsider its growing reliance on outside contractors to run the nation's wars and reconstruction efforts. Layers of subcontractors, poor documentation and lack of strong contract management are rampant and promote waste even after the GAO first warned of problems 15 years ago.
  • Pointed to growing Iraqi sectarian violence as a significant factor behind wasted U.S. dollars. Iraqi officials must begin to take primary responsibility for reconstruction efforts, an uncertain goal given widespread corruption in Iraq and the local government's inability to fund projects.

Rep. Henry Waxman, D-Calif., who chairs the panel, has pledged scores of investigations of fraud, waste and abuse — with subpoenas if necessary — on the Bush administration's watch. He decried the overpricing identified by the DCAA, a figure that has tripled since last fall.

Halliburton cited
Of the $10 billion in overpriced contracts or undocumented costs, more than $2.7 billion were charged by Halliburton Co., the oil-field services firm once headed by Vice President Dick Cheney.

"According to the Pentagon auditors, more than one in six dollars they have audited in Iraq is suspect," Waxman said. "It's no wonder taxpayers across the country are fed up and demanding real oversight."

Rep. Tom Davis, R-Va., the top Republican on the panel, pointed to ongoing, "systemic" problems in Iraq contracting.

"This much is clear: Poor security, an arcane, ill-suited management structure, and frequent management changes have produced a succession of troubled acquisitions," he said.

Bowen said his office had expanded an investigation of police training contracts awarded by the State Department. An audit by Bowen last month found tens of millions of dollars wasted on a DynCorp International contract to build an Olympic-size swimming pool for a police academy in Baghdad that has yet to be used. The pool as well as VIP trailers were ordered by Iraqi officials but never authorized by the State Department.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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