Video: Rebuilding Iraq: Wasted money?

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updated 9/15/2004 12:50:07 PM ET 2004-09-15T16:50:07

The rolling hills of the Flathead Indian Reservation in Montana are a world away from the chaos of Iraq. Yet when NBC News followed the paper trail of U.S. government contracts in Iraq, one led to a tiny information technology company owned by two tribes (the Salish and Kootenai) called S&K Technologies.

"It really feels like an honor to have one of our tribal entities be involved with the rebuilding of Iraq," says Tribal Chairman Fred Matt.

S&K Technologies hired 75 administrators, press officers and aid workers to work for the Coalition Provision Authority (CPA) in Baghdad. The total contract is worth about $20 million over two years.

Why would the Pentagon use a little company, with no track record in a war zone, to hire workers for Baghdad?

"As a tribally-owned company, we have some unique advantages that other companies don't," says S&K Technologies President Greg Dumontier.

As the company's Web site boasts, the law allows the government to award contracts to minority companies without competitive bidding. And there are even fewer restrictions for tribal companies.

The S&K contract, obtained by NBC News, was one of two dozen criticized by government investigators. A Pentagon audit found officials circumvented procedures and failed to ensure taxpayers "paid fair and reasonable prices." The report did not criticize the performance of S&K Technologies, but blamed the process.

"They're using the Indian tribal preference as a subterfuge to avoid open competition," says Charles Tiefer, a federal contracts expert at the University of Baltimore School of Law.

The Pentagon says it had to deploy resources in Iraq quickly and followed the law.

But a series of government reports hammer U.S. officials for how billions of dollars have been spent and not spent.

Of $18 billion set aside for Iraq last year, only $1 billion has been spent. Especially glaring is the failure to repair and build a sewage system.

Raw sewage still saturates the streets of Baghdad and pours into the Tigris River.

"We are seeing an increase in water-borne diseases, everything from cholera to hepatitis and chronic diarrhea," says Bathsheba Crocker, co-director of the Post-Conflict Reconstruction Project at the Center for Strategic and International Studies.

Administration officials say violence has slowed many projects, but that almost half the work has begun. Yet, as of Monday, of 2,300 projects planned, only 12 have been completed.

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