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Wasteful spending in Iraq has topped $1 billion, official estimates

WASHINGTON—At least $1 billion in taxpayers' money has been wasted in inefficient spending in Iraq, the federal government's top fiscal watchdog said Tuesday.

The estimate, by U.S. Comptroller General David Walker, is the first time anyone has put a number on the amount of misspending in Iraq.

It amounts to less than 2 percent of the $60 billion the government has spent since March 2003 on waging war in Iraq and rebuilding the country. But it's more than the government spends on research into Alzheimer's disease and asthma combined, for example.

For months now, federal auditors from a number of governmental agencies have highlighted spending problems that stem from no-bid contracts, poor cost estimates and a lack of adequate oversight.

Walker told Knight Ridder that getting an accurate figure on waste during the war is difficult because the Pentagon's accounting system is "abysmal."

During his testimony Tuesday before the House Government Reform Committee, Walker said the Pentagon got an A-plus for its ability to fight wars, but a D in financial management, bookkeeping transparency and its ability to keep contractors' costs down.

Pentagon chief procurement officer Deirdre Lee declined to comment on Walker's assessment, but said the war posed a uniquely difficult challenge for defense officials responsible for directing spending in Iraq.

As an example of overspending, Walker's agency, the General Accounting Office, said the involvement of the politically connected firm Halliburton in a contract to feed U.S. soldiers in Kuwait had cost taxpayers an extra $30 million.

Before the war, a Kuwaiti firm, Tamimi, had a contract to provide meals to troops at four bases in Kuwait. Just before the fighting started, the Pentagon turned that job over to Halliburton's subsidiary Kellogg Brown and Root.

As part of the switch, the Defense Department ordered KBR to rehire Tamimi to do the actual feeding, Waxman said. For undisclosed reasons, Halliburton was taken off the contract this April, and costs dropped from $5 a meal to $3 a meal, said Neal Curtin, the GAO's defense management chief.

Halliburton spokeswoman Wendy Hall said the costs dropped because Tamimi didn't have the start-up costs that Halliburton had.

That's not the way Democrats saw it.

"Halliburton is gouging the taxpayer and the Bush administration doesn't seem to care," said Rep. Henry Waxman, D-Calif., the ranking Democrat on the House Government Reform Committee. "Halliburton acts like an individual spending someone else's money—which is exactly what Halliburton is doing."

Committee Chairman Thomas Davis, R-Va., dismissed that notion. "I understand why others feel the need to say the word `Halliburton' as often as humanly possible. But we have more than just one contractor in Iraq, and lives are on the line."

In a separate matter, defense auditors said KBR also passed on to taxpayers another $10 million in unjustified expenses for feeding troops in Iraq.

Bill Reed, the director of the Defense Contract Audit Agency, the Pentagon's audit arm, said Halliburton billed the government for 36 percent more meals than were served. In all, Reed put the amount of overcharging at $186 million, and he barred the Pentagon from paying that amount.

Halliburton's Hall said the agency's figures were wrong and that it ignored the fact that KBR's contract required it to be able to feed a minimum number of troops no matter who showed up. If the Pentagon doesn't pay KBR, Hall said, the firm won't be able pay its subcontractors.

Earlier this year, Pentagon auditors rejected "two major task order proposals worth more than $3 billion to KBR because they were inadequate for the purpose of negotiating a fair and reasonable price," Reed said.

KBR also has been criticized for abandoning $85,000 trucks with flat tires, housing company officials in a five-star Kuwaiti hotel, raising prices for gasoline deliveries in Iraq and ordering empty trucks to crisscross the country.

The firm is under investigation by the Securities and Exchange Commission for allegations of bribery in Nigeria during a period when Dick Cheney, who's now vice president, was its chief executive officer. The company has denied any wrongdoing.


(c) 2004, Knight Ridder/Tribune Information Services.