Playing Fair: Tax Dollars, Contractors, and Rebuilding Iraq

Did you know that our tax dollars pay not only for the military operations in Iraq and Afghanistan, but also for reconstruction efforts there that are organized by American contractors? Those contractors have very little supervision, and instances of waste and fraud have been documented. Whistleblowers are wondering how many cases haven’t been documented.

Senate vote

On June 20, 2006, the Senate voted to table an amendment that would create a committee to investigate contracting abuses in Iraq and Afghanistan. They voted 44-52 along party lines.

The Amendment’s sponsor, Byron L. Dorgan (D-North Dakota) argues that the Senate is not providing sufficient oversight of the rebuilding process and that action needs to be taken to save taxpayers’ money.

Opponents argue that creating another committee isn’t going to save tax dollars.

What’s going on there?

Accusations of no-bid contracts in Iraq have been flying around for years. But what does this mean? In short, it means that many American companies aren’t able to compete for multi-billion dollar reconstruction projects in Iraq and Afghanistan. And the companies that do get the contracts are rarely inspected.

Some argue that the government’s system for awarding contracts (in general, not just in Iraq) is flawed. The "Indefinite Delivery Indefinite Quantity" or, IDIQ system allows the government to award vague contracts. For example, in 2004, Bechtel was awarded $1.8 billion to repair the infrastructure in Iraq for 24 months. So during that time, they had a monopoly on projects and services up to $1.8 billion. This method prevents companies from bidding and potentially bringing down the cost.

Further, a practice of grouping contracts together called "bundling" prevents smaller companies from bidding at all. Bundling creates enormous projects that only the largest companies can handle.

In addition, the government continues to award contracts to companies that have repeatedly violated rules and regulations, thereby undercutting laws meant to protect taxpayers. These companies include Lockheed, with 84 incidents of misconduct; Northrop Grumman, with 36 instances; and Fluor with 15 - just to name a few.

Due to this lack of management, contractors in Iraq may be taking the American people for a ride.

So what do we do?

The Project on Government Oversight, a non-profit and non-partisan watchdog group, recommends more public oversight and more transparency in the contract-granting process.

More specifically, they say that full and open bidding would save taxpayer dollars. They recommend that Congress close the loopholes in the Competition in Contracting Act of 1984 and restore the definition of "competitive" to two or more bidders.

The group also recommends that contracts worth over $25,000 dollars be made public because currently, task and delivery orders for hundreds of millions of dollars are not freely available.

Is anything being done now?

There are about 50 cases pending against contractors suspected of defrauding the government. The administration has sealed the cases due to a technicality in the False Claims Act. This statute, which was created during the Civil War, allows whistleblowers to sue contractors suspected of misconduct. The cases are blocked until the White House and the Justice Department allow them to proceed.

What do you think?

How should the government award large contracts? What should be done about the lack of public and congressional oversight? Is an investigative committee the answer?

Your input matters

Your representatives DO care what you think. Especially now -- 2006 is an election year and many representatives will be looking to reconnect with their constituents. Let your congressmen and women know what you think! Give your senators a piece of your mind! To find your reps, click here.

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Article Posted on: 6/25/2006