Corruption In Iraq & World: US Army to Probe for Waste, Fraud & Abuse in $3 Billion of Contracts in Iraq

Well, the article below explains that the US Army finally stepped up to the plate to investigate procurement contract fraud related to goods purchased for the Iraq and Afghanistan conflicts. Below today's article is an article published yesterday in Newsday that may have led to the announcements below.

A plus is that this article mentions that Army Secretary "Geren has also formed a special commission to examine long-term solutions to improve the Army's weapons and supply contracting process. " In my experience, this is the bigger problem. If you have a lousy method to process orders, you can't catch the bad guys. A GOOD process with transaction and batch controls prevents the bad guys from finding easy ways to commit fraud. That is what I saw in Baghdad where the Army didn't even have a system to track whether requisitions were properly handed off from one internal process unit to another, and they didn't have a backend system to track that all ordered items were delivered to the ordering agency on a timely basis.

There was NO ONE with the responsibility over the seven separate units processing procurements, thus they had no way to know how bad it was until I started bringing in requisitions that had been lost for a year because the contracts group didn't have a quality control process to prevent typos in phone numbers, addresses, and other critical data entered into purchase orders by very inexperienced enlisted personnel who did the data entry.

As a consequence, they had an extremely amateurish, fragmented system for procurement that allowed thousands of shipments to arrive in country without any identification information on who ordered it, thus the items were given to other units (that happened to ammunition my unit ordered), allowed to sit in massive warehouses, or were stolen.

The problem is that Iraq required an ad hoc set up of many new systems and the standard, centralized rules bound methods used in the US could not be used in Iraq, and the Army had no experience in setting up well controlled administrative systems from scratch, especially when officers from the Air Force and Navy rotated out of positions every 3-6 months. I had full Bird Colonels over the "contract office" yelling at me and trying intimidation when I asked about the above failures - all the military people were used to having the US based system, and didn't have skills to develop or understand well controlled systems that needed to be developed in an unstructured environment.

In contrast, many years ago I worked at ARCO, the oil company, and they had to establish field administration and control systems from scratch in the Alaskan Pipeline system, and they had similar problems, but they caught them in the first 1-2 years due to extensive auditing, and cleaned up the system problems quickly.
vj
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Note: The orginating DoD press release for this info is at:
http://www.defenselink.mil/news/newsarticle.aspx?id=47209

Army to Probe $3 Billion of Contracts in Iraq

By Richard Lardner
Associated Press
Thursday, August 30, 2007; Page D08

The Army will examine as many as 18,000 contracts awarded over the past four years to support U.S. forces in Iraq to determine how many are tainted by waste, fraud and abuse, service officials said yesterday.

Overall, the contracts are worth close to $3 billion and represent every transaction from 2003 to 2007 by a contracting office in Kuwait, which the Army has identified as a significant trouble spot.

Army Secretary Pete Geren says the investigation will include every transaction made by the contracting office in Kuwait since 2003.

Pentagon Procurement

The Defense Department's process for acquiring weapons and other equipment has been rocked by recent scandals and the scrutiny of the "revolving door" that can benefit former Pentagon officials.

Among the contracts to be reviewed are awards to former Halliburton subsidiary KBR, which has received billions of dollars since 2001 to be a major provider of food and shelter services to U.S. forces in Iraq and Afghanistan.

The officials did not specify which KBR contracts would be examined or their value.

The announcement, made by Army Secretary Pete Geren, comes as the number of criminal cases related to the acquisition of weapons and other supplies for U.S. forces in Iraq and Afghanistan has grown to 76. Twenty military and civilian Army employees have been indicted on charges of contract fraud.

"There have been reported cases of fraud, waste and abuse of contracting operations, with many of the worst cases originating out of Kuwait," Geren said.

Geren said that the Army has been auditing the contracting operation in Kuwait for more than a year. He acknowledged that the expanding list of criminal investigations was a factor in appointing a special task force headed by a three-star general.

"There is fraud," Geren said. "We have seen more cases lately, and that's cause for concern."

Lt. Gen. N. Ross Thompson has been empowered to do whatever he determines necessary "to prevent any further abuse, fraud or waste," Geren said.

Thompson, the military deputy to the Army's top civilian acquisition official, said that his task force will "make sure that we've identified anything that needs to be looked at that hasn't been already been picked up by an ongoing investigation."

By Sept. 30, Thompson said he plans to boost the number of employees in the Kuwait office by 35, giving it a staff of 90.

"We already know from our internal looks over the last few months in Kuwait that the experience level of some of the people -- not all of the people that we had in Kuwait -- wasn't up to the challenge or the complexity of the contracts," Thompson said.

By Jan. 1, contracts worth more than $1 million will be handled by the Army Materiel Command at Fort Belvoir, which has more staff able to deal with larger, more complex procurements, Thompson said.

In late 2005, the Army began audits, and its Criminal Investigation Command accelerated its inquiries into contract fraud in Kuwait, according to an Army news release. The command first established an Iraq Fraud Detachment and then a Kuwait office, both staffed with specially trained agents.

By early 2007, the Army had reorganized the Kuwait office, provided ethics training for employees and added a legal team.

Geren has also formed a special commission to examine long-term solutions to improve the Army's weapons and supply contracting process. That team will be headed by Jacques Gansler, a former under secretary of defense for acquisition, and its report is due in 45 days.

The Pentagon is also sending a team of investigators, led by Inspector General Claude M. Kicklighter, to examine problems with "weapons and munitions purchased by the U.S. government and intended for use by Iraqi security forces," said Chris Isleib, a Pentagon spokesman.

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Here is an article posted a day earlier on Newsday which may have led to the above article.
vj

newsday.com/news/opinion/ny-vpirq295350177aug29,0,949654.story
Newsday.com
Missing arms in Iraq - fraud or imcompetence?

August 29, 2007

The disturbing question of huge quantities of missing U.S. weapons supplied to Iraqi forces is now rippling out into an international scandal, with criminal investigations and indictments for fraud operations involving billions of dollars.

Erupting at a time when public support for the war is sinking ever lower, the missing arms debacle goes beyond poor record-keeping and lack of adequate weapons tracking systems at the Pentagon.

To incompetence and expediency is added the possibility of the criminal involvement of at least one senior U.S. military officer who once reported to Gen. David Petraeus, the top U.S. commander in Iraq, according to a news report in the New York Times.

It all began earlier this summer, with a General Accountability Office report that more than 110,000 AK-47 assault rifles, 80,000 Glock pistols, 135,000 pieces of body armor and 115,000 Kevlar helmets issued to Iraqi security forces could not be accounted for.

Later, Amnesty International researchers found that hundreds of thousands of U.S.-approved arms transfers from Bosnia-Herzegovina to Iraq - more than 90 tons of AK-47s - could also be missing.

Now, U.S. investigators are uncovering what may turn out to be the largest ring of fraud and kickbacks in the Iraq war. Petraeus himself is not under investigation, but he has conceded that in the rush to supply arms to Iraqi forces to combat a fast-growing insurgency in 2004 and 2005, arms were delivered without a tracking system in place. That's understandable, perhaps. But the possibility of weapons fraud on a massive scale is inexcusable, and it will cast a shadow on Petraeus' expected report next month on the progress of the U.S. troop surge.

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Here is the US Army news release on this topic:
from:
http://www.army.mil/-newsreleases/2007/08/29/4653-army-takes-further-action-to-fight-fraud/

Army Takes Further Action to Fight Fraud

Aug 29, 2007

Throughout 2007 the Army has undertaken a rigorous effort to remediate weaknesses in contracting. Today, the Secretary of the Army has established two efforts to broaden the Army's ongoing efforts to ensure policies and procedures are in place for all joint, expeditionary contracting operations in Iraq, Afghanistan and Kuwait and better prepare the Army for acquisition and logistical support of combat operations in the future.

First, a Special Commission on Army Contracting has been given a broad charter to examine current operations as well as to ensure future contracting operations are more effective, efficient and transparent and report back in 45 days.

Second, an Army Task Force has been stood up to reinforce and immediately address existing contracting issues and aggressively implement fixes as problems are identified.

The Special Commission on Army Contracting will be led by the Honorable Jacques Gansler, former Under Secretary of Defense for Acquisition, Technology and Logistics. The Commission will fully examine theater acquisition and program management processes; review management controls to prevent fraud, waste and abuse; assess legislative needs; and recommend changes in policies and procedures.

"The Commission will take a big picture look and ensure we are properly organized to support Army and Joint Force expeditionary operations in an era of persistent conflict," Secretary of the Army Pete Geren said. "The Commission will look at how we currently are doing things and how we should be doing things, and examine policies and procedures in the world of contracting and logistics - even the way we promote those who are serving in our contracting forces."

Dr. Gansler, a professor at the University of Maryland, has vast experience with contracting issues and is one of the most respected members of our nation's acquisition community. From 1997 to 2001 he served as the Under Secretary for Defense for Acquisition, Technology, and Logistics where he led the Department's work in Acquisition Reform. He also served as Vice Chairman, Defense Science Board; Chairman, Board of Visitors, Defense Acquisition University; Director, Procurement Round Table; member of the FAA Blue Ribbon Panel on Acquisition Reform; and senior consultant to the "Packard Commission" on Defense Acquisition Reform. Other members of the commission include Mr. David Berteau, former Assistant Secretary of Defense for Production and Logistics; retired Gen. Lester Lyles, former commander, Air Force Materiel Command; retired Gen. Leon Salomon, former commander, Army Materiel Command; Mr. George Singley, retired former SAIC Group president and career Army acquisition official. Col. George A. Sears, Commander, Contracting Center of Excellence, is serving as executive officer for the commission.

The Department of the Army began audits and the U.S. Army Criminal Investigation Command, commonly known as CID, increased investigative activity into allegations of corrupt contracting in Southwest Asia in late 2005. Deployed commanders also expressed their concerns and requested the Department send in additional CID Special Agents, auditors and contract specialists from the Army Audit Agency and from CID. In 2005, CID established the Iraq Fraud Detachment and in 2006, CID established the Kuwait Fraud Office - both staffed with specially-trained CID Special Agents. Throughout the investigation, the Army has provided timely updates to Congress and has taken corrective actions as warranted.

In February 2007, after then Secretary of the Army Dr. Francis Harvey was briefed on the matter, he directed action to correct deficiencies. Dr. Harvey tasked the Assistant Secretary of the Army for Acquisition, Technology, and Logistics (ASA(ALT)) to assess contracting activities throughout Central Command (CENTCOM) and to implement a Contracting Action Plan.

In response, in March 2007 ASA(ALT) deployed a senior contracting Operations Review Team to review all contract operations and in April began implementing a Contracting Action Plan which reorganized the Kuwait Contracting office, installed new leadership, established a Joint logistics procurement support board, increased staffing and deployed senior contracting professionals and attorneys to Kuwait, and provided ethics training and organic legal support.

"We've been doing quite a lot in this area for over a year, and now we're doing more," Geren said.

A second independent, but complementary effort is an Army Internal Task Force led by Lt. Gen. N. Ross Thompson, Military Deputy to the Assistant Secretary of the Army for Acquisition, Logistics, and Technology, and Ms. Kathryn Condon, Executive Deputy to the Commanding General, Army Materiel Command.

"The Army Task Force will take an intensive look at current operations and implement reforms and corrections immediately," Geren said. "Based on earlier findings, the Army already has taken several actions and will continue to implement a number of recommendations, including transferring contracting authority for major contracts from Kuwait to Army Materiel Command, reviewing past contract actions and establishing Requirements and Contract Teams in Kuwait by September 30."

As of August 28, there are 76 ongoing criminal investigations involving contract fraud committed against the U.S. military in the Iraq, Afghanistan and Kuwait theater of operations.

As the scope and scale of contracting in Southwest Asia has evolved, the Army has recognized the need to assess its contract management capacity. The Army went from supporting one Kuwait base camp in 2002 to supporting eight in 2007. Contracts increased from $150 million in 2002 to nearly $1 billion in 2006. While 20 military and civilian Army employees have been indicted on charges of contract fraud, the vast majority of Army contracting professionals fulfill operational requirements everyday for Soldiers serving in harm's way. With no exceptions, we continue to expect every Soldier and Army Civilian to reflect Army Values and the high standards to which the entire Army adheres, regardless of its mission area.

Last updated Wednesday 29 August, 2007 07:00 PM EST