Congressman Henry Waxman Asks Investigation of 7,000 Iraq Contracts

Congressman Waxman holds the periodic House Oversight Committee hearings on Fraud in Iraq contracting. Recently, they heard testimony from the DoD IG about billions of dollars paid for Iraq programs that were not properly documented. We covered that IG report in an earlier post, and mentioned that the IG whitewashed a major reason for the poor documentation, which was a waiver of requiring receiving documentation before paying suppliers. They did that, in my opinion, in order to comply with the Prompt Pay act which requires Federal payments be made within 30 days of receiving an invoice or the government must pay interest. The IG report concealed the issue by not describing the effects, only saying that the DoD needed to clarify problems with the Prompt Pay act.

Wel, now Waxman has demanded investigation of 7,000 possible cases of invoice payments made without documentation. His press release below indicates they still don't understand the main cause may be the prompt pay issue, and maybe not intentional fraud. Normally, any sane business or entity would require a signed receiving document properly filled out from the customer who ordered the materials before issuing any payment. But, it might be that the Federal Finance people waived that rule in order to meet the Prompt Pay act and prevent having to pay late fees or interest. That is what needs investigation. I submitted an email on Waxman's committee website about 2 weeks ago about that issue, but haven't heard anything.

However, any bad guys who learned that payments would be made without first getting receiving documents could use that knowledge to ship stuff to buddies (which was done in Vietnam), or just set up a fake vendor to submit false invoices for payment and not ship anything.
vj

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from http://federaltimes.com/index.php?S=3581879

Rep. Waxman estimates 7,000 contractor fraud cases linked to Iraq war
By ELISE CASTELLI
June 16, 2008
A top house Democrat wants the Defense Department inspector general to investigate more than 7,000 cases of fraud the lawmaker believes have occurred on contracts to support the Iraq war.
Rep. Henry Waxman, D-Calif., chairman of the House Oversight and Government Reform Committee, said that number is an estimate by his staff and that those cases involve more than $190 million in federal spending.

“It is difficult to have confidence that the department will take adequate steps to address the full magnitude of the potential criminal fraud,” Waxman wrote to IG Claude Kicklighter in a June 16 letter. “I therefore request that your office assess the extent of potential criminal fraud in the expenditure of U.S. funds in Iraq. “
Waxman’s staff came up with the projection based on a report issued by the Defense IG’s office in May. That report sampled 702 transactions worth $1.5 billion and found 28 of them worth $35 million appeared to involve criminal misuse of funds.

The 28 cases represent roughly 4 percent of the total surveyed for the report examining transactions by seven Army contingency contracting officers in Iraq. Waxman’s staff applied that 4 percent rating across the pool of 180,000 transactions worth $10.7 billion that those seven offices awarded — and came up with a figure of potential fraud.

Waxman said the IG’s staff confirmed the projected number and value of criminal cases and stated that the issue merited further investigation. Kicklighter’s staff also told Waxman that the Defense Criminal Investigative Service launched a new effort to review additional transactions for fraud.