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US: Army to examine Iraq contracts

by Richard LardnerAssociated Press
August 29th, 2007

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 Wednesday.

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

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.

Democrats in Congress have claimed that KBR, formerly known as Kellogg,
Brown and Root, benefited from ties to Vice President Dick Cheney, who
once led Halliburton Co., the Houston-based oil services conglomerate, and
congressional Republicans.

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 forces in Iraq and Afghanistan has grown to 76. So far, 20 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 the Army has been auditing the contracting operation in Kuwait
for more than a year. He acknowledged the expanding list of criminal
investigations was a factor in appointing a special task force headed by a
three-star Army 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 take whatever corrective
actions he determines are necessary "to prevent any further abuse, fraud
or waste," Geren said.

Thompson, the military deputy to the Army's top civilian acquisition
official, said 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 plans to boost the number of personnel 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, Va., 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 Fraud 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.

Separately, the Pentagon is 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," according to Chris Isleib, a Pentagon spokesman.




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