Deregulation, Mismanagement, and Incompetence
Have Squandered Billions in Taxpayer Dollars and
Hurt our Mission in Iraq
The Bush Republican legacy of waste, fraud and abuse in Iraq contracting is without precedent. In testimony before the Senate in March, Judge Radhi Hamza al-Radhi, head of Iraq’s Commission of Public Integrity (CPI), exposed the devastating extent of waste and corruption that has resulted from the Bush Administration’s failure to exercise oversight and ensure accountability in U.S.-led reconstruction efforts. Judge al-Radhi has estimated that more than half of the $18 billion worth of corruption that CPI uncovered in Iraq involved U.S. taxpayer money. He also stated that a portion of that money had been diverted to militia groups and al-Qaeda terrorists who have been responsible for killing Iraqi civilians and American soldiers.
Last year, more than four years after the Bush Administration began spending billions of dollars in Iraq, U.S. government auditors uncovered an alarming record of waste and abuse: $10 billion in questionable and unsupported contractor costs between 2003 and 2006. In September 2007, the Pentagon also reported that contracts worth $6 billion were under review by criminal investigators and $88 billion more were being audited for financial irregularities. As reports from the Special Inspector for Iraq Reconstruction (SIGIR) and other government and independent auditors continue to show, theft, reckless spending, and unlawful and corrupt practices persist — at great cost to the American people and at great risk to our troops and to our mission in Iraq.
These failures are not simply the result of the Bush Administration’s mismanagement and short-sighted policies in Iraq; they are the result of a conservative Republican governing philosophy that has promoted outsourcing, privatization, and deregulation at every opportunity. During this Administration, government spending on contracts has skyrocketed to record levels, nearly doubling from $207 billion in 2000 to $400 billion last year. Today, almost every federal agency relies on contractors to perform critical governmental functions, from tax collection to shipbuilding and even war planning and intelligence gathering. Even as it has turned to private companies to assume major governmental responsibilities, the Bush Administration has eschewed regulation and favored a hands-off approach to government that has led to weak and often nonexistent oversight and little accountability to the American people.
The Bush Republican Governing Philosophy Has Promoted Waste, Fraud, and Abuse in Iraq Contracting
The Bush Administration’s opposition to regulation has allowed contractors to game the system. The Bush Administration has pursued a hands-off approach to contracting, relying on its market-based worldview that favors deregulation and minimal oversight and assumes that the private sector will police itself and ensure cost-effective services. This approach has created a lawless environment where companies have been allowed to define the terms of their contracts; set the prices for their services; and even establish performance indicators and overall contract objectives for their work. As a result, critical projects like the construction of the U.S. Embassy in Iraq have fallen years behind schedule, gone millions over budget, and been undermined by shoddy work. Contractors have passed along higher costs to American taxpayers while suffering little, if any, consequences for substandard performance.
The Bush Republican philosophy puts private business interests over the public interest. Under the assumption that anything that is good for big business is always good for American taxpayers, the Bush Administration essentially handed a blank check to contractors operating in Iraq, often through multi-billion dollar no-bid and sole-source contracts. Instead of insisting that taxpayers get their money’s worth and providing incentives to protect American taxpayers and ensure quality work, the Bush Administration has given free-reign to companies and put their bottom-line profits before the country’s best interest. Time and again, the Administration has allowed contracting firms to outsource work to layers of subcontractors and non-Iraqi third country nationals who often have less training and are less qualified to perform the required tasks; turned the other way when companies set up off-shore shell companies to avoid payroll taxes; and rewarded shoddy work and criminal behavior with follow-on contracts and contract extensions.
While contractors have raked in record profits, the American people and our troops have paid a heavy cost. KBR (the former Halliburton subsidiary) continues to work in Iraq today – nearly two years after Pentagon auditors uncovered $2.7 billion in undocumented spending by the company and despite ongoing investigations into its delivery of unsafe water to U.S. troops in Iraq and faulty electrical work that has led to troop deaths.
Motivated by its distaste for government and support for privatization, the Bush Administration has outsourced roles critical to protecting our troops and ensuring the success of our mission in Iraq. Since the outset of the war in Iraq, the Bush Administration has turned to contractors to fill mission-critical roles, from training the Iraqi Army to providing logistical and tactical support to our troops on the battlefield; serving as translators for top military officials; and even handling sensitive intelligence operations. Contractors have essentially formed a second, private force, which, even today, outnumbers U.S. troops on the ground in Iraq. This practice has allowed private contractors to assume inherently governmental responsibilities and shifted decision-making power away from our elected representatives and military leaders to companies that are looking out for the interests of their shareholders. By hiring an unprecedented number of private contractors to perform functions formerly done by the military, Bush Republicans have unnecessarily inflated costs – paying millions to protect contractors when soldiers, in many cases, could have completed the jobs for much less.
The Results of These Failed Policies Have Been Disastrous
Misguided Bush Republican policies have placed our troops at risk and harmed our mission in Iraq. The Bush Administration’s lack of oversight in Iraq, failure to address corruption, and unprecedented reliance on contractors to fill responsibilities traditionally handled by government and military employees has resulted in unprecedented waste, fraud and corruption. This strategy has, according to Iraqi government officials, allowed reconstruction funds to be diverted to militia and insurgent groups and al-Qaeda terrorists; left our troops without sufficient body armor and protective equipment on the battlefield; and severely tarnished America’s reputation in Iraq and around the world.
Misguided Bush Republican policies have undermined U.S.-led reconstruction efforts in Iraq. The Special Inspector General for Iraq Reconstruction, along with other government and independent auditors, have reported millions in reconstruction contracts that have run far over budget, fallen years behind schedule, and been effectively undermined by shoddy work. This failure of Executive Branch oversight has meant money that should have gone to rebuilding Iraq’s health care and education systems, creating jobs and improving the country’s infrastructure – initiatives key to building the capacity of the Iraqi government and gaining the popular support critical to defeating terrorist and militant forces – has been lost to waste, fraud and abuse.
Bush Republican Mismanagement and Flawed Contracting Policies Have Further Undermined Oversight of Taxpayer Dollars in Iraq
Bush Republicans have not adequately enforced existing laws. Audits of Iraq reconstruction contracts have repeatedly found that the Bush Administration has failed to enforce federal laws and regulations, including the procedures that normally allow fair play, provide incentives for quality performance and cost-effectiveness, and ensure protection for employees and taxpayers. Instead, it has conducted faulty bidding processes; ignored systemic waste; been slow to punish companies that have engaged in fraudulent and criminal behavior; and threatened retaliation against officials and contractor employees who have blown the whistle on contracting abuses.
Bush Republicans have failed to devote the resources necessary to ensure effective oversight. Despite the dramatic increase in outsourcing to private contractors, the Bush Administration has failed to provide a sufficient supply of auditors, leaving its staff with fewer resources and less time to manage a growing number of contracts. As the bipartisan Gansler Commission recently reported, "the shortage of people and shortage of the needed training and high level experienced people" essentially created "an opportunity to create fraud" in Iraq reconstruction.
The Republican Congress abdicated its oversight role. The Republican-controlled Senate held just two hearings to examine Iraq contracting abuses from the start of the war in March 2003 through November 2006 (when they lost the majority in the Senate), certainly the most critical period for oversight of Iraq war contracting. Republican Committee Chairmen repeatedly rejected requests for oversight from Democratic members of oversight committees during this time – effectively rubber-stamping the Bush Administration’s flawed approach to contracting. Republicans in the Senate also repeatedly blocked efforts to protect American taxpayers from war profiteering and bring accountability to contracting in Iraq. On four separate occasions – in 2005 and 2006 – the Republican Presidential nominee, Senator McCain, and every other Republican Senator except one (former Senator Chafee) voted against legislation to establish a Special Committee on War and Reconstruction Contracting, modeled after the Truman Committee during World War II that saved taxpayers billions of dollars, which would have had full oversight authority to oversee military contracting in Iraq, to uncover and deter waste, fraud and abuse.
By contrast, since assuming the majority in the Senate in 2006, Democrats have held 15 oversight hearings on Iraq contracting. These hearings have examined several critical issues, including efforts to combat war profiteering and enhance the role of inspectors general, procedures for strengthening competition and accountability in the federal acquisition process, the role of private security firms in overseas operations, and initiatives to reform defense contracting and improve financial and business management at the Department of Defense. To supplement the work of these committees, the Senate Democratic Policy Committee has held 18 oversight hearings on Iraq contracting abuses since the start of the war.
The Bush Administration used signing statements and claims of executive privilege to undermine oversight. In the instances where the Democratic-led Congress has been able to pass legislation to strengthen contracting oversight, the Bush White House has used signing statements and improper assertions of executive privilege to undermine oversight. Citing national security concerns, the Bush Administration sought to weaken the authority of the Special Inspector for Iraq Reconstruction and the Commission on Wartime Contracting. The Administration has opposed the creation of a database to track the past performance of contractors and opposed the consideration of a company’s use of off-shore tax havens when awarding defense contracts. Further, the Bush Administration has refused to cooperate with Congressional investigations into contracting abuses, often stonewalling congressional requests for information and testimony.
Bush Republicans failed to stop waste and fraud even when abuses were brought to their attention. Instead of addressing contracting problems, the Bush Administration has consistently ignored evidence of waste, fraud and abuse. Over the last eight years, contractors with records of wasteful spending and misconduct have repeatedly been rewarded with contract extensions and new contracts, including companies that have been the subject of investigations related to the deaths of U.S. soldiers and Iraqi civilians. Administration officials also have allowed shoddy contract work to go unpunished; dismissed repeated warnings from inspectors about contractors failing to meet safety standards; and even threatened to fire officials and contractor employees who raised concerns about contracting abuses. These misguided Bush Republican policies have undermined our troops and led to inflated prices, overcharging and rampant corruption.