Assertion of more Iraq waste goes unsupported

House Oversight and Government Reform Chairman Henry Waxman, D-Calif., opened his latest hearing into the troubled Iraq reconstruction program Thursday by declaring that a government auditor had discovered $10 billion in "questioned and unsupported costs" and that the potential total waste, fraud and abuse could be much higher.

But the committee's witnesses -- three of the top government fiscal watchdogs -- deflated Waxman's $10 billion number and refused to endorse his projection of "tens of billions more in waste."

The heads of the Government Accountability Office, the Special Inspector General for Iraq Reconstruction and the Defense Contract Audit Agency did provide ample evidence of reconstruction contracts that were poorly managed, wasteful and, in some cases, fraudulent, with the amounts of possibly misused funds mounting into the billions.

And Oversight and Government Reform ranking member Tom Davis, R-Va., while noting that the reconstruction efforts were burdened by a deadly lack of security and the inefficiencies typical of war, agreed that "an arcane, ill-suited management structure and frequent management changes have produced a succession of troubled acquisitions."

Waxman started the committee's third hearing into the reconstruction problems by noting its previous disclosure of $12 billion in cash payments for which government auditors had trouble accounting.

Then he said the contract audit agency director, William Reed, would testify about $10 billion in questionable or unsupported spending in the $57 billion in contracts audited so far. And, because there is another $300 billion in unaudited contracts, "the total amount of waste, fraud and abuse could be astronomical," the chairman said.

But Reed explained that much of the $4.9 billion in "questioned" contract awards had not been paid and some of the challenged amounts were reduced after DCAA audits. And he noted that the $5.1 billion in "unsupported" costs "were usually resolved through contractor submission of additional supporting information."

Stuart Bowen, the special IG whose office was saved from closure by Democrats' pressure last year, said his agency's efforts had resulted in more than 300 criminal and civil investigations of reconstruction contracts, leading to four convictions and 23 cases still being prosecuted. But, he said, "fraud has not been a significant component of the U.S. experience" with Iraq contracts. "Waste is another issue."

And Comptroller General David Walker said GAO's review of the reconstruction and troop support contracts in Iraq "often reflects systemic and long-standing shortcomings" in the Pentagon's ability to manage contractors. The problems of poor business practices, poorly defined requirements and absence of senior U.S. leadership have been aggravated by the deteriorating security situation and the corruption and mismanagement in the Iraqi government, Walker said.

When Waxman tried to get the witnesses to agree with his projection that the total amount of waste would be much higher than $10 billion, all three declined to speculate without complete accounting data to support their estimates. "Just because there's not enough evidence" to support a contract account "doesn't mean that it's waste," Walker said.