Report Card: Military Contracting
“How did a company run by a 21-year-old president and a 25-year-old former masseur get a sensitive $300 million contract to supply ammunition to Afghan forces?”
That was the question asked by Congressman Henry Waxman, Democrat from California, at the start of a hearing last week on AEY, Inc.
A tiny Miami Beach munitions dealer, AEY is now under indictment. Awarded an Army contract in early 2007, it was paid over $60 million. It apparently sold the Army cartridges manufactured in China that were disguised as products from Albania. (It’s against the law for military contracts to deliver ammunition acquired, directly or indirectly, from a Communist Chinese military company.)
The indictment lists a devastating email to AEY’s president from his business advisor. A photograph attached to the message shows someone scraping the words “MADE IN CHINA” off a wooden crate!
It’s likely, according to Congressional investigators, that AEY got its product from stockpiles in Albania and other countries that have been trying to give away or destroy aging munitions.
It turns out that Pentagon procurement officials never consulted a list that the State Department maintains of individuals and companies suspected of illegal arms. The president of AEY was on that list.
This is only one of the smaller – but easier to describe — scandals of uncontrolled military contracting during the Iraq and Afghanistan wars.
In January of this year, Congress passed legislation creating an independent and bipartisan Commission on Wartime Contracting which is now beginning its work.
Our Congressman, John Tierney, was instrumental in establishing this commission. He credits the oversight work being done by the standing committees in Congress—now that Democrats, because of their majority, are finally permitted to initiate hearings—as follows:
“These good efforts have exposed the magnitude of waste, mismanagement, and abuse associated with wartime contracts and evidenced the need for this special commission … to ensure that taxpayer money is well-spent and contractors are held accountable.”
In May, the Department of Defense’s Inspector General issued a report on mismanagement of payments made in Iraq, Kuwait, and Egypt. Among its findings:
“We estimated that the Army made $1.4 billion in commercial payments that lacked the minimum supporting documentation and information for a valid payment, such as certified vouchers, proper receiving reports, and invoices. Payments that are not properly supported do not provide the necessary assurance that funds were used as intended.”
During a hearing on “Accountability Lapses in Multiple Funds for Iraq,” Congressman Waxman acknowledged that “normal accounting standards aren’t always possible in war zones…but some actions—like our government’s decision to hand out $12 billion in cash at the beginning of the war—defy logic…nearly $9 billion of that money was distributed with no accounting standards at all.”
Waxman went on to say: “There is something very wrong when our wounded troops have to fill out forms in triplicate for meal money while billions of dollars in cash are handed out in Iraq with no accountability.”
You can learn more, and even watch a video of the hearing, at http://oversight.house.gov/story.asp?ID=1980. Copies of unitemized vouchers can be seen at at http://oversight.house.gov/story.asp?ID=1965, including the July 2003 authorization of $320,800.000.00 in cash with the three-word description “Iraqi Salary Payment.”
Because of such grossly inadequate accounting, we will probably never learn the full scope of waste or outright fraud.
The central Government Accountability Office recently issued a report on the Department of Defense (DOD) noting its “concerns about DOD’s reliance on contractors to perform roles that have in the past been performed by government employees. Without the right-sized workforce, with the right skills, we believe this could place greater risk on the government for fraud, waste, and abuse. In part, this increased reliance has occurred because DOD is experiencing a critical shortage of certain acquisition professionals with technical skills as it has downsized its workforce over the last decade.”
When Republicans held the chairmanships of Congressional committees, they refused to investigate military procurement and accounting disasters in Iraq and Afghanistan. But they represent the party that boasts its superiority in frugal management of taxpayers’ money! And they’re quick to use the phrase “waste, fraud, and abuse” when it comes to vital budgets for ordinary public services.
Is it time to give the Republican Party an F on financial management and military procurement—as well as on war planning, health care, education, the environment, and the economy?
