Sen. Russell Feingold (D-Wis.), who helped create the inspector general's office and has pushed to keep it funded, said in a statement that the Aegis audit is "deeply troubling, and only reaffirms the desperate need for vigorous, independent oversight of the way taxpayer dollars are being spent in Iraq."
The Aegis contract, the largest postwar security contract in Iraq, has been controversial from the beginning. The company's chief executive, Tim Spicer, is a former lieutenant colonel in the Scots Guards who used to lead the private military firm Sandline International.
Sandline was tapped in 1997 to end a rebellion on an island in Papua New Guinea, but the government there was soon toppled. The year after, Sandline became embroiled in war in Sierra Leone. A parliamentary inquiry in 1999 found that the firm had been involved in shipping arms into Sierra Leone, despite a United Nations embargo. The company said it was acting with the British government's blessing, but government ministers were cleared of wrongdoing.
Spicer left Sandline in 2000, and the company ended operations in 2004. Aegis -- which bills itself as a defense assistance, risk management and security company -- was created in September 2002. After Aegis won the security contract in Iraq, several Irish American groups protested, citing a 1992 case in which two soldiers under Spicer's command shot and killed a Belfast teenager. Spicer has maintained that the soldiers were innocent.
Texas-based DynCorp, which lost a bid for the Iraq security contract, unsuccessfully protested the award to Aegis, citing allegations against Spicer, among other issues.
Doug Brooks, an acquaintance of Spicer's who heads the International Peace Operations Association, a trade group of security firms, said that the problems identified in the Aegis audit seemed "fairly minor" and that the firm deserves credit overall for difficult work in a dangerous place.
Peter W. Singer, a Brookings Institution fellow who has written a book on private military firms, said the audit is more troubling for what it says about the contracting process than for what it says about Aegis. Auditors reported that contracting officials were unaware of many of the problems with the contract and that until auditors brought them to light, they had been unable to correct the ones they did know about. Contracting officials blamed a heavy workload and a high staff-turnover rate.
"The fact that you have 41 people doing oversight for 6,500 contracts is just stunning," Singer said. "It's only getting worse, and it just points to the fact that the government is behind the curve when it comes to being a smart client."
Government oversight of contractors in Iraq was also at issue yesterday in a lawsuit brought by whistle-blowers against a firm called Custer Battles LLC, which had provided security at Baghdad International Airport in the aftermath of Saddam Hussein's fall from power. Two whistle-blowers have sued Custer Battles, claiming it defrauded the U.S. government of tens of millions of dollars.
The firm's lawyers have argued that the case doesn't belong in U.S. courts, however, because Custer Battles allegedly stole from the Coalition Provisional Authority, which they claim was an international institution, not an arm of the U.S. government. Yesterday, Justice Department lawyers disagreed, writing in a brief that for the purposes of this case, "the CPA is an instrumentality of the United States."
A federal judge in Alexandria still has to rule on the matter.
