$1.9 Billion of Iraq's Money Goes to U.S. Contractors

To get access to the funds, all that was usually needed was the recommendation of an entity called the Program Review Board, made up of 10 members and a chairman, according to former CPA officials. The final authorization required a single signature -- that of L. Paul Bremer, the occupation's top civil administrator.

CPA officials have acknowledged that contracts were sometimes shown to a just a few bidders and that winners were picked within days. Several of the large contracts that went to U.S. companies, for example, were awarded with no competition, including a $16.8 million contract awarded to Custer Battles LLC of McLean to provide security for the main U.S. military base in Baghdad, and a $15.6 million contract for police radios awarded to Motorola Inc. of Schaumburg, Ill., the CPA inspector general's compilation shows.

Iraqi company executives have complained since the first days of the occupation that the process favored U.S. firms. They said in interviews that they could not get through the heavily guarded gates of the occupation headquarters in the Green Zone to meet with contracting officers. They also said the process was so secretive that they had to bribe CPA translators to get information about what requests for bids were coming up.

In April, the CPA announced that contracts worth less than $500,000 awarded from the Iraq oil fund should go only to Iraqi companies.

The biggest contract obligation paid with Iraqi money went to KBR. The oil-services company's work began in early 2003, before the war with Iraq began, when the U.S. Army Corps of Engineers gave it a no-bid contract worth as much as $7 billion to repair Iraq's oil infrastructure. There were fears that Hussein would set the oil fields ablaze, and the U.S. government believed that it needed a contractor lined up to go in right behind invasion forces.

The first tasks KBR performed under the contract -- training for and advising on a safe shutdown of oil facilities, pre-positioning spill equipment and preparing repair plans -- were paid for with U.S. funds.

But in fall 2003, the occupation was confronted by a different kind of oil problem. It had become clear that pipeline sabotage was causing a shortage and the occupation authority decided that it had to import fuel to prevent a full-blown crisis.

Meanwhile, some members of Congress expressed their disapproval of using more U.S. money for KBR's no-bid contract. In meetings on Nov. 11 and Nov. 29 in Baghdad, the CPA authorized tapping Iraqi funds to import fuel and fix the distribution system, according to minutes of CPA meetings. The task was added to KBR's contract and no new bids were sought, even though the funding source changed.

In all, KBR was paid $2.53 billion, $1.64 billion of which came from the Iraqi funds, according to an analysis for The Washington Post by Andre Verloy, a researcher for the Center for Public Integrity.

Verloy said the commingling of U.S. and Iraqi money to pay for tasks under a single contract raises significant oversight issues. "It is often difficult enough to find out where the money is coming from, but if U.S. taxpayer funds are used alongside Iraqi money, who has the ultimate oversight?" he said. "Can Congress oversee work funded with Iraqi assets? Should U.S. government agencies even pay U.S. companies with Iraqi money?"