Iraq Contract Documents In 'Disarray,' Inspector Says

By Dana Hedgpeth
Washington Post Staff Writer
Tuesday, October 23, 2007

An independent oversight agency said it could not complete an audit of a $1.2 billion contract to train Iraqi policemen because records kept by the State Department and by DynCorp International, the contractor, were inaccurate and in disarray.

The State Department's Bureau of International Narcotics and Law Enforcement Affairs had only one contracting officer overseeing the deal, and its accounting for the work could take three to five years to sort out, according to the report to be released today by the Special Inspector General for Iraq Reconstruction.

"The documents were not in sufficient order for us to do an audit," said Stuart W. Bowen Jr., the special inspector general who is looking for waste, fraud and abuse in the $44.5 billion U.S. reconstruction effort. "They were in such disarray that it prevented us from reaching any meaningful conclusions."

The State Department bureau, according to Bowen's report, "does not know specifically what it received for most of the $1.2 billion in expenditures under its DynCorp contract." Known as INL, the agency had been told in previous audits by Bowen and by the State Department's inspector general that it needed to make improvements in its oversight of the contract. "INL's prior lack of controls," the report says, "created an environment vulnerable to waste and fraud."

DynCorp, of Falls Church, was awarded the five-year contract in February 2004 to provide housing, food, security, facilities and training for the Iraqi police program.

Bowen said the program "lacked oversight" from 2003 through 2006.

"This was the largest program INL had ever undertaken," Bowen said. "There was a lack of processes and a lack of personnel to ensure the program was managed. It was beyond their capacity. They didn't implement enough changes to address the greatly expanded capacity imposed by this $1.2 billion contract."

In a January audit of DynCorp's work under the INL contract, Bowen found that the State Department paid $43.8 million for manufacturing and temporary storage of a residential camp that had never been used. The audit also questioned the State Department's payment of $36.4 million for weapons and equipment, including body armor, armored vehicles and communications equipment that couldn't be accounted for because "invoices were vague and there was no backup documentation."

Bowen raised questions about INL's payment of business-class travel expenses for DynCorp officials. After INL questioned the charges, it said DynCorp re-paid $108,000. INL officials, according to Bowen's report, "have no confidence that the government has paid for only valid expenses under the contract."

In an Oct. 9 letter responding to Bowen's audits, Elizabeth Verville, acting assistant secretary for INL, said the agency has made "significant progress" in adding personnel, improving oversight and reviewing past invoices. She cited one example of improvement, saying INL "demanded repayment" of $4 million in June for work DynCorp had done on the camp after auditors questioned the payment. DynCorp has not repaid the money, but DynCorp spokesman Greg Lagana said it "believes the charges are appropriate."

He said the company's work in Iraq is a "very complex program and a complex contract in a country that's difficult to work in."

The State Department also faces criticism in another report, for its oversight of such security contractors as Blackwater and Dyncorp. An independent panel appointed by Secretary of State Condoleezza Rice urges the department to begin monitoring and controlling the movement of such contractors and improve coordination between contractors and other non-military security officers in Iraq, the New York Times reported today, citing people who have been briefed on the panel's report.

© 2007 The Washington Post Company