US Army contract fraud soars

2008-06-13 15:10

Fort Belvoir, Virginia - Double-billing. Bribes. Kickbacks. Military contracts are big targets for serious crimes - and there aren't nearly enough investigators to catch them all.

The Army's contracting budget has exploded since the wars in Iraq and Afghanistan began - from $46bn in 2002 to $112bn in 2007. Yet the number of people who hunt down crooked companies and corrupt officials has stayed about the same, according to Associated Press interviews and research.

Army investigation chiefs told the AP they need a dramatic increase in agents to fight contract fraud.

In combat zones, deals can be made quickly, often with foreign companies in countries where bribes are a routine part of doing business. Yet to monitor those billions in contracts, just under 100 civilian agents are assigned to the Army Criminal Investigation Command's procurement fraud office.

Even with more fraud police, there would be no guarantees. Flaws in how the Army awards and manages contracts, especially overseas, also need repairs to curb criminal activity.

Eliminate the abuse

"It's sort of like an assembly line for cars and having more checkers at the end of the line when the people aren't building the cars right," said Jacques Gansler, a military acquisition expert. "What we really need to eliminate the abuse is people doing it right in the first place."

Until that happens, the Army's procurement fraud team faces an increasingly complex workload that requires frequent overseas travel and specialised training to spot foul play in mountains of arcane paperwork.

"There's obviously more going on out there today than there was five years ago, but I have the same number of people," said Wes Kilgore, director of the command's Major Procurement Fraud Unit.

There are 95 ongoing investigations into Army contract irregularities in Iraq, Afghanistan and Kuwait. An additional 500 fraud cases have been launched in the United States, but most of those are not related to wartime contracts.

Extra staff

Under a proposal now being reviewed by senior Army officials at the Pentagon, Kilgore's staff would increase by 143 agents and 30 support personnel between 2010 and 2015. Army leaders approved a request last year to add 36 employees, including 23 agents. Those extra hands are still being hired or trained, however.

Overall, the 166 new agents would cost about $21.5m a year.

If the latest request is approved, Kilgore's unit would eventually have 260 agents to uncover and prevent contract fraud.

"We're concerned, and that's why we've pushed so hard on getting these numbers ramped up rather than sitting on our hands," said Daniel Quinn, the command's chief of staff.

Criminal Investigation Command officials rarely grant interviews. The decision to speak with a reporter reflects how critical the new hires are to them.

Location

It's not just the enormous flow of wartime money, it's the speed with which contracts are awarded that lures the cheaters. Location is key, too. In Iraq, Afghanistan and Kuwait, supplies such as bottled water, shipping containers, food and transportation might be needed quickly from local vendors. If only a few suppliers can fill the order, the choices may be limited. But the potential for a crooked deal is not.

Army Colonel Joe Ethridge, commander of the 701st Military Police Group, likens the situation to buying a plane ticket for travel to a remote location the day before a holiday weekend.

"The vendors know going in (the customer is) going to want this really fast and there's not going to be a lot of competition," said Ethridge, whose military police group includes Kilgore's procurement fraud unit.

- AP