Report details corporate plundering in Iraq, Afghanistan
3 September 2011
A joint congressional investigation into US government contracting in Iraq and Afghanistan confirms that the US occupation of the two countries has been a bonanza for corporate military contractors, with waste and fraud estimated as high as $60 billion.
The report is the product an extensive investigation, including 25 hearings, 15 trips to Iraq and Afghanistan, and hundreds of separate project audits. The Commission on Wartime Contracting in Iraq and Afghanistan consists of eight officials, four Republicans and four Democrats, appointed in 2008 by then-president Bush, then-House Speaker Nancy Pelosi, and other congressional leaders of both parties.
The commission was created in response to a series of scandals involving gross corruption and malfeasance by contractors. The worst was the September 16, 2007 massacre of 17 Iraqi civilians in Nisour Square in Baghdad, when a team of Blackwater contractors opened fire on motorists and pedestrians.
“At least $31 billion, and possibly as much as $60 billion, has been lost to contract waste and fraud in America’s contingency operations in Iraq and Afghanistan,” says the report’s executive summary. “Much more will turn into waste as attention to continuing operations wanes, as U.S. support for projects and programs in Iraq and Afghanistan declines, and as those efforts are revealed as unsustainable.”
According to the report, if one takes a conservative, mid-range estimate of waste and fraud, about $45 billion, “this amounts to $12 million every day for the past 10 years.”
“Fraud associated with federal government contracts in Iraq and Afghanistan has been widespread,” the report states bluntly. “Fraud includes such activities as bribery, gratuities, kickbacks, and conflicts of interest, as well as false claims and statements, cost/labor mischarging, bid rigging, and undelivered, defective and counterfeit products.”
Much of the theft and profiteering is an inevitable byproduct of the sheer scale of the contracting and subcontracting in the two war zones. Many of the functions carried out by uniformed military personnel in previous imperialist wars, notably Vietnam (1961-1973) and the first Persian Gulf War (1990-1991), were outsourced to contractors.
As the report notes, in 2010 the contract workforce employed by the military, State Department and the US Agency for International Development in Iraq and Afghanistan was larger than the total deployment of troops and civilian federal employees in the two countries.
As of March 31, 2010, the majority of the contract workers were Iraqi and Afghan nationals, 138,507, followed by third-country nationals, 76,988, and US nationals 45,927.
The Department of Defense accounts for 80 percent of contractors, hiring roughly one contractor for every uniformed service member. The State Department hired 18 contractors for every diplomat, while USAID hired 100 contractors for every aid officer.
There were a total of 260,000 contract workers in 2010. Combined with the 200,000 or so military and civilian US personnel, the total “footprint” of American imperialism in Iraq and Afghanistan is comparable in size to the US presence in South Vietnam, which topped the 500,000 mark during much of the period between 1965 and 1972.
There were economic considerations involved in the contracting surge, since the contractors and subcontractors relied largely on cheaper labor from third-country (usually South Asian) or Iraqi and Afghan work forces to provide food preparation, construction, truck transportation and security services.
But the main reason for the reliance on contractors was to maintain the all-voluntary military, since sustaining two major wars without contractors would have required reinstituting the draft. As the report notes, “The extensive use of contractors frees the military to use service members primarily for warfighting.”
Reliance on contractors also concealed, to some extent, the scale and cost of the wars, at least in terms of US casualties. US military casualties in Iraq, as of July 2011, were 4,464, but an additional 1,542 contractors have been killed. In Afghanistan, the US military death toll is 1,667, the contractor death toll 887.
During a recent 22-month period, from June 2009 through March 2011, contractor deaths in Iraq and Afghanistan actually exceeded military deaths. This is the result of the shift in the focus of military conflict from Iraq to Afghanistan, where contractors predominate among the security forces guarding US military facilities.
All these figures are dwarfed, of course, by the death toll among innocent civilians, Iraqi and Afghan, which likely exceeds 1 million people in the two wars combined.
The report details a series of abuses that were caused by or exacerbated by the heavy reliance on contractors:
• The use of contractors to manage other contractors
• Awarding long-term contracts without competitive bidding
• Extending contracts long past their scheduled expiration dates
• Using cost-plus contracts rather than fixed-price contracts
• Increasing ceilings on fixed-price contracts
• Organizing work through multiple tiers of subcontractors, making effective oversight impossible
Just four large companies accounted for 40 percent of the total contract dollars. Some 22 companies received contracts of at least $1 billion, accounting for 52 percent of all awards. The report notes that this concentration of contract dollars gave rise to a “too big to fail” syndrome, in which companies were so vital to the US war effort that the Pentagon was reluctant to hold them accountable.
A total of $206 billion in contracts have been awarded to support the wars in Afghanistan and Iraq, with the Pentagon accounting for 80 percent of the total. Logistics support services were the largest single component, $46.5 billion.
The largest single contract, LOGCAP III, was worth $36.3 billion over 10 years to Kellogg, Brown & Root (KBR), the former subsidiary of Halliburton. LOGCAP IV, a five-year deal that replaced it in 2010, was split between Fluor Corp. (northern Afghanistan) and DynCorp (southern Afghanistan).
The report notes, in restrained language, that these companies had a powerful motive to cut corners, and that the profit incentives could “take the form of lower-quality materials, reduced training, or lower performance standards.”
An entire chapter of the report is devoted to the details of some of the seedier examples of profit-gouging by large US companies.
In one case, Global Linguist Services obtained a five-year, $4.6 billion contract for translation services in Iraq, and subcontracted $3 billion to Northrop Grumman and other companies, including L-3 Communications, described as “its main competitor.”
The report declares that the subcontract to L-3 “appeared to be an accommodation to a firm that had protested the award to GLS.” To cover the cost of this payoff, “GLS trimmed the salaries of linguists, and led them to believe the government had directed the salary reductions.”
The report points out the remarkable fact that while the number of contracts, contractors and contract personnel soared over the past decade, “the number of Defense acquisition professionals had declined by 10 percent during a decade that saw contractual obligations triple.”
It is silent over the likely causal relationship between these two facts: contractors hired away many Pentagon acquisition professionals by offering much higher salaries; in turn, the lack of oversight encouraged payroll-padding and inflated contracts.
The report adds, “Other problems ranged from awards with no justification for the absence of competition to awards with no audits of proposals—even for billion-dollar task orders.”
The report’s authors, loyal defenders of American imperialism, express regret that the reliance on contractors has weakened the capabilities of core agencies like the Pentagon and State Department, leading to the effective privatization of US foreign policy.
“Because of the military and civilian agencies’ frequent rotations, contractors often become the keepers of historical knowledge,” they write. “Thus, government officials in some cases gradually cede de facto control over defense, diplomatic, and development activities to them.”
They also conclude that in both of the countries targeted for US conquest over the past decade, the reliance on contractors has been counterproductive. Alluding to the Nisour Square atrocity, they write, “The use of private security companies can present especially sensitive risks, because their armed employees can become involved in incidents that injure or endanger innocent civilians.”
The report further notes that the shift of resources in Iraq from the Pentagon to the State department over the past year—what the Obama administration calls “withdrawal” from Iraq—is problematic because the State Department is even less capable of effective subcontracting than the Department of Defense.
The study declares, “significant additional waste—and mission degradation to the point of failure—can be expected as State continues with the daunting task of transition in Iraq.”
As for Afghanistan, the Pentagon more than doubled its private security contractor personnel from June 2009 to June 2011, when it reached 15,000. An additional 12,000 private security contractors were working for State and USAID.
The report concedes that this heavy reliance on contractors is a major factor in sustaining the insurgents fighting against the US-NATO occupation. The report states:
“The largest source of funding for the insurgency is commonly recognized to be money from the drug trade. During a March 2011 trip to Afghanistan, experts told the Commission that extortion of funds from U.S. construction projects and transportation contracts is the insurgents’ second-largest funding source.”
Aside from the daily outrage produced by US military raids and assassinations, the economic impact of the US presence in Afghanistan is catastrophic. The report explains that “rapidly pouring large amounts of money into Afghanistan’s local economy, which has limited absorptive capacity, has contributed to inflation, distorted normal economic activity, and encouraged fraud and corruption. Also, once the United States leaves, the economy will be disrupted because many of the local nationals who are employed by the U.S. government and U.S. contractors may once again become unemployed or under-employed.”
The figures are striking. The annual GDP of Afghanistan when the US invaded in 2001 was $23 billion—less than what the US spends on the Afghan war in a few months. For the past six years, the US has spent $6.4 billion a year—the equivalent of one fourth of prewar Afghan GDP—just on military training and equipment of Afghan forces. The US has spent $11 billion—the equivalent of half of Afghanistan’s prewar GDP—for buildings and other facilities to house the Afghan National Security Forces.
It is evident that without an enormous US military and economic presence in the country, the entire edifice of the Afghan “state” would collapse, and rather swiftly. In this respect, what is taking place in Afghanistan closely parallels the experience of the US puppet regime in South Vietnam, where the country was not only devastated militarily but destroyed economically and morally, suffering a complete collapse with the withdrawal of US aid.
The conclusions drawn by the bipartisan commission are predictably reactionary, based on the premise that US military interventions throughout the world are both justified and necessary. The report calls for replacing many contract workers by training “deployable cadres for stabilization-and-reconstruction functions in high-risk areas of contingency operations.” In other words, US imperialism should set up a full-time colonial occupation force.
The report details in passing the staggering growth of American militarism over the past quarter century. Its executive summary notes: “in every year of the past 23 years, the United States has been engaged in an overseas-contingency operation. For the past 12 years, the United States has always and simultaneously been engaged in two or more overseas regions.”
In the last half-century, the US has embarked on 56 interventions abroad, the report states, including 10 land-based engagements lasting a year or more: Vietnam-Laos-Cambodia (1960s-70s), Lebanon (1982-83), Panama, Iraq/Kuwait (1990-91), Somalia (1992-93), Haiti (1993-96), Bosnia-Kosovo (1995-1999), East Timor (1999-2000), Afghanistan and Iraq. There is no other country in the world that comes close to such a record of continuous military aggression.
The report argues: “The geopolitical environment of recent years and in the foreseeable future provides ample reason to plan for the possibility that the United States may again become involved in overseas-contingency operations that require extensive contractor support.
“The unexpected and swift development of a campaign executed by the United States and NATO to suppress the Libyan government’s attacks on its citizens is a recent case in point. Unrest in Somalia and Yemen also raises the potential of a contingency operation that might require contractor support and stabilization-and-reconstruction operations.”
In other words, the bipartisan consensus of the Democrats and Republicans is that more and greater resources will be required to sustain the world position of American imperialism, in ever-bloodier efforts to dominate the globe.
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