September 19, 2006

Wyden Fights Waste in Iraqi Reconstruction as White House Requests Additional $60 Billion in Funds

No-bid private contracts may squander tax dollars as U.S. economy suffers

Washington, DC As the Bush Administration announced plans today to request at least $60 billion in additional Federal funds to rebuild and occupy Iraq, U.S. Senator Ron Wyden (D-Ore.) renewed his call for more accountability in the spending of American tax dollars there. Wyden urged his Congressional colleagues to finally pass a measure requiring the Administration to explain why it chose to let billions of dollars in private contracts for Iraqi reconstruction without allowing open and competitive bidding to keep costs down. Wyden wrote the measure earlier this year and won its inclusion in the Defense Appropriations bill; the final version of that bill is now being negotiated by House and Senate leaders.This latest request from the President makes it clear that the cost of rebuilding and occupying Iraq is only going to grow, said Wyden. At a time when Oregon families are hurting and education and health care are woefully underfunded, I want an accounting of how their tax dollars are being spent and why the Administration is refusing to use the most cost-effective method of doling reconstruction dollars out.On August 29, the Wall Street Journal reported that Bechtel Corp., one of the major limited-bid contract-holders for Iraqi reconstruction, will receive an additional $350 million for their work, as theyve already committed the full amount of their original $680 million contract to reconstruction projects. The Washington Post has reported that Halliburton, already the recipient of $1.7 billion in Iraqi reconstruction contracts and the single biggest government contractor in Iraq, stands to make hundreds of millions of dollars more under a no-bid contract recently awarded by the Army Corps of Engineers.Guerilla warfare, terrorist attacks and severe heat conditions have contributed to some delays in Iraqi reconstruction. But in July, an official at the U.S. Agency for International Development admitted to the Baltimore Sun that many Iraqi rebuilding projects could be completed at lower costs than the current contracts incur. Additionally, the General Accounting Office has reported that sole-source and limited-source contracts often waste taxpayer dollars; investigators found that Army officials often just took whatever level of services the contractor gave, without ever asking if it could be done more efficiently or at a lower cost.Many of the no-bid or limited-bid contracts awarded for Iraqi reconstruction are so-called cost-plus contracts. They pay a companys expenses, plus a guaranteed profit of one to eight percent. There are no limits on total costs, so the more a firm charges in expenses, the more profit it makes. Wydens amendment would require any Federal agency awarding no-bid or limited-bid Iraqi reconstruction contracts to publish, in the Federal Register, documents justifying that decision forcing agency officials to explain how a contract let with no bids could be more efficient or cost-effective.I believe that if Federal agencies have to justify their spending decisions in Iraq, the most egregious cases of waste will stop, said Wyden. The U.S. has an obligation now to rebuild Iraq but at a time when American schools are closing early, and American roads and bridges are crumbling from neglect, the American people deserve to have their money spent as judiciously as possible.Once the Senate and House agree on a final Defense Appropriations bill, the spending measure will move to the Presidents desk. Wydens provision, if retained in the bill, would require disclosure to begin immediately on no-bid and limited-bid contracts for Iraqi reconstruction.