Poor Contracting Hindering Iraq Reconstruction

The Department of Defense (DOD) effort to reconstruct Iraq following the U.S. invasion is being hampered by poor contracting with companies and inadequate security, a government watchdog agency says.

DOD has relied extensively on private contractors to undertake major reconstruction projects and provide support to its deployed forces in Iraq, but these efforts have not always achieved desired outcomes, according to a new report by the Government Accountability Office (GAO). GAO is the nonpartisan investigative arm of Congress.

Further, the Iraqi government must be able to reduce violence, sustain reconstruction progress, improve basic services, and make a positive difference in the daily lives of the Iraqi people, GAO says.

"The challenges faced by DOD on its reconstruction and support contracts often reflect systemic and long-standing shortcomings in DOD’s capacity to manage contractor efforts. Such shortcomings result from poorly defined or changing requirements, the use of poor business arrangements, the absence of senior leadership and guidance, and an insufficient number of trained contracting, acquisition and other personnel to manage, assess and oversee contractor performance, the GAO says in a new report. "In turn, these shortcomings manifest themselves in higher costs to taxpayers, schedule delays, unmet objectives, and other undesirable outcomes."


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Former DOD Contractor Sentenced in Bribery, Fraud, Money Laundering Scheme in Iraq

A former US Department of Defense (DOD) contractor was sentenced to nine years in prison and ordered to forfeit $3.6 million for his role in a bribery and fraud scheme involving contracts in the reconstruction of Iraq, Assistant Attorney General Alice Fisher of the U.S. Justice Department Criminal Division announced today.

Robert Stein, 52, of Fayetteville, N.C., was sentenced today in U.S. District Court for the District of Columbia by Judge Colleen Kollar-Kotelly. The judge also sentenced Stein to three years of supervised release.

Stein was arrested in Fayetteville on Nov. 14, 2005, and pleaded guilty on February 2, 2006, to being a felon in possession of a firearm, possession of machine guns, bribery, money laundering, and conspiracy in connection with a scheme to defraud the Coalition Provisional Authority --South Central Region (CPA-SC) in al-Hillah, Iraq.

"Robert Stein will now spend nine years in jail for exploiting hispublic position and accepting bribes for contracts during the rebuilding ofIraq," says Fisher. "The Department of Justice will protect the integrity of the federal contracting process byaggressively prosecuting fraud, bribery and other crimes that taint missions as critical as the reconstruction of Iraq."

Stein admitted to participating in a complex bribery, fraud and money-laundering scheme while serving as the comptroller and funding officer forthe CPA-SC. From December 2003 through December 2005, Philip Bloom, a U.S. citizen who owned and operated several companies in Iraq and Romania, Bruce Hopfengardner, a lieutenant colonel in the U.S. Army Reserves, and numerous public officials, including several high-ranking U.S. Army officers, conspired to rig the bids on contracts being awarded by the CPA-SC so that all of the contracts were awarded to Bloom. In return, Bloom provided the public officials with over $1 million in cash, SUVs, sportscars, a motorcycle, jewelry, computers, business class airline tickets, liquor, future employment with Bloom, and other items of value.

In addition, Bloom laundered over $2 million in currency that Stein and his co-conspirators stole from the CPA-SC that had been designated to be used for the reconstruction of Iraq. Bloom then used his foreign bankaccounts in Iraq, Romania and Switzerland to send the stolen money to Stein, Hopfengardner and other public officials in return for the awarded contracts. In total, Bloom received over $8.6 million in rigged contracts.

During the course of the conspiracy, Stein and other co-conspiratorsstole U.S. currency and funneled those funds to Bloom in order to purchase illegal controlled weapons which they converted to their own personal use in the United States, including assault rifles, silencers, and grenade launchers.

Stein has cooperated with the government's ongoing investigation.

On March 10, 2006, co-conspirator Bloom, pleaded guilty to relatedcharges of conspiracy, bribery and money laundering in connection with thesame scheme as Stein. Bloom is scheduled to be sentenced on February 16,2007.

On August 25, 2006, co-conspirator Hopfengardner pleaded guilty to related charges of conspiracy to commit wire fraud and money laundering inconnection with the same scheme as Bloom and Stein.


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U.S. To Step Up Iraq Reconstruction Alongside Troop Surge

The U.S. government will boost its Iraq reconstruction efforts in Baghdad and Anbar Province alongside President Bush's intended troop surge in Iraq, says a senior adviser to Secretary of State Condoleeza Rice and coordinator for Iraq.

President Bush says he will deploy more than 20,000 troops to deal with the violence gripping Iraq.

The State Department, meanwhile, will also immediately begin "deploying greater resources alongside our military in Baghdad and Anbar" in Iraq, says Ambassador David Satterfield.

"The centerpiece of this effort will be our expansion of our Provincial Reconstruction Teams," Satterfield says. "We will double our PRTs from 10 to 20, adding more than 300 new personnel. We will expand our PRTs in three phases with the first phase occurring over the next three months to complement our enhanced military efforts. In that time, we plan to co-locate nine new PRTs – six in Baghdad and three in Anbar – with Brigade Combat Teams engaged in security operations."

The PRTs Iraq will also include US Agency for International Development advisers, as well as civil affairs officers and bilingual advisors from the Department of Defense, Satterfield says.

PRTs will support local moderate Iraqi leaders through targeted assistance (e.g. microloans, vocational education and grants) to foster new businesses, create jobs and develop provincial capacity to govern in an effective and sustainable way, Satterfield says. PRTs will continue to play a leading role in coordinating several U.S. programs funded by the Congress, including Iraqi Provincial Reconstruction Development Councils (PRDC) and USAID’s local governance, community stabilization, and community action programs, he says.

"We intend to complete all three phases of our PRT expansion by the end of the calendar year," Satterfield adds, noting however that completion will be dependent both on the timing of, and level of funding appropriated in, the fiscal year 2007 supplemental appropriation measure to fund the Iraq war, as well as "circumstances on the ground in Iraq."

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