Pentagon Hires Contractors to Regulate Contractors

Instead of keeping watch itself, the Department of Defense today relies on contractors to monitor the work of other contractors, a risk strategy that became cemented during the Iraq War thanks to a politically-connected-and powerful-company with ties to the Bush White House.

In late 2004, the U.S. Army command overseeing logistical support for troops in Iraq had a serious problem on its hands. Army officials had hired KBR, then a subsidiary of Halliburton, which Vice President Dick Cheney had helped lead, to supply soldiers with food and other supplies. But at least $1 billion in billing by KBR was questioned by the Pentagon's Defense Contract Audit Agency, resulting in the Army deciding to withhold 15% of its payments to KBR.

Company officials fought the withholding and pressured both the Defense Department and Congress to release the money it claimed it was owed. So the Army removed those who had raised alarms over the billing and hired another company, consulting firm RCI, to conduct its own audit of KBR costs.

RCI didn't find any problem with KBR's billing and the contractor got most of its money.'

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