Up to $60B in war funds said wasted

WASHINGTON (AP) — As much as $60 billion in U.S. funds has been lost to waste and fraud in Iraq and Afghanistan over the past decade through lax oversight of contractors, poor planning and payoffs to warlords and insurgents, an independent panel investigating U.S. wartime spending estimates.

In its final report to Congress, the Commission on Wartime Contracting said the figure could grow as U.S. support for reconstruction projects and programs wanes, leaving both countries to bear the long-term costs of sustaining the schools, medical clinics, barracks, roads and power plants already built with American tax dollars.

Much of the waste and fraud could have been avoided with better planning and more aggressive oversight, the commission said. To avoid repeating the mistakes in Iraq and Afghanistan, government agencies should overhaul the way they award and manage contracts in war zones, the commission recommended.

The Associated Press obtained a copy of the commission’s 240-page report in advance of its scheduled public release on Wednesday.

Created by Congress in 2008, the eight-member commission held more than two dozen hearings, interviewed hundreds of military and civilian officials and traveled multiple times to Iraq and Afghanistan. The panel’s final report is the most comprehensive examination so far of the U.S. dependence on contractors and the government’s ability to manage them in combat areas.

The commission said calculating the exact amount lost through waste and fraud is difficult because there is no commonly accepted methodology for doing so. But using information it has gathered over the past three years, the commission said at least $31 billion has been lost and the total could be as high as $60 billion. The commission called the estimate “conservative.”

Overall, the commission said spending on contracts and grants to support U.S. operations in Iraq and Afghanistan is expected to exceed $206 billion by the end of the 2011 budget year. Based on its investigation, the commission said contracting waste in Afghanistan ranged from 10 percent to 20 percent of the $206 billion total. Fraud during the same period ran between 5 percent and 9 percent of the total, the report said.

Styled after the Truman Committee, which examined World War II spending six decades ago, the commission was vested with broad authority to examine military support contracts, reconstruction projects and private security companies. But the law creating the commission also dictated it would cease operating at the end of September 2011, even as the U.S. operations in Iraq and Afghanistan continue to be heavily supported by contractors.

The commission cited numerous examples of waste, including a $360 million U.S.-financed agricultural development program in Afghanistan. The effort began as a $60 million project in 2009 to distribute vouchers for wheat seed and fertilizer in drought-stricken areas of northern Afghanistan. The program expanded into the south and east. Soon the U.S. was spending a $1 million a day on the program, creating an environment ripe for waste and abuse, the commission said.

“Paying villagers for what they used to do voluntarily destroyed local initiatives and diverted project goods into Pakistan for resale,” the commission said.

The Afghan insurgency’s second largest funding source after the illegal drug trade is the diversion of money from U.S.-backed construction projects and transportation contracts, according to the commission. But the report does not say how much money has been funneled to the insurgency. The money typically is lost when insurgents and warlords threaten Afghan subcontractors with violence unless they pay for protection, according to the report.

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