Audit: US fails in tracking cost of Iraq contractors

The U.S. has spent about $6 billion on private security contractors and related services in Iraq, although the real tally remains unknown because the government has failed to track security costs, according to an audit from Iraq released Thursday. Since the war began, the U.S has hired some 77 private security firms to provide armed guards to protect U.S. and Iraqi government officials, supplies and buildings in the middle of the war zone, said the audit by the Special Inspector General for the Reconstruction of Iraq. Another 230 companies have provided related "security services" that range from intelligence gathering for private corporations in Iraq to protecting computer networks from hackers, according to the audit and interviews. "These are big numbers," said Deborah Avant, a University of California at Irvine professor who studies private security contractors. "They show that there is a lot going on that people aren't reading about in the papers." The number of private security companies and their total cost is larger than previous estimates. Just last month, a report by the Congressional Research Service estimated the total number of contractors at about 50 firms employing 30,000 people. Estimates of the cost of private security contractors have also varied. In 2005, the GAO estimated that the U.S. was paying $766 million for security costs. The audit report suggests that about $6 billion of the $50.8 billion the U.S. has spent in Iraq on rebuilding has gone to security–about 12 cents of every dollar. Private security officials said their industry is vital to the reconstruction of Iraq. They pointed to studies which have shown that the armed guards, who can make as much as $200,000 per year, are a cost effective way to provide security that would otherwise be performed by the U.S. military. "No matter what the number is, it's the cost of doing business in Iraq,'' said Lawrence T. Peter, the head of the Private Security Company Association of Iraq, an Iraqi-based industry group which counts just under 40 members today. ""It wouldn't have been less if the uniformed military did it. It might even have cost more." The audit is the most definitive account yet of the private security industry in Iraq. Still, the numbers in the report are, to put it mildly, squishy. Neither the Pentagon, nor the State Department, nor USAID specifically breaks out the costs of providing security. The audit acknowledges shortcomings in the numbers, and recommends better tracking. "It was not completely clear for several years that security costs were consuming large portions of reconstruction budgets,'' the audit said. "However, it is now clear that these costs were extremely high.'' Private security firms are one of the most complex and controversial issues in Iraq. The U.S. mission in Iraq would be impossible without them absent a dramatic increase in the number of U.S. soldiers. At the same time, the U.S. has repeatedly failed to control contractors. As private citizens, contractors do not have to follow military orders, nor are their actions covered by U.S. military legal codes. The contractors also enjoy broad immunity from Iraqi law, thanks to a regulation written by U.S. authorities. On a practical level, the result is that contractors are often legally or financially unaccountable. In the most well-known incident, Blackwater guards last year shot and killed 17 Iraqis in a square in Baghdad, touching off widespread anger in Iraq. Several of the contractors involved in that confrontation are under FBI investigation, but none have been charged. Incidents involving private security contractors have also sparked turning points in the war. The mutilations of four Blackwater contractors in Fallujah in 2004 prompted the first invasion of the city and threatened the stability of the U.S.-installed Iraqi government at the time. Immunity for contractors is a sticking point in ongoing negotiations between the U.S. and Iraq to allow American forces to remain in the country. The private security audit is one of several contained in a larger report by the Inspector General on the rebuilding of Iraq, which has so far cost around $125 billion in American, Iraqi and international funds. Among other notable findings, the report concluded: * More than $2 billion has been spent to support "soft programs" such as democracy building and macro-economic policy in Iraq with little evidence to show results. USAID alone has spent $600 million on two contracts to improve governance. * Corruption continues to plague reconstruction efforts, especially those involving Iraqi funds. All told, 45 people have been arrested, indicted or convicted for fraud in Iraq. * Rebuilding efforts in Iraq has shifted almost completely away from the construction of large scale projects to training and equipping Iraqi security forces. Currently, the U.S. plans to spend almost $18 billion to create a new Iraqi army and police force.