Cutting government waste and fraud is a tall order

[February 27, 2009]  WASHINGTON (AP) -- As President Barack Obama pledged Thursday to curb waste and fraud in federal spending, a top government watchdog gave members of Congress a sense of how hard the job will be.

The Defense Department spends more each year than any other federal agency on contracts -- $390 billion in 2008 alone -- yet the military has struggled for decades to award work efficiently, Gordon Heddell, the Pentagon's acting inspector general, told the House Appropriations defense subcommittee.

Although Heddell's authority is limited to Pentagon oversight, he said the problems are government-wide and stem mostly from having too few qualified acquisition personnel to keep an eye on the enormous flow of money to contractors.

"We clearly don't have enough contracting officials to do the work that is out there," he said. "So, it's either don't buy as much, or find more people that can handle it."

Yet recruiting and hiring people skilled in the arcane world of government contracting is challenging. Such employees are also prized by the private sector, which can usually offer better salaries and benefits.

In his written testimony, Heddell listed stark examples of companies that have bilked the military in recent years, including:

• C&D Distributors in Lexington, South Carolina, which was paid $20 million in fictitious costs to ship inexpensive plumbing fixtures and electronic equipment to U.S. troops in Iraq and Afghanistan. In the final transaction before the scheme was discovered, C&D billed the military nearly $1 million to send two flat washers that cost 19 cents each.
  
  The scam succeeded, Heddell said, because the company could manipulate the military's electronic bidding system.

• APL Ltd., a shipping company in Oakland, Calif., that agreed to pay more than $26 million to settle claims that it cheated the U.S. government on war-related contracts. The settlement came after an APL employee accused the company in 2004 of overcharging and double-billing the military for shipping supplies to Iraq and Afghanistan.

• A former KBR Inc. employee was sentenced to 26 months in prison and fined $216,000 for plotting to steal more than 784,000 gallons of jet fuel from a U.S. air base in Afghanistan. There was little oversight of fuel deliveries, Heddell said, "allowing such an extensive and overt theft of contracted material."

The Defense Department spent $154 billion in contracts in 2001, Heddell said. The boom in spending over the past seven years has led to creation of special inspectors general to watch over more than $80 billion in reconstruction projects in Iraq and Afghanistan.

Congress last year established the independent Commission on Wartime Contracting to investigate waste and corruption in Iraq and Afghanistan. Styled after the Truman Committee, which examined World War II spending six decades ago, the eight-member panel has broad authority to examine military support contracts, reconstruction projects and private security companies.

During the presidential campaign, Obama said if elected his administration would target the corruption and cost overruns in defense contracting.

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On the Net:

Pentagon inspector general: http://www.dodig.osd.mil/

[Associated Press; By RICHARD LARDNER]

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