Report: Iraq contracts have cost U.S. billions

WASHINGTON -- Military contracts in the Iraq theater have cost taxpayers at least $85 billion, and when it comes to providing security, they might not be any cheaper than using military personnel, according to a report released Tuesday.

The Congressional Budget Office report comes on the heels of increased scrutiny of contractors in the last year, some of whom have been investigated in connection with shooting deaths of Iraqis and the accidental electrocutions of U.S. troops.

The United States has relied more heavily on contractors in Iraq than in any other war to provide services ranging from food service to guarding diplomats. About 20 percent of funding for operations in Iraq has gone to contractors, the report said.

Currently, there are at least 190,000 contractors in Iraq and neighboring countries, a ratio of about one contractor per U.S. service member, the report says.

The study does not include monetary figures for 2008, so the total paid to contractors for work in the Iraq theater since the invasion of Iraq in 2003 is likely much higher. If spending for contractors continues at about the same rate, by the end of the year, an estimated $100 billion will have been paid to military contractors for operations in Iraq.

The death of a Green Beret from Pittsburgh, Sgt. Ryan Maseth, who was electrocuted in January while showering in Iraq, prompted a House committee oversight hearing last month into whether contractor KBR Inc. has properly handled the electrical work at bases it is tasked with maintaining. The military has also said that five other deaths were due to improperly installed or maintained electrical devices, according to a congressional report.

Senators have also been looking into the electrical work done by contractors.

In a separate matter, a federal grand jury is investigating whether Blackwater Worldwide guards acted illegally when they opened fire in a Baghdad intersection last September. Seventeen Iraqis died.

The Justice Department is expected to decide soon whether to bring charges. The company itself is not expected to be prosecuted. Executives from Blackwater, based in Moyock, N.C., said recently that they planned to scale back their security contracting business and focus on other areas, in large part because of the negative attention after the shooting.

The CBO estimated Tuesday that $6 billion to $10 billion has been spent on security work, and that the prices paid are comparable to a U.S. military unit doing that work. It estimated that about 25,000-30,000 employees of security firms were in Iraq as of early 2008.

The report said the legal status of contractor personnel is uncertain, particularly for those who are armed. It also noted that military commanders have less direct authority over the actions of contractors than they would a subordinate because the contract is managed by a government contracting officer and not a military commander.

That's because that's how the government designed the relationship, said Alan Chvotkin, executive vice president and counsel for the Professional Services Council, which represents government contractors.

"There is accountability through the contract and to the contracting officer," Chvotkin said.

The use of military contractors dates to the American Revolution. During the Vietnam War, U.S. contractors were targeted by protesters who accused the companies of profiting from the war.

Since the end of the Cold War, the military has relied more heavily on contractors as it reduced the size of its force. Also, the government in general has sought to outsource more activities that are not inherently governmental.

In the Iraq theater, contractors have performed duties that otherwise would have required the deployment of more troops. About 20 percent are U.S. citizens; 40 percent are citizens of the country where they are working; and the rest are from other countries.

The personal cost to many of the employees has been great.

They've faced kidnappings and at least 1,200 have died -- including four Blackwater employees who were ambushed in 2004 by insurgents in Fallujah who strung their remains from a bridge. Some female employees of contractors have alleged they were raped by co-workers in Iraq. Investigators have said a contractor was electrocuted when the air conditioner in his living room shorted, and the death is among the electrocutions under investigation.

Since the 2003 invasion of Iraq, much criticism has been directed at Halliburton, an oil services company once run by Vice President Dick Cheney.

Last year, KBR -- formerly known as Kellogg, Brown & Root -- separated from Halliburton and is now the Army's largest contractor, according to its Web site. It holds a multibillion-dollar contract to provide basic services including food and shelter for U.S. soldiers.

It agreed in 2006 to pay $8 million to settle six-year-old claims that it overcharged the Army for construction and other support services in the Balkans.

A KBR spokeswoman declined to comment on Tuesday.

In May, an internal audit from the Defense Department's inspector general of about $8 billion paid to U.S. and Iraqi contractors found that nearly every transaction failed to comply with federal laws or regulations aimed at preventing fraud.