New government commission blasts Iraq waste, fraud

[cnn-photo-caption image= http://i2.cdn.turner.com/cnn/2009/images/02/02/art.webb.gi.jpg caption="'Every interested American knows that there was rampant fraud, waste, and abuse following the invasion of Iraq,' Sen. Jim Webb, D-Virginia, said."]WASHINGTON (CNN) - Citing the need to restore public trust in an inefficient and allegedly corrupt military procurement process, a new government commission Monday officially began hearings to account for billions of taxpayer dollars misspent in Iraq and Afghanistan.

"Every interested American knows that there was rampant fraud, waste, and abuse following the invasion of Iraq," Sen. Jim Webb, D-Virginia, said at the opening hearing of the Commission on Wartime Contracting in Iraq and Afghanistan.

"They all know it, and they want us to demonstrate that we're willing to do something about it not simply in terms of process but in terms of accountability."

The seven-member commission begins its work as the U.S. military prepares to cut troop levels in Iraq, but strengthen its presence in Afghanistan, where Taliban and al-Qaeda elements have made gains in recent years.

A key commission goal is to ensure that the mistakes and corruption that have plagued the Iraqi reconstruction effort are not repeated as the primary focus potentially shifts back to Afghanistan.

"The record ... is littered with too many examples of buildings unfit for use, projects that can't be maintained at original scope and cost estimates, weapons and money gone missing, and outright fraud on the U.S. taxpayer," commission co-chair Mike Thibault said.

In a symbolic gesture, the commission's opening session was held in the same Senate hearing room used by the Truman Committee, believed to have recovered billions of taxpayer dollars by investigating military profiteering during World War II.

Like the Truman Committee, led by then-Sen. Harry Truman, "the Commission on Wartime Contracting's reason for existence is to ensure that the government pays fair and reasonable prices for the goods and services that it buys to support our war fighters," Thibault noted.

"Harry Truman has been rolling in his grave for the last five years," Sen. Claire McCaskill, D-Missouri, said. "He, in fact, has been in constant motion in his grave. He is astounded that we allowed this problem to get this far out of control. This has been a massive failure. We have failed our military and we have failed the American people."

McCaskill told the commission it was "going to need a two by four" to begin fixing the situation.

The Commission on Wartime Contracting (CWC), according to its Web site, is empowered to refer any violation or potential violation of law it identifies to the Attorney General. It is required to provide two annual reports to Congress: an interim report due May 1, 2009, and a final report due by August 2010.

The CWC's opening hearing highlighted the release of a new report on abuses in the Iraq reconstruction effort.

Titled "Hard Lessons: The Iraq Reconstruction Experience," the report says, among other things, that the massive reconstruction initiative was marked by waste and failures caused by "blinkered and disjointed" pre-war planning.

"Egregious examples of fraud" in Iraq, the report concludes, "grossly overburdened" the program.

"The overuse of cost-plus contracts, high contractor overhead expenses, excessive contractor award fees, and unacceptable program and project delays all contributed to a significant waste of taxpayers dollars," the report says.

The report includes multiple examples of waste, including a "skeletal, half-built" shell of a maximum-security prison in Khan Bani Saad, which "will probably never house an inmate" even though the United States spent $40 million on the now-halted $73 million project.

The project, sarcastically called "the whale" by local Iraqi observers, is described in the report as "perhaps the single greatest project failure in the U.S. reconstruction program" in part due to "poor security and weak subcontractor performance."

Looking beyond issues of waste and corruption, the report points out that Iraqi reconstruction was also hampered by the fact that it was pursued amid a deteriorating security situation.

"Why was an extensive rebuilding plan carried out in a gravely unstable security environment? asked Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction - whose oversight jurisdiction covers $50 billion in U.S. funds appropriated by Congress for Iraq.

"This question underscores an overarching hard lesson from Iraq: Beware of pursuing large-scale reconstruction programs while significant conflict continues."

The Iraq program was additionally marked by frequent changes in reconstruction strategy, "turbulence" caused by personnel turnover and "poor integration" of work by various U.S. government agencies. This was the result of "weak unity of command and inconsistent unity of effort."

Much of the "Hard Lessons" report looks to the future. It stresses the importance of developing "an agreed-upon doctrine and structure" for reconstruction "so that the United States is ready when it next must intervene in a failed or failing state."

The first of several principles mentioned for such operations: "Security is necessary for large-scale reconstruction to succeed."

- CNN's Joe Sterling contributed to this report