U.S. cannot account for billion-dollar Iraq contract

By David Morgan

WASHINGTON (Reuters) - The State Department does not know specifically what it received for a billion-dollar contract with security firm DynCorp International to provide training services for Iraqi police, a U.S. watchdog agency said on Tuesday.

The Office of the Special Inspector General for Iraq Reconstruction (SIGIR) said it was forced to suspend its audit of the DynCorp contract after administration officials told investigators they had no confidence in their own accounting records.

The inspector general said the agency had not validated the accuracy of invoices received before October 2006 and described bills and supporting documents as being in disarray.

Among the problems identified before the audit was suspended were duplicate payments, the purchase of a never-used $1.8 million X-ray scanner and payments of $387,000 to house DynCorp officials in hotels rather than other available accommodation.

The inspector general blamed the problems on long-standing contract administration problems at the State Department agency responsible for the contract -- the Bureau of International Narcotics and Law Enforcement Affairs, or INL.

"As a result, INL does not know specifically what it received for most of the $1.2 billion in expenditures under its DynCorp contract for the Iraqi Police Training Program. INL's prior lack of controls created an environment vulnerable to waste and fraud," SIGIR said in an interim review.

The report coincides with a controversy over the use of private security firms in Iraq, particularly Blackwater USA, which is under scrutiny over a September 16 shooting incident in Baghdad in which 17 people were killed.

The Pentagon employs at least 7,300 security contractors in Iraq and the State Department thousands more. U.S. officials say they are needed to free up soldiers for other tasks.