09/26/2006 08:51 am ET Updated May 25, 2011

Hundred Dollar Bags of Laundry

In a little-noticed report Monday, the Government Accountability Office released the latest on the wise and judicious use of taxpayer money in Iraq contracting. Guess what? It's the biggest number yet in the accounting mess that is the rebuilding of Iraq.

The tally shows that Defense Department auditors have raised questions over $3.5 billion in costs that contractors have charged the government for work in Iraq. The auditors either couldn't find sufficient documentation for the charges, or the bills were out of line--in other words, the auditor didn't think it was a good deal for taxpayers. Contractors have submitted such dubious charges all the time in Iraq, as is documented in Blood Money, my book about the reconstruction fiasco, and Iraq for Sale, Robert Greenwald's scathing new film.

Here's what should happen in the contracting process. The auditors take these questionable costs over to the Pentagon contracting official, the government guy who is supposed to be watching out for you and me, the taxpayers. The contracting official is supposed to review the auditor's work, and decide whether or not to withhold money from the contractor.

In Iraq, however, the contracting officials have frequently ignored the auditors' findings, the GAO concluded. Instead of withholding money, the contracting officials have often just gone ahead and paid the bill anyway: $100 laundry bag or not, if the contractor bought it, we're stuck with it.

The GAO report is filled with all sorts of hints of friction between the Pentagon's auditors and its contracting officials. When the GAO asked one auditor about whether he was satisfied with his coworker's decision to go ahead and pay a contractor, the auditor could only muster that the contracting official had done "the best job he could." Hardly a ringing endorsement.

The bottom line is this: The Pentagon wound up paying contractors about 80 cents on the dollar of all the suspicious costs. That means a contractor could rack up the charges on funny business purchases, and be reasonably certain that he'd get most of his money back.

So here's the question: Whose pocketbook is the Pentagon protecting in Iraq: yours, or the contractors?