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The Cable goes inside the foreign policy machine, from Foggy Bottom to Turtle Bay, the White House to Embassy Row.

Report faults State Department, DynCorp for missing $1 billion

The State Department cannot account for more than $1 billion it paid out to contractor DynCorp to train police during the first years of the Iraq war, in just one example of management shortcomings that have put at risk $2.5 billion worth of money spent on training policemen around the world, according to a damning ...

By Josh Rogin

January 25, 2010, 10:02 PM

The State Department cannot account for more than $1 billion it paid out to contractor DynCorp to train police during the first years of the Iraq war, in just one example of management shortcomings that have put at risk $2.5 billion worth of money spent on training policemen around the world, according to a damning new report.

The office of the Special Inspector General for Iraq Reconstruction (SIGIR) especially laid into the International Narcotics and Law Enforcement Affairs (INL), known as the "Drugs and Thugs" bureau, in an audit released Monday, for mishandling DynCorp.

The report comes at an inconvenient time for DynCorp, which is also doing most of the police training in Afghanistan. The Defense Department, which is taking over that mission soon, will need contractor help, but sources tell The Cable that DOD is trying to exclude DynCorp from that contract competition over the company’s vigorous protests.

Special Inspector Stuart Bowen told The Cable that since the problems at INL haven’t been corrected in the years that SIGIR has been reporting on the bureau, his office is now working with Deputy Secretary Jack Lew, Secretary of State Hillary Clinton‘s right-hand man on management issues in Foggy Bottom.

"Deputy Secretary Lew is a man who’s very familiar and committed to financial management," Bowen said. "He committed to addressing them directly and ensuring that this time the promises of improvements occur."

"I’m concerned about INL’s capacity to oversee large-scale projects," Bowen went on. "Whether the department [as a whole] has the capacity to ultimately do that still remains to be seen."

The SIGIR’s report on INL contains many damning revelations, including the fact that the first $1 billion spent on the DynCorp contract was overseen by just one person, and that person simply approved the invoices without scrutiny. When challenged, INL couldn’t produce the documentation on where that billion went, and is now trying to piece it together –a process that could take several years.

INL Assistant Secretary David Johnson declined to be interviewed about the report, but an INL spokesperson said that there are now three people in Iraq overseeing DynCorp’s contract there, with four more on the way this year. The spokesperson said there is now a process in Washington to check invoices that had saved $9 million, but SIGIR isn’t satisfied.

"INL continues to exhibit weak oversight of the DynCorp task orders for support of the Iraqi police training program," the report states. "INL lacks sufficient resources and controls to adequately manage the task orders with DynCorp. As a result, over $2.5 billion in U.S. funds are vulnerable to waste and fraud."

INL disputes that $2.5 billion of funds are "vulnerable."

The report also calls into question the relationship between INL and DynCorp in Iraq. Apparently, INL was involved in negotiating leases and building rentals for DynCorp in the Baghdad international zone that somehow resulted in exorbitant rates that kept going up every year. DynCorp then just put that all on INL’s tab and charged the bureau 11 percent extra in fees to boot.

The report is filled with examples of abuse and waste by DynCorp that INL paid for. In one example, $450,000 was spent to rent two generators when there were already plenty of generators to go around.

The report also details at length how SIGIR raised staffing and contract management issues with INL several times since 2005. Although INL has tried to address the problem, the results are far from satisfactory, according to SIGIR.

Lawmakers too are getting fed up with DynCorp’s handling of the police training mission and INL’s lax oversight.

"[INL has]been managing this contract in Iraq since 2004 and, according to this report, they have no idea where any of the money went," said Sen. Claire McCaskill, D-MO. "What’s even worse is that these are the same people responsible for police training in Afghanistan, so I don’t have any confidence that they’re doing a better job there."

Josh Rogin covers national security and foreign policy and writes the daily Web column The Cable. His column appears bi-weekly in the print edition of The Washington Post. He can be reached for comments or tips at josh.rogin@foreignpolicy.com.

Previously, Josh covered defense and foreign policy as a staff writer for Congressional Quarterly, writing extensively on Iraq, Afghanistan, Guantánamo Bay, U.S.-Asia relations, defense budgeting and appropriations, and the defense lobbying and contracting industries. Prior to that, he covered military modernization, cyber warfare, space, and missile defense for Federal Computer Week Magazine. He has also served as Pentagon Staff Reporter for the Asahi Shimbun, Japan's leading daily newspaper, in its Washington, D.C., bureau, where he reported on U.S.-Japan relations, Chinese military modernization, the North Korean nuclear crisis, and more.

A graduate of George Washington University's Elliott School of International Affairs, Josh lived in Yokohama, Japan, and studied at Tokyo's Sophia University. He speaks conversational Japanese and has reported from the region. He has also worked at the House International Relations Committee, the Embassy of Japan, and the Brookings Institution.

Josh's reporting has been featured on CNN, MSNBC, C-Span, CBS, ABC, NPR, WTOP, and several other outlets. He was a 2008-2009 National Press Foundation's Paul Miller Washington Reporting Fellow, 2009 military reporting fellow with the Knight Center for Specialized Journalism and the 2011 recipient of the InterAction Award for Excellence in International Reporting. He hails from Philadelphia and lives in Washington, D.C. Twitter: @joshrogin