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The Professional Services Council, a trade association representing some of the Iraq contractors, says much of the blame can be placed upon "a growing politicization of government procurement," as well as the distance between the procurement planners sitting in Washington and contractors in the field.
They have a point. The lack of accountability, reports the Project on Government Oversight in a recent report, can be attributed to the gutting of acquisition workforce and oversight personnel, mandated by Congress starting in the mid-1990s, at a time when the Pentagon began to hand out large open-ended (Indefinite-Delivery/Indefinite-Quantity) contracts to well-connected firms including Bechtel and Halliburton. The result is layer upon layer of subcontracts, with little transparency and reduced government oversight.
Ironically, the contracting agencies' solution has been to outsource much of the oversight process itself. While the CPA's audit staff was cut by nearly half during 2004, for example, AID and other agencies were hiring contractors to oversee other contractors with whom they already had ongoing contractual relationships, according to this report released by Henry Waxman, D-California, and Senate Democrats.
U.S. firms are not the only ones to complain about how difficult it has been to get in on the action. (Rep. James P. Moran Jr., D-Virginia, told to a Washington Post reporter that a company in his district was told by Pentagon officials that "if they want the money they really have to go though Halliburton.") Even the administration's closest Iraqi allies have been critical.
Last February, for example, Rend Rahim Francke, the U.S.-appointed Iraq Governing Council's representative in Washington, openly criticized the CPA for passing over Iraqi firms when awarding billions of dollars in reconstruction contracts. Iraqi firms, she said, could easily have done the work more cheaply and quickly. In December, AID claimed at least 100,000 Iraqis were currently employed in U.S.-funded reconstruction projects, a figure it expects will grow.
The CPA's rush to impose new economic rules - especially the announced intention to rapidly privatize 200 state-owned enterprises, has also done considerable damage to the confidence and trust that Iraqis have had. Critics say the CPA's Orders were clearly designed to benefit foreign investors more than the Iraqi people, and constitute a virtual blueprint for economic colonialism.
CPA Order 39, for example, would essentially privatize Iraq's 200 state-owned industries. The order allows for "national treatment" of foreign investors (i.e. no preferences for local bidders and investors), who can also own 100 percent of any privatized business with unrestricted, tax-free remittance of all profits.
A leaked memo written by British attorney general Lord Goldsmith acknowledges that the CPA may have outstepped its own legitimate authority in issuing the orders, warning Prime Minister Tony Blair that 'major structural economic reforms would not be authorized by international law.' "
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