Dec 5, 2013
Where Has All the Money Gone?
Posted on May 15, 2013
By David Vine, TomDispatch
By the second Gulf War, contractors represented roughly one in two deployed personnel in Iraq, with the company now known as KBR employing more than 50,000 people, or enough to staff 100 army battalions. Burger Kings, Starbucks, and car dealerships, as well as air conditioning, steak, and ice cream became regular features of often city-sized bases. However, this wasn’t a phenomenon restricted to war zones. U.S. bases worldwide look much the same, which helps explain the staggering taxpayer dollars they consume.
Calculating Costs in a “Dysfunctional” System
The problem is, it’s remarkably difficult to figure out who’s been benefiting from all the taxpayer money. The government doesn’t bother to compile such information. This meant I had to pick through hundreds of thousands of contracts and research scores of companies in countries worldwide.
I began with publicly available government contract data and followed a methodology for tracking funds used by the Commission on Wartime Contracting. This allowed me to compile a list of every Pentagon contract with a “place of performance”—that is, the country where most of a contract’s work is performed—outside the United States since the start of the Afghan war (fiscal year 2002).
Scrolling through 1.7 million spreadsheet rows, one for each contract, offered a dizzying feel for the immensity of the Pentagon’s activities and the money spent globally. Generally, the companies winning the largest contracts have been doing one (or more) of four things: building bases, running bases, providing security for bases, and delivering fuel to bases. Among those 1.7 million contracts, there was one for $43 for sand in South Korea and another for a $1.7 million fitness center in Honduras. There was the $23,000 for sports drinks in Kuwait, $53 million in base support services in Afghanistan, and everything from $73 in pens to $301 million for U.S. Army industrial supplies in Iraq.
Cheek by jowl, I found the most basic services, the most banal purchases, and the most ominous acquisitions, including concrete sidewalks, a traffic light system, diesel fuel, insect fogger, shower heads, black toner, a 59” desk, unskilled laborers, chaplain supplies, linen for “distinguished visitor” rooms, easy chairs, gym equipment, flamenco dancers, the rental of six sedans, phone cards, a 50” plasma screen, billiards cues, X-Box 360 games and accessories, Slushie machine parts, a hot dog roller, scallops, shrimp, strawberries, asparagus, and toaster pastries, as well as hazardous waste services, a burn pit, ammo and clips, bomb disposal services, blackout goggles for detainees, and confinement buildings.
The $385 billion total is at best a rough estimate; the real totals are surely higher. The Federal Procurement Data System that’s supposed to keep track of government contracts “often contains inaccurate data,” according to the Government Accountability Office. Harvard University economist Linda Bilmes calls the system “dysfunctional.” For example, hundreds of thousands of contracts have no “place of performance” listed at all. There are 116,527 contracts that list the place of performance as Switzerland, even though the vast majority are for delivering food to troops in Afghanistan and at bases worldwide.
The unreliable and opaque nature of the data becomes clearer when you consider that the top recipient of Pentagon contracts isn’t a company at all, but a category labeled “miscellaneous foreign contractors”; that is, almost 250,000 contracts totaling nearly $50 billion, or 12% of the total, have gone to recipients we can’t identify. As the Commission on Wartime Contracting explains, “miscellaneous foreign contractors” is a catch-all “often used for the purpose of obscuring the identification of the actual contractor[s].”
The reliability of the data only worsens when we consider the Pentagon’s inability to track its own money or pass an audit. Identifying the value of contracts given to specific companies is made more difficult by a general lack of corporate transparency, as well as complicated subcontracting arrangements, the use of foreign subsidiaries, and frequent corporate name changes.
Still, examining the top contractors is illuminating. Let’s start with the top three whose names we know:
1. KBR: Among the companies bringing home billions, the name Kellogg, Brown & Root dominates. It has almost five times the contracts of the next company on the list and is emblematic of broader problems in the contracting system.
KBR is the latest incarnation of Brown & Root, the company that started paving roads in Texas in 1919 and grew into the largest engineering and construction firm in the United States. In 1962, Halliburton, an international oil services company, bought Brown & Root. In 1995, Dick Cheney became Halliburton’s president and CEO after helping jump-start the Pentagon’s ever-greater reliance on private contractors when he was President George H.W. Bush’s secretary of defense.
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