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Friday, August 17, 2007 

Pentagon Paid $999,798 To Ship Two 19-Cent Washers To Texas

Have you wondered about the cost of the Iraqi war? A good war is NOT CHEAP for taxpayers, but it is sure good for some businesses:

"Aug. 16 (Bloomberg) -- A small South Carolina parts supplier collected about $20.5 million over six years from the Pentagon for fraudulent shipping costs, including $998,798 for sending two 19-cent washers to a Texas base, U.S. officials said.

The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent split washer to Patrick Air Force Base in Cape Canaveral, Florida, Pentagon records show."

Yahoo News

I think perhaps the post title should clarify that, in this case, we're talking about a fraud perpetrated by the company, not a conscious decision by the Pentagon to pay a million dollars for shipping (not that the Pentagon shouldn't have caught on right away, and not that it's not almost just as bad that they didn't, but just to make the point that the Pentagon didn't INTEND to spend that kind of money on this, they were duped).

It's an important distinction because often the Pentagon does, intentionally and deliberately, pay HUGE fees to companies for their work related to Iraq or other conflict zones, and I think one can legitimately question the appropriateness of the costs of many of those "legitimate" purchases too (Haliburton, Blackwater, etc...). In this specific case however, it was clearly a case of fraud. Fraud that should have been caught right away, it's true, but fraud nonetheless.

When I first read the post title, I thought this outrageousness was part of some deliberate policy on the part of the Pentagon ('cause I've seen crazy, deliberate, stuff like this before) and I think that would have been much worse (and IS much worse, to the extent that such things actually do happen). Anyway, I just thought it was an important distinction between the war being good for businesses that take advantage, but do so legally (though perhaps not morally) and war being good for those who are willing to engage in out and out fraud.

LKO said, "often the Pentagon does, intentionally and deliberately, pay HUGE fees to companies for their work related to Iraq or other conflict zones"

You mean like Halliburton and the shameful conflict of interest that Dick Cheney has perpetrated on the American people? I think there is more financial 'nod nod wink wink' going on then we think.

Yes leftdog,

That's exactly what I meant. That's the only reason I thought the change might be appropriate, to distinguish this post's example of incompetence from the many other examples of... I'm not even sure what the word would be. Profiteering, I guess. Yeah, I guess profiteering works nice. Although I suppose you could call these twins profiteers too, but I think you see the distinction I'm trying to make. This post is about a case of fraud. The other Pentagon payments and contracts are actually much more sinister, which was why I thought it important to point out the distinction.

These women deliberately defrauded the Pentagon. Halliburton's shenanigans are more "legitimate" in a legalistic sense (perhaps), but the fact that the Pentagon let's contractors like Halliburton and Black Water get away with the stuff they do is probably worse than that they let these two twins slip through. In one case, the Pentagon failed (for a time) to catch a deliberate fraud. In the other, on paper no "fraud" ever even occured. Everyone knew, and knows pretty much exactly what's going on. There not failing to catch fraudsters; they wouldn't even recognize the contracts and fees as untoward. Which makes it worse, I think.

I agree - still is there no equivalent of an 'auditor general' in the US like we have here - that can monitor the books and report to Congress? Sheila Fraser is every government's nightmare but the role she plays on behalf of the public is invaluable.

Hey. Maybe these washers were really, really big!

I think the GAO (the Government Accountability Office) does that in the U.S. (used to be called the General Accounting Office but the name was changed).

I believe the equivalent to Sheila Fasier in the U.S. is the Comptroller General, currently Clinton appointee David M. Walker (the Comptroller General, because of the nature of the position, recieves a 15 year appointment).

The GAO is here: LINK and they do actually have a page dedicated specifically to their Iraq-related work, here: LINK.

A quick look reveals reports like:

"DOD's Lack of Adherence to Key Contracting Principles on Iraq Oil Contract Put Government Interests at Risk"

"DOD Cannot Ensure That U.S.-Funded Equipment Has Reached Iraqi Security Forces"


"Conditions in Iraq Are Conducive to Fraud, Waste, and Abuse"

The other aspect of those kinds of payments that we have to wonder aloud about is whether they are funding "black budget" items - the things that you don't want to admit that you are doing, so you bill them as "$20,000 hammers" and take the PR flak when it hits.

Perhaps I'm being unduly paranoid here, but it seems to me quite possible that the monies involved could well be funding all sorts of interesting things.

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