Funding the Army and Reconstructing Iraq

By Hsia, Timothy K. | Army, January 2008 | Go to article overview

Funding the Army and Reconstructing Iraq


Hsia, Timothy K., Army


Lately, Washington and the defense community have been abuzz with the discovery and coverage of several illegal contracts and financial wrongdoings by military members. Most of the focus has been on major contracts in Washington and in Kuwait; overlooked, however, among the accusations of financial wrongdoing is the fact that there is little or no oversight in financial transactions conducted by the military within Iraq. The consequences of the lack of oversight and accountability are unforeseen, perilous and possibly injurious to our fighting forces.

Army units deployed in Iraq rely not only on traditional means of sustainment, but also on special funds that are available only in theater. For day-today operations, units can disburse money from a program called operations and maintenance, Army (OMA), which allows units to draw American cash for immediate purchase of equipment. The problem with this financial stream is that units are essentially limited to purchasing equipment from reputable vendors because of the required documentation.

Essentially, OMA purchases become shopping trips to the nearest Army and Air Force Exchange Service (AAFES) store, because often the exchange is the only source of quality and selection that units demand. If units do not purchase from AAFES, they are likely to visit a third-country national or localnational store for equipment. There are very few of these shops, however, and often their equipment is of dubious quality; moreover, the prices triple the cost of identical goods that can be found on the Internet.

The most problematic fund into which insurgents have been able to tap and enrich themselves is the commander's emergency response program (CERP), which allows the Army to find, assess and fund contracts that will assist in developing the infrastructure of a neighborhood. CERP funds awarded to construction projects range from wall building to separating neighborhoods and are awarded to Iraqi construction companies whose intentions and loyalties are unverifiable and dubious at best. These companies in turn frequently find it sensible and economically viable to pay off insurgent cell leaders in order to ensure they are not attacked while finishing projects initiated by the U.S. Army. In essence, a completed contract means that there are three satisfied parties at the end of the day: the U.S. Army unit that initiated the contract, the Iraqi vendor that carried out the terms of the contract and the insurgent cell that refrained from stopping the fulfilling of the contract. Even worse, when units are forced to leave a certain area of operations they occasionally find no replacement unit to which they can transfer contracts. As a result, projects remain unfinished.

Besides CERP and field ordering officer funds, the U.S. Army also relies on purchase request and commitments (PR&Cs) for equipment and services. But Army units are forced to first rely on Iraqi vendors to satisfy a PR&C, the logic being that this will strengthen the local economy and that in most cases there are no other means available to fulfill a unit need other than relying on Iraqi assistance. …

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