Federal Audit Criticizes Iraq Contract Oversight

WASHINGTON — A security firm run by a controversial former British commando was criticized Friday in a U.S. government report that underlined the continued failings of officials responsible for overseeing contracts in Iraq.

The report, an audit by the Pentagon’s special inspector general for Iraq reconstruction, Stuart W. Bowen Jr., found that London-based Aegis Defense Services had not vetted the backgrounds of Iraqi employees, had failed to document weapons training and had not set up required operations centers or hostage rescue teams.

Aegis was founded by Tim Spicer, a onetime British special forces officer who has been involved in mercenary operations from Papua New Guinea to Sierra Leone. The firm won a $293-million contract last year to protect U.S. reconstruction officials.

“There is no assurance that Aegis is providing the best safety and security for the government and reconstruction contractor personnel and facilities,” the audit said.

Aegis executives defended the company’s record. They noted that the audit said Aegis was “generally in compliance” and performing most duties under the contract, the largest for security in Iraq.

“As a result of our performance to date our contract has been formally extended for a further year,” spokeswoman Sara Pearson said in a statement.

Doug Brooks, the president of an industry group, the International Peace Operations Assn., said the audit focused more on paperwork than performance problems. “There were a lot of suspicions early on” about Aegis’ abilities, he said. “But the general perspective from the companies working in Iraq is that it’s being well done.”

Aegis is not a member of the group Brooks heads.

The Aegis contract has been sharply criticized. Other security firms argued that the company, which was formed in 2002, had no experience in Iraq.

Also, human rights activists and Irish American groups protested the involvement of Spicer, who has persistently supported two soldiers under his command who were convicted of the 1992 murder of a Belfast teenager.

A British parliamentary inquiry found that another company Spicer ran, Sandline, shipped arms to Sierra Leone in 1998 despite a United Nations embargo. Sandline said the shipments were approved by British officials, who were later cleared of wrongdoing.

In Iraq, Aegis serves as an information clearinghouse, running centers that conduct daily briefings in which unclassified intelligence is exchanged by the U.S. military and security contractors. It also guards facilities and transports officials.

In random checks, the audit found that of 20 non-Iraqi employees who had been issued 30 weapons, the company could document training for only 13 of the weapons.

The inspector general also found no evidence that any of the 20 Iraqi employees in the review had undergone police background checks. The company argued that such checks had no value in the chaos of Iraq.

The audit also reported that Aegis had created six centers, instead of the 18 called for in the contract, and had not provided the hostage-rescue training mandated by the contract. The company said those terms were changed at the direction of the U.S. in response to circumstances in Iraq. U.S. officials backed up Aegis’ contention.

The report also criticized the oversight exercised by the Project and Contracting Office, the Pentagon agency that manages the reconstruction effort.

The audit found that the U.S. official overseeing Aegis had no experience in contract monitoring or the security field. A PCO spokesman on Friday could not comment on the reasons such an individual was given responsibility for the three-year contract. A more experienced overseer has since been appointed.

The inspector general also found that the PCO was woefully understaffed, with 41 contract officers to oversee 6,500 agreements worth more than $8.5 billion. The office has authority to hire up to 69 contract officers but has had trouble filling the positions, the government’s front line defense against waste, fraud and abuse of tax dollars.

PCO officials also told the auditors that they were grappling with high turnover, which has emerged as one of the biggest problems in Iraq’s reconstruction. Contract officers stay in Iraq for periods as brief as four months, impeding progress on the $18.4-billion rebuilding effort.

Army Maj. Tom Leonard, a PCO spokesman, said more contract officers were on the way.

“We are gaining more folks as we are moving forward to solve this,” he said.

Brooks said security contractors had been frustrated by the lack of contract officers in Iraq.

“They feel they’re doing a really good job, but nobody knows it because nobody is there to look over their shoulder,” the industry representative said. “They’re keen to have better oversight.”