Congressman Stephen F. Lynch, member of the House Subcommittee on National Security, Emerging Threats and International Relations, introduced the "Iraq Contracting Fraud Review Act of 2005" (H.R. 4351), legislation that would ensure greater accountability and transparency in Iraq contracting.  Specifically, Lynch's bill would require the Secretary of Defense to review all Defense Department Iraq reconstruction and troop support contracts involving any contractor, subcontractor, or U.S. official that has been indicted or convicted for related contract illegalities.  The bill would also require the Secretary to report subsequent findings back to Congress within 180 days.  

Congressman Lynch's legislation stems from the Subcommittee's continuing investigation of documented waste, fraud, and abuse in Iraq reconstruction and troop support contracting and arose in response to the recent federal indictments of a former Halliburton official and subcontractor.  In March of 2005, the Department of Justice announced that Jeffrey Mazon, a former Halliburton procurement manager, and Ali Hijazi, the managing partner of LaNouvelle General Trading and Contracting Company, a Kuwaiti firm and Halliburton subcontractor, had been indicted in relation to a kickback scheme through which the company overcharged the U.S. government by approximately $3.5 million.  

During resulting Subcommittee hearings, Congressman Lynch repeatedly asked Defense Department representatives whether, in light of the indictments, all contracts involving Mr. Mazon, Mr. Hijazi, or LaNouvelle were being reviewed.  Unfortunately, aside from very vague assurances that a contractual review is "ongoing,” these officials failed to offer any specifics on the nature, scope, and any results of the work. 

According to Congressman Lynch, "Our goal with this legislation is to assist in tracking the flow of up to $20 billion that has already been misallocated or unaccounted for in Iraq and ensure greater governmental transparency and accountability as we continue towards the stabilization and reconstruction of Iraq.  Regrettably, the extent of financial waste, fraud, and abuse amounts to a lost opportunity to provide meaningful assistance to the Iraqi people and has frustrated our overall policy in Iraq, an effort for which we've sacrificed a great deal financially and, more importantly, the lives of more than 2,000 of our men and women in uniform.” 

 

Lynch added, "This is a matter of common sense.  Clearly, these indictments have raised significant questions regarding the integrity of other contracts involving these parties, yet a comprehensive contractual review does not appear to be a priority for the Defense Department.  It's about time we adopt a real system of accountability.”  

Specifically, Lynch's bill would promote greater governmental transparency and accountability in Iraq Reconstruction contracting by requiring the Secretary of Defense to:

• Review all defense contracts (including a task or delivery order contract) entered into on or after March 1, 2003 by the Defense Department that:

1)  relate to reconstruction or troop support in Iraq; and

2)  involve any contractor, subcontractor, or federal officer/employee that has been indicted or convicted for fraud or any other violation of federal law with respect to another Defense Department contract relating to reconstruction or troop support in Iraq.

• Notify the House Government Reform and Armed Services Committees and Senate Governmental Affairs and Armed Services Committees when the review required by the Act has begun. 

• Complete the review and submit a subsequent report to the appropriate Committees within 180 days of enactment.  

Rep. Lynch’s legislation has seven original cosponsors, including

Rep. Henry Waxman, the Ranking Member of the Government Reform Committee, and

Rep. Tom Lantos, the Ranking Member of the International Relations Committee.

Copies of the "Iraq Contracting Fraud Review Act of 2005" are available upon request.

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