IRAQ: Securtiy Firm Falls Short on Safety Audit

A controversial British firm responsible for a $293 million U.S. Army security contract in Iraq could not prove that its armed employees received proper weapons training or that it had vetted Iraqi employees to ensure they did not pose a threat, according to a government audit released yesterday.

In addition to criticizing Aegis Defence Services Ltd., the audit took aim at the Army's contracting office in Iraq for poor oversight. It reported that the official who was supposed to keep watch over Aegis's contract had not been trained in either monitoring contracts or security. The office was also severely short-staffed: At the time of the audit, 41 officials were administering 6,500 contracts and task orders.

The findings mean "there is no assurance that Aegis is providing the best possible safety and security for government and reconstruction contractor personnel and facilities," according to auditors with the Office of the Special Inspector General for Iraq Reconstruction.

Aegis, an almost three-year-old London-based firm whose chief executive provided military assistance to warring factions in Asian and African conflicts in the late 1990s, received its Iraqi security contract last May. With the award, Aegis was put in charge of providing armed bodyguards for the Army's Project and Contracting Office, which oversees reconstruction projects, as well as coordinating security for 10 other prime contractors in Iraq.

An Aegis spokeswoman responded to the audit with a statement noting that "the auditors found that Aegis was generally in compliance with the terms of the contract," and, "As a result of our performance to date our contract has been formally extended for a further year." The original contract was for one year, with options to extend it for two more.

Yesterday's report came in the midst of other reminders of the security challenges that Iraq continues to pose. On Thursday, six Blackwater USA contractors were killed when the helicopter in which they were riding went down north of Baghdad. And yesterday, Halliburton Co., the single biggest U.S. contractor in Iraq, said it may have to pull out of work restoring Iraqi oil fields because of insurgent attacks.

While Aegis generally met its requirements in providing security to U.S. officials and other contractors, the auditors reported, the company fell short in several key areas. A random survey of 20 Aegis employees who had been issued weapons -- including AK-47 and M4 assault rifles -- showed that the company did not have the needed weapons training documentation for 14 of them. As a result, auditors could not say whether "all contractor personnel are qualified on the weapons that they had been issued."

The inspector general's report also faulted the company for not adequately documenting background checks on its 125 Iraqi employees. While the company was supposed to conduct interviews and other checks on the employees to make sure they did not pose "an internal security threat," auditors found documentary evidence that the vetting process was often lacking.

Maj. Gen. Daniel E. Long Jr., director of the Project and Contracting Office, wrote in a letter responding to the audit that his office generally concurred with the criticisms and was working to correct them.

The special inspector general's office, which was created by Congress, provides oversight of the billions of dollars in U.S. government funds being spent to rebuild Iraq following the United States-led invasion in 2003. It has issued 16 reports and has at least 10 others in progress, a spokesman said.

Sen. Russell Feingold (D-Wis.), who helped create the inspector general's office and has pushed to keep it funded, said in a statement that the Aegis audit is "deeply troubling, and only reaffirms the desperate need for vigorous, independent oversight of the way taxpayer dollars are being spent in Iraq."

The Aegis contract, the largest postwar security contract in Iraq, has been controversial from the beginning. The company's chief executive, Tim Spicer, is a former lieutenant colonel in the Scots Guards who used to lead the private military firm Sandline International.

Sandline was tapped in 1997 to end a rebellion on an island in Papua New Guinea, but the government there was soon toppled. The year after, Sandline became embroiled in war in Sierra Leone. A parliamentary inquiry in 1999 found that the firm had been involved in shipping arms into Sierra Leone, despite a United Nations embargo. The company said it was acting with the British government's blessing, but government ministers were cleared of wrongdoing.

Spicer left Sandline in 2000, and the company ended operations in 2004. Aegis -- which bills itself as a defense assistance, risk management and security company -- was created in September 2002. After Aegis won the security contract in Iraq, several Irish American groups protested, citing a 1992 case in which two soldiers under Spicer's command shot and killed a Belfast teenager. Spicer has maintained that the soldiers were innocent.

Texas-based DynCorp, which lost a bid for the Iraq security contract, unsuccessfully protested the award to Aegis, citing allegations against Spicer, among other issues.

Doug Brooks, an acquaintance of Spicer's who heads the International Peace Operations Association, a trade group of security firms, said that the problems identified in the Aegis audit seemed "fairly minor" and that the firm deserves credit overall for difficult work in a dangerous place.

Peter W. Singer, a Brookings Institution fellow who has written a book on private military firms, said the audit is more troubling for what it says about the contracting process than for what it says about Aegis. Auditors reported that contracting officials were unaware of many of the problems with the contract and that until auditors brought them to light, they had been unable to correct the ones they did know about. Contracting officials blamed a heavy workload and a high staff-turnover rate.

"The fact that you have 41 people doing oversight for 6,500 contracts is just stunning," Singer said. "It's only getting worse, and it just points to the fact that the government is behind the curve when it comes to being a smart client."

Government oversight of contractors in Iraq was also at issue yesterday in a lawsuit brought by whistle-blowers against a firm called Custer Battles LLC, which had provided security at Baghdad International Airport in the aftermath of Saddam Hussein's fall from power. Two whistle-blowers have sued Custer Battles, claiming it defrauded the U.S. government of tens of millions of dollars.

The firm's lawyers have argued that the case doesn't belong in U.S. courts, however, because Custer Battles allegedly stole from the Coalition Provisional Authority, which they claim was an international institution, not an arm of the U.S. government. Yesterday, Justice Department lawyers disagreed, writing in a brief that for the purposes of this case, "the CPA is an instrumentality of the United States."

A federal judge in Alexandria still has to rule on the matter.

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