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Tuesday, September 26, 2006

Millions in Iraq contracts awarded to 'dummy vendor'

"A review of Iraq reconstruction funding revealed that 96 contracts worth $362 million were obligated for payment to 'Dummy Vendor,' as opposed to a legitimate supplier.

The Special Inspector General for Iraq Reconstruction discovered the contract entries in the Army Corps of Engineers' financial management system during a review of agreements signed under the Iraq Relief and Reconstruction Fund 2, a three-year appropriation that expires Sept. 30. Officials with the IG office determined that the contracts were not properly obligated and will be lost at the end of the month.

In discussions with Army Corps financial managers, investigators learned that the vendor name was used in the contracting system to allow the entry of data where a specific vendor did not exist. That field has since been modified so that Dummy Vendor is not allowed as an entry, they said.

'We do not believe in using this term there was any attempt to mislead on the true status of obligations,' the investigators wrote in their report, SIGIR-06-037. The obligations were recorded between November 2004 and August 2006, and none have been used for actual disbursements.

The funds were obligated by the Army Corps' Gulf region division project and contracting office in five categories: contingency; design/build program close out; public works center costs; supervision and administration; and claims and unknown.

Investigators recommended that the Army Corps either act immediately to obligate the funds properly or seek to have them extended legally. But the Army Corps chief financial officer responded last week that the contracting office would be advised to deobligate the funds afunds, the money would be available for five fiscal years for in-scope modifications, contract close-out and cost overruns. As expired funds, the money would be available for five fiscal years for in-scope modifications, contract close-out and cost overruns.

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