Windfalls of War

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Rescue workers work on the damaged section of the Pentagon following the 9/11 terrorist attack. Department of Defense, Tech. Sgt. Cedric H. Rudisill/AP

As U.S. military deaths and injuries from roadside bombs escalated after the invasion of Iraq, the Pentagon rushed to find solutions.

Competition is normally the cornerstone of better prices and better products, but the urgency of dealing with improvised explosive devices, or IEDs, has been cited to justify a number of sole-source contracts to companies promising quick solutions over a decade of war.

One such company was Tucson-based Applied Energetics, which markets a futuristic weapon that shoots beams of lightning to detonate roadside bombs. The company won over $50 million in military contracts for their lightning weapon, all without full and open competition, even though there was another company marketing similar technology. Despite test failures, the company, in part thanks to congressional support, continued to get funding.

In August, the Marine Corps, which was on the verge of awarding the company yet another sole-source contract for the lightning weapon, cancelled the latest $3 million deal after the commander of the unit in Afghanistan decided it didn’t meet their needs.

In the meantime, a competitor, called Xtreme Alternative Defense Systems, an Indiana-based firm with its own lightning-based counter-bomb technology, says it’s had good results with only a fraction of the federal funding that Applied Energetics has received—$1.5 million. The company is preparing to test its technology at a military range. “We did our own development based on state grants” and federal funds, says Pete Bitar, the head of the company. “I cashed out my 401(k).”

Windfalls of War

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Secretary of Defense Donald Rumsfeld talks with troops in Iraq. KBR has been paid $37 billion to build infrastructure like this dining hall.   Jim Watson/AP
KBR, formerly Kellogg, Brown and Root, won the first "concierge" contract for an array of services in Iraq and Afghanistan and parlayed it into a sole-source $37 billion bonanza

Windfalls of War

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The Pentagon tried to sole-source a new line of refueling tankers to Boeing for $37 billion, citing the urgency of war, but was overruled. Even though Boeing eventually won the contract, a competition with Europe's EADS forced down the cost of the contract and saved taxpayer dollars.  Boeing
The air tanker fight shows how competition among defense contractors can drive down the cost of new weapons systems, to the benefit of taxpayers. The Pentagon's competed contracts fell to 55 percent in the first half of 2011.

Windfalls of War

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United Flight 175 collides with south tower of the World Trade Center. Chao Soi Cheong/AP

UPDATED 10/7/11: Ten years ago, American bombs rained down on Afghanistan, the first thrust of revenge for the 9/11 attacks on the Pentagon and the World Trade Center.

The United States went to war to find and kill terrorist leader Osama bin Laden, who had been given refuge by Afghanistan's Taliban leadership. The Taliban fell quickly; it took another 10 years to kill bin Laden. And still the war drones on.

More than 6,000 soldiers have died in Afghanistan and Iraq. The wars cost taxpayers $2 billion a week. The Pentagon has awarded $206 billion in contracts to support operations in Iraq and Afghanistan.

The bipartisan Commission on Wartime Contracting has concluded that up to $60 billion spent on contracts in Iraq and Afghanistan has been lost to waste, fraud and abuse.

 “The need for reform is urgent,” the commission report said. “Contractors’ support…has been unnecessarily costly, and has been plagued by high levels of waste and fraud.”

Over the last decade, the Center for Public Integrity and its website iWatch News have kept a watchdog’s eye on the Bush administration and now the Obama administration. What follows is a compendium of the Center’s best work on the war.

Windfalls of War III (2011)

Pentagon's no-bid contracts triple in 10 years of war
Over a decade of war, the Pentagon has awarded lucrative military contracts without competitive bidding, and the amount has increased from $50 billion in 2001 to $140 billion in 2010.

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