The government does not know how much it spends on private security contractors in total, the GAO said. But it's more than expected. "Contractor officials acknowledge that the cost of private security services and security-related equipment, such as armored vehicles, has exceeded what they originally envisioned," the GAO said.

The Pentagon estimates there are 60 private security firms with as many as 25,000 employees in Iraq. Some elite personnel make $33,000 a month. But there are no industry standards, and soldiers are not taught in advance how to interact with the armed contractors, according to the GAO.

Conflicts between contractors, military
The use of contractors has led to occasional conflicts with the military. In May, the Marines detained 19 contractors for three days, claiming the contractors fired at them. The contractors, who worked for Zapata Engineering of Charlotte, denied firing at the Marines and said they were roughed up while in custody.

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At one point, an Army unit barred private contractors from their dining facilities after they refused to stop carrying their loaded weapons. Soldiers also continue to mistakenly fire on security contractors, despite recently established procedures. Between January and May, 20 such friendly-fire incidents were reported, though the actual figure is probably higher since some contractors have said they no longer report them, the GAO said.

The Department of Defense said it is developing a policy to improve coordination between military forces and contractors and a training strategy for deploying troops on contractor issues. "Training materials would benefit both operational military forces and" contractors, the DOD said in a response attached to the report.

Award fees deemed unnecessarily high
In a separate report yesterday, the Office of the Special Inspector General for Iraq Reconstruction reported that more money than necessary may be going into the pockets of government contractors involved in the rebuilding process.

A review by auditors of 18 reconstruction contracts found that the formula used for doling out special monetary awards, which are above and beyond basic fees, tended to skew them too high.

For instance, the inspector general's office found that a contractor that received an evaluation of "average" performance won award fees of $1.67 million but could have been given just $309,436 under another widely accepted awards system. In a second case, a contractor won no award fees but ended up being paid $439,145 after it appealed because it hadn't received feedback on its work from the government.

U.S. officials responsible for contracting in Iraq said they were taking steps to improve the award fee process.

Difficulties with contractors also contributed to the challenging reconstruction task in Afghanistan, according to a separate GAO report released yesterday. In 2004, USAID planned to build 286 schools by the end of the year, but because of contractor and security problems, it had finished only eight by September, the report said. The agency did not always require contractors to establish clear objectives or hold them accountable for meeting the targets, the report said.

The reconstruction projects in Iraq and Afghanistan together represent the largest U.S. assistance efforts since World War II. In Iraq alone, the GAO said the United States has allocated $24 billion and has spent $9 billion since 2003.

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