CORRUPTION IN THE PROCUREMENT PROCESS/OUTSOURCING GOVERNMENT FUNCTIONS:

ISSUES,CASESTUDIES,IMPLICATIONS

PROF. NIKOS PASSAS

[Shortened version prepared by W. Black]

 REPORT TO INSTITUTE FOR FRAUD PREVENTION

NORTHEASTERNUNIVERSITY,BOSTON FEBRUARY 2007

EXECUTIVE SUMMARY

This report presents a case study into procurement fraud and corruption in connection with ongoing U.S. programs in Iraq. The U.S. effort involves unprecedented reliance on private contractors to provide services and goods in a combat environment. The methods employed for this study combined interviews, site visits, collection and analysis of court documents, review of the literature and secondary data.

The report covers six primary topics. First, it shows why U.S. procurement for Iraq inherently took place in a criminogenic environment. Second, it explains how elite criminals act dynamically to take advantage of such environments and to change such environments to optimize them for crime. Third, it notes why effective controls are essential to limit procurement abuses. Fourth, it demonstrates that inadequate controls and other practices have made the environment even more criminogenic. Fifth, it summarizes why the procurement abuses have harmed national security.  Sixth, it suggests policy reforms to reduce the abuses.