Paul Thompson / The Daily Mail – 2011-08-31 00:01:20

http://www.dailymail.co.uk/news/article-2031509/Pentagon-wasted-30BN-Iraq-Afghanistan-720m-late-fees-forgetting-return-shipping-containers.html

Pentagon Wasted $30 Billion in Iraq and Afghanistan and ‘More than $720 Million on Late Fees for Forgetting to Return Shipping Containers’

LONDON (August 29, 2011) — The Pentagon spent more than $30 billion on contracts and grants in Iraq and Afghanistan, a report has revealed, while $720 million of the money was wasted on fees for shipping containers, which it failed to return on time.

The amount of money squandered over the past ten years amounts to at least one in every six dollars spent, records to be released in full on Wednesday show.

Meanwhile, it has emerged that military officials underestimated the amount of time they would need to rent out 20-foot-long containers used to ship equipment overseas — resulting in hundreds of millions of dollars thrown away on embarrassing late fees.

The huge waste has emerged from a report to be submitted to Congress on Wednesday by the Commission on Wartime Contracting in Iraq and Afghanistan. The report outlines a number of embarrassing examples of reckless overspending on needless contracts.

For example, $40 million was spent on a prison in Iraq, which was ultimately not completed because the country did not need it. The commission’s co-chairmen also noted a $300 million power plant in Kabul, which relied on sustained funding and expertise which the region could not be left to provide for itself.

The late fees for containers were spent because shipping companies charge up to $2,200 each time a container fails to arrive back at their depot on time. Charges levied in a similar way a customer has to pay a late fee when returning a DVD or library book. Many of the containers remain in Iraq and Afghanistan while running up a daily charge that have amounted to more than $70 million a year – or an average of $1.3million a week.

Late fees peaked in 2004 at $128million a year after the invasion of Iraq and the massive security operation in the wake of the downfall of Saddam Hussein. Four years later, with troops pulling out of Iraq, that figure dropped to $17million, according to records obtained by USA Today.

But with thousands of more troops now in Afghanistan as part of President Obama’s surge to contain Taliban extremists the amount paid in “late” fees went back up to $30 million for 2010.

Defence spending has come under intense scrutiny as budgets are squeezed following the debt crisis. The annual budget for the military is $553billion but cuts are expected as the Pentagon are forced to trim back on expensive projects.

Military analysts said the Pentagon should have kept a closer eye on the spending and likened the late fees to payments charges by libraries for overdue books. ‘This is real money,’ said John Pike, executive director of Globalsecurity.org, a defence policy group.

Winslow Wheeler, a defence analyst at the Center for Defense Information, accused Pentagon chiefs of failing to manage their budgets correctly. ‘These are the kinds of things that happen when people are asleep at the wheel,’ he said.

Military officials attribute the decline in late fees since 2004 to better management, use of more government-owned shipping boxes and caps on the cost of buying delinquent containers. Contracts have also been modified in recent years to limit how much the government pays before it owns the container.

The rates the military pays for late fees compare favorably with those paid by private companies moving cargo.

Figures obtained by USA Today show that if the military fails to return a container, a rent-to-own arrangement requires it to pay the shipper nearly $7,400 for a 20-foot container worth $3,200. Maersk Line Limited is one of the top recipients of late fees, according to the Pentagon.

‘When a container is not returned in a timely manner, carriers miss the opportunity to serve a customer,’ said company spokesman Kevin Speers. ‘Detention fees are a common incentive to prompt the on-time return of containers similar to late-fees on a car or movie rental.’

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