All Aboard the Latin American Drug War Gravy Train

Waging the war on drugs in Latin America is a gold mine for contractors, a waste for taxpayers

Private companies received nearly $2 billion in Latin American drug war contracts between 2005 and 2009, according to a report released Thursday by Sen. Claire McCaskill (D-Mo.). That money may as well have been stuffed in garbage bags and dropped randomly from the backs of airplanes.

The two major agencies tasked with overseeing the drug war in Latin America—the State Department and the Department of Defense—lack "a centralized database or system with the capacity to track counternarcotics contracts," McCaskill found. As a result, both agencies struggled to explain contracts worth millions of dollars that were awarded to unknown recipients to complete ambiguous and often sketchy projects.

"In one instance," reads McCaskill's report, "the State Department awarded a $2.1 million no-bid contract to 'miscellaneous foreign contractors' to purchase pickup trucks in Bolivia. According to the Department, the lack of competition was justified because the source was unique. The Department did not provide information to explain why the particular source was uniquelyqualified to provide pickup trucks."

All told, the State Department's Bureau of International Narcotics and Law Enforcement Affairs (INL) awarded more than $50 million in contracts to "miscellaneous foreign contractors," and another $6.8 million for "miscellaneous commodities, supplies, and/or services" between 2005 and 2009. The INL's bean counters have no idea who these companies are, or what they were tasked with doing, only that, in most cases, they got paid.

When pressed for more accurate data by the Senate, INL attempted to match receipts from diplomatic posts with its "Global and Regional Financial Management Systems." After several months, INL concluded that "the volume of procurement actions overwhelms staff capacity in some instances" because many of the "acquisition steps are manual processes that are both time-consuming and error prone."

The State Department's investigation into INL's contractor accounting began in May 2010. A year later, "INL still could not adequately account for counter-narcotics contract spending."

Not every dollar, however, went to anonymous contractors and ambiguous projects. A little more than 50 percent of what the U.S. spent between 2005 and 2009, or $1.6 billion, went toward "aircraft-related services, maintenance, logistics, support, equipment, and training." The Army spent $75,000 on paintball supplies and $5,000 on "rubber ducks," which is code for fake M-16s. And a provision in the Small Business Administration's program for "disadvantaged" businesses allowed three Alaska Native corporations—Olgoonik, Alutiiq, and Chugach McKinley, Inc.—to receive more than $50 million worth of "sole-source contracts of unlimited value without justification or approval" to provide meal service, "engineering and software support activity," and security guards in Bolivia and Colombia.

On the Department of Defense side, McCaskill's report found "instances where contract personnel were allowed to depart the contract without recovering all issued property, loss of laptop computers, and other valuable items such as GPS's." The chief (but not sole) offender in this category was the company DynCorp, which demonstrated "inadequate accounting of government property."

Whether or not these contracts should cost less or be better accounted for is one question. An even bigger question is whether these contracts are necessary even in the context of the drug war. In 2007, the Army awarded a contract to a company in Bogota for tractor trailers. Upon learning that it had received the contract, Talleres Los Pitufo sent a letter to the Army demanding 50 percent of its payment up front. The Army's in-country office never responded to the letter, and it took them an entire year to figure out that Talleres Los Pitufo, in turn, never delivered the tractor trailers.

McCaskill's findings led her to declare that U.S. "efforts to rein in the narcotics trade in Latin America, especially as it relates to the government's use of contractors, have largely failed." That's a strikingly realistic and honest rebuttal to President Barack Obama's claim that the U.S. and its Latin American partners are winning the war on drugs. A White House spokesperson, for instance, cited increased border seizures of drugs and firearms as proof positive that we're winning. The same official declined to mention increased violence, torture, kidnappings, sexual assaults, and open skirmishes between cartels, other cartels, and police.

There's also arguably a streak of pure utility in McCaskill's stance. Her willingness to challenge U.S. counter-narcotic efforts solely on the grounds of contractor malfeasance when contractors in Iraq and Afghanistan have been accused of everything from murdering civilians to turning a blind eye to human trafficking suggests there's a decreasing appetite on Capitol Hill for drug-war adventuring.

So while there's a strong moral argument for drawing down our interdiction efforts in Latin America, there's an even simpler argument by Washington standards: "We are wasting tax dollars," McCaskill said Thursday, "and throwing money at a problem without even knowing what we are getting in return."

Mike Riggs is an associate editor at Reason magazine.