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SIGIR 

Special Inspector General for IRAQ Reconstruction 

For more information, contact SIGIR Public Affairs at 

(703) 428-1100 or PublicAffairs@sigir.mil Special Inspector General for Iraq Reconstruction 

Summary of Report: SIGIR 11-022 

Why SIGIR Did This Study 

Over the past eight years, billions of dollars in 

contracts have been awarded to support relief 

and reconstruction activities in Iraq. The 

Congress has raised questions about many of 

these contracts and particularly questioned 

subcontracting actions. This report examines 

subcontracts associated with a contract awarded 

in September 2007 to Anham, LLC (Anham) to 

provide for the receipt, storage, and onward 

movement of supplies and equipment needed to 

reconstitute the Iraqi Security Forces and 

reconstruct the country’s infrastructure. The 

contract had obligations of approximately 

$119.1 million, of which Anham subcontractors 

provided at least $55 million in supplies and 

services. 

SIGIR’s objectives for this report were to 

determine (1) the adequacy of government 

oversight of Anham and its subcontracting 

procedures and (2) whether Anham’s costs 

under the contract are fair and reasonable. 

What SIGIR Recommends 

SIGIR recommends that the Office of the 

Secretary of Defense change its guidance to 

contracting officers and give them 

responsibility, in cooperation with DCAA, for 

reviewing subcontract prices charged to the 

government to ensure they are reasonable. 

SIGIR also recommends that the Commander, 

U.S. Central Command: 1) determine whether 

Anham and its subcontractors are affiliated; 2) 

review all vouchers submitted by Anham for 

this contract to ensure that prices are fair and 

reasonable; and 3) initiate a systematic review 

of billing practices on all Anham contracts in 

Iraq and Afghanistan. 

SIGIR also recommends that the Director, 

Defense Contract Management Agency, conduct 

a new contractor purchasing system review of 

Anham. 

Management Comments and Audit 

Response 

The Defense Contract Mangement Agency and 

the U.S. Central Command’s Joint Theater 

Support Contracting Command agreed or 

partially agreed with SIGIR’s 

recommendations. 

July 30, 2011 

POOR GOVERNMENT OVERSIGHT OF ANHAM AND ITS 

SUBCONTRACTING PROCEDURES ALLOWED QUESTIONABLE COSTS 

TO GO UNDETECTED

What SIGIR Found 

SIGIR found significant weaknesses in the government’s oversight of 

Anham’s business systems and other contract administration functions, 

which left the government at significant risk of paying unreasonable costs. 

In four key Anham business systems that we reviewed, SIGIR found the 

following: 

 DCAA reviewed and approved Anham’s accounting system 

 DCAA did not review Anham’s estimating system 

 DCAA reviewed Anham’s billing system and found significant 

weaknesses 

 DCMA reviewed and recommended approval of Anham’s 

purchasing system despite identifying significant gaps in 

documentation on the degree of price competition obtained. 

DCMA, also did not ask important questions about close and/or 

affiliated relationships that Anham may have with some of its 

subcontractors 

 Contract oversight by the Contracting Officer Representatives 

(CORs) was weak in that the CORs did not compare vouchers to 

receiving documents, signed for delivery of goods without verifying 

that the goods were delivered, and allowed Anham employees to 

sign for receipt of $10 million in goods. 

SIGIR conducted a limited incurred cost review of Anham, questioning 

almost 39% of the costs ($4.4 million) reviewed either because we question 

whether the costs are fair and reasonable, or because they were not properly 

documented. Some of the costs SIGIR questions result from questionable 

competition practices, inappropriate bundling of subcontractor items and 

close working relationships or possible ownership affiliations between 

Anham and certain subcontractors. For example, SIGIR believes Anham 

may have less than an arms-length relationship with six subcontractors who 

were awarded approximately $55 million in purchases and services under the 

reviewed contract. As a result of the multiple problems identified in this 

report, SIGIR is questioning all the costs on this contract. 

Some of these issues could have been identified during an incurred cost 

review. A contractor is required to submit to DCAA its incurred costs for 

the year, and DCAA determines if the contractor’s costs are allowable, 

allocable, and reasonable. However, DCAA has not yet conducted an 

incurred cost review on Anham and is several years behind in meeting its 

overall incurred cost review requirement for Iraq contracts. 
SPECIAL INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION 

2530 Crystal Drive • Arlington, Virginia 22202 

July 30, 2011 

MEMORANDUM FOR SECRETARY OF DEFENSE 

COMMANDER, U.S. CENTRAL COMMAND 

DIRECTOR, DEFENSE CONTRACT MANAGEMENT AGENCY 

SUBJECT: Poor Government Oversight of Anham and Its Subcontracting Procedures 

Allowed Questionable Costs To Go Undetected (SIGIR 11-022) 

We are providing this audit report for your information and use. The report discusses issues 

related to the oversight of an Iraq relief and reconstruction contract and the subcontracts awarded 

to support that contract. Specifically, the Special Inspector General for Iraq Reconstruction 

looked at a contract awarded for warehouse and distribution services at the Port of Umm Qasr 

and Abu Ghraib. We performed this audit in accordance with our statutory responsibilities 

contained in Public Law 108-106, as amended, which also incorporates the duties and 

responsibilities of inspectors general under the Inspector General Act of 1978. This law provides 

for independent and objective audits of programs and operations funded with amounts 

appropriated or otherwise made available for the reconstruction of Iraq and for recommendations 

on related policies designed to promote economy, efficiency, and effectiveness, and to prevent 

and detect fraud, waste, and abuse. This audit was conducted as SIGIR Project 1009. 

The Defense Contract Management Agency and U.S. Central Command provided written 

comments on a draft of this report, which SIGIR addressed as appropriate. Those comments are 

printed in their entirety in Appendix I and J. 

We appreciate the courtesies extended to the SIGIR staff. For additional information on the 

report, please contact Glenn Furbish, Assistant Inspector General for Audits (Washington, D.C.), 

(703) 604-1388/ glenn.furbish@sigir.mil, or Jason Venner, Principal Deputy Assistant Inspector 

General for Audits (Washington, D.C.), (703) 607-1346/ jason.venner@sigir.mil. 

Stuart W. Bowen, Jr. 

Inspector General 

cc: U.S. Secretary of State 

Commanding General, U.S. Forces–Iraq 

Director, Defense Contract Audit Agency 
Table of Contents 

Table of Contents i

Introduction 1

Background 1

Government Agency Roles and Oversight Responsibilities 4

Objectives 7

Weak Government Oversight Resulted in Significant Pricing Risks 8

DCAA Conducted Reviews of Major Business Systems, but Deficiencies Were Not 

Mitigated 8

DCMA’s Purchasing System Review Was Not Thorough 10

Government Reviews of Vouchers Were Poor and Incomplete 14

DCAA Conducted Provisional Payment Reviews but Has Not Yet Completed Incurred 

Cost Reviews 15

SIGIR Questions Whether $4.4 Million in Costs Paid by the Government Are 

Reasonable and Supported 17

Example 1: Trailers, Plumbing, Electrical Supplies, and Furniture 17

Example 2: Giant Voice Loudspeaker Warning Systems 20

Example 3: Closed Circuit Television Systems 22

Example 4: Anham’s Airfreight Costs Lacked Documentation of Approval 24

Example 5: Anham’s Costs for Leased Equipment Are Higher Than Market Prices 25

Conclusions and Recommendations 28

Conclusions 28

Recommendations 29

Management Comments and Audit Response 30

Appendix A—Scope and Methodology 31

Appendix B—Pioneer’s Costs for Items Compared to a Competitor 34

Appendix C—Total Value of Anham’s Contracts with the U.S. Government in 

Afghanistan and Iraq 36
Appendix D—Advertisement for Giant Voice Mobile Unit 37

Appendix E—Pioneer Voucher and Market Comparison 38

Appendix F—Questionable Costs on Pioneer Leased Equipment 39

Appendix G—Abbreviations 41

Appendix H—Audit Team Members 42

Appendix I—DCMA’s Management Comments 43

Appendix J—CENTCOM’S Management Comments 45

Appendix K—SIGIR Mission and Contact Information 47
1 

Poor Government Oversight of Anham and Its 

Subcontracting Procedures Allowed Questionable Costs 

To Go Undetected 

SIGIR 11-022 July 30, 2011

Introduction 

Since 2003, the United States Government has awarded billions of dollars to support relief and 

reconstruction services in Iraq. A significant amount of the contracted work was, in turn, 

subcontracted to lower-tier firms. The term “subcontractor” in this report refers to any person or 

organization that furnishes supplies or services under a prime contractor. Oversight of 

subcontractors in contingency operations has been a long-term concern and the subject of 

hearings before, among others, the Senate Homeland Security and Government Affairs 

Committee, the House Congressional Committee on Oversight and Government Reform 

(Subcommittee on National Security and Foreign Affairs)1

, and the Commission on Wartime 

Contracting in Iraq and Afghanistan.2

This report examines subcontracts associated with a contract awarded in September 2007 by the 

former Joint Contracting Command–Iraq/Afghanistan to Anham, LLC (Anham)3 to provide for 

the receipt, storage, and forward movement of supplies and equipment needed to reconstitute the 

Iraqi Security Forces and reconstruct the country’s infrastructure. The contract had a ceiling 

price of $300 million and, at its conclusion, obligations of approximately $119.1 million. 

Anham subcontractors provided at least $55 million of supplies and services under this contract. 

Both the Iraq Security Forces Fund (about $91.0 million) and the Army’s Operations and 

Maintenance Fund (about $28.1 million) funded this contract. Anham holds contracts for goods 

and services with the U.S. government totaling about $3.9 billion (see Appendix C). 

Background 

On September 26, 2007, the Joint Contracting Command–Iraq/Afghanistan (JCC-I/A), now 

known as the U.S. Central Command (CENTCOM) Joint Theater Support Contracting 

Command, awarded a cost-plus indefinite-delivery, indefinite-quantity contract to Anham to 

operate and maintain two strategically located warehouse and distribution facilities—one at the 

town of Abu Ghraib near Baghdad International Airport and the other at the Port of Umm Qasr. 

 

1 “Subcontracting in Combat Zones: Who Are Our Subcontractors,” House Committee on Oversight and 

Government Reform, Subcommittee on National Security and Foreign Affairs, June 29, 2010. 

2 “Subcontracting: Who’s Minding the Store,” The Commission on Wartime Contracting in Iraq and Afghanistan, 

July 26, 2010. 

3

 Anham, LLC appears to be the same entity as Anham FZCO, which is incorporated in Dubai, United Arab 

Emirates in the Dubai Airport Free Zone. In communications with SIGIR, Anham officials alternately referred to 

the company as Anham, LLC, Anham FZCO, and Anham, LLC FZCO. Company officials later clarified that there 

is only one company, and it is called Anham FZCO. However, all signed contract documents on this contract list the 

name Anham, LLC. For simplicity, hereafter we refer only to Anham. 
2 

The contract required Anham to provide all resources necessary to operate and maintain the 

warehouses, including logistics, management, and life support. These warehouse and 

distribution sites received, held, repackaged and redistributed supplies and equipment to Iraqi 

government ministries. The U.S. military’s ultimate goal was to transfer operational control to 

the Iraqi military. While the contract stated that some services could be used to move materiel 

for projects supporting U.S. military forces, coalition and/or multinational forces, and other 

governmental/non-governmental agencies, U.S. on-site commanders stated that almost all goods 

shipped through these facilities went to the Government of Iraq. 

On September 29, 2007, the first task order was issued to operate and manage the two 

warehousing and distribution facilities. Later, on April 1, 2008, a second task order was awarded 

to operate and maintain a smaller satellite distribution facility at Taji. In addition, according to 

contracting officials, a limited number of goods were also received at the Baghdad International 

Airport. Figure 1 shows the locations of the two warehouses and two smaller distribution 

locations. 

Figure 1—Location of Warehouse and Distribution Points on the Anham Contract 

Source: Contract documents, site visits, and interviews with site commanders. 
3 

Anham was to procure necessary resources such as communications and information technology 

systems, trucking services, and transportation assets (including providing a variety of trucks and 

heavy duty transport equipment), fuel, and life support for staff and other services. 

Altogether, the contract had six task orders. Task orders are the vehicles the government uses to 

authorize a contractor to spend money on specific cost-plus contractual functions that define the 

scope of work to be performed. As of June 29, 2011, $119.1 million was obligated against these 

task orders, of which $113.4 million has been disbursed. Table 1 shows the six task orders and 

the total obligations and disbursements for each task order. 

Table 1—Task Orders Issued on the Anham Warehousing Contract as of June 29, 

2011 ($ millions) 

Task 

Order Date Description 

Total 

Obligations 

Total 

Vouchered 

Costs

1 9/26/07 Operate and manage the Umm Qasr and Abu 

Ghraib warehouses and provide trucking to 

move supplies throughout Iraq 

$78.7 $78.7

2 4/1/08 Take over management of a satellite 

warehouse 

0.5 0.5

3 3/30/08 Transfer materials from the Ramadi 

Internment Facility to Abu Ghraib warehouse 

0.6 0.6

4 1/22/09 Implement option year one for Task Order 1 26.2 24.0

5 1/22/09 Implement option year one for Task Order 2 0.7 0.7

6 1/20/10 Implement option year two for Task Orders 1 

and 2 

12.4 8.9

Total $119.1 $113.4

Note: 

Numbers are affected by rounding. 

Source: Contract documents and cost data from the U.S. Army Corps of Engineers, Finance Center. 

Task Order 1 authorized funding for Anham to operate and manage the two warehouses at Umm 

Qasr and Abu Ghraib. Task Orders 4 and 6 each authorized one-year extensions to continue 

managing the two warehouses authorized under Task Order 1. Task Order 2 authorized funding 

to manage an additional warehouse at Taji, and Task Order 5 authorized a one-year extension of 

those operations. Finally, Task Order 3 authorized funding for a transfer of materials from an 

internment facility at Ramadi to the Abu Ghraib warehouse. In June 2010, all remaining work 

under the contract, except for the Taji operations, was terminated for the U.S. government’s 

convenience. In July 2010, the Abu Ghraib warehouse was transferred to the Government of 

Iraq. 

The Anham contract was negotiated as a cost-plus contract where the costs incurred by Anham 

are reimbursed by the government. Cost-plus contracts are inherently more risky for the U.S. 

government than fixed-price contracts where the costs are clearly determined upfront, and cost 

overruns above the determined price are the responsibility of the contractor. Cost-plus contracts 

carry more risks because the costs are not known at the outset. Therefore, the Federal 
4 

Acquisition Regulation (FAR) requires government officials to carefully monitor contractor 

performance to ensure, among other things, that the prices charged are fair and reasonable. 

An indefinite-delivery, indefinite-quantity contract is used when the quantity of goods or 

services to be provided under the contract are not specifically known at the time the base contract 

is awarded, beyond a minimum and maximum quantity. Task orders are awarded under such a 

contract to define the scope of work and obligate funds. An indefinite-delivery, indefinitequantity contract may also stipulate the cost or pricing arrangement in accordance with FAR Part 

16. The pricing arrangements for Task Orders 1 and 2 of the warehouse and distribution contract 

were originally cost-plus award fee but were changed to cost-plus fixed fee. Task Orders 2, 4, 5, 

and 6 were cost-plus fixed fee. Because Task Order 3 was for a defined piece of work, it was 

awarded as a firm fixed-price task order. Cost-reimbursement pricing arrangements are suitable 

for use only when contract performance uncertainties do not permit costs to be estimated with 

sufficient accuracy to use any type of fixed-price contract. 

All of the purchases from Anham subcontractors were fixed-price purchases. Anham added its 

management and administration fees to the cost of the purchases. 

Government Agency Roles and Oversight Responsibilities 

Government program, contracting, contract administration and audit agencies, as well as Anham, 

played important roles in monitoring and overseeing this contract. An important role of 

government contract administration is evaluating the prime contractor’s internal controls to make 

sure that they are consistent with FAR requirements and produce fair and reasonable prices for 

the government. Such assessments are crucial because it is the prime contractor’s responsibility 

to manage its subcontractors, and prime contractors generally rely on their business systems for 

this purpose. Moreover, a contractor’s business systems establish its internal controls. 

The government also conducts incurred cost audits to examine the appropriateness of a 

contractor’s cost representations. Government assessments of the adequacy of a prime 

contractor’s business systems can occur either before or after a contract is awarded, and the 

weaknesses identified can affect the level of contract monitoring required after a contract is 

signed. For example, if an assessment identifies weaknesses in a prime contractor’s purchasing 

system, the Defense Federal Acquisition Regulation Supplement (DFARS) allows the 

Administrative Contracting Office (ACO) to initiate special reviews of the weaknesses.4

 Finally, 

incurred cost audits, which are generally performed a year after contract award, allow the 

government to express an opinion as to whether incurred costs are reasonable, applicable, and 

allowable. 

Program Office 

The Multi-National Force–Iraq was the program office on this contract and established the 

requirement for it. On January 1, 2010, the Multi-National Force–Iraq transitioned into U.S. 

Forces–Iraq. Multi-National Force–Iraq, and later, U.S. Forces–Iraq supplied the on-site 

commanders at Abu Ghraib and Umm Qasr as well as the Contracting Officers’ Representatives 

(CORs). 

 

4

 DFARS 244.304 Surveillance; and FAR 44.304. 
5 

Contracting Office

JCC-I/A awarded the contract and was responsible for its administration. The U.S. Central 

Command Joint Theater Support Contracting Command assumed JCC-I/A’s responsibilities in 

July 2010, after the contract ended. Thus, its primary responsibility is to close out the contract. 

FAR 1.602-2 states that Contracting Officers are responsible for ensuring performance of all 

necessary actions for effective contracting, ensuring compliance with the terms of a contract, and 

safeguarding the interests of the United States in its contractual relationships. This includes 

determining the reasonableness of costs charged to the government, ensuring that goods and 

services provided under the contract are received, and providing contractors’ consent to 

subcontract. Contracting Officers may delegate those responsibilities to another office. Part (c) 

of Section 1.602-2 allows Contracting Officers to request and consider the advice of specialists 

in audit and other fields, as appropriate, in order to carry out their duties. Furthermore, FAR 

42.202 allows Contracting Officers to delegate their responsibilities to an Administrative 

Contracting Office (ACO). Between September 2007, and the contract’s end in July 2010, there 

were 15 different Contracting Officers assigned to the Anham contract. 

Administrative Contracting Office 

JCC-I/A assigned ACO responsibilities to DCMA. An ACO administers day-to-day activities 

following the contract award. For the Anham contract, DCMA accepted responsibility for 

property administration and quality assurance. JCC-I/A requested that DCMA also manage 

payment administration; however, DCMA declined to provide this service. 

DCMA assigned CORs to assist in performing contract oversight responsibilities. The COR 

appointment letters for the Anham warehousing contract authorized the representatives to: 

 accept for the government goods and services provided under the contract and verify that 

invoices (vouchers in this case) matched receiving reports 

 verify Anham’s performance of the technical requirements of the contract 

 monitor performance and report any deficiencies 

 resolve problems identified by users within the scope of the contract 

 develop and implement a quality assurance surveillance process, and maintain adequate 

records 

The ACO is also responsible for granting, withholding, or withdrawing approval of a 

contractor’s purchasing system, a review which evaluates the efficiency and effectiveness with 

which the contractor spends government funds and complies with government policy when 

subcontracting. 

Contract Auditing 

FAR 42.101(b) designates DCAA as the DoD agency responsible for reviewing and approving 

vouchers for payment, and DCAA reviewed and approved costs on the Anham warehousing 

contract. DCAA receives vouchers directly from the contractor, provides provisional payment 

approval of vouchers found acceptable, and suspends payment of vouchers with questionable 

costs. In its provisional approval process, DCAA auditors review the vouchers to verify that 

indirect costs are computed using acceptable billing rates, that fees claimed are computed based 
6 

on contract requirements, that vouchers have been properly prepared and are mathematically 

accurate, and billed costs are reconciled to the contractor’s accounting records. Once a voucher 

is provisionally approved, it is forwarded to the paying agent designated in the contract for 

payment. If rejected, DCAA returns the voucher to the contractor, in this case Anham, for 

correction as quickly as possible, but not later than five working days after receipt. 

DCAA also performs other reviews including incurred cost audits and price proposal 

evaluations. A contractor is required to submit to DCAA its incurred costs for the year, after 

which DCAA determines if the contractor’s costs are allowable, allocable, and reasonable. 

DCAA evaluates the contractor’s initial price proposals in support of Contracting Officer’s 

decision-making process. 

DCAA performs other pre-award and post-award audit functions in support of the Contracting 

Officer. For example, based on audit risk, DCAA may conduct audits of contractor estimating 

systems on a periodic basis. As part of that review, it evaluates the prime contractor’s policies 

and procedures for ensuring the proposed subcontract costs are fair and reasonable. 

Oversight of Subcontractors 

According to the FAR, a prime contractor is responsible for assuring that it obtains competition 

for subcontractor procurements to get a fair and reasonable price in the same way that a 

government contracting officer is required to obtain a fair and reasonable price before awarding a 

contract. Nevertheless, this does not relieve the government of any oversight responsibility. 

Because close business relationships may exist between a contractor and its subcontractors, 

government policy guidance has been developed for government officials to pay attention to 

these types of relationships. 

The process for overseeing subcontractors is discussed in a number of government regulations 

and manuals including the FAR, the DFARS, and the DCAA Audit Manual. On July 26, 2010, 

the DCAA Director testified before the Commission on Wartime Contracting in Iraq and 

Afghanistan and provided a clear description of the process. In his prepared statement before the 

Commission, the Director said: 

The FAR requires contracting officers to purchase supplies and services from responsible 

sources at fair and reasonable prices. The contracting officer is responsible for 

determination of price reasonableness for the prime contract, including subcontracting 

costs (FAR 15.404-3(a)). DCAA often provides the necessary audit support to the 

contracting officer during both the pre-award and post-award contract stage in the 

evaluation of prime contract costs that include subcontract costs. 

FAR 42.202(e)(2) clearly states that it is the prime contractor’s responsibility to manage 

its subcontractors. Prime contractors generally rely on their estimating, purchasing and 

billing systems as a means to manage their subcontracts. As noted in the Commission’s 

[Commission on Wartime Contracting] interim report (June 2009), adequate contractor 

business systems are the first line of defense against waste, fraud, and abuse. 

All DoD prime contractors are responsible for having an acceptable estimating system 

that consistently produces well-supported proposals acceptable as a basis for negotiation 
7 

of fair and reasonable prices (DFARS 215-407-5-70(b)). One key characteristic of an 

adequate estimating system is the contractor’s ability to determine through review and 

analysis, the reasonableness of proposed subcontract prices (DFARS 215.407-5-

70(d)(2)(xv)). The proposal phase of a contract award involves the prime contractor’s 

estimating and purchasing systems working together to prepare an adequate estimate of 

cost or price. Generally, purchasing system processes identify responsible prospective 

subcontractors and vendors from which subcontract proposals are obtained. The 

estimating and purchasing systems work in conjunction to conduct and document 

analysis of the subcontractor proposals to ensure the awarded subcontract price is fair and 

reasonable (represents the best value for the government), regardless of whether the 

contemplated subcontract is sole-source, competitively awarded, or for a commercial 

item. After contract award, the contractors [sic] billing system works in conjunction with 

the purchasing system to ensure only those subcontract costs which are eligible for 

payment (that is, allocable, allowable, and reasonable, and in accordance with contract 

terms and conditions) are included in the prime contactor’s billings to the government. 

The FAR also provides additional guidance to Contracting Officers on the need to review the 

relationship between prime contractors and their subcontractors. Where an “affiliate” 

relationship exists, the Contracting Officer is expected to pay closer attention to the contractor’s 

activities. To clarify any such relationship, Contracting Officers are expected to ask questions 

about contractor and subcontractor affiliation during a Contractor’s Purchasing System Review. 

DCMA normally conducts these reviews for DoD in accordance with FAR Part 44. Subpart 

44.202-2, for example, states that the Contracting Officer and/or the ACO should give 

“particularly careful and thorough consideration” when “close working relationships or 

ownership affiliations between the prime contractor and subcontractor or vendor may preclude 

free competition or result in higher prices.” “Affiliates” means business concerns or individuals 

if, directly or indirectly, (1) either controls or can control the other, or (2) a third party controls 

or can control both. Both of these subparts highlight the potential risk of overcharges by 

affiliates when there is less than an arm’s-length relationship with the prime contractor. 

Objectives 

SIGIR’s objectives for this report were to determine (1) the adequacy of government oversight of 

Anham and its subcontracting procedures and (2) whether Anham’s costs under the contract are 

fair and reasonable. 

For a discussion of the audit scope and methodology and a summary of prior coverage, see 

Appendix A. For a list of Pioneer Iraqi General Trading Company (one of Anham’s 

subcontractors) costs for items compared to its competitors, see Appendix B. For the total value 

of Anham’s contracts in Afghanistan and Iraq, see Appendix C. For an advertisement of the 

Giant Voice Mobile Unit required in performance of the contract, see Appendix D. For 

Pioneer’s vouchers and market comparison, see Appendix E. For questioned costs on leased 

equipment, see Appendix F. For a list of abbreviations used, see Appendix G. For the audit 

team members, see Appendix H. For DCMA’s management comments, see Appendix I. For 

CENTCOM’s management comments, see Appendix J. The SIGIR mission and contact 

information, see Appendix K. 
8 

Weak Government Oversight Resulted in Significant 

Pricing Risks 

SIGIR found significant weaknesses in the government’s oversight of Anham business systems 

and other contract administration functions. These weaknesses left the government at particular 

risk of paying unreasonable costs. The government’s oversight of Anham’s business systems 

was supposed to provide assurances that Anham was following FAR requirements and reduce 

risks of paying unreasonable prices for goods and services, but it broke down. Of the three key 

Anham business systems that DCAA was responsible for reviewing, DCAA approved only 

Anham’s accounting system. DCAA did not review Anham’s estimating system, and, while it 

did review Anham’s billing system, it was done late into the contract and only then uncovered 

significant weaknesses. 

DCMA reviewed and recommended approval of Anham’s purchasing system but did so without 

asking important questions about close and/or affiliated relationships that Anham may have had 

with its subcontractors. Further, DCMA recommended approval of the purchasing system even 

though it was unable to find documentation of price analysis in any of the cases that it reviewed. 

According to DCMA officials, they have changed their approach to performing purchasing 

system reviews, and based on their current procedures, they would not have recommended 

approval of Anham’s purchasing system. In addition, DCAA has not yet completed an incurredcost review. 

SIGIR also found that ACO and COR contract oversight was weak. The CORs did not compare 

all vouchers to receiving documents, as required, to assure that the government was billed for 

only delivered items, and the government allowed Anham employees to sign for receipt of $10 

million in goods, a major control problem. 

DCAA Conducted Reviews of Major Business Systems, but 

Deficiencies Were Not Mitigated 

DCAA is responsible for reviewing three prime contractor business systems to ensure that 

subcontractor prices are fair and reasonable: the accounting system, the billing system, and the 

estimating system. DCAA reviewed Anham’s accounting and billing systems, but the 

deficiencies found were not mitigated. DCAA has not conducted an estimating system review 

nor has it yet completed an audit of the costs incurred on the contract. 

DCAA Determined That Anham’s Accounting System Was Adequate 

DCAA conducted a review of Anham’s accounting system in May 2008, and determined that 

Anham’s accounting system was adequate for accumulating and billing costs under government 

contracts. However, according to the report, the procedures utilized in the audit program were 

not sufficiently robust to render an opinion on the key control activities and objectives that 

comprise a full-scope audit of internal controls. 
9 

DCAA Reviewed Anham’s Billing System Late and Found Significant Problems 

DCAA audited Anham’s billing system controls in 2009, more than 20 months after the contract 

was awarded, to provide reasonable assurance that Anham consistently complied with 

established billing system internal controls to reduce the instances of overpayment. DCAA 

reviewed invoices paid in January and February 2009, and concluded that “Anham does not have 

adequate policies and procedures in place to assure that only billable costs/prices/fees applicable 

to U.S. government contracts are included in billings in accordance with applicable regulations 

and contract terms.” DCAA tested selected paid vouchers submitted in 2008 and concluded that 

“reliance cannot be placed on [Anham’s] procedures for the preparation of interim vouchers.” 

As a result, DCAA rejected Anham’s request for direct billing authority which would have 

allowed the company, for example, to submit vouchers directly to the U.S. Army Corps of 

Engineers’ Finance Center for payment rather than through DCAA. 

DCAA Did Not Conduct a Review of Anham’s Estimating System 

It is DoD policy that all contractors have estimating systems that consistently produce wellsupported proposals acceptable as a basis for negotiating fair and reasonable prices (DFARS 

215.407-5-70(b)). The decision to conduct an estimating system review is risk-based. However, 

DCAA did not review Anham’s estimating system. 

According to the DCAA Director’s July 2010 testimony before the Commission on Wartime 

Contracting, estimating system reviews are an important part of the government’s process for 

ensuring subcontractor costs are fair and reasonable. According to the Director: 

[o]ne key characteristic of an adequate estimating system is one which addresses the 

prime contractor’s responsibility for determining through review and analysis, the 

reasonableness of proposed subcontract prices (DFARS 215.407-5-70(d)(2)(xv)). The 

proposal phase of a contract award involves the prime contractor’s estimating and 

purchasing systems working together to prepare an adequate estimate of cost or price. 

Generally, purchasing system processes identify responsible prospective subcontractors 

and vendors from which subcontract proposals are obtained. The estimating and 

purchasing systems work in conjunction to conduct and document analyses of the 

subcontractor proposals to ensure that the awarded subcontract price is fair and 

reasonable (represents the best value to the government), regardless of whether the 

contemplated subcontract is sole-source, competitively awarded, or for a commercial 

item. 

The DCAA Contract Audit Manual identifies indicators of, or conditions that may cause 

significant estimating deficiencies. One such indicator is the “consistent absence of analytical 

support for significant proposed cost amounts.” DCMA identified poor price analyses during its 

review of Anham’s contractor’s purchasing system (discussed in the next section of this report). 

However, as discussed below, DCMA did not conduct its contractor purchasing system review 

until 23 months into the contract and therefore DCAA would not have been aware of these 

contractor deficiencies. 
10 

No Incurred Cost Audit Performed Yet 

Incurred cost reviews determine if costs claimed for reimbursement are reasonable, applicable to 

the contract, and in keeping with generally accepted accounting principles. According to DCAA, 

incurred cost audits are usually performed on a contractor fiscal year basis. An incurred cost 

audit has not yet been completed on this contract. When completed, this audit may disclose the 

questionable costs SIGIR identified in this report. However, the timing of the government’s 

processes for identifying, assessing, and mitigating risks is occurring late into the life of the 

contract and increases the possibility that unreasonable costs may have gone undetected. In 

addition, DCAA is behind in conducting incurred cost audits. SIGIR believes that in a 

contingency environment where records can be hard to find and there is high turnover of 

contracting personnel, a large time-gap between the payment of vouchers and the incurred cost 

audit increases the risk that unreasonable or unallowable costs will go undetected. 

DCMA’s Purchasing System Review Was Not Thorough 

DCMA reviewed Anham’s contractor purchasing system in August 2009, 23 months after the 

contract was awarded. DCMA recommended the ACO approve Anham’s purchasing system, but 

identified Anham weaknesses in the adequacy and degree of price competition it obtained, and 

recommended that the ACO conduct additional surveillance. However, there is no evidence that 

the ACO provided additional oversight. DCMA’s review also did not assess Anham’s business 

relationships with some of its key subcontractors, nor did Anham provide this information. 

The contractor purchasing system review identified several weaknesses, including poor price 

analyses and procurement documentation. Contractor purchasing system reviews document a 

contractor’s policies, procedures, and performance under that system, and are an ACO 

responsibility. According to FAR 44.302, the ACO should conduct this review if a contractor’s 

sales to the government are expected to exceed $25 million during the 12 months following 

signing of the contract.

According to the DCMA report prepared by the Procurement Analyst, “it is the procurement 

analyst’s recommendation that the ACO grant approval of the Contractor’s Purchasing System.” 

However, the review made 11 recommendations to address deficiencies and stated in bold 

lettering that, “the ACO should conduct surveillance of the supplier’s system in accordance 

with FAR 44.304 and DFARS 244.304, to ensure that these recommendations are 

corrected.” Late in the contract, one ACO reviewed several million dollars in vouchers and 

questioned a significant percentage of the costs. However, this is the only evidence SIGIR found 

that any follow up took place. 

According to the FAR (Section 52.244-5), the contractor shall select subcontractors (including 

suppliers) on a competitive basis to the maximum practical extent consistent with the objectives 

and requirements of the contract. The FAR requires cost and price analysis in certain 

circumstances and identifies the two preferred price analysis techniques: comparing price 

quotations (competition) and comparing prior quotations with current quotations for the same or 

similar items. The FAR (Section 15.404-1(b)(2)(i)) also states that, “normally, adequate price 

competition establishes a fair and reasonable price.” 
11 

Although DCMA approved Anham’s purchasing system, its review of 55 Anham purchase 

orders and subcontracts found the following: 

 38 purchase orders and subcontracts lacked adequate documentation (source justification, 

price analysis, etc.). 

 34 purchase orders and subcontracts required a price analysis, and all 34 had 

“ineffective” price analyses (e.g.,“The files lacked documentation to support this.”). 

 34 subcontracts/purchase orders required a justification for awards made without 

adequate price competition, and 32 of the justifications to support these single/solesource awards were inadequate. 

DCMA did not review Anham’s ownership and management relationship with its subcontractors, 

an important part of a contractor purchasing system review. FAR Subpart 44.303, in particular, 

directs those conducting the review to give special attention to “the treatment accorded affiliates 

and other concerns having close working arrangements with the contractor.” DCMA, however, 

did not ask questions that should have uncovered ownership and management relationships 

between Anham and its subcontractors that may make them affiliated, as defined in the FAR. 

Identifying ownership and management relationships is important because these types of 

relationships, while not precluded by the FAR, raise concerns about whether there are armslength business practices occurring that could compromise the government’s ability to get fair 

and reasonable prices for delivered goods and services. FAR Part 44.202-2 states that the 

Contracting Officer and/or the Administrative Contracting Office should give “particularly 

careful and thorough consideration” when “close working relationships or ownership affiliations 

between the prime contractor and subcontractor or vendor may preclude free competition or 

result in higher prices.” Both of these subparts, and a clause in the Anham contract, identify the 

circumstances under which Anham would be required to notify the Contracting Officer of its 

intent to subcontract. These subparts and clauses highlight the potential increased risks of 

overcharges by these affiliates when there is less than an arm’s-length relationship with the 

prime contractor. 

According to DCMA officials, they asked Anham to identify any organizational relationships 

with subsidiaries or affiliated companies during the purchasing system review. Anham provided 

DCMA information showing that the company was formed as a collaboration among three 

affiliated investment and contracting groups. The three companies are HII-Finance, Arab Supply 

and Trading Company, and Munir Sukhtian International. Anham also reported that “the 

Company features a powerful team of local subsidiaries and affiliates...” However, Anham did 

not disclose a relationship to any subcontractors with whom it does business. 

According to DCMA officials, the DCMA review team did not follow up to determine if any of 

these subsidiaries or affiliates were in fact subcontractors to the Anham contract and whether 

there were any common ownership or management relationships with any of these subsidiaries 

and affiliates. As a result, the Contracting Officer did not have information about the potential 

risks of subcontracting with companies with ownership or management relationships that may 

have triggered a more careful evaluation of Anham’s purchasing decisions. 
12 

DCMA has changed its review requirements, placing more emphasis on affiliate relationships. 

They stated that their reports now have a subsection on affiliates, and they comment on whether 

the prime contractor has a policy on subcontracting with affiliates. They further stated that 

DCMA analysts have been directed to query the prime contractor to identify affiliate transactions 

generated during the review period to include a representation of these transactions as part of 

their sample of transactions reviewed. 

Because neither the Contracting Officer nor his or her designated representative on this contract 

were aware of any relationships between Anham and its subcontractors providing goods or 

services under this contract, SIGIR conducted its own research of public sources, including 

public filings to the Commonwealth of Virginia State Corporation Commission and Dunn and 

Bradstreet. SIGIR also asked Anham to disclose any ownership or management relationships 

that it has with subcontractors on this contract. From these sources, SIGIR developed the 

following information: 

 There are six subcontractors on the warehousing contract with whom Anham has an 

ownership or management relationship, or both. According to Anham, five of these 

companies are not affiliates as defined in the FAR. However, Anham’s website identifies 

four of the companies as affiliates. SIGIR found that all six subcontractors are directly or 

indirectly owned, wholly or substantially, by one or more of the three family groups (or 

members thereof) that collectively own 100% of Anham through subsidiary entities. 

DCMA did not ask about this information and Anham did not disclose it during the 

purchasing system review. The six Anham subcontractors and the dollar value of their 

purchase orders on this contract are: 

o Nour USA, Ltd., $0.5 million 

o Knowlogy Corporation (Knowlogy), $1.1 million 

o Unitrans International (Unitrans), $32.8 million 

o Pioneer Iraqi General Trading Company (Pioneer), $20.4 million 

o American International Services, $0.2 million 

o Superior Heavy Equipment Company, $0.2 million 

 Anham officials told SIGIR that only one subcontractor used in the contract―Superior 

Heavy Equipment Company―was an affiliate as defined in the FAR. However, they did 

not disclose this information to DCMA during the purchasing system review. 

Anham officers hold key management positions in five of the six companies identified above. 

For example, Anham’s chief executive officer (CEO) is also the chairman, director, or president 

of four of the five Anham subcontractors that it states are not affiliates. The Anham CEO is 

chairman of Unitrans, and his family group owns 100% of Unitrans through the holding 

company HII-Finance. Unitrans is the largest subcontractor on Anham’s contract, accounting for 

nearly $33 million, or about 29%, of total costs through July 31, 2010. 

The Anham CEO is also director and owner (through his family group) of Knowlogy, and 

president of Nour USA Ltd., which his family group partly owns. He is also director and 
13 

(through his family group) part owner of Superior Heavy Equipment Company, the company 

Anham identified as an affiliate. Finally, the Anham CEO is also director and owner (through 

his family group) of HII-Finance, which directly or indirectly owns 100% of Knowlogy, 

American International Services, and Unitrans, as well as 25% of Anham. 

The secretary of Anham who signed the warehousing contract is also treasurer of Nour USA and 

secretary of American International Services. Finally, the Anham secretary is also director in 

HII-Finance which, as noted, owns 25% of Anham and, directly or indirectly, 100% of 

Knowlogy, American International Services, and Unitrans. Finally, Pioneer Iraqi General 

Trading Company is 90% owned by an individual who is part of a family group that owns 50% 

of Anham through a subsidiary. The information presented above is just a partial discussion of 

the financial and management relationships between Anham and six of its subcontractors. 

Figure 2 shows certain ownership and management relationships between Anham, its owners, 

and the subcontractors discussed in this report. 

Figure 2—Companies Invested in Anham and Certain Subcontractors with 

Common Owners and Managers 

Note: Anham told SIGIR that a company called GMS Holdings, Inc. is a 50% owner of Anham. 

Source: Anham and its corporate filing data from the Virginia State Corporation Commission. 
14 

Government Reviews of Vouchers Were Poor and Incomplete 

In addition to the poor oversight of Anham business systems, SIGIR found that millions of 

dollars of vouchers were not reviewed and compared to receiving documents. CORs sometimes 

signed for delivery of goods without verifying that the goods were actually used in the 

performance of the contract, and, in some cases, Anham employees signed for the receipt of 

goods instead of the CORs. Late in the contract, one ACO reviewed several million dollars in 

vouchers and questioned a significant percentage of the costs. 

Vouchers Were Either Not Reviewed or Received Limited Review 

The government either did not review or only conducted limited reviews of Anham’s vouchers. 

The contract required Anham to submit its vouchers to both the COR and to DCAA for review. 

The COR reviews, in general, are supposed to ensure that vouchers match receiving documents. 

At the time of our review, $113.4 million in expenses had been incurred. However, SIGIR found 

that the ACO reviewed only $32.74 million in vouchers, and the CORs reviewed only another 

$32.20 million in vouchers for trucking services. Moreover, Anham did not submit $44.7 

million in vouchers for warehousing and delivered items to the ACO, and thus these were not 

reviewed and compared to receiving documents. According to DCMA officials with whom 

SIGIR spoke, the ACO conducted self-described “cursory reviews” of $32.74 million in 

vouchers. DCMA officials described these reviews as verifying that Anham billed items 

appropriate to the contract. 

Beginning in April 2010, the ACO undertook an extensive review of about $2.7 million in 

vouchers for reasonableness that resulted in the ACO questioning $1.2 million, or 44% of the 

costs reviewed. Generally, the ACO disapproved or questioned vouchers because they lacked 

supporting documentation, including lease versus buy evaluations for leased equipment. The 

ACO requested the necessary supporting documentation, but Anham failed to provide the 

requested documents. According to the ACO who conducted the review, Anham continued to 

send vouchers for these items, and the ACO continued to deny payment because Anham did not 

provide the necessary documentation for the charges. 

Table 2 shows a summary of vouchers reviewed and not reviewed for this contract. 

Table 2—Summary Status of Voucher Reviews (in millions) 

Vouchers for warehouse operations and delivered items 

Vouchers receiving a detailed review by ACO (DCMA) $2.7

Vouchers receiving a limited review by ACO (DCMA) 32.7

Vouchers not reviewed 44.7

SUB-TOTAL $80.1

Invoices for trucking services

Vouchers reviewed by CORs 32.2

TOTAL $112.3

Source: DCMA officials and Anham invoices. 
15 

Anham Employees Signed for the Receipt of Goods 

SIGIR’s review of material and receipt documentation Anham provided showed that CORs did 

not sign for receipt of over $10 million in fuel delivered under this contract. U.S. government 

officials did not verify that $7.8 million in leased equipment charged to the government was used 

in the performance of the contract. For fuel delivery, Anham provided receipts for 60 of 73 

requested transactions, accounting for 91% of fuel costs during that period. Anham employees 

had signed all of these receipts.5 No U.S. government official signed any fuel receipts at Abu 

Graib or Umm Qasr from March 2008 to January 2010. 

CORs Signed for Delivery of Goods without Verifying That the Goods Were Delivered 

In the course of the audit, SIGIR also found that two CORs signed for receipt of over $32 million 

in trucking services (i.e., trucks provided by Anham for use during the contract) without 

physically confirming that the number of trucks billed was actually utilized.6 Instead, the CORs 

relied on Anham-provided documents as evidence that the number of trucks billed was accurate. 

The CORs could not explain how they confirmed that Anham was only charging for trucks they 

actually used or had available. 

DCAA Conducted Provisional Payment Reviews but Has Not Yet 

Completed Incurred Cost Reviews 

Although ACO reviews of vouchers were minimal, DCAA officials stated that they conducted 

provisional payment reviews on all Anham invoices. To date, however, DCAA has not 

completed an incurred cost review. 

According to DCAA officials, they received all Anham invoices except invoices for trucking 

services, and they conducted the required provisional payment reviews. These officials stated 

that provisional payment reviews do not determine whether the costs submitted for 

reimbursement are reasonable, nor do they match invoices to receiving documents, verify costs 

against vendor invoices, or compare costs to market prices. The reviews verify that indirect 

costs are computed using acceptable billing rates, that fees claimed are computed based on 

contract requirements, that vouchers have been properly prepared and are mathematically 

accurate, and billed costs are reconciled to the contractor’s accounting records. Once a voucher 

is provisionally approved, it is forwarded to the paying agent designated in the contract for 

payment. 

DCMA and OSD (Acquisition, Technology, and Logistics) officials told SIGIR that DoD’s 

decision to rely solely on DCAA incurred cost reviews and DCAA contract closeout reviews 

(reviews that can take place years after a contract is completed) is predicated on a belief that 

these and other DCAA and DCMA business system reviews discussed above result in little risk 

to the government of paying unreasonable prices. However, according to DCAA officials, 

incurred cost reviews should not substitute for oversight by the contracting officers or their 

 

5 FAR 7.503(c) (12) (v) lists “accepting or rejecting contractor products or services” as an “inherently governmental 

function.”

6

 Trucking charges were based on a fixed rate, which only required approval by the Contracting Officer’s 

Representative before being sent to the payment office. 
16 

designated representatives. DCAA sees contracting officer oversight as complementing their 

incurred cost reviews. 
17 

SIGIR Questions Whether $4.4 Million in Costs Paid 

by the Government Are Reasonable and Supported 

SIGIR questions $4.4 million or almost 39 % of the costs from a judgmentally selected sample of 

about $11.4 million in vouchers and procurement actions because they appear to be not fair and 

reasonable or were not properly documented. The following five examples are discussed below: 

 $453,666 for trailers, plumbing, electrical supplies, and furniture 

 $105,178 for two voice-warning systems 

 $165,124 for two closed-circuit TV systems 

 $210,901 for freight 

 $3,450,000 for leased equipment 

Example 1: Trailers, Plumbing, Electrical Supplies, and Furniture 

SIGIR is questioning $453,666, or about 33% of the total costs associated with this 

$1,374,834.90 purchase because of issues with possible affiliation, questionable competition, and 

inappropriate bundling of items that negatively affected the government. 

Anham was asked to buy housing trailers, miscellaneous plumbing and electrical supplies, 

furniture, concrete barriers, bricks, and a generator. Anham bundled these diverse items into one 

purchase order and solicited proposals from six companies. Only one company, Pioneer Iraqi 

Trading Company, provided proposed costs for all items. Another company provided a cost 

proposal for trailers, plumbing, electrical supplies, and furniture, but not the generator. The 

other four competitors provided price quotes for only a few items within the categories. 

According to a Technical and Financial Offer Comparison Anham provided, Pioneer had the 

“best price, past performance, and complete offer” and received the nearly $1.4 million purchase 

order. The costs SIGIR questions and the reasons SIGIR questions these costs follow. 

1. Possible Affiliation. A member of the family group that owns (through a subsidiary) 

50% of Anham owns a 90% share in Pioneer. As discussed earlier, this relationship was 

not disclosed to DCMA during the contractor’s purchasing system review and therefore, 

the ACO was unaware of the potential risks associated with subcontracting with these 

companies. 

2. Questionable Competition. The purchase order was given to Pioneer based on overall 

“best price,” despite the fact that overall, Pioneer’s prices were almost 21% higher than 

its competitor.7

 

Another factor that raises questions about competition is how a competition could 

produce such wide-ranging prices. For example, the proposal sought pricing for 43 

plumbing and electrical items, and SIGIR’s review found the following:

 One competitor offered prices that were lower than Pioneer’s for 41 of the 43 

items. 

 

7

 The calculation excluded the cost of the generator because the competitor did not provide price quote for this item. 
18 

 For 11 of the 43 items, Pioneer proposed prices that were more than 10 times 

higher than the competitor’s: 

o For a water level electric control switch, Pioneer charged the government $900 

as compared to the competitor’s offer of $7.05 (a 12,666% difference). 

o For a PVC elbow, Pioneer charged the government $80 as compared to the 

competitor’s offer of $1.41 (a 5,574% difference). See Figure 3 for a picture 

of the PVC elbow. 

o For a PVC trap, Pioneer charged the government $75 as compared to the 

competitor’s offer of $1.41 (a 5,219% difference). 

o For a 100-amp circuit breaker, Pioneer charged the government $3,000 as 

compared to the competitor’s offer of $94.47 (a 3,076% difference). 

o For a 250-amp circuit breaker, Pioneer charged the government $4,500 as 

compared to the competitor’s offer of $183.30 (a 2,355% difference). 

o For a 400-amp circuit breaker, Pioneer charged the government $5,500 as 

compared to the competitor’s offer of $260.85 (a 2,008% difference). 

o For a 32-amp circuit breaker–large, Pioneer charged the government $150 as 

compared to the competitor’s offer of $9.87 (a 1,420% difference). 

o For rolls of cable, 4-core x 6mm, Pioneer charged the government $275 as 

compared to the competitor’s offer of $8.46 (a 3,151% difference). 

o For a 250W sodium vapor flood light Pioneer charged the government $650 as 

compared to the competitor’s offer of $35.25 (a 1,744% difference). 

o For a reducing nut, 1" to 3⁄4”, Pioneer charged the government $50 as compared 

to the competitor’s offer of $4.23 (a 1,082% difference). 

o For a steel rebar, Pioneer charged the government $350 as compared to the 

competitor’s offer of $16.92 (a 1,969% difference). 

3. Increased Costs Resulting from Bundling Items. Bundling refers to putting items 

together. SIGIR does not know whether the government or Anham decided to bundle 

the items into one purchase order, but overall, we believe that bundling items in this way 

resulted in the government paying higher prices than necessary. Specifically, bundling 

was disadvantageous to the government in two ways. 

First, three categories of dissimilar items―trailers; plumbing, electrical supplies, and 

furniture; and a generator―were combined in one purchase order. Bundling them in 

one purchase order was not necessary because the total cost of each category was above 

the contract’s minimum purchase order threshold, and each category could have been 

purchased separately.8

 Purchasing these items separately from the subcontractor with 

the lowest price would have resulted in a savings to the government of $223,097.9

 

 

8

 Anham officials stated that the minimum threshold for purchase orders is usually $50,000. 

9

 The cost for the generator was excluded from this analysis because Pioneer’s competitor did not provide quotes. 
19 

The second disadvantage to the bundling was that two of the categories contained 

dissimilar items that significantly skewed the cost. The government could have saved an 

additional $230,569 for a total savings of $453,666, by removing these items from the 

single purchase order and purchasing them separately from the lowest bidder. For 

example: 

 The trailer category contained a requirement for concrete barriers. By bundling 

the concrete barriers and trailers into a single purchase, the government paid 

$826,000. However, if the government purchased the trailers from the lowest 

bidder and the concrete barriers from the lowest bidder, it would have paid 

$643,524, a savings of $182,475. Both items were above the contract’s minimum 

purchase threshold and could have been purchased separately. 

 The plumbing, electrical supplies, and furniture category contained a requirement 

for bricks. By bundling these items into a single purchase, the government paid 

$476,285. However, if the government purchased the plumbing, electrical 

supplies, and furniture from the lowest bidder and the bricks from the lowest 

bidder, the government would have paid $205,094, a savings of $271,191. While 

the lowest offer for the bricks was $40,000, which is below the $50,000 minimum 

purchase order, the bricks could still have been bundled with another item such as 

the concrete barriers into a separate purchase that would still have saved the 

government a significant amount of money. 

Appendix B of this report contains additional information on Pioneer’s costs for items on this 

contract as compared to a competitor. 

Figure 3—Anham Billed a 1.5′′ x 4.0′′ 90-degree PVC Elbow at $80 

Source: An example of a PVC elbow that SIGIR photographed. 
20 

Example 2: Giant Voice Loudspeaker Warning Systems 

SIGIR is questioning $105,178 of the costs Anham billed the government because of issues 

related to possible affiliation with subcontractors, and questionable competition. 

Anham was asked to purchase two warning systems―the Giant Voice Loudspeaker Warning 

System―to alert warehouse employees of dangerous events. Anham identified the specific 

system that it wanted to buy (see Appendix D for the manufacturer’s advertisement) but did not 

purchase the system directly from the manufacturer at the retail price of $44,615. Instead, 

Anham sought proposals from three competitors. A company named Knowlogy provided the 

lowest bid of $90,908 per system, including installation, and received the order. However, 

Knowlogy did not purchase the systems directly but rather purchased two systems from a 

subcontractor named ESTEK. We could not find any explanation as to why an additional 

subcontractor was brought into this transaction, but such actions warrant examination as they 

tend to increase costs. Ultimately, the government paid $206,543 for two systems (including 

Anham’s overhead fees) that SIGIR believes could have been obtained for about $101,365. The 

reasons why SIGIR questions the $105,178 difference are: 

1. Possible Affiliation. Anham’s Chief Executive Officer is director and (through his 

family group) owner of Knowlogy. As discussed earlier, this possible affiliation was not 

disclosed to DCMA during the contractor’s purchasing system review and therefore, the 

ACO was unaware of the potential risks posed by this relationship. Also, the systems 

were shipped by Unitrans, another company with whom Anham has an ownership and 

management relationship.

2. Questionable Competition. Anham solicited cost quotes―to purchase and install the 

Giant Voice systems at Abu Ghraib and Umm Qasr warehouses―from three companies 

(see Table 3). Anham selected Knowlogy to acquire the systems. Knowlogy’s proposal 

to buy and install the system, not including shipping, was $90,908. 

SIGIR questions the competition for this purchase based on price. The manufacturer’s 

retail price on this system was $44,615, not including shipping. However, the three 

proposals obtained by Anham range from 104% (Knowlogy) to 183% (Competitor 2) 

above retail cost. This wide disparity in proposed prices seems unusual in a competitive 

environment. 

Table 3—Bids for the Giant Voice Systems (cost per system exclusive of shipping) 

Items Knowlogy Competitor 1 Competitor 2 

Giant Voice Mobile Unit $57,228 $64,732 $75,720 

Portable Control Unit $13,680 $16,000 $18,940 

Installation and Labor $20,000 $45,000 $31,550 

Total $90,908 $125,732 $126,210 

Source: Anham as of 09/2010. 

 
21 

SIGIR is also questioning whether Anham engaged in a true competition with reputable 

subcontractors to obtain lowest bids. The giant voice system is a commercial item that SIGIR 

confirmed Anham could easily have purchased directly from the manufacturer, who has other 

contracts in Iraq. Instead, Anham sought proposals from companies that do not appear to be 

representatives of the manufacturer, nor, on the surface, appear to have any expertise in warning 

systems. One competitor, for example, is a data processing company located in Cyprus. SIGIR 

questions why Anham chose to use middlemen rather than sources close to the manufacturer as 

the use of middlemen almost guarantees that the government will pay a higher price. 

Finally, including installation costs also raises questions about the competition. The three 

competitors provided installation costs ranging from $20,000 to $31,550. According to the 

manufacturer, however, the system is “plug and play” and requires little effort to install. To 

confirm this assertion, SIGIR obtained the manufacturer’s operating manual and visually 

inspected an installed unit at Abu Ghraib warehouse. We noted that installation involved 

cranking down the four foot pedestals, cranking up the vertical speaker tower, and plugging the 

unit into a power source (see Figure 4). The ease of installation raises the question as to why, in 

a competitive environment, three different companies estimated such high installation costs. 

SIGIR also questions the installation costs charged to the government because Anham’s site 

manager stated that the labor and equipment used to install the Giant Voice unit at Abu Ghraib 

warehouse was provided by on-site personnel already paid by the U.S. government. Moreover, 

the Giant Voice unit intended for the Umm Qasr warehouse was delivered after the warehouse 

was turned over to the Government of Iraq, so the Iraqis were responsible for the installation. 

Figure 4—Anham, through Knowlogy, Billed $20,000 for Installation of a “Plug 

and Play” Voice System

Source: SIGIR photo from visit to Abu Ghraib warehouse.
22 

Example 3: Closed Circuit Television Systems 

SIGIR is questioning $165,124 Anham billed the government because of issues related to 

possible affiliation with its subcontractors, price competition, and unsupportable charges. 

Anham was asked to purchase two Closed Circuit Television Systems (CCTVs) for the Abu 

Ghraib and Umm Qasr warehouses. The proposal identified the specific CCTV system Anham 

wanted, which was a commercially available system. Anham, however, did not go to the 

manufacturer. Rather, it solicited cost proposals from five companies and, again, Knowlogy 

provided the lowest proposal at $188,302 each and was awarded the purchase. Knowlogy then 

went to ESTEK and purchased the systems for $160,302 each, including installation, training, 

and a one-year maintenance contract. A review of Anham vouchers, however, shows that 

Anham billed the U.S. government $386,535 for the two systems, including Anham’s overhead 

fees. SIGIR found that the two systems could have been procured from a U.S.-based company 

for $194,904 (or $221,411 with Anham’s overhead fees). As a result, SIGIR questions $165,124 

(the difference between $386,535 that was billed to the government and $221,411 that the 

systems actually cost with allowable overhead fees). 

The costs SIGIR questions and the reasons SIGIR questions these costs are: 

1. Possible Affiliation. Anham’s Chief Executive Officer is director and (through his 

family group) owner of Knowlogy. As discussed earlier, this possible affiliation was not 

disclosed to DCMA during the contractor’s purchasing system review, and therefore, the 

ACO was unaware of the potential risks posed by this relationship. 

2. Questionable Competition. Again, as was the case with the voice warning system, 

instead of purchasing the CCTV systems directly from the manufacturer or a 

manufacturer’s representative, Anham solicited cost proposals―to purchase, ship, and 

install the CCTV system at the Abu Ghraib and Umm Qasr warehouses―from five 

companies. It is not clear from Anham’s documentation that the companies that were 

solicited for proposals have expertise in closed circuit security systems, including the 

data processing company in Cyprus that also provided a proposal for the voice warning 

system. 

SIGIR’s research also found that two of the companies that were solicited for proposals 

are owned by two individuals with the same last name living at the same address. Yet 

the two companies submitted proposals that were $55,674 different, again raising 

questions about the validity of the competition that took place on this proposal. SIGIR 

again questions why Anham chose to use middlemen rather than sources close to the 

manufacturer, as using middlemen almost guarantees that the government will pay a 

higher price. 

3. Questionable Costs. After Knowlogy was awarded the purchase, it asked ESTEK―a 

company that had also provided a cost proposal for the CCTV system―to buy the 

CCTV systems. SIGIR obtained a purchase order that show that ESTEK bought the 

systems for $194,904 from a U.S.-based company operating in Iraq. This included 

installation, training, and maintenance. 
23 

SIGIR then obtained another invoice that showed ESTEK charged Knowlogy $320,604 

for the two systems, $125,700 higher than the $194,904 it paid. In reviewing 

information that Anham provided, SIGIR did not find documentation that explained the 

cost difference. 

Lastly, a review of multiple invoices showed Knowlogy charged Anham $340,260 for 

the two systems, $19,656 more than it paid to ESTEK. The invoices reviewed also 

showed that Knowlogy charged Anham for training, installation, and maintenance, even 

though these services were a part of ESTEK’s original cost proposal. In responding to 

SIGIR’s observation, Anham officials stated that Knowlogy actually gave the 

government a “discount” rate. Specifically, Anham officials said that the original 

requirement was for Anham to install 16 cameras at Abu Ghraib warehouse. The 

government later wanted Anham to install 20 cameras, but did not approve any cost 

increase. Wanting to “keep the client happy and get the work done,” Anham negotiated 

with Knowlogy to install the additional cameras at no extra cost. SIGIR was unable to 

find adequate documentation supporting this statement. 

In total, SIGIR calculates that Anham could have saved the government about $165,124 

had it purchased the CCTV systems from the initial source, rather than contracting with 

Knowlogy. 

Figure 5 shows how each of the involved entities marked up the cost of the Giant Voice and 

Closed Circuit Television Systems. 

 
24 

Figure 5—Mark-ups and Other Questionable Charges by Anham for “Giant Voice” 

and CCTV Equipment 

Note: 

ESTEK charged Knowlogy $141,816 for two Giant Voice systems (which includes Giant Voice units and portable control units). The

manufacturer’s cost for the two systems is $89,230. The difference is $52,586. Similarly, ESTEK charged Knowlogy $320,604 for two CCTV 

security systems. ESTEK paid $194,904. The difference is $125,700.

Source: SIGIR analysis of invoices, contracts, and shipping/receiving documents from the manufacturers, ESTEK, Knowlogy, 

Unitrans, and Anham. 

Example 4: Anham’s Airfreight Costs Lacked Documentation of 

Approval 

SIGIR is questioning about $210,901 in airfreight charges because Anham did not provide 

documentation showing the need for using airfreight services for transporting materials and 

equipment to Iraq. 

To illustrate, 13 of the 20 invoices that SIGIR reviewed did not indicate that airfreight had been 

authorized by a U.S. official10, and some of the airfreight costs were significant. For example, 

we found that Anham billed $34,880 to airfreight heating and air conditioning units from Saudi 

Arabia to Baghdad, Iraq. Anham also billed $30,070 to airfreight plywood, light bulbs, and 

cotton gloves from Amman, Jordan to Baghdad. Lastly, Anham airfreighted exercise equipment 

from the United States at a cost of $23,327. SIGIR believes that while some of these materials 

and equipment may have been urgently needed, the high cost of transporting some items that 

appear non-essential (such as exercise equipment) warrants a closer review by U.S. officials. 

Table 4 shows Anham’s airfreight costs that lack documentation of approval. 

 

10 Three other invoices showed airfreight charges for which there was no documentation of approval. However, 

SIGIR’s review showed that Anham reversed these charges billed to the government. 
25 

Table 4—Anham’s Airfreight Charges to Iraq Lacking Documentation of Approval 

Shipment Departure Point Questioned Costs

Exercise Equipment United States $23,327.60

Firefighting Equipment United States 12,991.12

Heating and Cooling Units Saudi Arabia 34,880.00

Construction Materials Jordan 30,070.00

Spare Parts United States 8,319.72

Tools United States 6,875.00

Tires United States 6,490.00

Tires United States 7,139.00

Office Supplies Jordan 8,750.00

Auto Parts and Engine Oil United Arab Emirates 26,271.30

Electronic Equipment United States 4,411.00

Unknown Jordan 21,823.75

Unknown United States 19,552.18

Total $210,900.67

Source: SIGIR analysis of Unitrans’ invoices provided by Anham. 

Example 5: Anham’s Costs for Leased Equipment Are Higher 

Than Market Prices 

SIGIR questions about $3.45 million that Anham charged the government for leased equipment. 

SIGIR reviewed 37 separate invoices that showed Anham charged the government $7.8 million 

for leased equipment from April 2008 to June 2010. These invoices contained 35 individual 

leased items including backhoes, cranes, trucks, forklifts, septic tankers, concrete mixers, fuel 

tankers, street sweepers, and shovels. Figure 6 shows some of the leased equipment at Abu 

Ghraib warehouse. 

Figure 6—Leased Equipment at Abu Ghraib Warehouse 

Source: SIGIR photograph of equipment at Abu Ghraib Warehouse, taken May 19, 2010. 

 
26 

SIGIR’s market price analysis for each of the 35 items concluded that Anham charged $3.45 

million, or 42% more than the average price in our market survey. (Appendices E and F detail 

SIGIR’s market price analysis.) In responding to our observations, Anham officials stated that 

costs charged to the government included operators, insurance, and maintenance that SIGIR’s 

analysis did not include. However, SIGIR could not confirm that equipment lease rates included 

operator costs. It is also unclear from Anham’s files that the bids companies provided for leasing 

the equipment included these services, and none of the bids discussed labor rates. SIGIR spoke 

with a COR who was on site at Abu Ghraib for 24 months, and she stated that Pioneer did not 

provide operators for forklifts. Instead, Anham provided the operators by using on-site labor that 

was already billed separately. Based on this observation, at least one-third of the leased 

equipment costs should not have included an operator’s cost. Another COR told SIGIR that the 

leased equipment was barely used in the contract’s final year. 

SIGIR asked Anham to provide additional documentation from its subcontractor Pioneer and its 

suppliers as well as an address and point of contact for Pioneer for us to contact. Anham told 

SIGIR that it was “unable to provide” an address for Pioneer. This seems implausible, however, 

since Pioneer provided $20.4 million in goods and services under this contract, and Anham lists 

Pioneer as an affiliate on its website. SIGIR subsequently located Pioneer’s address on a 

purchase order. Of note, Pioneer’s address on this purchase order is the same address as 

Anham’s office in Amman, Jordan. 

SIGIR sent Pioneer an email requesting invoices for the items it leased for Anham under this 

contract. In a response email from Pioneer, its officials stated that the company could not 

provide SIGIR with its subcontractors’ (3rd tier subcontractors) invoices for the following 

reasons. (The following quotes were taken verbatim from Pioneer’s response to SIGIR.) 

1. Disclosing information for local venders will put Pioneer at high risk because of 

commitments to their suppliers of not disclosing their contacts. Disclosing these 

contacts would put Pioneer and their staff, their life, and even their extended families 

at extremely high risk. 

2. Pioneer [does not] keep all the documentations for all activities either because of 

security reasons or because of not keeping documentation based on subcontractors 

request of not dealing with the US government or because they don't know that we 

are dealing with US government. Other reason is that there is no condition in Anham 

tenders for suppliers that they should disclose their information. If this condition was 

there, then Pioneer would either manage to provide [this] information since day one 

as possible or decline from participation from these bids. 

3. In Iraq, there are no standard points for [material handling equipment] supplies 

and the same goes true for many other services and also for the fuel. Many of deals 

were executed by phone calls or by word of mouth or they don't keep any documents 

for security reasons. 

4. Iraqi market is not similar to the international standard markets because of high risk 

environment, military actions, non modern working process, no system for commercial 

market and no regulations to organize local, individual business, so there is no certain 
27 

resource or certain documents that can obtained for your works especially if they know that 

you deal with US contractors. Actually we are talking about the period that security was the 

main concern of any deal. 
28 

Conclusions and Recommendations 

Conclusions 

This report looked at the processes used to ensure that the U.S. government pays fair and 

reasonable prices on contracts that involve subcontractors. Overall, we found a number of areas 

that we believe require attention, specifically, the review of prime contractor business systems 

and the need to take action when risks are identified. 

One of the risks identified in this review was DCMA’s failure to ask about Anham’s 

relationships with its subcontractors. Exploring these relationships is important because it may 

raise important questions about whether there is truly an arms-length business relationship 

between the prime contractor and its subcontractors. DCMA officials agreed that they should 

have conducted a more thorough review. 

The lack of transparency regarding the relationship between Anham and its subcontractors calls 

into question whether Anham used due diligence to ensure that the U.S. government received a 

fair price for the goods and services it purchased. Anham and its subcontractors either could not 

or would not provide SIGIR basic cost documentation to support the costs they charged. 

Moreover, SIGIR’s analysis that Anham and six subcontractors may be “affiliates” within the 

meaning of the FAR because of ownership and management relationships would, if 

substantiated, limit the markup and costs allowed to be charged to the U.S. government. 

Because government oversight did not sufficiently explore these relationships, however, no 

effort was made to limit allowable markups and costs. 

Another risk is that DCMA recommended approval of Anham’s purchasing system even though 

it could not find required documentation of price analysis for all 38 items it tested. Without 

these price analyses, DCMA could not determine if Anham’s subcontractor prices were fair and 

reasonable. The analyst who conducted the review did recommend that the ACO perform 

surveillance of Anham’s purchasing system, but there is no evidence in the contracting files that 

this occurred. Instead, the various CORs involved in this contract appear to have relied on 

questionable competition as their basis for determining if prices were fair and reasonable. 

DCMA officials told SIGIR that they have changed their procedures and improved the oversight 

of purchasing system reviews. They stated that based on the procedures put in place subsequent 

to SIGIR raising concerns, they would not have approved Anham’s purchasing system. 

DCAA is going to complete an incurred cost review on this contract, and this review may 

explain some of SIGIR’s questioned costs. However, DCAA has a significant backlog of 

incurred cost reviews, and delays add additional risk and vulnerability that the government may 

pay unreasonable or unallowable costs. 

In addition to the risks identified above, SIGIR also found problems with the day-to-day 

oversight of this contract. Fifteen different Contracting Officers were assigned to this contract 

over the roughly two-and-a-half years of contract implementation which, in and of itself, results 

in a lack of continuity necessary for effective oversight. Further, Contracting Officers and their 

designated representatives failed to effectively review over $44 million of about $112 million in 
29 

vouchers. Vouchers were not compared to receiving documents, deliveries were not verified, 

and contractor employees were allowed to sign for the receipt of millions of dollars in supplies. 

Late in the contract, an ACO started reviewing invoices, and these reviews disapproved or 

questioned over 44% of invoiced costs. These reviews demonstrate what can be accomplished 

with effective oversight. 

Given the risks SIGIR identified in this review, we conducted our own price review. Our review 

involved only $11.4 million in invoices and questioned $4.4 million, or about 39 % of the costs. 

SIGIR questioned these costs because of questionable competition, SIGIR’s own price analyses, 

or because Anham did not provide documentation to show that it was charging the U.S. 

government in accordance with the contract and FAR regulations. The issues we identified are 

significant enough that SIGIR believes that all costs under this contract should be carefully 

examined, as well as all contracts awarded to Anham. 

Recommendations 

SIGIR recommends that the Office of the Secretary of Defense change its guidance to 

contracting officers to give them responsibility, in cooperation with DCAA, for reviewing the 

reasonableness of prices charged to the government. 

SIGIR also recommends that the Commander, CENTCOM, take the following actions: 

1. Determine whether Anham and its subcontractors on this contract are “affiliates” as 

defined by the FAR. 

2. Review all vouchers submitted under this contract to ensure that appropriate pricing 

analysis was conducted and that prices are fair and reasonable. 

3. Initiate a systematic review of billing practices on all Anham cost-type prime contracts in 

Iraq and Afghanistan. 

SIGIR also recommends that the Director, Defense Contract Management Agency, conduct a 

new contractor purchasing system review on Anham. 

 
30 

Management Comments and Audit Response 

 SIGIR received written comments from the Defense Contract Management Agency (DCMA) 

and the CENTCOM Joint Theater Support Contracting Command (C-JTSCC). The Office of the 

Secretary of Defense did not respond to SIGIR’s draft report. 

DCMA concurred with SIGIR’s recommendation that it perform a new contractor purchasing 

system review of Anham. 

C-JTSCC partially concurred with SIGIR’s recommendation that it determine whether Anham 

and its subcontractors on this contract are “affiliates” as defined in the FAR. However, it stated 

that it believes DCMA would be the more appropriate agency to make the determination since it 

was delegated the responsibility for reviewing and approving the contractor’s purchasing system. 

SIGIR does not agree. The FAR assigns the ACO the responsibility to approve the purchasing 

system, and the ACO may request that DCMA conduct the review. Responsibility for the system 

review, however, remains with C-JTSCC. Additionally, DCMA’s conclusions and 

recommendations are advisory to the ACO and it is the ACO’s responsibility to approve or 

disapprove Anham’s purchasing system based on the DCMA findings. For example, the DCMA 

purchasing system report that is discussed in this report clearly states that the report provides the 

ACO with a basis for granting, withholding or withdrawing approval of a contractor’s purchasing 

system. 

C-JTSCC also partially concurred with SIGIR’s recommendation that it review all vouchers 

submitted under this contract, but believes that the voucher reviews should only be performed on 

cost type contracts. SIGIR would generally agree with C-JTSCC’s position, if Anham’s firm 

fixed price subcontracts were awarded based on adequate price competition. However, this 

report raises questions about the Anham’s competition practices. As a result, SIGIR believes 

that a review of all vouchers, both fixed price and cost should be reviewed. The extent of this 

review should be based on the results of the new contractor purchasing system review of Anham, 

that DCMA has agreed to conduct. C-JTSCC also questions whether it will be able to complete 

the review in the time remaining before USF-I ends its mission in June 2012. While SIGIR 

recognizes the time constraint, we believe that it should work with DoD to get the resources 

needed. 

Finally, C-JTSCC partially concurs with SIGIR’s recommendation that it systematically review 

the billing practices on all Anham contracts in Iraq and Afghanistan. C-JTSCC does not believe 

that it should review firm fixed price contracts with Anham. SIGIR agrees that where a prime 

contract is fixed price it would not need review. 

 
31 

Appendix A—Scope and Methodology 

Scope and Methodology 

In March 2010, the Special Inspector General for Iraq Reconstruction (SIGIR) initiated Project 

1009 to examine the oversight and cost of Anham’s contract (W91GXZ-07-R-011) for 

warehouse and distribution services at Abu Ghraib and the Port of Umm Qasr. This audit was 

performed by SIGIR under the authority of Public Law 108-106, as amended, which also 

incorporates the duties and responsibilities of inspectors general under the Inspector General Act 

of 1978. SIGIR conducted its work from March 2010 through June 2011 in Baghdad, Iraq and 

Arlington, Virginia. 

To determine the adequacy of contract oversight, we interviewed knowledgeable officials at 

CENTCOM Joint Theater Support Contracting Command (formerly Joint Contracting 

Command–Iraq/Afghanistan), the Defense Contract Management Agency, the Defense Contract 

Audit Agency, the U.S. Army Corps of Engineers, the U.S. Forces–Iraq J4 (Logistics), 

Contracting Officers’ Representatives, and Abu Graib and Umm Qasr commanders. We also 

requested and reviewed the contract files, and other relevant oversight documents. 

To determine the adequacy of the government’s oversight of Anham business systems, we 

reviewed available government reports and information on Anham’s accounting, billing, 

purchasing and estimating systems. Specifically, we evaluated DCAA reports on Anham’s 

accounting and billing systems and DCMA’s report on Anham’s purchasing systems. We also 

held discussions with DCMA and DCAA officials to better understand their roles and 

responsibilities. 

To assess whether costs charged under this contract were reasonable, we used a two-phase 

methodology. Phase I involved testing a limited judgmental selection of transactions across all 

five of Anham’s cost categories (Fuel, Trucking, Equipment, Labor, and Other Direct Costs.) 

Based on the results of that testing, along with the results of limited data mining, Phase II 

involved testing a larger, more targeted set of transactions. 

Our total dataset consisted of 295 line items totaling $23.15 million, for which we requested 

from Anham 2nd tier invoices and other evidence of incurred costs. Of those 291 transactions 

we went back to Anham and their affiliates and requested 3rd tier invoices for 116 transactions 

totaling $11.25 million. We selected a judgemental sample of items from a slightly different 

data set of $11.35 million in goods and services on which to conduct market research whose 

costs appeared unusually high on Anham’s subcontractor invoices. See Table 5 for a breakdown 

of all selected transactions. 

In addition, we evaluated documentation provided by Anham management regarding the level of 

competition they obtained on procurement actions we judgmentally selected as a means of 

testing the extent to which they were following FAR requirements to obtain adequate price 

competition. We also assessed whether there was documentation available that supported 

Anham’s decisions. 
32 

Table 5—Total Transactions Selected and Tested 

Total Transactions for 

which SIGIR Requested 

2nd Tier Invoices and 

Receiving Documents 

Total Transactions for 

which SIGIR Requested 

3rd Tier Invoices and 

Evidence of Competition 

Total Transactions on 

which SIGIR Conducted 

Some Market Analysis 

Phases 

I & II # $ # $ # $

Labor 64 $246,676.98 - - - -

Other Direct 

Costs 112 $9,849,209.27 89 $8,067,400.78 112 $9,849,209.27

Equipment 22 $1,502,856.22 15 $560,173.46 22 $1,502,856.22

Fuel 69 $10,949,614.25 12 $2,618,838.45 - -

Trucking 24 $153,677.20 - - - -

Total 291 $22,702,033.92 116 $11,246,412.69 134 $11,352,065.49

To determine whether Anham’s costs were fair and reasonable we conducted open market 

research. For leased costs we contacted a large U.S. contractor in the Baghdad area who 

requested bids from six subcontractors in the Baghdad area. For all other market prices we 

performed internet research using dimensions and serial numbers to obtain prices for like goods. 

To determine the cost of the contract, SIGIR obtained and analyzed relevant financial and other 

data from the U.S. Army Corps of Engineers’ Finance Office as well as the contractor. 

This audit was conducted in accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain sufficient, appropriate 

evidence to provide a reasonable basis for our findings and conclusions based on our audit 

objectives. We believe that the evidence obtained provides a reasonable basis for our findings 

and conclusions based on our audit objectives. 

Use of Computer-processed Data 

We did not use computer-processed data in this report. Cost data was provided by the 

contracting office and Anham. 

Internal Controls 

We identified and reviewed internal controls used in managing and administering the contract. 

Our review included controls related to the contract administration and program management. 

To conduct this review, we examined documents in the contract file such as invoice approvals 

and held discussions with key oversight officials for insight on internal controls. We did not 

examine Anham’s internal management and financial controls. We presented the results of our 

review in the body of this report. 
33 

Prior Coverage 

We reviewed the following reports by SIGIR and the Government Accountability Office: 

Special Inspector General for Iraq Reconstruction 

Iraq Security Forces Fund: Weak Contract Oversight Allowed Potential Overcharges by 

AECOM To Go Undetected, SIGIR 10-005, 10/30/09. 

Security Forces Logistics Contract Experienced Certain Cost, Outcome, and Oversight 

Problems, SIGIR 09-014, 4/26/09. 

U.S. Government Accountability Office 

Role in Helping Ensure Effective Oversight and Reducing Improper Payments, GAO-11-331T, 

2/1/11.

 
34 

Appendix B—Pioneer’s Costs for Items Compared to 

a Competitor 

Item Qty

Competitor 

Price

Pioneer 

Price

Pioneer’s 

Price as % 

Under/Over 

Competitor

Potential 

Under-/ 

Overcharge

Trailers 

12 ft x40 ft, open bay accommodation trailers 20 $19,065.08 $14,500.00 -24% $-91,301.60 

12 ft x40 ft, two rooms accommodation trailers 10 19,411.00 15,500.00 -20% -39,110.00 

fasterin [sic] ablution Trailer 1 28,378.60 16,800.00 -41% -11,578.60 

Western ablution Trailer 1 28,378.60 17,500.00 -38% -10,878.60 

40 ft. metal container 1 9,400.00 4,500.00 -52% -4,900.00 

concrete barriers, 1 m x 2 3/2 high 236 676.80 1,450.00 114% 182,475.20 

Subtotal $24,706.40

Materials 

cable, 4-CORE X 150 MM 55 95.88 350.00 265% 13,976.60 

cable, 4-CORE X 50 MM 150 35.25 275.00 680% 35,962.50 

cable, 4-CORE X 35 MM 160 25.38 250.00 885% 35,939.20 

cable, 4-CORE X 6 MM 5 8.46 275.00 3,151% 1,332.70 

circuit breaker box with 1500 AMP circuit 

breaker, BUS BARS 1500 AMP 1 3,525.00 7,500.00 113% 3,975.00 

circuit breaker, 400 AMP 1 260.85 5,500.00 2,008% 5,239.15 

circuit breaker, 250 AMP 4 183.30 4,500.00 2,355% 17,266.80 

circuit breaker, 100 AMP 1 94.47 3,000.00 3,076% 2,905.53 

water tank, 10,000 liters 1 1,445.25 6,500.00 450% 5,054.75 

water pump, 3" 2 1,163.25 1,500.00 29% 673.50 

water level float, electrical control switch 1 $7.05 900.00 12,666% 892.95 

cement, portland 3 232.65 550.00 136% 952.05 

sand, red 36 42.30 214.28 407% 6,191.40 

gravel, 7MM 48 42.30 214.29 407% 8,255.30 

sodium vapor flood light 250 W 6 35.25 650.00 1,744% 3,688.50 

washing machine, heavy duty 8 1,762.50 2,500.00 42% 5,900.00 

circuit breaker, large, 32 AMP 4 9.87 150.00 1,420% 560.52 

silicon tube 50 2.82 10.00 255% 359.00 

PVC, 4" ID X 6 meters 13 38.07 150.00 294% 1,455.09 

PVC elbow, 1.5" X 4 15 1.41 80.00 5,574% 1,178.85 

PVC, 1/5" X 6 meters 10 49.35 80.00 62% 306.50 

PVC traps, 4" 8 1.41 75.00 5,219% 588.72 

PVC T-Union, 4" 16 6.35 60.00 845% 858.48 

galvanized steel pipe, 1" X 6 meters 15 56.40 120.00 113% 954.00 

erducing [sic] nut, 1" to 3/4" 30 4.23 50.00 1,082% 1,373.10 

nipple, 1" to 3/4" 30 4.23 40.00 846% 1,073.10 

PVC T-Union, 1" to 3/4" 30 4.23 40.00 846% 1,073.10 
35 

Item Qty

Competitor 

Price

Pioneer 

Price

Pioneer’s 

Price as % 

Under/Over 

Competitor

Potential 

Under-/ 

Overcharge

Materials 

water heater, 380 liters 3 634.50 1,500.00 136% 2,596.50 

desk 26 352.50 450.00 28% 2,535.00 

dresser drawers 164 211.50 400.00 89% 30,914.00 

single beds 2 129.72 150.00 16% 40.56 

wardrobes 2 297.51 450.00 51% 304.98 

double deck bunk beds 72 317.25 250.00 -21% -4,842.00 

galvanized steel pipes, 3/4" X 6 meters 15 $49.35 90.00 82% 609.75 

laundry drier, heavy duty 8 1,128.00 1,500.00 33% 2,976.00 

pillow 164 21.15 25.00 18% 631.40 

mattress, single 164 28.20 120.00 326% 15,055.20 

blankets 164 45.12 90.00 99% 7,360.32 

bed sheets, sets 164 28.20 65.00 131% 6,035.20 

refrigerator, 5 cu ft 38 423.00 1,500.00 255% 40,926.00 

chairs 26 197.40 200.00 1% 67.60 

bricks, 6 cm X 8 cm X 24 cm 8,000 14.10 5.00 -65% -72,800.00 

Steel rebar, 1/2" X 6 meters 24 16.92 350.00 1,969% 7,993.92 

Subtotal $198,390.82 

Total $223,097.22

Note: 

Percentages are affected by rounding. 

Source: SIGIR’s analysis of Anham’s data. 
36 

Appendix C—Total Value of Anham’s Contracts with 

the U.S. Government in Afghanistan and Iraq 

Table 6 shows the number and value of Anham’s contracts with the U.S. government for work 

performed in Iraq, Afghanistan, and elsewhere. This information was obtained from Anham and 

their accounting firm, Compass BPO. SIGIR didi not audit this data or these contracts. Funded 

values represent the portion of the total contract amount for which the U.S. government has 

identified and obligated the source of funds. The total contract amount could be higher. 

Table 6—Anham’s Contracts with the U.S. Government in Iraq and Afghanistan 

Iraq Afghanistan

Iraq/Kuwait/

Jordan Unidentified Total

Number of 

Contracts 35 20 1 10 66

Funded Value $1,193,965,130 $446,395,133 $2,156,364,276 $70,485,243 $3,867,209,782

Source: Anham and their accounting firm, Compass BPO. 

 
37 

Appendix D—Advertisement for Giant Voice Mobile 

Unit 
38 

Appendix E—Pioneer Voucher and Market Comparison 

Table 7—December 2008 Invoice for Leased Equipment from Pioneer and Current Market 

Rates 

On site/Permanent Equipment 

Equipment Type QTY 

Dec. working 

days 

USD 

rent/Day Total

Market 

Average

Amount billed 

over Market 

Average

Septic tanker - w 1 31 300 9,300 4,417 4,883

Septic tanker - Y 1 31 300 9,300 4,375 4,925

Septic tanker - R 1 31 300 9,300 4,317 4,983

Garbage truck 1 31 300 9,300 5,167 4,133

BUS 1 31 200 6,200 4,233 1,967

KIA 2 Ton 1 31 50 1,550 2,678 -1,128

Cargo double cabin 2 ton 1 31 100 3,100 2,678 422

Cargo truck 10 ton 1 31 200 6,200 3,925 2,275

Cargo truck 10 ton 1 31 200 6,200 4,008 2,192

Shovel 1 31 275 8,525 5,167 3,358

Crane 20 Ton 1 29 250 7,250 6,317 933

Concrete Mixer 1 31 200 6,200 6,200 0

Telescope Forklift 1 31 275 8,525 6,208 2,317

Fuel Tanker 1 31 200 6,200 4,775 1,425

Street sweeper 1 31 250 7,750 5,525 2,225

Dump truck 1 31 220 6,820 4,467 2,353

Wrecker 1 31 275 8,525 5,603 2,922

Forklift TCM 3 Ton 1 31 175 5,425 3,632 1,793

Forklift TCM 3 Ton 1 31 175 5,425 3,648 1,777

Forklift Komatsu 3Ton 1 31 175 5,425 4,123 1,302

Forklift Mitsubishi 3Ton 1 31 175 5,425 4,123 1,302

Forklift HELI 3Ton 1 31 175 5,425 3,982 1,443

Forklift HELI 3Ton 1 31 175 5,425 3,982 1,443

Forklift HELI 10 Ton 1 31 225 6,975 5,817 1,158

Forklift TCM 3 Ton 1 31 175 5,425 4,098 1,327

Forklift TCM 3 Ton 1 31 175 5,425 4,098 1,327

Forklift Hyundai 3 Ton 1 31 175 5,425 4,048 1,377

Crane 80 ton 1 31 1200 37,200 15,167 22,033

Temporary equipment 

Shovel 1 31 400 12,400 6,450 5,950

Dump truck 1 31 350 10,850 4,467 6,383

Dozer 1 31 450 13,950 6,425 7,525

Roller machine 1 31 550 17,050 6,208 10,842

Poclain - Backhoe 1 31 550 17,050 5,965 11,085

Grader 1 31 500 15,500 6,008 9,492

Crane 28 ton 1 8 500 4,000 4,000 0

Total Invoice Amount $304,045 $176,301 $127,744
39 

Appendix F—Questionable Costs on Pioneer Leased 

Equipment 

Month Invoiced Amount

SIGIR Calculated 

Average Market Rate

Percent Over

Market

Potential 

Overbilling 

Apr 2008 $195,275 $142,219 27% $53,056

Apr 2008 $62,000 $20,851 66% $41,149

May 2008 $251,370 $164,153 35% $87,217

June 2008 $325,725$ $191,317 41% $134,408

July 2008 $58,900 $15,751 73% $43,149

July 2008 $286,445 $176,360 38% $110,085

Aug 2008 $58,900 $15,851 73% $43,049

Aug 2008 $330,245 $198,075 40% $132,170

Sep 2008 $393,125 $224,685 43% $168,440

Sep 2008 $57,000 $15,851 72% $41,149

Oct 2008 $58,900 $15,851 73% $43,049

Oct 2008 $343,845 $203,536 41% $140,309

Nov 2008 $57,000 $15,851 72% $41,149

Nov 2008 $288,075 $173,702 40% $114,373

Dec 2008 $65,100 $20,626 68% $44,474

Dec 2008 $304,045 $176,301 42% $127,744

Jan 2009 $289,305 $175,901 39% $113,404

Feb 2009 $297,010 $184,374 38% $112,636

Feb 2009 $64,400 $25,401 61% $38,999

Mar 2009 $318,595 $180,267 43% $138,328

Mar 2009 $71,300 $25,401 64% $45,899

Apr 2009 $307,850 $179,067 42% $128,783

Apr 2009 $69,000 $25,401 63% $43,599

May 2009 $316,595 $178,266 44% $138,329

June 2009 $281,975 $173,800 38% $108,175

July 2009 $265,095 $170,725 36% $94,370

Aug 2009 $213,120 $126,668 41% $86,452

Sep 2009 $229,300 $137,885 40% $91,415

Oct 2009 $228,470 $129,685 43% $98,785

Nov 2009 $233,750 $135,650 42% $98,100

Dec 2009 $252,720 $142,850 43% $109,870

Jan 2010 $245,520 $135,650 44% $107,557
40 

Month Invoiced Amount

SIGIR Calculated 

Average Market Rate

Percent Over

Market

Potential 

Overbilling 

Feb 2010 $227,160 $141,050 38% $86,110

March 2010 $208,695 $125,960 40% $82,735

Apr 2010 $199,350 $123,618 38% $75,732

May 2010 $211,745 $124,393 41% $87,352

June 2010 $204,600 $124,126 39% $80,474

Total $7,871,505 $4,537,113 42.33% $3,332,078

Source: SIGIR Analysis of 37 Pioneer invoices. 
41 

Appendix G—Abbreviations 

Abbreviations Description 

ACO Administrative Contracting Office 

Anham Anham, FZCO, LLC 

CEO Chief Executive Officer 

COR Contracting Officer’s Representative 

C-JTSCC Joint Theater Support Contracting Command 

DCAA Defense Contract Audit Agency 

DCMA Defense Contract Management Agency 

DFARS Defense Federal Acquisition Regulation Supplement 

ESTEK Efficiency System Technology, Inc. 

FAR Federal Acquisition Regulation 

JCC-I/A Joint Contracting Command–Iraq/Afghanistan 

Knowlogy Knowlogy Corporation 

Pioneer Pioneer Iraqi General Trading Company 

SIGIR Special Inspector General for Iraq Reconstruction 

Unitrans Unitrans International Corporation 

 
42 

Appendix H—Audit Team Members 

This report was prepared and the audit conducted under the direction of Glenn Furbish, Assistant 

Inspector General for Audits, Office of the Special Inspector General for Iraq Reconstruction. 

The staff members who conducted the audit and contributed to the report include: 

Allan J. Jones 

Richard Kusman 

J.J. Marzullo 

Robin McCoy 

Tinh Nguyen 

Robin L. Rowan 

James Shafer 

 
43 

Appendix I—DCMA’s Management Comments 
44 
45 

Appendix J—CENTCOM’S Management Comments 

 
46 
47
47 

Appendix K—SIGIR Mission and Contact Information 

SIGIR’s Mission Regarding the U.S. reconstruction plans, programs, and 

operations in Iraq, the Special Inspector General for Iraq 

Reconstruction provides independent and objective: 

 oversight and review through comprehensive audits, 

inspections, and investigations 

 advice and recommendations on policies to promote 

economy, efficiency, and effectiveness 

 deterrence of malfeasance through the prevention and 

detection of fraud, waste, and abuse 

 information and analysis to the Secretary of State, the 

Secretary of Defense, the Congress, and the American 

people through Quarterly Reports 

Obtaining Copies of SIGIR 

Reports and Testimonies 

To obtain copies of SIGIR documents at no cost, go to 

SIGIR’s Web site (www.sigir.mil). 

To Report Fraud, Waste, and 

Abuse in Iraq Relief and 

Reconstruction Programs 

Help prevent fraud, waste, and abuse by reporting 

suspicious or illegal activities to the SIGIR Hotline: 

 Web: www.sigir.mil/submit_fraud.html 

 Phone: 703-602-4063 

 Toll Free: 866-301-2003 

Congressional Affairs Hillel Weinberg 

Assistant Inspector General for Congressional 

 Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 2530 Crystal Drive 

 Arlington, VA 22202-3940 

Phone: 703-428-1059 

Email: hillel.weinberg@sigir.mil 

Public Affairs Deborah Horan 

Office of Public Affairs 

Mail: Office of the Special Inspector General 

 for Iraq Reconstruction 

 2530 Crystal Drive 

 Arlington, VA 22202-3940 

Phone: 703-428-1217 

Fax: 703-428-0817 

Email: PublicAffairs@sigir.mil