An arti­cle by James Risen in today’s New York Times con­firms some­thing we’ve long sus­pected: the single most impor­tant reason why the military’s depen­dence on pri­vate con­trac­tors is a bad idea is that such depen­dence effec­tively allows the con­trac­tors to extort the fed­eral government.

That seems to be just what hap­pened in the case of Charles M Smith, a senior civil­ian Army offi­cial, and the $20+ bil­lion KBR con­tract he was respon­si­ble for over­see­ing during 2004. As Risen tells it, Army auditors

had deter­mined that KBR lacked cred­i­ble data or records for more than $1 bil­lion in spending…Mr. Smith refused to sign off on the pay­ments to the com­pany. “They had a gigan­tic amount of costs they couldn’t justify,” he said in an interview.

The fact–if it is a fact–that an outfit like KBR would try to shaft the fed­eral gov­ern­ment out of $1 bil­lion dol­lars would sur­prise exactly no one, I expect. But what comes next is the really out­ra­geous part: two days after Smith noti­fied KBR of his deci­sion, he dis­cov­ered that he’d been uncer­e­mo­ni­ously replaced in his over­sight posi­tion. The bil­lion dol­lars in pay­ments and per­for­mance bonuses were approved, and KBR got its money.

For the Army, the deci­sion was appar­ently an easy one. Accord­ing to Risen,

[Army offi­cials] said that KBR had warned that if it was not paid, it would reduce pay­ments to sub­con­trac­tors, which in turn would cut back on services.

There it is, pure extor­tion.