The Treasury Department has relied extensively on outside contractors in its execution of the financial bailout, an oversight committee said in a new report, shielding much of the work of the massive government effort from public view.

The Congressional Oversight Panel, formed as part of the 2008 legislation that created the Troubled Assets Relief Program, said in a report published early Thursday and made available to reporters in advance that the Treasury has taken "significant steps" to ensure that private contractors were used appropriately and that some experts have praised the department for going "above and beyond" the usual standards for government contracting.

But the reliance on private contractors - the Treasury has 220 employees working on TARP, compared with 600 at one major contractor, Fannie Mae - has also made the government's execution of TARP less subject to review by outsiders and raises the potential for conflicts of interest, the report said.

"Private companies today fulfill many of the TARP's most important functions," Sen. Ted Kaufman (D-Del.), chairman of the oversight panel, said in a conference call with reporters Wednesday. "It invites many concerns that wouldn't exist otherwise."

A Treasury Department official argued that the government needed to rely on private firms to get TARP, enacted in the midst of a deep financial crisis in the fall of 2008, up and running quickly.

"Treasury's demand for skills, resources and expertise was urgent, and we quickly needed qualified assistance," spokesman Mark Paustenbach said. "At the same time, our contracting process remains open and transparent."

The report notes some ways that the contracting process limited transparency. Contractors, for example, are not subject to the Freedom of Information Act. And they can hire subcontractors whose compensation and involvement are not publicly disclosed.

Moreover, the Treasury Department relies on law firms, investment management firms and others to disclose any conflicts of interest themselves.

"As a result, the public has only limited assurance that all potential conflicts have been disclosed and addressed," the report said, stating that the government should develop an independent mechanism to monitor conflicts.

The oversight panel had particular skepticism about the use of Fannie Mae and Freddie Mac, two mortgage finance firms effectively controlled by the government, to carry out mortgage relief programs. Both firms "have a history of profound corporate mismanagement," the report said, "and both companies have fallen short in aspects of their performance," including a data error by Fannie Mae and, for Freddie Mac, problems meeting deadlines.

Moreover, efforts to help small, disadvantaged businesses through the contracting process have not always been effective. One such business, having received such an award, delegated about 80 percent of the contract to a large business, the report said.

"The panel is concerned by the lack of outreach by Treasury to find qualified minority-owned businesses to participate in the TARP," the report said.