Govt. Uses Contractors to Probe Iraq Contractors Letting contractors probe other contractors' alleged Iraq abuses may be illegal.

Oct. 3, 2008  -- In an apparent violation of federal regulations, the State Department has outsourced to private contractors the responsibility to investigate possible crimes committed by security contractors in Iraq.

Earlier this year, the State Department's Bureau of Diplomatic Security hired the private firm U.S. Investigations Services (USIS) to fill positions in the newly created Force Investigation Unit (FIU) that investigates potential misuses of force against civilians by U.S. security contractors. The contract investigators have been in Iraq since this summer.

The FIU was created in the wake of last year's deadly shooting in Baghdad's Nisoor Square, when 17 Iraqi civilians allegedly were killed by security personnel employed by Blackwater Worldwide who were guarding a State Department convoy. The case sparked widespread outrage and prompted calls for greater oversight of security contractors in Iraq.

According to a contract obtained by ABC News, the company was hired to supplement Diplomatic Security personnel. However, the eight USIS contractors hired for the team represent the majority of the full-time team, an apparent violation of federal regulations that prohibit such work by contractors.

According to Federal Acquisition Regulation part 7.5, it is not permissible to hire contractors for jobs "considered to be inherently governmental functions" including "the direct conduct of criminal investigations."

The State Department did not respond to a list of questions submitted seeking comment, including the status of the contract and whether such a contract might possibly be illegal.

"We received a contract [and] we've staffed it," USIS spokesman Michael John said. "Since it's a contract with the Department of State, we serve at the Department of State's request.

"If it's determined that we can't hold a contract, we obviously won't be doing work on that contract," he added.

After the Nisoor Square shooting, much of the forensic evidence was cleaned up before an investigation could take place, making it difficult to build a case against any individuals who might have been accused of wrongdoing.

A State Department review of the incident recommended the creation of a "Go Team" to prevent future investigations from being compromised by preserving evidence and interviewing witnesses quickly after an incident occurs. The team also would conduct preliminary investigations into weapons discharges and the provision of condolence payments to victims' families.

The move to staff the FIU "Go Team" with contractors appears to contradict statements made earlier this year by the top State Department official who headed the review. Asked by reporters if the teams would be staffed by contractors, Ambassador Patrick Kennedy replied, "No, no, the [FIU] Go Teams are composed of State Department employees."

The hiring of investigative contractors has raised concerns in Congress.

In a recent letter to Secretary of State Condoleezza Rice, obtained by ABC News, Sen. Russell Feingold, D-Wis., called the move to hire contractors for the FIU "highly troubling" because it called into question "the department's commitment to improving oversight of its contractors."

He urged cancellation of the contract and manning the FIU solely with government personnel.

"Anything less will further exacerbate tensions within Iraq and the region caused by our perceived failure to hold U.S. contractors accountable for misuse of force against civilians," Feingold added.

Feingold's letter also raises concerns about the admissibility in court of evidence not gathered by law enforcement personnel.

"The presence of contractors in the Force Investigation Unit could jeopardize this responsibility and undermine the perceived impartiality of the investigation unit," the letter says.

Feingold's office says it has not yet received a response from the State Department.

After the shooting in Nisoor Square, the State Department implemented a number of changes in convoy operating procedures, including the placement of cameras in all convoy vehicles to document potential incidents and a requirement that all department convoys in Iraq must be accompanied by a Diplomatic Security agent.

Feingold also calls into question the need to hire the contractors in the first place, pointing out that the State Department has received funding to hire an additional 100 Diplomatic Security personnel to meet the increased demand for agents in Iraq.

Peter Singer, an expert on private security contractors at the Brookings Institution, agreed with the federal regulation prohibiting contractors from conducting criminal investigations.

"The key question is not whether can a contractor do it, but rather should a contractor do it," Singer said. "There are some things that you outsource because it makes sense and it might yield better efficiency. But there are other functions that are inherently governmental, which you just can't outsource.

"From the perspective of governmental regulations now, overseeing investigations of a criminal law nature is an in-house job," he added. "Even more, from the perspective of common sense, it's a no-brainer. You don't have those outside the government as an investigating authority over potential crimes, particularly those in a war zone."

Despite numerous allegations of misconduct by some of the 20,000 contractors in Iraq, to date, none have been prosecuted.