Godfrey left Iraq in February 2005, frustrated that the waste he’d encountered seemed uncontrollable. He had come across officials from the Defense Contract Management Agency, his team leader’s former billet, and he had little faith that they would succeed where he had failed. “The ones I met were pathetic,” he says. “Some had no experience: they’d just got their degrees. They didn’t ask questions, and they missed the issues that I brought up. They had access to me and my memos, and not once did one ever come to me and say, ‘Can we talk, Barry?’”

Apart from its connections in Washington, there is something else that protects KBR: the perception, widespread throughout the military, that it has provided generally good-quality services in war-zone conditions. As Grayson puts it, “Halliburton’s philosophy is not to deliver crap. Halliburton’s philosophy is to deliver extraordinarily overpriced but adequate services in support of the government.”

That these have cost billions of dollars more than they should have is an inconvenient detail, and already the Pentagon is moving on. Officials now accept that the monopoly granted by logcap 3 had its drawbacks, and at the end of June the army announced that the contract will soon be terminated and replaced with a new one, logcap 4. Under this, the largesse will be split among three corporations: DynCorp, Fluor, and KBR. logcap 4 is another cost-plus, indefinite-delivery, indefinite-quantity contract, but at least this time KBR’s income, as well as DynCorp’s and Fluor’s, will be capped. Over the next 10 years, KBR will have to satisfy itself with charging American taxpayers $50 billion for its services under logcap 4.

These improvements may turn out to be little more than cosmetic. According to Bowen, what’s needed is full disclosure of all subcontracting arrangements and a substantial increase in the number of officials who spend their time designing and policing contracts.

With logcap 4, however, the reverse is about to happen. The government agencies responsible for oversight will be assisted by Serco, a Virginia-based services company that in February was awarded a “planning support contract” worth up to $45 million a year. The Bush administration maintains that hiring Serco to regulate logcap 4 will improve efficiency and counter fraud and waste.

David Walker, of the G.A.O., fears that the weakened state of oversight is poised to get “much worse.” Not only is there a large “skills gap,” but “a significant percentage of the existing contract workforce is eligible to retire or will be eligible to retire within the next few years.” Outsourcing oversight brings still more problems in its wake, he says, starting with conflicts of interest, which arise whenever the company being monitored has other business, existing or potential, with the one doing the monitoring.

False Claims Act suits could help to remedy these deficiencies, if only the Department of Justice weren’t suppressing them. One day, though, the seals on the complaints will have to be lifted. “I wish I could tell you about the ones that are under seal,” says Grayson, “because some of them really are time bombs. They’re literally burying these cases to keep the public from finding out about them, and to keep anything from being done on them. But it is a time bomb, because any normal amount of attention on these cases would result in massive amounts of money being recovered for the taxpayers.”

There are a few encouraging signs that a day of reckoning is drawing near. Committees in both the House and the Senate have held hearings on contracting in Iraq, and several plan to hold more. Patrick Leahy, the Democratic chairman of the Senate judiciary committee, has introduced a War Profiteering Prevention Act, which would make it much easier to investigate corrupt contractors and call them to account. And in August, the news that tens of thousands of weapons intended for Iraqi security forces had vanished or been stolen prompted the Pentagon to announce that its inspector general, Claude M. Kicklighter, would lead an 18-person team to investigate “contracting practices” in Iraq.

In the more distant future, a Democratic administration might open up the vaults and expose the American public to the scale of what has been looted. “What we have seen up to now is the worst of the worst in terms of a deliberate cover-up,” Grayson says. But if and when it comes to an end, he thinks it’s entirely possible that Congress will appoint a special prosecutor—one whose targets might one day reach “an extremely high level.”

David Rose is a Vanity Fair contributing editor.