The Pentagon said previous inquiries had pointed out problems with contracting and that it had enacted reforms [EPA]

The Pentagon wasted more than $30bn on contracts in Iraq and Afghanistan due to shoddy management and a lack of competition, the heads of an independent inquiry said on Monday.

In its final report to Congress, due to be released Wednesday, the Commission on Wartime Contracting warns that waste and fraud have undermined US diplomacy, fomented corruption in host countries and tarnished the nation's image abroad.

"Tens of billions of taxpayer dollars have been wasted through poor planning, vague and shifting requirements, inadequate competition, substandard contract management and oversight, lax accountability, weak inter-agency co-ordination, and subpar performance or outright misconduct by some contractors and federal employees," the co-chairs of the panel, Christopher Shays and Michael Thibault, wrote in the Washington Post.

"Both government and contractors need to do better."

The Pentagon said previous inquiries had pointed out problems with contracting and the department had enacted a number of reforms as a result.

"We are well aware of some of the deficiencies over the years in how we've worked contracts," spokesman Colonel Dave Lapan told reporters.

"We have worked hard over those years to try to correct those deficiencies when we've come across them," said Lapan.

The department will review the report to look for any additional measures to prevent waste, he added.

The report comes amid mounting pressure in Washington to scale back defence spending and waning public support for the Afghan mission after nearly a decade of war.

Private enterprises

The US military has increasingly turned to private companies since the September 11, 2001 attacks, with the contractor workforce at times surpassing 260,000 people - a roughly one-to-one ratio with troops deployed.

But the commission found that the US went to war in Afghanistan in 2001, and in Iraq in 2003, without sufficiently preparing to handle the "enormous scale and numbers of contracts".

As a result, "America is over-relying on contractors," they said.

The commission chiefs also warned that another $30bn or more could be wasted if the Iraqi or Afghan "governments are unable or unwilling to sustain US-funded projects after our involvement ends".

Among the examples cited by the commission was a $40m prison built in Iraq that the Baghdad government "did not want and that was never finished," Shays and Thibault wrote.

In Afghanistan, the US spent $300m on a power plant in Kabul that the Afghan government cannot afford to sustain and lacks the technical experts to run, the panel found.

Contract cancelled

Another report on Monday found the Pentagon has almost tripled funding for no-bid contracts since 2001, from $50bn in 2001 to $140bn in 2010.

The lack of competition in contracting has resulted in waste, lower quality services and fraud, according to the investigative report by the non-profit Centre for Public Integrity.

In one case, a Tucson-based company, Applied Energetics, won more thsn $50m in funding for a futuristic "lightning weapon" that is supposed to detonate roadside bombs, even though it had failed some tests.

In August, the marine corps cancelled the latest $3m proposed contract after a commander in Afghanistan decided the weapon would not provide what his unit needed.

The defence department often justifies no-bid contracts by saying there is only one legitimate supplier of certain goods, that there is "an unusual and compelling urgency," or that holding a competition would undermine national security, the report said.

During his 2008 presidential campaign, Barack Obama vowed to rein in contracting and, following his election, issued a memorandum calling for more competition.

But the report found that Pentagon no-bid contracts have continued to increase.

The defence department said no-bid contracts were sometimes necessary to rush sophisticated equipment to troops in combat.

"There have been many instances because of wartime needs where a long, lengthy competitive bid contract process does not serve the needs of the warfighters," Lapan said.