And the consequences didn't take long to manifest.

In an August 2006 report, the House of Representatives' Committee on Government Reform stated that "full and open competition has been the exception, not the rule."

Aside from costly blunders by FEMA itself - like spending $3 million on 4,000 camp beds that were never used, or $10 million to renovate a military barracks that was used for temporary housing by only six occupants - a lot of the money was squandered through fraudulent behavior by the contractors themselves.

Just one example of many: four contracts worth $500 million each for the removal and disposal of debris backfired when "lax government oversight allowed the contractors to double-bill for the same debris, overstate mileage to claim extra fees, haul ineligible debris from private property to boost reimbursements, and inflate prices by improperly mixing low-cost vegetative debris into loads of high-cost construction and demolition debris," complained the committee.

However, these stories sound harmless compared to the jet-set life contractors for the U.S. military/Iraq war have been living.

Last week, it was revealed that a small parts supplier based in South Carolina charged the Pentagon $20.5 million in the last six years for fraudulent shipping costs, "including $998,798 for sending two 19-cent washers to an Army base in Texas," reported Bloomberg.

"The company also billed and was paid $455,009 to ship three machine screws costing $1.31 each to Marines in Habbaniyah, Iraq, and $293,451 to ship an 89-cent washer to Patrick Air Force Base in Cape Canaveral, Florida, Pentagon records show."

Unbelievable. But how could the owners of the company - twin sisters - get away with it for so long?

The fault, said Cynthia Stroot, a Pentagon investigator, lies with the Defense Department's purchasing system, which pays bills for shipping to combat areas or U.S. bases that are labeled "priority" automatically.

According to Stroot, the Pentagon hopes to get back most of the money "by auctioning homes, beach property, jewelry and 'high-end automobiles'" the sisters blew the money on.

"They took a lot of vacations," the investigator said, but also noted that fraudulent billing "is not a widespread problem."

But if we can believe a recent documentary, titled "Iraq for Sale: The War Profiteers," it is.

According to first-hand witnesses that speak up in the movie, U.S. government contractors in Iraq are living the good life. And the more money they spend, the more money they can request for the next year.

Former KBR/Halliburton truck driver James Logsdon says if management accidentally ordered the wrong equipment, "computers still in boxes, new vehicles, they'd push them out into what they called 'burn pits.' And they would just set it on fire, claim it as a loss, get more money for the right equipment or the right stuff they needed."

Ben Carter, another former KBR/Halliburton employee: "They got brand-new trucks over there, and there's not even oil filters. So when the motor blows, what do you do? Buy a new truck and bill the government."

[Watch "Iraq for Sale" here.]