Controversial projects

The commission said more than 240,000 private sector employees are supporting military operations in Iraq and Afghanistan and more work for the US state department and the US Agency for International Development.

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It highlighted a string of controversial projects, including the construction of a $30m dining facility at a US base in Iraq that is scheduled to be completed by the end of the year but is unlikely to be used.

A new building set to become the headquarters for US forces in Afghanistan was reported to be full of cracks in the structure, broken and leaking pipes, sinking pavements and other defects.

"The army should not have accepted a building in such condition," the report said.

KBR criticised

The commission also raised concerns over a massive support contract known as "LOGCAP" that provides troops with services including housing, meals, mail delivery and laundry.

The report found that only 13 government employees worked in an office managing the services for both Afghanistan and Iraq.

KBR Inc, the primary LOGCAP contractor in Iraq, has been paid nearly $32bn since 2001.

The firm has defended its performance and criticised the commission for making "biased" statements against the company.

"As we look back on what we've done, we're real proud of being able to go into a war theatre like that as a private contractor and support 200,000 troops," William Utt, the chairman of KBR, told the Associated Press news agency.