WASHINGTON - Defense Department investigators said Tuesday they are going to be more aggressive suspending or barring companies from doing US contract work in Iraq if they are involved in war profiteering there.

A woman carries her child through the ruins of Saddam Hussein's Republican guard barracks destroyed in the early stages of the US led invasion on Iraq, in Baghdad, Iraq, Tuesday, March 20, 2007, on the fourth anniversary of the invasion. [AP]

Stuart Bowen, special inspector general for Iraq reconstruction, said taking such action is an effective tool, particularly when auditors are struggling to come up with enough detailed evidence for criminal prosecutions.

Bowen's comments came in testimony before the Senate Judiciary Committee, as lawmakers complained that assessing fines is not enough to stop the billions of dollars in waste, fraud and abuse plaguing Iraq reconstruction projects. Auditors last month told Congress that about $10 billion has been squandered by the US government on Iraq reconstruction aid because of contractor overcharges and unsupported expenses.

The US has appropriated more than $38 billion for Iraq relief and reconstruction, including some money for security forces and economic programs, according to the latest quarterly report from the special inspector general, released in January.

Fining companies a million dollars, said Sen. Arlen Specter , R-Pa., can simply amount to "an inexpensive license to cheat the taxpayers."

"This really is the cost of doing business," said Specter, noting that the fraud can often be in the hundreds of millions of dollars.

According to Army spokesman Dave Foster, eight individuals or companies have been barred from doing business with the Army, and another eight have been proposed for debarment. Foster also said that as of Jan. 30, 16 companies or individuals have been suspended from doing business, based on allegations of fraud and misconduct connected to Iraq reconstruction contracts.

Bowen said that such administrative action against those who commit misconduct can strip them of security clearances.

Iraqi officials are also investigating as many as 2,000 cases of fraud, amounting to about $8 billion in unaccounted for Iraqi construction funds, he said.

Committee Chairman Patrick Leahy , D-Vt., said more controls are needed over how billions of dollars for Iraq reconstruction is spent and that the Justice Department needs to move more aggressively in prosecuting fraud in Iraq.

Deputy Assistant Attorney General Barry Sabin said his agency is devoting significant resources to the effort, but he would not say how many investigators are working full time on the Iraq fraud cases. He said the prosecutions are complicated, and he would not say how many more people will be charged this year.

So far, he said, 16 people have been convicted in connection with fraud, kickbacks or other contracting violations.

Leahy is pushing legislation that would make war profiteering a specific crime and would apply to all contract fraud, whether it occurs in the United States or overseas.