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KAI RYSSDAL: It's been pushed off the front pages for the past couple of days. But Iraq was back in the news this afternoon. About 50 people were killed in a market south of Baghdad. Adding to the problems that Iraqi security forces will have to address. There's still a sectarian insurgency. Along with widespread corruption. The Iraqi government is investigating western contractors who provide food to the Iraqi military. Contracts are worth millions of dollars. But Ben Gilbert reports some of the money isn't making it to the table.

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BEN GILBERT: It's late afternoon at this Iraqi Army patrol base just north of Ramadi, and the soldiers are ready for lunch. A giant steel pot of rice, mixed with a red sauce, sits on a small fire. The soldiers eat a Spartan meal like this three times a day. And Haddi Said, a 26-year-old private from Basra, is not happy.

HADDI SAID [interpreter]: The Iraqi soldiers need good food to fight the insurgents. This is not enough for me!

When Said says it's not enough, he's not talking about the quantity of the food, but rather its poor quality. The Iraqis' American trainers don't like it either. Capt. David Brouillette has lived with this unit for nearly a year. He says the food is barely fit for human consumption.

CAPT. DAVID BROUILLETTE: I know the first week I was here, I ate strictly Iraqi food. I lost 10 pounds. It's a great weight-loss plan, but I wouldn't advise it.

Brouillette looks over at the latest food delivery. It consists of a bag of rice, some flat bread, and a crate of rotten, pulverized tomatoes.

BROUILLETTE: It's gotten worse. It wasn't like this all the time. But it's recently . . . It's getting worse.

In this 150-man unit based in Ramadi, the strain of poor conditions and bad food is showing. Brouillette says half the soldiers from this unit have left. Even those who stayed say they may not stick around forever if conditions don't change.

BROUILLETTE: You can only go so long. If I fed you rotted food, how long would you stay at a job? And shot at you?

One Iraqi soldier in the unit, 21-year-old Private Kassam Mehdi, from Hilla, says the problem isn't the lack of quality food in Iraq — in fact, there's plenty. He says the contractor is the problem.

KASSAM MEHDI [interpreter]: The contractor is a bad guy. The contracting company stole the money the Ministry of Defense allocated for food to feed the soldiers.

For thousands of soldiers like Mehdi, Iraq's Ministry of Defense shells out $12 a day for food, trash pick-up and laundry services. In fact, the troops have only been getting $4 worth. The contracting problems aren't just isolated to places like this small outpost in rugged Anbar Province. According to the inspector general at the Iraqi Ministry of Defense, Faisal Mohammed Bakr Mehdi, bad food, contractor waste and corruption are widespread.

FAISAL MOHAMMED BAKR MEHDI: We have civilian contractors who start selling the main contract to subcontractors, and that's the source of the corruption.

Inspector Mehdi says he has opened his own investigation into the corruption at the MOD, specifically the office of logistics. It's here that contracts for food and trash pick-up would have been written and approved. He won't say how much money was taken, but he scoffs at my suggestion that it might amount to just a few million dollars.

MEHDI: What's $5 million? What are you talking about?

The US military has confirmed the food contractors are being investigated but won't provide details on which contractors, nor on how much money is missing, while the investigation is ongoing. But if the Iraq soldiers only received services worth $4 per day out of $12 paid for, then the total amount of missing or misspent money could amount to more than $300 million.

Inspector Mehdi's investigation has just begun, because the MOD's Office of Logistics, and the general director of that office, blocked Mehdi and his investigators' access to the contracts until last month.

MEHDI: Just recently, before four months, we were struggling to get the contracts. We got them at end.

But it's just the beginning of the investigation, and Mehdi is evasive about who exactly he is investigating. But he says the solution to the contractor corruption is to increase oversight and decentralize the process. That would mean giving Iraqi commanders more authority in hiring contractors to provide food and other services to their soldiers. He says the money saved could be used to increase soldiers' pay and, ultimately, their morale.

In Baghdad, I'm Ben Gilbert for Marketplace.