The US Department of Defense has ordered an investigation to focus on the expanding network of Pentagon information-operations contractors, in an effort to enhance transparency in defence contracts given to private agencies.

The inquiry follows news reports that $25m in funds from the Pentagon’s programme against roadside bombs was used by a senior civilian Defence Department employee, Michael D Furlong, to hire private contractors to gather information on suspected insurgents in Afghanistan.

According to the Washington Post, the deal, which Furlong says was authorised by top US military commanders, extends to every branch of the armed forces, which have spent millions of dollars on private contractors to satisfy military commanders’ new interest in information operations.

Many of the private contractors are retired military, CIA and other intelligence specialists.

A retired senior Defense Intelligence Agency officer W Patrick said that information operations was the “hot thing”.

“Retired colonels and senior executive service officers are forming teams to compete,” he said.

According to a Defense Department inspector general report released in September 2009, between 2006 and 2008, Central Command alone had 172 contracts worth $270m just for information operations in Iraq.