It would be easy to mistake Guy Lawson's book "Arms and the Dudes" for absurdist fiction, a Kafkaesque take on America's military involvement everywhere.

But sadly — and hilariously — it is true, a tale filled with duplicity, greed and just plain old-fashioned stupidity.

During the administration of George W. Bush, spending for private military contracts skyrocketed — from $145 billion in 2001 to $390 billion in 2007. Much of the money went in no-bid awards to companies including Halliburton and Blackwater.

Public outrage at this insider favoritism ultimately prompted the government to open bidding on Defense Department contracts with terms that were favorable for small businesses. This meant small-time scoundrels had a shot at big bucks.

The "company" at the center of this book, AEY, was run by a ninth-grade dropout who was working out of his one-room apartment. His name was Efraim Diveroli, and he had successfully bid on several smaller weapons contracts. But now he was about to enter the big time.

With the United States committed to equipping the Afghan army with AK-47s, it sought to award a $300 million contract for weapons, including 100 million rounds of ammunition. AEY bid, and won.

Diveroli had recruited buddies David Packouz and Alex Podrizki to help him. They'd met as teenagers at a Miami Beach yeshiva and "belonged to a posse of orthodox Jewish kids who styled themselves as grunge punks" who were into drugs, not religion.

The trio set to work. Diveroli was the perfect ringleader: sufficiently shady and, as Packouz discovered, "devoid of moral purpose." According to Lawson, he manipulated and cheated everyone, from partners to suppliers. But had he been an honorable sort, he'd never have been able to fulfill the contract.

The government banned rounds made in China or Russia, which is where most AK-47 ammunition is made. Diveroli found a cache of old but serviceable rounds in Albania — manufactured in China decades earlier and given to Albania during the Cold War years.

All it needed was to be repackaged into crates that lacked Chinese markings. But AEY was forced to give Albanian mobsters the repackaging business, taking it away from an Albanian businessman who had started the work. The cheated Albanian businessman contacted U.S. media outlets, which led to an exposé on the front page of the New York Times.

U.S. government investigators found AEY an easy and safe target: a small company with no political connections. Faced with the prospect of long prison terms, the three friends pleased guilty to fraud, with only Diveroli serving prison time.

The real bad "guy," though, Lawson maintains, was the system. He argues that not only should the government never have given AEY the contract, but that it turned a blind eye to the company's illegal dealings, buying banned armaments from illegal dealers.

"Arms and the Dudes" would have worked as entertaining fiction. As the real-life escapades of a high school dropout and friends so easily able to game the federal government — the federal government — it is as disturbing as anything you're likely to read this year.

Curt Schleier is a book critic in New Jersey.