At What Cost -- Contingency Contracting In Iraq and Afghanistan -- Interim Report to Congress

Commission on Wartime Contracting In Iraq and Afghanistan (2009-06-11)

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• CWC_Interim_Report_At_What_Cost_06-10-09.pdf: Commission on Wartime Contracting -- Interim Report -- 2009-06-10

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Executive Summary

Since 2001, Congress has appropriated about $830 billion to fund U.S. operations in Iraq and Afghanistan. Over that period, America’s reliance on contractors has grown to unprecedented proportions to support logistics, security, and reconstruction efforts related to those operations. More than 240,000 contractor employees—about 80 percent of them foreign nationals—now work in Iraq and Afghanistan, supporting the Department of Defense. Additional contractor employees support the Department of State and the U.S. Agency for International Development.

Contract employees manage dining facilities, wash uniforms, guard military bases, protect diplomats, transport supplies, and build everything from waterâ€\x90treatment plants to hospitals. Contractors are doing vital work, generally to good effect, but the sheer scale of their operations and weaknesses in the federal contractâ€\x90management and oversight systems create plentiful opportunities for waste, fraud, and abuse.

The Commission will address nine focus areas in preparation of its Final Report. While these may be some of the most intractable issues, if successfully addressed they hold the greatest promise for significant reform in contingency contracting. They are:

• leadership, culture, and accountability within the key agencies responsible for contingency operations;
• staffing and training of the federal acquisition workforce;
• pre-\x90deployment planning for contractor support and integration;
• policies related to inherently governmental functions;
• the process for defining contract requirements;
• contract pricing and competition;
• contractor performance and cost effectiveness;
• visibility into and accountability of subcontractors—in particular, foreign subcontractors; and
• the Iraq drawdown and the Afghanistan buildup.

This Interim Report to Congress addresses problems in our system of framing, managing, and overseeing contracts that support American military, diplomatic, and reconstruction activities. Some of these problems, noted below as “Issues of Immediate Concern,” require prompt attention as well as systematic study and ultimately recommendations for statutory, regulatory, or organizational change. The report reviews long-\x90standing issues such as shortages of trained acquisition personnel that still plague U.S. operations. It also addresses the heavy reliance on foreign subcontractors who may not be accountable to any American governmental authority. It calls attention to new concerns such as the implications of hiring foreign contract workers to guard U.S. military bases. And it takes note of the inadequate plans and resources available to manage an enormous task of shipping property back to the United States or to other areas of U.S. operations, transferring it to the Iraqi government, or disposing of it as we leave Iraq and bolster operations in Afghanistan.

ISSUES EXAMINED IN THE INTERIM REPORT

The body of this Interim Report is organized into five chapters. The first, Management and Accountability, offers essential background on the government’s use of contingency contractors and examines high-\x90level, overarching issues of contract management, accountability, policy, and process that permeate the succeeding narratives. Chapters 2, 3, and 4 cover the major functional areas of the Commission’s work: Logistics, Security, and Reconstruction. Each chapter lays out the work to date and the items on the agenda for the Commission’s future work. The concluding chapter, On the Agenda, gathers the projected lines of investigation from each of the preceding chapters to outline an integrated framework for our path forward.

The chapters describe current knowledge and the results of fact-\x90finding work. They review incidents, diagnose problems, and identify points for future inquiry and analysis.

Some of the key issues discussed in these chapters include:

Management and Accountability

• Neither the military nor the federal civilian acquisition workforces have expanded to keep pace with recent years’ enormous growth in the number and value of contingency contracts.

• Contracting agencies must provide better and more timely training for employees who manage contracts and oversee contractors’ performance. In particular, members of the military assigned to perform on-site performance oversight as contracting officer’s representatives often do not learn of the assignment until their unit arrives in theater, and then find insufficient time and Internet access to complete necessary training.

• Contract auditors are not employed effectively in contingency contracting.

• Contracting officials make ineffective use of contract withhold provisions recommended by their auditors, and many contract audit findings and recommendations are not properly resolved.

• The government still lacks clear standards and policy on inherently governmental functions. This shortcoming has immediate salience given the decisions to use contractors in armed-\x90security and life-\x90support tasks for military units.

Logistics

• Contractors provide critical support to U.S. military personnel in Iraq and Afghanistan, yet the Department of Defense cannot provide a complete accounting of all the contracted support it relies upon. The absence of definitive information affects commanders’ ability to understand and make best use of the support they receive, and impedes policy makers’ ability to address the appropriate balance between contractors and military personnel.

• The Department of Defense has failed to provide enough staff to perform adequate contract oversight. Inadequate oversight, poorly written statements of work, lack of competition, and contractor inefficiencies have contributed to billions of dollars in wasteful spending in the Army’s largest contract for support services, the Logistics Civil Augmentation Program or LOGCAP contract.

• Contractors are playing a key role in the drawdown of U.S. military forces in Iraq. As military units withdraw from bases, the number of contractor employees needed to handle closing or transfer tasks and to dispose of government property will increase. Strong government oversight will be required, but preparations for this major shift out of Iraq and into Afghanistan or other areas are sketchy.

Security

• The Rules of Engagement for the military differ significantly from the Rules for the Use of Force for private security contractors. The Rules for the Use of Force for private security contractors guarding forward operating bases may not adequately protect military personnel.

• Documented problems with the selection, training, equipping, arming, performance, and accountability of private security-contractor employees will require policy and regulatory changes to provide more effective oversight.

Reconstruction

• Attempts to achieve unity of effort and more measurable results are hampered by weaknesses in the planning, organizing, coordinating, and oversight of reconstruction and development projects.

• Reconstruction, stabilization, and development activities in contingency operation zones can involve numerous government agencies, private-sector, and nongovernmental organizations. Yet there is no locus of planning, coordination, and information—a situation that undermines the goals of the total effort, and one that should be corrected.

• The lack of coordination between USAID projects and the Department of Defense’s Commander’s Emergency Response program funded projects is a serious problem that needs to be addressed to maximize capacity building and avoid cross-\x90purpose efforts.

THE COMMISSION'S MANDATE

The Commission is investigating contingency contracting in a wartime environment.{{As stated in 10 U.S.C. - 101(a)(13), the term contingency operation means “a military operation that – (A) is designated by the Secretary of Defense as an operation in which members of the armed forces are or may become involved in military actions, operations, or hostilities against an enemy of the United States or against an opposing military force; or (B) results in the call or order to, or retention on, active duty of members of the uniformed services under [other portions of this title] … or any other provision of law during a war or during a national emergency declared by the President or Congress.” }} Reliance on contingency contractors has grown for several reasons, including:

• the ease of engaging contractors rather than hiring new federal civilian employees,

• post-Cold War reductions in military personnel,

• federal civilian work force not keeping pace with demands,

• lack of adequate planning for extended contingency operations, and

• unplanned and untimely budgeting.

The combination of this growing reliance with a mixture of hasty decisions, lack of planning, day-\x90to-\x90day exigencies, and other actors—especially long-standing problems in staffing and training the federal civilian and military workforces that perform the work, as well as manage and audit contracts—has stressed our system of wartime contracting and generated widespread criticism. That is why Congress created the Commission.

In 2008, Congress established the Commission on Wartime Contracting in Iraq and Afghanistan. Lawmakers designed the Commission as an independent, bipartisan panel to assess a range of issues related to wartime contracting, including the extent of waste, fraud, abuse, and mismanagement of wartime contracts in Iraq and Afghanistan, and to make recommendations concerning contracting for reconstruction, logistical support, and security functions. Details from the authorizing language, Section 841 of Public Law 110-\x90181, appear in an appendix to this Report.

Part of the Commission’s mandate is to survey and assess—but not re-create—the work of others who have examined contracting issues. These include the Government Accountability Office, the Congressional Research Service, the Commission on Army Acquisition and Program Management in Expeditionary Operations (better known as the Gansler Commission), and academic and non-governmental organizations.

Another, especially important resource is the work of the Special Inspector General for Iraq Reconstruction, the Special Inspector General for Afghanistan Reconstruction, and the Inspectors General for the Department of Defense, the Department of State, and the U.S. Agency for International Development. Their investigations have been a vital input to this Commission’s work. We will continue to monitor their reports and maintain our professional contacts with them. We are determined to capture the lessons of their valuable work in our Final Report to Congress and ensure that their recommendations are not overlooked or lost.

ISSUES OF IMMEDIATE CONCERN

Many issues appear in this Report. Some are already well defined and are receiving close attention for research and evaluation. Others—as previewed in Chapter 5, On the Agenda—have been flagged for scrutiny as the Commission proceeds on its work plan toward the Final Report to Congress.

We believe some issues, however, should not wait for complete analysis in our Final Report. Evidence already in hand makes it clear some issues of immediate concern require prompt action to avoid further undermining U.S. objectives and wasting more taxpayer money:

• The drawdown of U.S. forces in Iraq risks incurring enormous waste, which could range from completion of work that may not need to be done, to poorly controlled handling and disposition of U.S. government property.

• There is a critical shortage of qualified contract-\x90management personnel in theater and those that are there are stretched too thin. In particular, the process for designating and training contracting officer’s representatives to check contractor performance in theater is broken.

• The benefits of competition are not being fully realized because of the slow pace of the transition from LOGCAP III to the more competitive LOGCAP IV logistics support contract.

• Too many contractor business systems are inadequate and must be fixed.

• There is a need for greater accountability in the use of subcontractors. Subcontracts account for about 70 percent of the work, but government has very little visibility into their operations.

• The effectiveness of contractor support of expanded U.S. operations in Afghanistan is compromised by the failure to extract and apply lessons learned from Iraq, particularly those about poor coordination among agencies.

• The Department of Defense should accelerate its plans to establish a contracting command in Afghanistan. The troop surge in Afghanistan demands that contracting oversight be conducted inâ€\x90country rather than from Iraq, which is currently the case.

• The Department of Defense should take immediate steps to ensure that contractors providing security for our operating bases are well trained and equipped to provide strong force protection to our military.

CONCLUSION

This Interim Report is a snapshot of work in progress. In the months ahead, we will hold additional meetings with representatives of federal agencies, military, contractors, nongovernmental organizations, and others, including scholars. We will conduct additional hearings, make additional trips to the theaters of operation, gather more information in stateside meetings with stakeholders, and further develop research strategies. When our investigations uncover possible violations of law or regulation, we will make additional referrals to lawâ€\x90enforcement and administrative officials.

Our aim is to diagnose specific problems, uncover systemic causes, and produce actionable recommendations for reform in our Final Report to Congress. Current projects may change to adapt to new findings or new developments, and new tasks will no doubt emerge. Throughout that process, we will be guided by our statutory mandate and by our professional determination to provide a roadmap for reforms that will assist our government and military to manage contingency operations.

We will also remember hindsight has 20/20 vision, and meticulous evaluations of past events can overlook the fog and friction that always mark combat operations. While we shine light on governmental and industry shortcomings to ready ourselves for our country’s next engagement, we honor the efforts—at times heroic—of all those who provide support to the warfighters and government employees who carry out America’s missions.