Senators vow to continue work of expiring wartime contracting panel

Harry Truman "would be shocked," Sen. Claire McCaskill, D-Mo., told a Senate panel Wednesday during the final hearing on the expiring Wartime Contracting Commission that was modeled on World War II anti-corruption investigations led by the 33rd president.

Nearly one-third of the $206 billion that the United States has spent on contractors in Iraq and Afghanistan could have been wasted, the commission reported in August, and senators fear the same mistakes will be repeated in future war zones.

"We must know why we are contracting, who we contract with, and what we are paying for a particular service or function," McCaskill said. "It is just shameful that, despite the great work of the commission and the community of auditors and inspectors general who have reviewed these contracts, that we don't know -- and may not ever know -- those simple things about the contracts awarded in Iraq and Afghanistan."

McCaskill was a witness at the hearing called by Sen. Joe Lieberman, I-Conn., chairman of the Homeland Security and Governmental Affairs Committee, to listen to commission members elaborate on what Lieberman recalled a "disturbing" report that highlighted an absence of "competition that should be the cornerstone of government contracting." With the bipartisan commission's term expiring on Sept. 30, Lieberman and ranking member Susan Collins, R-Maine, vowed to continue its work and to follow up with legislation.

"How well we execute wartime contracting helps to determine how well we build the peace," said Collins, who has authored legislation to improve the acquisition workforce and address such problems as unclear performance requirements, poor program management, and a disconnect with the economic and cultural situation in foreign countries.

Commission members and officials at the State and Defense departments were questioned on the perceived overreliance on contractors, cost accounting failures and difficulties of establishing U.S. legal jurisdiction over contractor misconduct in war-zone operations.

Also discussed was why the Obama administration had not followed through on a 2008 congressional mandate that it create a Contingency Contracting Corps -- "a cadre of trained acquisition professionals who could deploy in contingency operations or disaster response" -- an idea also endorsed by the commission. The Office of Management and Budget "has fallen down on the job in standing up a contingency contracting corps," McCaskill said.

Commission member Katherine Schinasi, formerly of the Government Accountability Office, said, "Agencies acknowledge that they can't mount and sustain [a war effort] without contractor support, but after 20 years they are unprepared to manage contracts." Noting, for example, that training in war zones is done almost exclusively by outside contractors, she said, "a failure to enact powerful reforms now will result in more waste in the future."

Commission Co-chairman and former Rep. Christopher Shays, R-Conn., said, "Contracting became the default option and grew too fast. Contractors can be cheaper if you use them efficiently." He cited an example of a base that had assigned 15 people to maintain electricity yet only three were working. "So they built themselves a clubhouse," he said. "It's not the fault of anyone in government contracts because it goes way back, but we have to be honest about it."

Commission member Dov Zakheim said the U.S. Agency for International Development "has essentially farmed out everything, including managing the contractors to contractors." But one of the challenges is that civil servants can't be forced to work in war zones, he said, and so local contracting companies -- even those that fail to pay their bills or whose employees commit crimes -- feel they are irreplaceable.

Another challenge is accounting for contractor overbillings. The Defense Contract Audit Agency has a $600 billion backlog and needs a larger staff, Shays said.

The agency representatives accepted many of the commission's recommendations, but they defended current actions to address the problems. Patrick F. Kennedy, undersecretary of State for management, said he didn't think the department's use of "support by contactors has resulted in a loss of accountability." There is "robust oversight by U.S. government staff," he said, noting that State's contracting office charges other bureaus within the department a 1 percent fee from their budgets every time they put out a contract.

Richard Ginman, the Pentagon's director of Defense procurement and acquisition policy, disagreed with the proposal for elevating contractor supervision within agencies, saying, "we need all levels to be knowledgeable" in that area. He said a study on whether the military services rely too much on contracts was begun two years ago and the results are being reviewed.

McCaskill promised to follow up, in her role as a member of the Armed Services Committee, on the issue of which officials and agencies are responsible for determining that contracts for reconstruction in war zones are advisable and sustainable. "We can't afford to build things in a country that can't afford to operate them or when they will just be blown up," she said.

She raised the issue at an Armed Services Committee hearing Friday, telling top Pentagon officials that she wants someone to go back to Iraq and Afghanistan and document the contracts that have been worthwhile. Defense Secretary Leon Panetta agreed on the need to address the issue quickly.