Wartime contracting commission details years of waste

The U.S. government has wasted tens of billions of dollars on contracts in Iraq and Afghanistan and must make sweeping changes to avoid similar mistakes in the future, according to a report published on Thursday by the congressionally chartered Commission on Wartime Contracting.

The report included 32 legislative, regulatory and policy proposals to reduce waste, fraud and abuse through enhanced oversight and improved deployment of government resources.

Among the most significant recommendations was limiting the government's reliance on armed private security contractors. Touching on arguably the most controversial aspect of wartime contracting, the panel suggested the government embed federal employees with armed private security contractors to ensure command and control of all hostile situations. The commission's final report, due this summer, will more broadly address concerns that the government has relied excessively on private security contractors.

The panel also advised creating a permanent inspector general office for contingency operations. And it called for establishing a new "dual-hatted" position at the Office of Management and Budget and the National Security Council to provide oversight and strategic direction for overseas contingency activities.

"For many years the government has abdicated its contracting responsibilities -- too often using contractors as the default mechanism, driven by considerations other than whether they provide the best solution, and without consideration for the resources needed to manage them," the commission concluded. "That is how contractors have come to account for fully half the United States presence in contingency operations."

The 72-page report suggested that a host of circumstances have led to an overreliance on the use of contractors in battle zones. They include a depleted acquisition workforce, a downsized military, the limited deployability of federal civilian personnel and a lackadaisical attitude by senior officials who put little emphasis on procurement costs.

"War by its nature entails waste," the report stated. "But the scale of the problems in Iraq and Afghanistan also reflects the toxic interplay of huge sums of money pumped into relatively small economies and an unprecedented reliance on contractors."

Although there is no central database that tracks wartime contracting exclusively, the commission estimated that since 2001, at least $177 billion has been obligated in contracts to support military operations in Iraq and Afghanistan. The Defense Department has spent the overwhelming majority of those funds -- $154 billion.

The report concluded, however, that tens of billions of dollars have ultimately been wasted either through ill-conceived projects, a lack of competition, poor planning, inadequate contract oversight, or outright corruption.

"When it comes to oversight of contingency contracting, we've been driving beyond the reach of our headlights," said Commission Co-Chairman Michael Thibault, former deputy director of the Defense Contract Audit Agency. "Reforms are badly needed."

During fiscal 2010, about 200,000 contract employees -- primarily non-Americans -- supported U.S. operations in Iraq and Afghanistan, a figure roughly equal to the number of military personnel in the two war zones.

Despite the scope of the effort, senior officials at military and civilian agencies have consistently failed to consider cost a significant factor in their pre-award planning, or post-award performance-management decisions, the report said.

"For many senior officials, contractors appear to be a 'free' source of labor with no direct impact on their budgets," the commission found. "Funded out of what they perceive to be unconstrained overseas contingency operation budgets, many senior officials pay scant attention to articulating specific support requirements, negotiating contract terms and managing contractor performance."

To reverse the trend of reckless spending, the commission suggested Defense, the State Department and the U.S. Agency for International Development undertake a comprehensive contingency personnel assessment to determine the gaps in resources and capabilities, including the ability to manage contractors. Congress also should provide funding for agencies to develop a deployable cadre of acquisition support staff for contingency activities, the report said.

The commission argued that the reforms will pay for themselves through reduced waste and increased efficiencies in contingency operations.

Other commission recommendations included:

• Measuring senior military and civilian officials' efforts to manage contractors and control costs;
• Establishing offices of contingency contracting at Defense, State and USAID;
• Developing interagency certification requirements and a training curriculum for contingency acquisition personnel;
• Breaking out and competing major subcontract requirements for large multifunction support contracts;
• Limiting contingency task-order performance periods;
• Requiring agencies to certify their use of a new past performance database;
• Issuing more suspensions and debarments;
• Mandating that consent to U.S. civil jurisdiction be a condition of contract awards and clarifying that the government maintains criminal jurisdiction over civilian-agency contractors operating overseas.