Surge Protectors

Contractors will play a vital role in the troop buildup in Afghanistan, but have agencies learned their lesson from Iraq?

On Dec. 1, 2009, President Obama announced in a televised address to the nation that 30,000 additional troops and nearly 1,000 federal civilians would be deployed to Afghanistan. The goal of the surge, which brings total U.S. military forces in country to roughly 100,000, is to reverse recent Taliban gains and strengthen the capacity of Afghanistan's security forces.

The armed forces aren't the only ones ramping up their involvement in Afghanistan. Quietly, and with comparatively little documentation, tens of thousands of private contractors are flooding into the country, reconstructing war-torn cities, drilling wells for drinking water and providing electricity to residents. The success of these contractors could accelerate the gains of the military and hasten America's exit from this increasingly deadly war zone. But if stories of waste, corruption and fraud emerge en masse from Afghanistan, as they did so publicly in Iraq, then the mission could be jeopardized and taxpayers could be left to pick up billions of dollars in unnecessary costs.

"There are a tremendous number of variables coming into play at the same time in Afghanistan," says Robert B. Dickson, executive director of the congressionally chartered Commission on Wartime Contracting. "And contractors are right in the middle of it."

Unprecedented Mission

The Pentagon's dependence on contractors in Afghanistan is unprecedented, even when compared with their sizable presence in Iraq. Since December 2007-when the Defense Department first began tallying its war zone contractors-troops generally have outnumbered or hovered close to the number of contractors in Iraq. In Afghanistan, where many believe the military mission has been under- resourced, the difference is staggering.

According to Pentagon figures, as of Sept. 30, 2009, there were more than 104,000 contractors in Afghanistan compared with roughly 64,000 troops-a ratio of 1.6 contractors for every military service member. Those figures do not include an estimated 20,000 State Department and U.S. Agency for International Development contractors.

And the use of contractors in theater is rising rapidly. From June through September 2009, Defense contractors in Afghanistan increased by 40 percent while private security contractors doubled, from approximately 5,000 to more than 10,000, according to Pentagon data. The summertime buildup coincided with the administration's previous surge of 21,000 additional troops to the region. The Congressional Research Service projects the deployment of 30,000 extra troops could require as many as 56,000 more contractors to provide support services.

Critics argue that privatizing wartime foreign policy is not sustainable and might not be warranted. "We have a job creation program in Afghanistan, when we need one back home," says Allison Stanger, a professor of international politics and economics at Middlebury College in Vermont and author of One Nation Under Contract: The Outsourcing of American Power and the Future of Foreign Policy, (Yale University Press, 2009).

The administration's contracting strategy in Afghanistan is somewhat different from the one in Iraq. Under the Afghanistan First program, more than 75 percent of contract workers are local nationals, compared with about 25 percent in Iraq. "When we use local contractors, we bolster the delicate and growing Afghan economy by funding their private sector," said Sen. Bob Bennett, R-Utah, during a December hearing of the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight.

Putting thousands of Afghans to work on federal contracts is complicated and can lead to unexpected consequences. Subcommittee Chairwoman Sen. Claire McCaskill, D-Mo., says the U.S. military pays so well that locals are forgoing opportunities to join the badly understaffed Afghan security force. "If you're an Afghan, and you can make more money cooking for American troops than you can make taking up a gun to fight the Taliban, I'm betting they're going to cook for the troops," McCaskill says.

The administration must walk a delicate political tightrope in awarding contingency contracts to Afghan businesses, some of which are affiliated with dangerous local tribes, says Charles Smith, who oversaw the massive Logistics Civil Augmentation Program contract during the early days of the Iraq war as chief of the Army Field Support Command. The LOGCAP contract covers the meals, laundry, information management and sanitation services for troops in theater.

"You award a contract to one firm, and you tick off three others," says Smith, who is now retired. "That's going to be a big problem there. There's a risk they'll shoot a rocket-propelled grenade at your contracting office rather than filing a protest with the [Government Accountability Office]." He says the Army likely will try to keep the peace by spreading contracts around to as many local businesses as possible, even if costs begin to escalate. Smith, who has been outspoken about overseas contracting, says he was forced out of his job in 2004 after objecting to what he says was the Pentagon's hands-off treatment of the controversial firm KBR.

There have been other strategic changes as well. The State Department is shifting away from large U.S.-based contracts to smaller, more flexible reconstruction agreements with fewer subgrants and subcontracts, says Daniel Feldman, the department's deputy to the special representative for Afghanistan and Pakistan. "These smaller contracts and grants will be managed by U.S. officials in the field, closer to the actual activity implementation, making it easier for those same officials to direct, monitor and oversee projects to ensure the proper use of taxpayers' funds," Feldman told the contracting oversight subcommittee in December.

Defense supply contracts appear to be moving in the opposite direction, with a greater dependence on multiyear, indefinite delivery-indefinite quantity contracts, says Mark W. DeYoung, president of ATK Armament Systems, a Minneapolis-based supplier of munitions and tactical equipment. "Rather than cycling in new contracts, they are using fewer contracts, but with as much flexibility as possible," DeYoung says.

Paying the Price

One thing that hasn't changed is the undeniably high cost of contracting in a war zone. According to federal data the subcommittee examined, the government has spent more than $23 billion on contracts in Afghanistan since 2002. In 2008 alone, Defense, State and USAID combined spent more than $8.2 billion on Afghan contracts.

Federal auditors fear that a high percentage of that spending might have been wasted. Countless reports during the past seven years have found that billions of dollars in contract spending have been misspent in Iraq. After examining $5.9 billion in contracts for Afghanistan troop support, including linguists and translators, the Defense Contract Audit Agency told the subcommittee that more than $950 million was either unreasonable or unsupported because contractors failed to provide sufficient documentation.

"If we can't get control of the costs, every war in the future will bleed us dry," says Dina Rasor, a defense contracting expert and co-author of Betraying Our Troops: The Destructive Results of Privatizing War (Palgrave McMillan, 2007). "These are the hidden costs that we will be paying for years. And the longer this goes on, the more it becomes the new normal."

Some major contracts in Afghanistan have come under scrutiny recently. A pair of task orders to increase power generation for Afghan residents has failed to meet expectations, according to the USAID inspector general. The IG also criticized contracts to improve the country's education system and agricultural production. And road reconstruction contracts have suffered from poor planning, deteriorating security and inadequate management, causing schedule delays and cost increases, GAO found.

"We are making the same mistakes [as in Iraq] but at the same time creating new problems," says Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform Committee. "When you look at what's going on, it's clear that we have not learned a lot."

The committee has initiated multiple investigations into the behavior and transparency of contractors in Iraq and Afghanistan, and Towns has requested procurement documents from the Defense Department. Most of those requests, Towns says, have been ignored.

A frequent concern echoed by lawmakers and government watchdogs has been the lack of contracting officer technical representatives, auditors and contract management specialists in Afghanistan to supervise operations and verify that companies are meeting requirements. This deficiency has been exacerbated by constant turnover among these employees, many of whom serve only three- to six-month tours.

"When I was in Iraq in 2004, if we needed something, we got it," Maj. Gen. Richard P. Formica, former commanding general of the Combined Security Transition Command-Afghanistan, told the Commission on Wartime Contracting in December. "But in Afghanistan we have had to figure out how to do without it."

Oversight of contracting in Afghanistan has long lagged behind Iraq, which has had a special inspector general in place since 2004. A Special Inspector General for Afghan Reconstruction was established only in 2008, seven years after the U.S. invasion. John Brummet, assistant IG for audits in Afghanistan, said the office is playing catch-up, following a money trail that is often years old and chasing down contract personnel who are long gone. "We've done a good job moving a lot of money into Afghanistan," Brummet says. "But we have not done as good of a job in staffing up agencies to oversee those contracts."

But administration officials are confident they have addressed the staffing and resource concerns. In recent months, State and USAID have significantly bolstered their contracting and technical staffs. The Army Criminal Investigation Command also increased its presence in Afghanistan.

The Pentagon, meanwhile, says it is deploying additional-and better trained-contract specialists to supervise critical projects. Lee Thompson, executive director of LOGCAP for the Army Sustainment Command, says that in January 2009, only 40 percent of Defense's 428 contracting officer representative positions in Afghanistan were filled. Twelve months later, nearly 90 percent of the slots were filled. "We have seen significant improvements in oversight and in better defining requirements," Thompson says. "We are setting expectations based on what's happening on the ground. And we're asking if they are delivering what we ask for on time and with quality. And the answer is yes."

Thompson will have his work cut out for him. Capped at 10 years and $150 billion, the fourth version of LOGCAP is far and away the Army's most expensive and highly scrutinized contract. After years of relying on KBR as the sole provider of meals, laundry, housing and other support services, the Army has turned to a trifecta of companies to bid on work in Afghanistan, Iraq and Kuwait: DynCorp International of Falls Church, Va.; Fluor Intercontinental Inc. of Charlotte, N.C., and Houston- based KBR.

DynCorp won two task orders to provide services in the southern and western regions of Afghanistan while Fluor will handle the eastern and northern sections. The transitions are expected to be complete by July, Thompson says. KBR, which still operates in Iraq under the previous LOGCAP III contract, has been shut out under the new contract structure. The former Halliburton subsidiary has been criticized repeatedly by lawmakers and watchdogs for poor contract performance and questionable bookkeeping under the LOGCAP contract.

The task orders are structured so contractors can easily surge to meet requirements on the ground, including setting up new forward operating bases. DynCorp, for example, expects to have 7,000 employees in place by May, but can quickly pivot to add 1,000 more, says Spence Wickham, the company's senior vice president and program manager for LOGCAP IV.

The Afghanistan task orders contain a clause that limits the circumstances under which costs can deviate from a competitively established service price matrix. The clause protects against unwarranted cost creep, officials say. "A program of this magnitude deserves accurate record-keeping," Wickham says. "And it deserves contractors that are doing the right thing every day."

Despite the adjustments, issues already have popped up. DynCorp fired one of its key subcontractors, Agility Defense and Government Services, after the firm was indicted for violating the False Claims Act and suspended indefinitely from doing business with the government. DynCorp has moved Agility's work in-house, Wickham says. DCAA auditors also suspended more than $14 million in charges billed to Fluor under LOGCAP IV because of compensation and purchasing questions, Defense officials said. "Problems are resurfacing," says Smith, the former LOGCAP chief. "We will be resolving Afghan contract audits 10 years from now."

'Biblical Times'

Nearly the size of Texas, Afghanistan is unlike virtually any location on the planet. Considered the fourth or fifth poorest country in the world, Afghanistan is riddled with endemic poverty, illiteracy and corruption. Weather conditions are unpredictable, with blistering hot summers and frigid, forbidding winters. Infrastructure is limited. The two-lane Ring Road, which qualifies there as a superhighway, serves as the primary conduit for American convoys. Buildings often are little more than mud huts. "There's virtually nothing here," Thompson says. "It's like biblical times."

Security is the other pressing concern. Insurgents take full advantage of Afghanistan's rigorous mountain terrain, ambushing supply convoys and deploying destructive roadside bombs. Between October 2008 and September 2009, 104 contractors were killed in Afghanistan and more than 1,400 others were injured, according to the Labor Department. Since the war began in 2001, more than 7,000 contractors have been killed or wounded in Afghanistan.

The combatlike conditions have led to an increased reliance on private security contractors, which now represent roughly 10 percent-almost exclusively Afghan nationals-of the contracting force in Afghanistan. Doug Brooks, president of the IPOA, a trade organization that includes security contractors, says while the percentage is the highest he has ever seen, oversight and management of these contracts have vastly improved. Security contractors in Iraq came under intense scrutiny after guards for Blackwater Worldwide, now known as Xe Services LLC, opened fire in a crowded Baghdad intersection, killing 17 civilians. "Diplomacy toward local populations is a large part of the lessons learned from Iraq," he says.

The only long-term solution to the instability in Afghanistan, officials say, is to build up the size and capacity of Afghan Army and police. But that plan has struggled to meet expectations. According to Defense Department officials, the Afghan National Army stands at roughly 96,000 soldiers-half the size of the force in Iraq, whose population is about the same-but is slated to grow to 136,000 by October. The 94,000-person Afghan National Police force, which the Congressional Research Service reports is "riddled with corruption" and short of equipment, is progressing slower.

Since 2001, the government has spent nearly $30 billion on training, equipping and supporting the Afghan National Security Forces, including contracts with training companies such as DynCorp, MPRI and Xe. But government watchdogs question whether those funds have been well-managed. A July 2009 report by the Special Inspector General for Afghanistan Reconstruction said the Combined Security Transition Command-Afghanistan, which manages the security training, "does not have the capability to ensure that U.S. funds are managed effectively and spent wisely."

According to the report, the lone contracting officer technical representative overseeing the $404 million contract, which covers 17 locations throughout Afghanistan, lacked experience and was unable to make field visits to check performance. In August, the State Department agreed to transfer responsibility for the Afghan National Police training program to Defense, which plans to rebid the training contracts. "Over the last few years, as the size of the Afghan National Security Forces continued to grow and the number and size of contracts increased, our capacity to manage these contracts did not," says Formica, who leads the command.

The U.S. military's ability to better manage such contracts is critical and could dictate how long American forces remain in Afghanistan. "Training the Afghan National Security Forces is the ballgame," said Chris Shays, co-chairman of the Commission on Wartime Contracting and a former congressman from Connecticut, during the December hearing. "Regardless of the issues under debate, the endgame must be creating self- sufficient Afghan army, national police, and border police forces that are free from corruption and able to provide adequate security."

Field Work

Contractors for the Logistics Civil Augmentation Program contract provide a variety of support services in Afghanistan.

Basic Services

l Laundry and bath

l Clothing exchange

l Clothing repair

l Food service

l Mortuary affairs

l Sanitation

l Billeting

l Facilities management

l Morale, welfare and recreation

l Information management

l Personnel support

Additional Services

l Maintenance

l Transportation

l Medical services

l Engineering and construction

l Signal

l Retrograde

l Power generation and distribution

l Standard Army Management Information System operations

l Physical security

Source: U.S. Army