The Army is increasingly relying on service contractors to support battlefield operations. 
rmy peacekeepers in the Balkans joke that they’re missing a patch on their camouflage fatigues. “We need one that says ‘Sponsored by Brown and Root,’ ” says a staff sergeant, who, like more than nearly 10,000 soldiers in the region, has come to rely on Brown and Root Services, a Houston-based contractor, for everything from breakfast to spare parts for armored Humvees.
The Texas company provides services to the Army under the largest logistics contract yet awarded in the rapidly growing market for supporting soldiers overseas. The deal has paid Brown and Root $2.2 billion since troops were first sent to Bosnia in 1995 and covers tasks as diverse as the duties soldiers perform on the NATO peacekeeping mission. “We do everything that does not require us to carry a gun,” says David Capouya, Brown and Root’s regional manager for the service contract in Kosovo.
To save money and make better use of military personnel, the services increasingly are hiring contractors to provide support behind the lines. Paying contractors to manage motor pools and build barracks frees up soldiers for front-line missions. Additionally, with troops rotating in and out of the Balkans every six months, a permanent civilian contractor workforce offers stability and experience that soldiers cannot gain during their half-year tours.
A Growing Trend
The military’s use of contractors is not new—private firms fed cavalry horses during the Revolutionary War—but the number of companies deployed and the tasks they perform have increased markedly in the past decade. Some 5,200 contractor employees accompanied the 541,000 troops who fought in the Persian Gulf War. That’s one contractor for every 100 or so military service members. In the Balkans, the ratio has risen to almost one and one-half contractors for every soldier with more than 12,000 contractors supporting slightly more than 9,000 soldiers.
The Defense Department’s 2001 Quadrennial Defense Review, a planning and budgeting blueprint updated every four years, suggests the contractor-to-soldier ratio will continue to rise and that contracting out battlefield services will become as common as hiring private companies to build tanks. “Only those functions that must be done at DoD should be kept at DoD,” states the QDR. “Over the last several decades most private sector corporations have moved aggressively away from providing most of their own services. Aggressively pursuing this effort will require a major change in the culture of the department.”
The General Accounting Office found in September 2000 that more than 10 percent of the money Defense has spent in the Balkans has been paid to contractors for battlefield support. Of the $13.8 billion spent on Balkans peacekeeping operations from 1995 through March 2000, more than $2 billion went to support service contracts, GAO reported. “The Department of Defense has increasingly relied on contractors rather than soldiers to provide some services in the Balkans as force level ceilings have been reduced,” according to the report, “Army Should Do More to Control Contract Cost in the Balkans” (NSIAD-00-225).
William Tuttle, a retired Army general who, until recently, headed the Logistics Management Institute in McLean, Va., says that in addition to increasing the ratio of contractors to service members, the military services are managing their contracts with battlefield support firms differently. Instead of hiring hundreds of companies, as they did in Vietnam and the Persian Gulf, the services have found it easier to make a single firm responsible for all support. “The tasks are so similar that having one person in charge makes accountability much easier,” Tuttle says.
The Army, Air Force and Navy each have indefinite-delivery, indefinite-quantity (IDIQ) contracts for support services and can issue work orders to preapproved contractors as needs arise. The contracts proliferated as a result of mid-1990s procurement reforms designed to allow agencies to purchase services more quickly. With thousands of soldiers moving in and out of the Balkans annually, the Army has been the only service to widely use IDIQ contracts for battlefield support.
Army Col. Vincent Boles, commander of the Army’s Field Support Command in Rock Island, Ill., says the Army has assigned more work to support contractors because fewer troops are being deployed for peacekeeping operations and they can’t be spared to act as cooks or transportation specialists. “By having contractors in the rear, we can move soldiers to the front,” he says. Boles says contractors often hire local workers who can establish infrastructure much more quickly and at a lower cost than can soldiers. As the Army seeks to become more mobile, he says, it’s likely to continue replacing support troops with contractors.
A Big Deal
The Army’s five-year, $2.2 billion Balkans Sustainment Contract has been dubbed “the mother of all service contracts,” by the Contract Services Association of America, a government contractors association in Washington. The Balkans deal has its roots in the Army’s first IDIQ contract for global logistics support, the Logistics Civilian Augmentation Program(LOGCAP). Under that five-year umbrella contract, awarded to Brown and Root in 1992, the contractor planned and provided logistics support for Army contingency operations throughout the world. LOGCAP was used first in 1992 in Somalia, where Brown and Root earned $62 million for building and maintaining Army base camps. Just two years later in Haiti, Brown and Root more than doubled its Somalia earnings, making $133 million building bases and providing other support to about 18,000 troops.
Those early contingency operations showed the value of LOGCAP, but it was not until troops were deployed to the Balkans in 1995 that contractors truly became a fixture on the post-Cold War battlefield. Since then, Brown and Root has employed between 5,000 and 20,000 contractors to build and operate bases and perform dozens of other support functions for as many as 20,000 GIs carrying out peacekeeping operations in the former Yugoslavia. By 1997, when the initial LOGCAP contract expired, the Army awarded the Balkans Sustainment Contract, a single IDIQ pact that runs through 2004.
Meanwhile, the Army awarded a separate LOGCAP contract in 1997 for contingency operations outside the Balkans. DynCorp of Reston, Va., won that five-year pact. Worth just a fraction of the Balkans deal, the contract has focused largely on planning for contingency operations. DynCorp has deployed some contractors to provide support work in East Timor and more recently in Central Asia for anti-terrorism operations. In December, the Army announced Brown and Root had been awarded the service’s latest LOGCAP contract, a 10-year pact for worldwide combat support.
With contractors nearly as common as land mines in the Balkans, it’s only fitting that when soldiers first step off airplanes in Kosovo, they are met not by their commander, but by a Brown and Root civilian worker who tells them where they can pick up their gear and assigns them to their barracks. Indeed, Brown and Root is the umbilical cord for troops in the region. At Camp Bondsteel, Kosovo, with 3,600 troops the Army’s largest base in the Balkans, Brown and Root’s work has included:
- Building nearly 200 dormitory-style barracks in less than 90 days.
- Providing 600,000 gallons of water a day and generating enough electricity to sustain a city of 25,000 people.
- Running a supply center with about 14,000 product lines.
- Washing 1,200 bags of laundry and cooking and serving more than 18,000 meals a day.
- Operating 95 percent of the Army’s transportation, including rail lines and airfields.
Capouya, Brown and Root’s Kosovo manager and a retired Army officer, says that about 5,000 of the company’s 5,500 workers in Kosovo are local residents, making the firm Kosovo’s largest employer. The remaining workers are either U.S. or British residents who serve as managers or craftsmen. Most are former service members with experience supporting deployed troops. “It’s key that management is military so we can understand our customer,” says Capouya. Local workers are paid in accordance with local wages, which usually range from $1 to $3 an hour. “We can’t inflate the wages because we don’t want to over-inflate the local economy,” says Capouya. The wages may seem low by U.S. standards, but they are good by Kosovo standards as evidenced by the more than 15,000 job applications from local residents that Brown and Root has on file.
Brown and Root also has hired about two dozen subcontractors in the region. Capouya says Brown and Root usually hires other companies for one-time tasks, while training its own workforce for routine duties. For example, it hired subcontractors to build the perimeter fence around Camp Bondsteel, but Brown and Root maintains its own firefighting staff for the camp.
Performance Management
The Defense Contract Management Agency, which annually oversees 325,000 acquisition contracts valued at $825 billion, applies the same approach to battlefield support contracts that it uses to oversee the procurement of fighter planes. Typically, the agency sends contract specialists into Defense program offices and contractor manufacturing facilities to monitor contracts. For battlefield support contracts, DCMA deploys teams to each region to ensure that troops on the ground are getting what they need.
“Our job is to be the Johnny-on-the-Spot wherever our warfighters need a contractor service,” says Army Brig. Gen. Edward Harrington, DCMA director. The agency now has a team of 21 military and civilian workers based in the Balkans to perform quality assurance, property management and contract management duties.
To ensure quality, DCMA interviews soldiers to gauge customer satisfaction, reviews the quality of finished services and conducts random checks of contractors’ procedures to ensure they are following contract guidelines. DCMA immediately discusses any concerns about service quality with the contractor. “The majority of findings noted have been minor and, upon conclusion of discussion [with Brown and Root], corrected on the spot,” according to a report by Army Maj. Arthur Spenard, a team leader for DCMA in the Balkans from February to August 2001.
DCMA audits property books and other records to monitor the more than $600 million worth of government equipment Brown and Root uses in the Balkans. Brown and Root “consistently maintained high levels of property accountability,” Spenard says. Additionally, DCMA verifies the need for new work and services, making sure proper approvals are in place and costs are reasonable before contractors begin work. “It’s very easy for troops to request something of a contractor, but it’s up to DCMA to ask whether it really is necessary,” says Navy Lt. Cmdr. Casey Burns, who recently completed a tour of duty as part of a DCMA contracting team in the Balkans.
The Balkans pact is a performance-based contract that allows the contractor to earn extra fees for meeting and exceeding specific goals. “Our profit is determined by our performance,” says Capouya. Every four months, Brown and Root is eligible for a performance bonus. The quality of contractor services is evaluated in three areas:
- Performance.
- Cost controls and funds management.
- Coordination, flexibility and responsiveness.
The Army, DCMA, and Brown and Root participate in the quarterly reviews, but feedback from soldiers receiving the services carries the most weight during evaluations. If minimum performance goals are met, Brown and Root receives a bonus of 1 percent of the cost of providing that service, but if it exceeds the minimum, the company can receive a bonus of up to 8 percent of the service cost. Most quarters, Brown and Root receives 100 percent of the bonuses it’s eligible for, Capouya says. Spenard calls Brown and Root’s performance excellent “across the spectrum of services” and says using contractors on the battlefield is a viable alternative to deploying soldiers to provide support. He adds that having contract monitors in the field is critical. “Things in the peacekeeping environment move at a different speed. A fast turnaround in the U.S. can be taking seven days to get information from an attorney, but in the Balkans the turnaround can be done in a matter of hours,” Spenard says.
Navy contract monitor Burns says there have been cases of “contractor extravagance” and Brown and Root must be reminded to keep costs down. For example, contractors were replacing railings and sidewalks more frequently than needed and were installing expensive wooden railings. After DCMA raised concerns, Brown and Root agreed to use less expensive supplies and make upgrades less frequently, he said. Still, Burns believes large, umbrella contracts are the best way to purchase battlefield support services. “It would be a huge monster to manage otherwise. I can’t imagine how many people you’d need to manage 15 or 20 different contractors,” he adds.
