New direction charted for wartime contracting

The cost of the war in Iraq has ballooned, in part, because of the dearth of trained acquisition professionals assigned to the theater and the failure of federal agencies to establish a uniform set of procurement policy guidelines, a pair of government watchdogs testified this week.

Defense and State Department officials, meanwhile, said that while slow out of the gate, they have altered many of their policies and are well on their way to reasserting control of contractors that work alongside military personnel.

At a joint hearing of two Senate Homeland Security and Governmental Affairs subcommittees Thursday, Stuart Bowen Jr., special inspector general for Iraq reconstruction, said post-conflict operations have been plagued by a lack of oversight and a convoluted mismanagement system, which placed no one entity in charge of the contingency contracting efforts.

"The contracting process in Iraq suffered from a tapestry of regulations applied by diverse agencies, which caused inconsistencies and inefficiencies that inhibited management and oversight," Bowen said.

William Solis, director of defense capabilities and management at the Government Accountability Office, said the Defense Department's inability to supervise contractors could be tracked back to a number of long-standing management problems.

Solis said Defense refused to integrate contractors into its long-term planning process; failed to properly allocate and train sufficient procurement staff, and did not systematically analyze lessons learned from previous conflicts that involved contractors -- most notably the 1991 Gulf War and military operations in the Balkans in the mid-1990s. The result, Solis said, has hurt both taxpayers and military operations.

"We have found several instances," he said, "where poor oversight and management of contractors has led to negative monetary and operational impacts."

The Defense Contract Audit Agency reported that out of $57 billion in contracts for services and reconstruction in Iraq, more than $10 billion either is questionable or cannot be supported because of a lack of information.

Meanwhile, federal agencies have opened at least 80 separate criminal investigations into wartime contracts totaling more than $5 billion, said Sen. Thomas Carper, D-Del., chairman of the Subcommittee on Federal Financial Management, Government Information, Federal Services and International Security.

Despite the waste outlined in several audits and government reports, no contracting officials appear to have lost their jobs or been denied a promotion, according to Solis and Bowen.

Sen. Claire McCaskill, D-Mo., who co-sponsored a recently passed amendment to create a Commission on Wartime Contracting, said the Bush administration had failed to hold officials accountable. If top officials do not lose their jobs or, in the case of uniformed military leaders, are stripped of a star, McCaskill said, "things will not change."

Defense officials have conceded that they underestimated or misread many of the problems that came as a result of the military's reliance on contingency contractors, but said they now have a better handle on the workforce and oversight issues.

"Faced with this unprecedented scale of our dependence on contractors, we have confronted major challenges associated with the visibility, integration, oversight and management of a large contractor force working alongside our deployed military personnel that, frankly, we were not adequately prepared to address, said Jack Bell, deputy undersecretary of Defense for logistics and materiel readiness.

Bell said his office was working on a "comprehensive policy and program management framework" that would better determine the requirements of contractors in support of wartime efforts; establish a deployable contingency acquisition unit, and improve training and education for contracting professionals thrust into the theater. The Defense and State departments, he added, also have made progress implementing an agreement, passed last year, to improve the oversight of private security contractors.

Defense, Bell said, also is reviewing the recommendations of a report issued last year by a commission chaired by Jacques Gansler, who served as undersecretary of Defense for acquisition, technology and logistics from 1997-2001. The Gansler report suggested that the Army beef up its depleted contracting workforce by adding nearly 2,000 more workers and restructure its management organization to create five new Army general officers, and one Senior Executive Service position, to oversee the wartime contracting effort.

"The Army needs general officers who know contracting and can serve as functional advocates for expeditionary operations; and to avoid the problems that are now being experienced in Iraq, Afghanistan and Kuwait, said David Maddox, the now retired former commander in chief of the U.S. Army Europe and a member of the Gansler Commission.

The estimated number of contractors working in Iraq has ranged in recent years from 125,000 to 180,000, although a high percentage of that figure is believed to be Iraqi laborers and foreign nationals. At the end of fiscal 2007, U.S. Central Command reported more than 196,000 contractor personnel working for Defense in Iraq and Afghanistan, Bell testified.

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