The Buzz

Untangling Iraq Contracts

Two separate reviews in mid-July have shed more light on murky contracting operations in Iraq. The inspectors general of the Interior Department and the Coalition Provisional Authority, which once oversaw the U.S. occupation of Iraq, examined a number of contracts, as well as the business practices of government contracting agencies and the companies they hire.

The Interior report criticized the department's National Business Center, a fee-for-service contracting agency, for procuring commercial interrogators on behalf of military commanders in Iraq and Cuba using contracts for information technology. The Interior IG, Earl Devaney, found 11 such procurements and said they were outside the scope of their contracts. Personnel at the business center used two General Services Administration schedule contracts for technology and professional engineering services.

Devaney recommended that Interior terminate all active orders with CACI International and Lockheed Martin, the companies that supplied the interrogators. He also questioned the nature of fee-for-service agencies. The IG drew a direct line between the interrogator contracts and what he said was "the inherent conflict in a fee-for-service operation, where procurement personnel, in their eagerness to enhance organization revenues, have found shortcuts to federal procurement procedures and procured services for clients whose own agencies might not do so."

Meanwhile, the office of the inspector general for the Coalition Provisional Authority, which is still functioning, though the CPA has dissolved, reviewed the internal management controls of five large contractors working in Iraq. The IG examined the broad category of corporate governance at Fluor-AMEC LLC, Halliburton Co., Parsons Corp., Perini Corp. and Washington Group International. In almost all cases, the IG found, the companies had established sound policies governing their conduct in the war zone.

Perilous Projects

The fiscal 2005 Defense Department appropriations bill enacted this summer takes issue with the Pentagon's management of several high-profile procurement and development projects, a number of which suffered budget setbacks. The legislation hit all three services with funding cuts, restructuring plans and reporting requirements while targeting program management, delays and budget gimmicks to rein in the Pentagon's handling of more than $416 billion in appropriations.

House-Senate conferees trimmed $268 million in overhead costs from the Future Combat System-the centerpiece of the Army's transformation-and imposed a specific spending profile for the program's remaining $2.9 billion in fiscal 2005.

House and Senate appropriators also were critical of Air Force programs, including what they termed the service's "flawed and irresponsible" financial strategy for its C-17 multiyear procurement contract. Nevertheless, conferees called on the Air Force to forfeit $158 million in fiscal 2005 aircraft procurement money to pay for an extra C-17 not included in President Bush's budget request.

Appropriators also put the Air Force's F/A-22 stealth fighter on notice, fully funding the $4.15 billion request but imposing on it an independent cost assessment of the program. Conferees called on the Pentagon's acquisition office to sponsor a study of cost estimates and production plans for the estimated $43 billion fighter program, which has experienced frequent delays and cost overruns.

The Navy also took some knocks, with conferees approving $1.176 billion in research and development funds for its new DD(X) destroyer, a reduction of roughly $255 million from the president's request.

ON THE RECORD...

...In its report issued in mid-July, the National Commission on Terrorist Attacks Upon the United States concluded that the Sept. 11 attacks "revealed four kinds of failures: in imagination, policy, capabilities and management." Some examples of each, as reported by the commission:

Imagination: Imagination is not a gift usually associated with bureaucracies. . . . It is therefore crucial to find a way of routinizing, even bureaucratizing, the exercise of imagination. Doing so requires more than finding an expert who can imagine aircraft being used as weapons. Indeed, since al Qaeda and other groups had already used suicide vehicles, namely truck bombs, the leap to the use of other vehicles, such as boats or planes, is not far-fetched. . . . The methods for detecting and then warning of a surprise attack that the U.S. government had so painstakingly developed in the decades after Pearl Harbor did not fail; instead, they were never really tried.

Policy: The U.S. policy response to al Qaeda before 9/11 was essentially defined following the embassy bombings [in Kenya and Tanzania] in August 1998. . . . The tragedy of the embassy bombings provided an opportunity for a full examination, across the government, of the national security threat that [Osama bin Laden] posed. Such an examination would have made it clear to all that issues were at stake that were much larger than the domestic politics of the moment. But the major policy agencies of the government did not meet the threat.

Capabilities: Looking back, we are struck with the narrow and unimaginative menu of options for actions offered to both President Clinton and President Bush. Before 9/11, the United States tried to solve the al Qaeda problem with the same government institutions and capabilities it had used in the last stages of the Cold War and its immediate aftermath. These capabilities were insufficient, but little was done to expand or reform them. . . . Government agencies also sometimes display a tendency to match capabilities to mission by defining away the hardest part of their job. They are often passive, accepting what are viewed as givens, including that efforts to identify and fix glaring vulnerabilities to dangerous threats would be too costly, too controversial or too disruptive.

Management: However the specific problems are labeled, we believe they are symptoms of the government's broader inability to adapt how it manages problems to the new challenges of the 21st century. The agencies are like a set of specialists in a hospital, each ordering tests, looking for symptoms and prescribing medications. What is missing is the attending physician to make sure they work as a team.

High And Wide

"Despite the president's promise to bring businesslike thinking to the federal government, the Bush administration has overseen, or at the very least permitted, a significant expansion in both the height and width of the federal hierarchy," says Paul Light, director of the Center for Public Service at The Brookings Institution and a professor at New York University. "There have never been more layers at the top of government, nor more occupants at each layer." Light's analysis of positions listed in The Federal Yellow Book directory shows that the number of different leadership support titles used by agencies, such as chief of staff, deputy chief of staff and deputy assistant secretary, has more than tripled since 1960.