contracting

WASHINGTON: How much will it really cost to shut down the Army’s ill-fated Future Combat Systems program? Up to $1.5 billion, potentially three times the “special termination cost” reported by Inside Defense on Friday. Keep reading →

Washington: Millions in unspent reconstruction dollars could be left behind in Iraq and Afghanistan if DoD does not fix its contracting review process, a new Government Accountability Office says.

The Defense Department’s acquisition office is facing a review backlog of nearly 58,000 contracts awarded to Iraqis between 2003 and 2010, according to the report. Of those unreviewed contracts, nearly 90 percent have passed the original scheduled dates for review, it adds.

These reviews are required under DoD’s wartime contracting process, to officially close these deals and get them off the department’s books

By not reviewing those contracts, DoD cannot tell whether the money handed to Iraqi firms on those deals was completely spent or if there are extra dollars that need to be returned to the U.S. Government.

In past reviews, DOD has already identified at least $135 million in unspent funds that could potentially be available to DoD to meet other more pressing needs.

“Contract closeout is a key step to ensure the government receives the goods and services it purchased . . .and if done timely, provides opportunities to use unspent funds for other needs and reduces exposure to other financial risks,” according to the report.

But more importantly, without those reviews, DoD cannot clearly verify if that money was used to complete the project or simply pocketed by those Afghan or Iraqi firms, according to the report.

The inability to keep track of these contracts is due to “the lack of advance planning, workforce shortfalls, and contractor accounting challenges” of the part of the DoD expeditionary contracting corps, according to the report.

For example, there is nothing in the department’s rulebook on wartime contracting that requires DoD to review and close out reconstruction deals in a timely manner.

As a result, these deals are left essentially open-ended, with no way of knowing how many millions DoD is leaving on the table in Iraq and Afghanistan.

But in light of the growing budget pressures the department is facing, DoD is doing all it can to be sure it gets every dollar coming to them from these contracts.

In a Sept. 26 letter to the GAO, DoD’s Director of Defense Procurement and Acquisition Policy Dick Ginman said the department is in the midst of getting a number of fixes in place to address the problems pointed out in the office’s report.

First off, Ginman has directed additional resources to the Army’s Contracting Command to ensure contract closeouts are completed quicker. In Iraq and Afghanistan, DoD has ordered Central Command’s contracting office to “monitor and assess” progress on closing out these deals, and report weekly to the command.

At the Pentagon, department officials are also changing its wartime contracting rules to include requirements that will make contract reviews a top priority.

Reaping the Benefits of a Global Defense Industry

Greg Sanders CSIS photo

  As the Defense Department’s budget goes down, the number of contracts awarded without competitive bids is going up. The share of contracts awarded without competition has risen from 39 percent in 2009 to 42 percent in 2012, according to a report I co-authored with Jesse Ellman and Rhys McCormick on DoD Contracting Trends. The news for… Keep reading →

Washington: Failure to fix the way DoD does business on the battlefield will fall squarely on the shoulders of the congressional Super Committee tasked with trimming the national security budget, a former lawmaker said today.

Former Rep. Chris Shays, a moderate Republican, said if the committee does not at least consider adopting the recommendations made by a bipartisan commission on contracting reform co-chaired by Shays, then the congressional panel itself “will be a failure,” he said.

His comments came during today’s release of the final report by the Commission on Wartime Contracting in Iraq and Afghanistan, detailing the tens of billions of taxpayer dollars wasted in DoD-financed reconstruction aid programs in both countries.

Between $31 to $60 billion, or 10 to 20 percent of total contracting dollars spent by DoD and the State Department has been wasted in Iraq in Afghanistan, commission co-chair and former Deputy Director of the Defense Contract Audit Agency Michael Thibault during today’s briefing.

Former DoD Comptroller and commission member Dov Zakheim said the actual numbers were closer to the $60 billion mark, due to outright fraud by contractors and lack of oversight and proper management by the U.S. government.

The problem became so endemic in Iraq and Afghanistan that insurgent forces were sending billing statements to contracting firms, detailing exactly how much it would cost to ensure they would not be attacked during their work, Zakheim said.

These issues were symptomatic of a Pentagon where combat contracting is “not taken seriously,” compared to the department’s top-dollar acquisition programs, commission members claimed.

Emphasizing the point, commission member and former Managing Director for Acquisition and Sourcing Management at the Government Accountability Office, Katherine Schinasi said the commission’s figures — put another way — equal nearly $12 million lost per day in war contracting.

These issues, commission members added, were not just a matter of dollars and cents but, “a national security issue of the highest importance” that would not be going away anytime soon.

To that point, Scott Amey, general counsel for the government watchdog group Project On Government Oversight, also warned those losses would not end once U.S. troops pull out of Iraq and Afghanistan.

“Reconstruction and diplomatic missions will not end when troops are withdrawn,” Amey said in a statement. “The government must ensure that it is prepared for the State Department to take over operations, and additional taxpayer dollars are invested, especially as the government continues to rely on contractors to complete those missions.”

Shays admitted that contracting reform represents only a small sliver of the Super Committee’s “mammoth task” to trim between $12 and $15 trillion in defense spending.

Ongoing fiscal belt-tightening on the Hill and at DoD, he added, will also make some of the committee’s 15 “strategic recommendations” for reform tough to implement, Shays admitted.

But Shays noted that several of those recommendations, such as increasing interagency coordination and strengthening enforcement over wartime contracts, can be done by DoD and State without spending any more money.

For their part, DoD has already taken steps to improve wartime contracting “based on the Department’s own analysis”, Pentagon spokesman Col. Dave Lappan said in a statement released today.

Those efforts, he added, took into account previous work done by the Government Accountability Office and department’s Inspector General’s office, as well as the preliminary findings made by the commission itself.

Some of the changes driven by DoD in wartime contracting include increased investigation and prosecution of contractor fraud cases, hiring more people to oversee contracting and monitor instances of fraud and increasing training for soldiers who issue contracts in the field, according to Lappan.

“Monitoring, assessing, and taking corrective action is a continuous process within the Department, and we continually improve our planning,soversight, and the management of contractors on the battlefield,” he said.

Washington: The Pentagon must phase out its use of private security contractors, or find a way to make sure their presence on the battlefield does not put U.S. troops at risk, a former DoD official said yesterday.

That recommendation was one of many included in the final report of the Commission on Wartime Contracting in Iraq and Afghanistan. Keep reading →

Washington: The rules have changed for the hired guns who work on the Defense Department’s payroll.

The rules governing private security contracting firms working in war zones will now cover contractors working in all U.S.-led missions overseas, including humanitarian, peacekeeping or “other military operations” where DoD has boots on the ground, according to an Aug. 1 memo issued by Pentagon acquisition chief Ash Carter. Keep reading →