Between $31 billion and $60 billion has been lost to waste and fraud in contracting for US contingency operations in Iraq and Afghanistan according to the Commission on Wartime Contracting in Iraq and Afghanistan. In its final report issued last week, the Commission warned that “much more [spending on contingency operations] will turn into waste as attention to continuing operations wanes, as U.S. support for projects and program in Iraq and Afghanistan declines, and as these efforts are revealed as unsustainable.”
After more than two years of study, the Commission said waste and fraud had undermined the effectiveness of contingency contract spending. It maintained that agencies were forced to “over-rely” on contractors to perform mission-critical functions. And, because agencies do not have the necessary acquisition personnel and contracting structures to oversee the contractor force, the report said contracting extended into activities government personnel should perform. As a result, “unreasonable risks to mission objectives and other key U.S. interests” were created.
The Commission also found that “inherently governmental” rules proved insufficient to guide contracting for contingencies making it difficult for government managers to apply a “systematic consideration of operational, political, and financial risks” in determining the appropriateness of performing work under contract.
The Commission listed process deficiencies at all phases of the contingency contracting process that led to “massive waste, fraud, and abuse.” These included: a lack of understanding of local conditions and capabilities; insufficient integration at the program and project level; and a failure to define requirements in a timely manner at the contract level.
The report also asserted that efforts to manage and enforce competition in war-related contracting proved ineffective. Often long-term contracts were not recompeted, contracts were extended beyond expiration dates, and cost-reimbursable contract types were used instead of using fixed-price contracts to expand the competitive pool, the report stated.
To fix these problems, the Commission recommendations include: using risk factors in contracting decisions; developing and deploying acquisition management and contractor oversight personnel; phasing out private security contractors for some functions; improving interagency coordination; creating a permanent Inspector general for contingency operations; setting annual competition goals for contingency contracts; and strengthening enforcement tools.
Congress must also do its part to aid efforts to manage and oversee contingency contracting, the Commission said. It urged Congress to provide or reallocate funding for contingency contracting reform and require regular assessments of agencies’ progress in implementing contracting reform.
Daniel Gordon, Administrator of OMB’s Office of Federal Procurement Policy, generally applauded the report. “We welcome the report and commend the Commission for shining a spotlight on waste in contracting [and] on the need to strengthen the contracting function at agencies,” he said in an OMB blog. Gordon said progress is already being made on many of the Commission’s recommendations citing success in reducing improper payments and “cracking down on nonperforming contractors.”
The Professional Services Council (PSC), which represents government professional and technical services contractors, said while the report “contains valuable lessons from contingency operations,” it ignores “the dynamic and complicated realities of contingency operations.” PSC disagreed that the government “over relied” on contracting and the use of contracts in place. The “messy” and unstable nature of contingency operations often requires that immediate support be made available for success, it said. This means, PSC emphasized, that individual task orders that make sense for routine needs during stable conditions are not a “viable means of ensuring that immediate support and services are available to the warfighters and diplomats in the most timely manner.”
The Commission on Wartime Contracting in Iraq and Afghanistan, created under Section 841 of the National Defense Authorization Act of 2008 (P.L. 110-181), was directed to assess contingency operations contracting and examine the extent of waste, fraud, and abuse in such contracting. It is co-chaired by Christopher Shays (former republican congressman from Connecticut) and Michael Thiebault (former Deputy Director of DCAA). Commission members include former Under Secretary of Defense (Comptroller) Dov Zakheim and former Principal Deputy Under Secretary of Defense (Comptroller) Robert Henke.