The Last Word on Wartime Contractors?

In the most comprehensive report yet to look at wartime contracting, a three-year study has found that national security cannot be about the profits of war.
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At the end of September, after three years of hearings, reports and deliberations, the Commission on Wartime Contracting in Iraq and Afghanistan turned off its lights for the last time. It left behind a report that is arguably the most comprehensive examination yet of the fraud, waste, and abuse rife among contractors in Iraq and Afghanistan.

“Contractors are a reality,” says the commission’s co-chair, former nine-term Republican congressman Christopher Shays of Connecticut. “You can’t go to war without contractors. The irony is that we went to war unprepared to use contractors.” More than 260,000 contractors were employed in Iraq and Afghanistan as of March 31, 2010.

The great advantage of contractors is low overhead. The security agencies only had to carry them on the books as “contingencies,” such as Iraq or Afghanistan, arose. The alternative was to hire a larger military work force, which would mean recruiting, training, housing, and maintaining troops on a full-time basis, war and peace, and offering veteran services after they muster out.

The added value of contractors has been a hot topic on Capitol Hill. No one really had determined with any certainty whether it was less costly to the government to keep more troops on the payroll or contract out personnel, on an as-needed basis. Each time a government auditing agency tried to calculate cost and savings, it arrived at widely different numbers and conclusions.

“Under certain, limited circumstances,” the report found, contractors were the cheaper option. The dominant factor driving savings was the lower wages paid to local and third-country-national contractor employees. The report said that more than 80 percent of those employees were not U.S. citizens.

But the economies of contracting have been overshadowed by their abuses. As the report explained, “The waste incurred in Iraq and Afghanistan has added enormously and unnecessarily to the cost of U.S. involvement.”

Shays says the commission found “losses to taxpayers were in the range of $30 billion to $60 billion, and I think it was closer to $60 billion.”

To give an idea of how pervasive problems might have been, the commission expects total spending for contractors from 2002 through the end of this year to reach $206 billion.

Plus, the misspent $60 billion does not include the treasure thrown into what Shays calls “unsustainable projects.” According to the report, “Examples range from the $35 billion that Congress has appropriated since 2002 to train, equip, and support the Afghan National Security Forces, to scores of health-care centers in Iraq that far exceed the Ministry of Health’s ability to maintain them.”

Looming just as large in the report is the unprecedented demand for contractors. “We rely on contractors too heavily, manage them too loosely, and pay them too much,” former commissioner Dov Zakheim testified on Oct. 19 before the Senate Armed Services Subcommittee on Readiness. About two-thirds of the contractor force supported the troops through jobs such as running the mess hall, the laundry, and the PX, while another 20 percent filled more skilled positions in areas such as translation, logistics, and construction. The balance served as armed security.

The Defense Department simply can’t keep up, according to the report. Oversight has taken a backseat to expediency. “The number of Defense acquisition professionals had declined by 10 percent during a decade that saw contractual obligations triple,” the report states.

It’s as if the contractors had “home field advantage” in war zones, says Shays. Contracts that had been in place for a decade, he says, are managed by the government’s contracting officer representatives, or CORs, who were regularly rotated in and out of the country. “The contractor knows everything and the COR knows very little.”

What emerged from the committee’s three years of labor, $25-million budget, 15 trips to warzones, and a thousand official meetings, including 25 high-level hearings, was a bundle of 15 proposals. Consider that there are already 17 different federal agencies involved at some level in contingency contracting. As Zakheim pointed out in October before a Senate committee, changing the direction of a $700-billion organization like the Defense Department is like “herding icebergs.”

However, there was one commission proposal that resonated with Congress, and legislation is in the works. John Tierney, a Democratic representative from Massachusetts, has proposed a measure that would create an independent Special Office of Inspector General for Overseas Contingency Operations.

Tierney’s bill called for a new office to referee both the front and back ends of the contingency-contracting process, consolidating it. Up front, it would and play honest broker to Defense, State and the U.S. Agency for International Development as they set policies. On the back end, the I.G. would wear the green eye shades for audits and investigations. Violations would be handed off to the Justice Department.

“We’ve taken care of the oversight,” says Rep. Jason Chaffetz of Utah, a rising star in the tea party movement. “Now we have to take care of the reform part of contingency contracting.”

Chaffetz, one of the “young guns” of the House Republicans that includes Paul Ryan of Wisconsin and Majority Leader Eric Cantor of Virginia, chairs the Oversight and Government Reform subcommittee on National Security, where Tierney is the ranking member. “There’s a case to be made for the way Mr. Tierney’s bill works out,” he says. “It’s a pretty good piece of legislation.” He may propose a similar bill of his own if he gains the support of Darrell Issa, his chairman, who Chaffetz describes as “very positive.” Tierney was not available for comment.

The commission has endorsed Tierney’s bill. As Shays has said, contractors represent U.S. policy during times of crisis and conflict and they are essential to wartime operations. Yet, while contractors now make up half the personnel in war zones, “The Defense Department has never treated oversight of contractors as a core function.”

Certainly most contractors play by the rules, and all contractors are driven by the bottom line. What is more, the contractors control many of the levers of defense, and on that front, the Commission on Wartime Contracting was blunt: “National security is not a business decision.”

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