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Iraq pullout could mean more non-competitive defense contracting

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Out go all the U.S. troops by year’s end, President Obama said Friday about Iraq. And in go the contractors, along with some familiar contracting problems, say other government officials and independent experts.

As the United States pulls out its remaining 50,000 or so troops after a decade of conflict costing around $1 trillion, many of the soldiers’ non-fighting functions will be pursued by a force of State Department-funded government contractors expected to near 15,000.

That preliminary estimate, now being circulated by the administration among lawmakers on Capitol Hill, would represent an overwhelming share of the official remaining U.S. presence in the unsettled country. But even after wide publicity about past contracting abuses and waste, new scandals may trail behind this persistent deployment, according to a commission created by Congress to study the missteps so far.

“After a decade of war, the government remains unable to ensure that taxpayers and warfighters are getting good value for contract dollars spent,” Dov S. Zakheim, a former Pentagon comptroller and a member of the congressionally-created Commission on Wartime Contracting, told the Senate Armed Services committee a day before Obama’s announcement.

In an August report, prepared after a three-year study of contracting in Iraq and Afghanistan, the commission estimated that between $30 billion and $60 billion has been lost to waste and fraud so far in those conflicts, representing 15 to 30 percent of all that Washington has spent on contractor-provided security, civil reconstruction, training, and other nation-building work.

The commission warned that additional billions may be lost in the years ahead if Defense Department and State Department contracting authorities let remaining management problems fester or fail to safeguard contractor programs and projects that remain uncompleted.

“The Commission sees no indication that Defense, State, and USAID [Agency for International Development] are making adequate plans to ensure that host nations will be able to operate and maintain U.S.- funded projects on their own,” it reported.

Although some waste can be attributed to Iraq’s pervasive culture of corruption, many of the war’s contracting shortcomings stemmed from poor foresight, planning, and management by Washington that has not been adequately addressed, the commission said.

“Clearly, if the State Department until now has had trouble managing its contracts, and there is no question it has had some, I don’t know how it is going to manage all of this,” Zakheim testified. Katherine V. Schinasi, a colleague on the commission and former analyst at the General Accountability Office, said, “we’ve seen enough poor outcomes from State Department contracting that we were not in agreement” with the department’s positive assessment of its own abilities to undertake a wider role.

“The hard reality is that changing values, doctrine, expectations, practices, and other aspects of organizational culture in a vast and complex enterprise [like the Defense Department] is like herding icebergs,” Zakheim added, calling it “a slow process requiring heroic exertions, sustained attention, and unrelenting leadership.”

The handoff in Iraq from U.S. military forces to contractors has been under way for some time, but many of the estimated 16,054 U.S.-origin contractor employees remaining on the Defense Department’s payroll there in late summer may leave those assignments in coming months. They have provided training, base support, security, translation, logistics, construction and transportation for the U.S. troops that Obama said will be home by Christmas.

According to a preliminary estimate given at the Senate hearing, the State Department plans a persistent presence in Iraq of roughly 17,000 U.S.-paid workers, of which 14,000 may be contractors. On Friday, White House officials, speaking on background at a briefing for reporters, projected that 4,500 to 5,000 of these will be employed in guarding three U.S. diplomatic posts in Irbil, Basra, and Baghdad.

Zakheim, commenting generally about the government’s policies before the withdrawal announcement, testified that “we rely on contractors too heavily, manage them too loosely, and pay them too much.” He said the documented waste in past Iraq and Afghanistan contracts demonstrated that federal agencies still are not preparing properly for future contingencies.

He also said contractors still are not properly held accountable for their lapses, through suspensions, debarments, or prosecution. “Staffing shortages have led to a Defense Contract Audit Agency backlog of nearly $600 billion [worth of transactions], delaying recovery of possible overpayments,” Zakheim said. Some multi-billion dollar contracts are still not being opened to multiple bidders, he added, calling this “not at all reasonable” a decade after the U.S. intervention in Iraq and Afghanistan began.

Frank Kendall, the Pentagon’s top acquisition and logistics official and the senior official there overseeing the transition from military to State Department control, affirmed in prepared testimony that his department was initially “unprepared to manage” the contractors used in Iraq. It lacked the right policies, failed to employ the right contracting officers, and exercised poor management and oversight, he said.

Kendall noted, however, that annualized Army debarments of contractors increased from 94 to 178 over the past four years; the number of Army contracting officers has been increased; and new contracting policies have been written.

“There is a lot of risk in the transition” to State, Kendall added in response to questions from Sen. Kelly Ayotte (R-N.H.). “We are in decent shape” after a year of work, but “I’m sure there will be problems…The State Department has never done anything this big,” Kendall said.

 Responding to questioning from Sen. Claire McCaskill (D-Mo.) about the risks associated with shifting projects to local control, Kendall also said “we agree with your concern: We have not done as much, I think, in the past as we should about the sustainability of our projects [once they are turned over to the local government], so it is definitely a priority for our projects going forward.”

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Reprinted by permission of The Center for Public Integrity.

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U.S. Air Force

U.S. Air Force technicians install an antenna at Sather Air Base, Iraq, in August.

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