Defense Contracting in Iraq: Issues and Options for Congress
Defense Contracting in Iraq:
Issues and Options for Congress
Updated August 15, 2008
Valerie Bailey Grasso
Specialist in Defense Acquisition Policy
Foreign Affairs, Defense, and Trade Division
Defense Contracting in Iraq: Issues and Options
This report examines logistical support contracts for troop support services in
Iraq primarily administered through the U.S. Army’s Logistics Civil Augmentation
Program (LOGCAP). LOGCAP is an initiative designed to manage the use of
civilian contractors that perform services during times of war and other military
mobilizations. On April 18, 2008, DOD announced the Army’s LOGCAP IV
contract awards to three companies - DynCorp International LLC, Fort Worth, TX;
Fluor Intercontinental, Inc, Greenville, SC; and KBR, Houston, TX, through a full
and open competition. The LOGCAP IV contract calls for each company to compete
for task orders. Each company may be awarded up to $5 billion annually for troop
support services with a maximum annual value of $15 billion. Over the life of
LOGCAP IV, the maximum contract value is $150 billion.
Congress is concerned about the Federal oversight and management of DOD
contracting in Iraq, particularly under LOGCAP. Recent assessments from the
Government Accountability Office (GAO), DOD Office of the Inspector General
(DOD-IG), and the Special Inspector General for Iraq Reconstruction (SIGIR) reveal
a lack of accountability for large sums of money spent for Iraq contracts. Congress
is also concerned about contractor insurance premiums through the Defense Base Act
(DBA); such premiums comprise significant costs under LOGCAP. The DBA
requires that many Federal government contractors and subcontractors provide
workers’ compensation insurance for their employees who work outside of the
United States. The U.S. Army’s LOGCAP contract covers costs for DBA insurance
and includes significant overheard and other costs beyond the costs of the actual
insurance claims. In 2007, the U.S. Army audited DBA costs under LOGCAP and
uncovered rising program costs and wide fluctuations in insurance rates.
Another potential issue of congressional interest is a July 2008 GAO report
focused on the performance of the Defense Contract Audit Agency (DCAA). GAO
auditors uncovered many improper management practices. As a result, DOD has
asked the Defense Business Board to examine these issues and report its findings
within 60 days.
The Fiscal Year (FY) 2008 Defense Authorization Act (P.L. 110-181) contains
provisions that are intended to reduce instances of DOD contract waste, fraud, abuse,
and mismanagement. Other provisions require the Secretary of Defense to provide
a plan for addressing skill shortfalls in the DOD acquisition workforce; provide for
a periodic and independent management review of DOD contracts; prohibit the
awarding of sole source contracts and non-competitive grants; and establish a
commission on wartime contracting to investigate contracts in Iraq and Afghanistan.
The House and Senate versions of their proposed FY2009 Defense Authorization
bills contain new provisions that would extend these provisions for all Federal
This report will be updated as warranted.
In troduction ......................................................1
Purpose and Scope ............................................1
Air Force Contract Augmentation Program..........................1
Logistics Civil Augmentation Program.............................2
LOGCAP Contracts (1992-2007).................................2
LOGCAP IV Contract Awards...................................3
The planning contract was awarded to Serco.....................3
ASC selected the performance contractors......................4
The Defense Base Act (DBA)and LOGCAP.....................7
Awarding of Defense Contracts...................................8
Full and Open Competition..................................8
Emergency Contracting Authorities............................9
Rapid Acquisition Methods.................................10
Audits, Investigations, and Reports...............................10
Role of Federal Agencies...................................10
Special Inspector General for Iraq Reconstruction (SIGIR)........10
Latest SIGIR Review..........................................11
DOD Inspector General....................................12
Government Accountability Office (GAO).....................13
Potential Oversight Issues..........................................14
DOD Contracting Officials.................................16
Development of Contract Requirements.......................17
Use of Indefinite-Delivery/Indefinite-Quantity Contracts..........17
Costs and the Use of No-Bid and Sole-Source Contracts..........18
Use of Overhead Fees.....................................19
The Gansler Commission...................................22
Independent Panel to Examine the Defense Contract Audit Agency..22
Potential Options for Congress......................................23
Option 1: Implementing the Gansler Commission Recommendations....24
Option 2: Expanding the SIGIR’s Jurisdiction......................24
Option 3: Convening a Study of the Federal Employee and Contractor
W orkforce ..............................................25
Option 4: Requiring More Detail for Better Oversight................25
Investigation of DOD Contracts ............................26
Appendix A. Selected Reports......................................27
Congressional Research Service.................................27
Congressional Budget Office....................................27
Government Accountability Office...............................28
Department of Defense Inspector General, Quarterly Report to Congress,
April 30, 2008...........................................28
Army Audit Agency...........................................29
Appendix B. Selected Legislative Initiatives on Iraq Contracting...........30
Selected Legislation Introduced in the 110th Congress................30
H.R. 5658, National Defense Authorization Act for FY2009.......30
H.R. 3033, Contractors and Federal Spending Accountability Act
H.R. 5712, Close the Contractor Fraud Loophole Act.............30
H.R. 3928, Government Contractor Accountability Act of 2007....30
H.R. 4881. Contracting and Tax Accountability Act of 2008.......30
H.R. 4102/S. 2398,Stop Outsourcing Security Act...............30
S. 2147, Security Contractor Accountability Act of 2007..........30
H.R. 528, Iraq Contracting Fraud Review of 2007...............31
H.R. 663, New Direction for Iraq Act of 2007..................31
H.R. 4102, Stop Outsourcing Security Act.....................31
S. 2147, Security Contractor Accountability Act of 2007..........31
H.R. 897, Iraq and Afghanistan Contractor Sunshine Act..........31
H.R. 3695, Freeze Private Contractors in Iraq Act...............31th
Selected Legislation Passed in the 110 Congress....................31
P.L. 110-181, the FY2008 National Defense Authorization Act,
H.R. 4986 (formerly H.R. 1585).........................31
Defense Contracting in Iraq: Issues and
Options for Congress
Purpose and Scope
This report will examine logistical support contracts for troop support services
(also known as service contracts1) in Iraq, primarily administered through a smaller
program, the United States Air Force Contract Augmentation Program (AFCAP) and
a larger program, the United States Army’s Logistics Civil Augmentation Program
(LOGCAP).2 This report will focus primarily on contracts involving Department of
Defense (DOD) appropriated funds, although some projects involve a blending of
funds from other agencies.3
Air Force Contract Augmentation Program
The U.S. Air Force has a smaller contingency contracting support program for
services in Iraq. The Air Force Contract Augmentation Program (AFCAP)
administers logistical support service contracts in Iraq. AFCAP is the largest
contingency support contract awarded by the Air Force. AFCAP is an “umbrella”
contract, similar to the U.S. Army’s LOGCAP. It was designed to provide an on-call
capability for troop sustainment and support. The program was established in 1997
for a wide-range of non-combatant, civil engineering services during wartime,
contingency operation, and humanitarian efforts. AFCAP provides for contractor
support to relieve active duty and air reserve personnel in the areas of food service,
1 Federal Acquisition Regulation (FAR) 37, Subpart 37.1 defines “service contracts” as
contracts that directly engage the time and effort of a contractor whose primary purpose is
to perform an identifiable task rather than to furnish an end item of supply.
2 Department of the Army. Logistics Civil Augmentation Program (LOGCAP). Army
Regulation (AR) 700-137, Introduction, 1-1. Purpose, p. 1.
3 For a fact sheet on the application of federal procurement statutes to contracts for the
reconstruction of Iraq, see CRS Report RS21555, Iraq Reconstruction: Frequently Asked
Questions Concerning the Application of Federal Procurement Statutes, by John R. Luckey;
for a discussion on Iraqi Relief and Reconstruction Fund (IRRF) contracting issues, see CRS
Report RL31833, Iraq: Recent Developments in Reconstruction Assistance, by Curt Tarnoff.
For a discussion on private security contracting see CRS Report RL32419, Private Security
Contractors in Iraq: Background, Legal Status, and Other Issues, by Jennifer K. Elsea and
Nina M. Serafino. For a discussion of war-related costs see CRS Report RL33110, The Cost
of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11, by Amy
Belasco. For a discussion on the FY2008 DOD appropriations and authorization bills, refer
to CRS Report RL33999, Defense: FY2008 Authorization and Appropriations, by Pat
Towell, Stephen Daggett, and Amy Belasco.
lodging, carpentry, plumbing, electrical, mechanical, air conditioning, laundry plant
operations, fire protection emergency management, project and program
Initially, AFCAP began as a five-year, $475 million program; now it is a 10-
year, $10 billion program. AFCAP is managed by the Air Force Civil Engineer
Support Agency at Tyndall Air Force Base and the Air Force Services Agency in San
Antonio, Texas. The contract consists of administrative task orders awarded to six
companies: Washington Group International, CH2M Hill Global Services,
URS/Berger JV, Bechtel National, DynCorp International and Readiness
Management Support. The AFCAP contractor maintains a core staff in theater to
plan, organize, and acquire resources on an as-needed basis.4
Logistics Civil Augmentation Program
LOGCAP was established by the U.S. Army on December 6, 1985 with the
publication of Army Regulation 700-137. LOGCAP is an initiative to manage the
use of civilian contractors who perform services in support of DOD missions during
times of war and other military mobilizations. The use of LOGCAP contracts
augments combat support and combat service support to military forces.5
In September 2006 the Army Sustainment Command (ASC) was created to
serve as the “logistics integrator” for the contingency contracting and sustainment
needs of the military worldwide. ASC oversees about 65,000 contractors and
manages about $25 billion in contracts.6 The Defense Contract Management Agency
(DCMA) manages the task orders issued under the LOGCAP contract.7
LOGCAP Contracts (1992-2007)
The first LOGCAP contract (LOGCAP I) was awarded on August 3, 1992 to
Brown and Root Services of Houston, Texas (also know as KBR). Reportedly, the
contract was competitively awarded and consisted of a cost-plus-award-fee contract
for one year followed by four option years. The Army Corp of Engineers reportedly
4 $10 Billion AFCAP III Award Provides Expeditionary Engineering. Defense Industry
Daily: Military Purchasing News for Defense Procurement Managers and Contractors, at
[http://www.defenseindustrydaily.com/10b-afcap-iii-program-contract-provi d e s -
5 LOGCAP contracts have been previously awarded for work in Rwanda, Haiti, Saudi
Arabia, Kosovo, Ecuador, Q atar, Italy, southeastern Europe, Bosnia, South Korea, Iraq, and
Kuwait. Under LOGCAP, private sector contractors are used to provide a broad range of
logistical and other support services to U.S. and allied forces during combat, peacekeeping,
humanitarian and training operations.
7 U.S. Congress. Deficient Electrical Facilities at U.S. Facilities in Iraq. Hearing before the
House Oversight and Government Reform Committee. Statement of Jeffrey P. Parsons,
Executive Director, Army Contracting Command, U.S. Army Materiel Command, July 30,
held a competition to award the second LOGCAP contract (LOGCAP II). The
contract, a cost-plus award fee contract for one base year followed by four option
years was awarded to Dyncorp on January 1, 1997. The third LOGCAP contract
(LOGCAP III) was awarded in 2001 to Halliburton/KBR.8
LOGCAP III, a ten-year contract (one base year followed by nine option years),
was awarded to Halliburton/KBR to perform a variety of tasks. Initial press reports
indicated that the 2001 LOGCAP III contract would be for the development of a
contingency plan for extinguishing oil well fires in Iraq; however, subsequent press
reports indicate that the contract included such tasks as providing housing for troops,
preparing food, supplying water, and collecting trash. This contract was awarded
under a cost-plus-award-fee, Indefinite-Delivery/Indefinite-Quantity (ID/IQ)
contract.9 The 2001 contract was based on specific task orders which are issued
individually and only for those services that DOD felt were necessary to support the
mission in the near term. During 2003, LOGCAP III contract rose to more than $3.5
billion. According to one press account, Halliburton/KBR reportedly earned a fixed
incentive bonus,10 while another press account reported that the Halliburton/KBR
LOGCAP III contract was a cost-plus, award fee contract that earned a 2% fixed fee
with the potential for an extra 5% incentive fee.11
The fourth LOGCAP contract (LOGCAP IV) was executed with a different
acquisition strategy. According to the Army, the LOGCAP IV contract award as
based on a full and open competition. Instead of using a single contractor, the
contract called for multiple contractors. Competitions were held and the contracts
were awarded based on what represented the best value to the government.12 In best
value source selections, the government may make trade offs to make awards based
on factors other than costs or technical superiority. The use of multiple LOGCAP
contractors is reportedly intended to reduce the government’s risk. Under the new
strategy, the three performance contractors may compete for individual LOGCAP
task orders, creating a competitive environment meant to control costs and enhance
LOGCAP IV Contract Awards
The planning contract was awarded to Serco. In August 2006 the
Army held a competition to select a logistical planning and program support
8 KBR was formerly known as Brown and Root Services. Brown & Root Services was the
original LOGCAP contractor.
9 Indefinite delivery/indefinite quantity contracts, also known as ID/IQ contracts, supply an
indefinite quantity of supplies, goods, or materials for an indefinite period of time. See
FAR, Part 16, Types of Contracts.
10 Jaffe, Greg and King, Neil, Jr. U.S. General Criticizes Halliburton. Wall Street Journal,
March 15, 2004.
11 See the Center for Public Integrity’s website at [http://www.publicintegrity.org/wow/]
under the section for Windfalls of War, U.S. Contractors in Afghanistan and Iraq.
12 FAR, Part 15. Contracting by Negotiation.
contractor for LOGCAP IV. Two proposals were received and in February 2007 the
ASC selected Serco, Inc., of Vienna, VA. This contract will have a minimum value
of $613,677 with a contract period of one base year followed by up to four one-year
options with a maximum annual contract value of $45 million and a maximum
contract value of $225 million.13
The ASC news release announcing the initial award selection described the
range of logistical and program services provided under the contract. They appear
on ASC website.
!Augmenting the Army’s capability to develop and update worldwide
management and staffing plans for contingencies;
!working with LOGCAP IV performance contractors to assure that
they understand these plans;
!helping theater planners integrate LOGCAP into their plans;
!assisting planners in incorporating a broad range of contracted
!developing scopes of work officially referred to as procurement
!preparing independent government cost estimates which are
compared against the contractor’s bids to assure valid costs for task
!conducting analysis of how performance contractors will do the
work outlined in the task orders’ scopes of work;
!analyzing performance contractors’ costs;
!working with the Army to measure LOGCAP IV contractor
!recommending process improvements in the above actions.14
ASC selected the performance contractors. The Army conducted a
competition to select up to three performance contractors for services similar to those
rendered under LOGCAP III.15 Solicitations were issued in October 2006 and six
13 U.S. Army Sustainment Command, February 16, 2007; News Release, U.S. Army
Sustainment Command, June 27, 2007.
14 Ibid, p. 1.
15 From the Army’s FY2008 Budget Estimates for the Global War on Terrorism: LOGCAP
augments combat support and combat service support force structure by reinforcing military
assets with civilian contract support. The program provides primarily base life support
services to the forces in theater. Base life support services provide a full spectrum of
services, including food service, power generation, electrical distribution, facilities
management, dining facility operations, pest management, hazardous and non-hazardous
waste management, latrines, water systems, billeting management, fire fighting and fire
protection services, and laundry service operations. In Iraq, the program provides for the
Multi-National Force — Iraq base logistics support, base camp reorganization, the
International Zone, Camp Bucca Prisoner of War base operations support, and contractor
support management in theater. In Afghanistan, the program manages base operations
support for the Coalition Joint Operations Area — Afghanistan, and the Kabul, Bagram,
proposals were received. In June 2007 the ASC selected three companies to serve
as performance contractors - DynCorp International LLC, Fort Worth, TX; Fluor
Intercontinental, Inc, Greenville, SC; and KBR, Houston, TX.
Protests. On June 27, 2007 the losing companies filed protests with GAO
over the LOGCAP IV award decision.16 GAO sustained the protests on October 5,
2007. The Army reopened the competition. Five companies submitted bids. On
April 17, 2008, the Army announced that it would re-award the LOGCAP IV contract
to the three companies previously awarded contracts under LOGCAP IV.
Contract Details. The LOGCAP IV contract will cover a range of services:
!supply operations, including food, water, fuel, spare parts, and other
!field operations, including food, laundry, housing, sanitation, waste
management, postal services, and morale, welfare and recreation
!other operations, including engineering and construction; support to
the communication networks; transportation and cargo services; and
facilities and repair.17
LOGCAP IV contracts were awarded as ID/IQ contracts with one base year
followed by nine option years. Each company will compete for task orders. Each of
the three contracts will have a maximum value of $5 billion per year, with a
collective annual maximum value of $15 billion and lifetime maximum value of
$150 billion for LOGCAP IV.18
Kandahar, and Salerno airfields. In Kuwait, the program manages Camps Spearhead, Udari,
Arifjan; theater Retrograde operations; the theater-wide transportation mission; theater oil
analysis and test facilities; management and diagnostic equipment, and bulk fuel operations.
Army Operations and Maintenance, Volume 1, February 2007, p. 13, at
16 Kelley, Matt. GAO Challenges $150B Contract Awarded By Army: Urges Review of 10-
year Deal to Support Troops. USA Today, October 31, 2007, p. 5A. According to the
article, the ASC spokesperson identified was Daniel Carlson. According to Dan Gordon,
a GAO official identified in the article, the ruling was issued under seal. Also, see GAO
Upholds Protests to Army’s Award of $50 Billion for LOGCAP 4. Engineering News-
Record, November 5, 2007, Construction Week; pg. 9, Vol. 259, No. 16. An ASC
spokesperson announced that the LOGCAP III contract would be extended while the Army
made a final decision.
17 Sheftick, Gary. Three Firms to Vie for LOGCAP Services in Theater. Department of
Defense, U.S. Army Release. April 18, 2008.
18 U.S. Army Sustainment Command. ASC Selects LOGCAP IV Contractors, June 27,
Legislation passed in the FY2008 National Defense Authorization Act (P.L.110-
181) requires increased oversight and accountability for DOD contracting during
combat operations. The House passed H.R. 5658, their version of the Fiscal Year
(FY) 2009 National Defense Authorization bill on May 22, 2008 and the bill was
later placed on the Senate Legislative Calendar. Overall these provisions seek to
enhance competition, reduce sole-source contracts, improve the acquisition
workforce, address waste, fraud, and mismanagement, and provide mechanisms for
greater oversight and transparency. A group of twenty-four provisions included in
the bill are known as the Clean Contracting Act of 2008. A similar bill, H.R. 6069,
was introduced in the second session of the 109th Congress.
The Senate introduced S. 3001, their version of the FY2009 Defense
Authorization bill, on May 12, 2008, and placed it on the Legislative Calendar. One
provision, Section 812, would establish a DOD Contingency Contracting Corps to
ensure the capability to provide staff for deployment both within and outside of the
Policymakers continue to express concern over the oversight of Iraq contracts
for several reasons including the expense and difficulty of managing logistical
support contracts; allegations and reported instances of contract waste, fraud, abuse,
and financial mismanagement; and questions regarding DOD’s ability and capacity
to manage such contracts. Some policymakers have raised questions as to whether
DOD has the right mix of acquisition workforce personnel trained and equipped to
oversee these large-scale contracts. Due to such concerns, Congress has extended the
tenure of the Office of the Special Inspector General for Iraq Reconstruction (SIGIR).
From March 2004 through April 2008 SIGIR conducted audits and investigations and
presented recommendations for improving the management of Iraq reconstruction
and relief activities.19
Recent assessments from GAO, DOD’s IG, and the SIGIR reveal a lack of
Federal oversight, management, and accountability for funds spent for Iraq
contracting. An audit conducted by the DOD IG revealed that the Federal
government failed to substantiate the disbursement of at least $7.8 billion of $8.2
billion dollars spent for goods and services in Iraq. In a May 22, 2008 congressional
hearing before the House Oversight and Government Reform Committee, DOD
officials revealed estimates that the Army disbursed $1.4 billion in commercial
19 See the Special Inspector General for Iraq Reconstruction, Quarterly Report to Congress,
April 30, 2008, at [http://www.sigir.mil/reports/quarterlyreports/default.aspx]. The SIGIR
replaced the Inspector General for the Coalition Provisional Authority (CPA-IG). As
provided for in P.L. 108-106, the SIGIR provides an independent and objective audit,
analysis, and investigation into the use of U.S.-appropriated resources for Iraq relief and
reconstruction. The SIGIR, Stuart W. Bowen, Jr., was appointed as CPA-IG on January 20,
2004. He reports to both the Department of State and the Department of Defense, provides
quarterly reports and semi-annual reports to Congress, and has offices in Baghad and
Arlington, VA. For a summary of the history of U.S. reconstruction assistance in Iraq, see
CRS Report RL31833, Iraq: Recent Developments in Reconstruction Assistance, by Curt
payments that lacked the minimum supporting justification and documentation for
a valid payment - such as certified vouchers and invoices. In one reported instance,
a $320 million payment in cash was made without justification beyond a signature.20
The Defense Base Act (DBA)and LOGCAP. Congress is also interested
in costs under the Defense Base Act (DBA). The DBA requires that many Federal
government contractors and subcontractors provide workers’ compensation insurance
for their employees who work outside of the United States.21 The U.S. Army’s
LOGCAP covers costs for DBA insurance and includes significant overheard and
other costs beyond the costs of the actual insurance claims.
In September 2007, the USAAA (U.S. Army Audit Agency) released its audit
report of DBA costs under LOGCAP and uncovered rising program costs and wide
fluctuations in insurance rates. In early 2007, an audit of the DBA program was
initiated by the U.S. Army Audit Agency (USAAA) due to several factors, including
the growing complexity of the DBA program, rising program costs, and wide22
fluctuations in insurance rates. The audit report stated that the costs of DBA
insurance charges were paid through the Army’s LOGCAP contract with KBR.
Chairman Waxman offered the following testimony on the DBA financial
transactions under the LOGCAP contract.
On September 28,2007, the Army Audit Agency issued a report examining
DBA payments under the single largest contract in Iraq, KBR’s $27 billion
contract to provide meals, housing, laundry, and other logistical support to
the troops, also known as the Logistics Civil Augmentation Program
(LOGCAP). The findings in this audit provide an illustration of the waste
in the DBA program.
In its audit, the Army Audit Agency reported that the Army had reimbursed
KBR for DBA charges of $284 million made by its insurance company
AIG through fiscal year 2005. Of this amount, the auditors reported that
AIG would be required to pay out only $73 million in actual claims. The
auditors observed that “the cost of DBA insurance substantially exceeded
the losses experienced by the LOGCAP contractor.”
20 U.S. Congress. Accountability Lapses in Multiple Funds for Iraq. Testimony of Mary L.
Ugone, Deputy Inspector General for Auditing, U.S. Department of Defense, Office of the
Inspector General. Hearing before the House Oversight and Government Reform
Committee, May 22, 2008.
21 The provisions of the Defense Base Act (DBA) are provided in statute at 42 U.S.C. §§
at 33 U.S.C. §§ 901-950. Regulations implementing the DBA are provided in Parts 701-704
of Title 20 of the Code of Federal Regulations (CFR) and in the Federal Acquisition
Regulation at 48 C.F.R. §§ 28.305, 52.228-3, and 52.228-4.
22 The USAAA does not publicly release its audit reports. However, the House Committee
on Oversight and Government Reform has posted a copy of this report, titled Audit of
Defense Base Insurance for the Logistics Civil Augmentation Program, Audit of Logistics
Civil Augmentation Program Operations in Support of Operation Iraqi Freedom, on its
website at [http://oversight.house.gov/documents/20080515102103.pdf].
The data the Committee received from AIG indicate that expenses in
providing DBA insurance are typically 40% of premiums. Using this
estimate, AIG’s expenses under the LOGCAP contract would be $114
million, and its underwriting profit would be $97 million. The Army Audit
Agency concluded that AIG’s rates appear “unreasonably high” and
“excessive,” warning of an “increased risk that the Army could be
overcharged.” The audit report found that there is “a high risk that the
contractor may have been paying more than necessary for this insurance” and
that “significant annual increases insurance companies made to DBA
insurance rates don’t appear to be consistent with the risk.” Army auditors
also raised concerns about the cost-plus nature of these charges.
As the auditors stated, “because the LOGCAP contract is primarily a cost-
reimbursable contract, the cost of this insurance is ultimately passed on to the
government. As a result, there is little incentive for KBR to control its costs
for DBA insurance. To the contrary, under the LOGCAP contract, KBR itself
is paid its fee as a percentage of these DBA costs, ranging from 1% to 3%,
meaning that KBR may have received between $2.8 million and $8.4 million
on top of AIG’s23 profits. Although the Army auditors found that “Army
personnel at all levels appear to be aware of, and concerned with, the high
cost of DBA insurance,” they concluded that “sufficient action hadn’t been
taken to scrutinize these costs.” The auditors also warned that “we believe
similar problems could exist on other contracts outside the LOGCAP
Awarding of Defense Contracts
In most cases, federal government contracts are awarded under “full and open
competition.” However, there are exceptions, particularly during times of war.
Full and Open Competition. In general, authorities that govern the
awarding of most federal government contracts can be found in the United States
Code (U.S.C.) and the Federal Acquisition Regulation (FAR). The Competition in
Contracting Act of 198425 explicitly states that the federal government “shall obtain
full and open competition through use of the competitive procedures in accordance
with the requirements of this title and the FAR.”26 The FAR and the Defense Federal
23 AIG stands for American International Group, Inc.
24 U.S. Congress. House Oversight and Government Reform Committee Hearing. Defense
Base Act Insurance: Are Taxpayers Paying Too Much? Supplemental Information on
Defense Base Act Insurance Costs. Memorandum from the Majority Staff, to the Members
of the House Oversight and Government Reform Committee, May 15, 2008, p. 7.
25 41U.S.C. 253. CICA can also be found in Title 10 U.S.C., Chapter 137, and was included
in Section 805 of the FY2004 National Defense Authorization Act (P.L. 108-136).
26 41 U.S.C. 253 (a)(1)(A).
Acquisition Regulation Supplement (DFARS) give DOD at least seven exceptions
to the use of other than full and open competition in the awarding of contracts.27
Two of the seven circumstances are (1) when the Secretary of Defense
determines that DOD’s need for a property or service is of such an “unusual and
compelling urgency” that the United States would be seriously injured unless DOD
is permitted to limit the number of sources from which it solicits bids or proposals;
and (2) when the use of full and open competition would compromise national
Emergency Contracting Authorities. Title 41 USC Section 428a grants
special emergency procurement authority to heads of executive agencies where it is
determined that a procurement is to be used in support of a contingency operation,
or to facilitate defense against or recovery from nuclear, biological, chemical, or
Contingency Contracting. Contingency contracting differs from
emergency contracting - the first usually describes situations where urgent
requirements are necessitated by disasters, while the second usually describes
military, humanitarian, or peacekeeping operations.28 DOD has developed initiatives
to strengthen DOD contracting operations, particularly in contingency contracting
situations.29 Section 817 of the National Defense Authorization Act for Fiscal Year
(FY) 200630 directs the Secretary of Defense, in consultation with the Chairman of
the Joint Chiefs of Staff, to develop a joint policy for contingency contracting during
27 The Defense Federal Acquisition Regulation and AIDAR are supplements to the FAR.
See DFARS, Subpart 206.3, and AIDAR, Subpart 706.3, Other Than Full and Open
Competition. The exceptions are: (1) There is only one responsible source available to
fulfill the contract requirements; (2) the federal agency’s need for these goods or services
is of such an unusual and compelling urgency that the federal government would be
seriously injured if this contract were not awarded; (3) the federal government needs to
ensure that suppliers are maintained in the event of a national emergency, or to achieve
industrial mobilization, or to establish or achieve or maintain an engineering, development,
or research capability; (4) The federal government has an international agreement to make
this acquisition through means other than through full and open competition; (5) a statute
specifically authorizes or requires that the contract be made through a specific source; (6)
The use of full and open competition may compromise national security; (7) The public
interest would be better served by use of other than full and open competition. The
procedures for submitting written justifications to use other than full and open competition,
including review requirements and delegation of authority, are outlined in DFARS, Subparts
206.303-1 and 206.304, and AIDAR 706.3. For a more detailed discussion on the seven
exceptions to the use of full and open competition, refer to CRS Report RS21555, Iraq
Reconstruction: Frequently Asked Questions Concerning the Application of Federal
Procurement Statutes, by John R. Luckey.
28 Drabkin, David, and Thai, Khi V. Emergency Contracting in the US Federal Government.
Journal of Public Procurement 2007, Vol. 7, No. 1, p. 84.
29 For further information on DOD Procurement and Acquisition Policy governing
contingency contracting, refer to [http://www.acq.osd.mil/dpap/pacc/cc/about.html], visited
November 7, 2007.
30 P.L. 109-16.
combat operations and post-conflict operations no later than one year from the bill’s
enactment. Sections 815 and 854 of the John Warner National Defense
Authorization Act for FY2007required DOD to report to Congress on contingency
contracting requirements and program management, and to develop instructions to
implement a contingency contracting program. The report was issued in October
Rapid Acquisition Methods. Section 811 of the FY2005 National32
Defense Authorization Act grants the Secretary of Defense limited rapid acquisition
authority to acquire goods and services during combat emergencies. Also, Title 10,
Section 2304 outlines the use of ID/IQ task orders, sealed bidding, certain contract
actions, and set-aside procurement under section 8(a) of the Small Business Act33 as
examples of ways to expedite the delivery of goods and services during combat
operations or post-conflict operations.
Audits, Investigations, and Reports
Role of Federal Agencies. No one federal agency has the sole mission
to audit, investigate, or oversee DOD-appropriated funds for troop support services
under LOGCAP. Multiple agencies share responsibility, among them the Defense
Contract Audit Agency (DCAA), the Defense Contract Management Agency
(DCMA), the Army Audit Agency (AAA), and the DOD Inspector General.
Special Inspector General for Iraq Reconstruction (SIGIR). Media
reports suggests that a perceived lack of transparency in the earliest Iraq contracts led
to the appointment of the Special Inspector General for the Coalition Provisional
Authority (now SIGIR). SIGIR Stuart Bowen has audited and investigated contracts
for Iraq reconstruction and relief funds, although some projects have involved a34
blending of IRRF funds with DOD appropriated funds. The SIGIR’s additional
investigations into LOGCAP contracts have largely described LOGCAP contracts as
lacking transparency, oversight, and financial accountability, and his investigations
have documented some cases of waste, fraud, abuse, and financial mismanagement.
31 Report on DOD Program for Planning, Managing, and Accounting for Contractor Services
and Contractor Personnel during Contingency Operations, accompanied by a memorandum
to the Honorable Richard B. Cheney from the Honorable P. Jackson Bell, Deputy Under
Secretary of Defense for Logistics and Materiel Readiness, October 15, 2007. Section 815
covers the implementation of DOD Instruction (DODI) 3020.41,Contractor Personnel
Authorized to Accompany Armed Forces, October 3, 2005, at
[http://www.dtic.mil/whs/direc tives/corres/ html/302041.htm] .
32 Section 806 of the Bob Stump National Defense Authorization Act for Fiscal Year 2003
(10 U.S.C. 2302 note) is amended through the passage of Section 811.
33 15 U.S.C. 637(a).
34 For a discussion of contract funds for Iraqi Relief and Reconstruction projects, see CRS
Report RL31833, Iraq: Recent Developments in Reconstruction Assistance, by Curt Tarnoff.
Also, for a discussion on federal procurement statutes as they affect Iraq reconstruction
projects see CRS Report RS21555, Iraq Reconstruction: Frequently Asked Questions
Concerning the Application of Federal Procurement Statutes, by John R. Luckey.
According to the Congressional Budget Office, the SIGIR has produced more than
150 reports, audits, or investigations of reconstruction-related activities.35 Estimates
have been made that the SIGIR’s work has resulted in significant benefits to the
In June 2007 the SIGIR released a report based on its partial audit of Task
Order 130, awarded to KBR on April 27, 2006 to provide support services to officials
at the U.S. Embassy in Iraq as well as other Iraq sites. This report found substantial
deficiencies in both KBR’s ability to provide enough data for the SIGIR to perform
an adequate audit and investigation of (what appeared to be) gross overcharges for
fuel and food services. Additionally, the report found that the government’s
oversight and management of the contract was inadequate and contributed to the
SIGIR’s inability to completely audit and investigate the contract - including an
evaluation of the government’s ability to provide oversight and management.37
Overall, the SIGIR has recommended that the federal government “generally
avoid the use of sole-source and limited-competition contracting actions.”38 The
report concludes that the use of sole-source and limited competition contracting in
Iraq should have ended sooner, and that contracts issued previously under limited or
sole-source competition should have been subject to re-competition.
Latest SIGIR Review
The latest LOGCAP review is a continuation of a past review of LOGCAP
Task Order 130 (awarded on April 27, 2006 with an estimated value of $283 million)
and a new review of LOGCAP Task Order 151 (awarded on June 6, 2007 with an
estimated value of $200 million). Both task orders were awarded to KBR for support
services to the Chief of Mission and Multi-National Force-Iraq staffs (located at the
U.S. Embassy-Iraq) and for services at other Chief of Mission sites within Iraq
(located in Baghdad, Basra, Al Hillah and Kirkuk.) SIGIR conducted its review at
KBR sites in Baghdad and involved interviews with personnel responsible for the
administration and oversight from DCMA, DCAA, and DOS; personnel with the
Joint Area Support Group-Central appointed as the Contracting Officer’s Technical
Representatives (COTRs); the LOGCAP Task Order 151 Support Officer; personnel
35 Paying for Iraq Reconstruction. An Update of the January 2004 analysis. Congressional
Budget Office, December 8, 2006.
36 Senator Collins Works To Extend The Term of the Office that Oversees Billions in Iraqi
Reconstruction Dollars. Press Release of the United States Senate Committee on
Governmental Affairs, November 13, 2006. Also, see SIGIR website [http://www
.sigir.mil/] for audits reports.
37 Logistics Civil Augmentation Program Task Order 130: Requirements Validation,
Government Oversight, and Contractor Performance. SIGIR 07-001, June 22, 2007, at
38 Lessons in Contracting from Iraq Reconstruction. Lessons Learned and
Recommendations from the SIGIR, July 2006.
at the Army’s Logistic and Budget Offices, and KBR managers and operational
personnel. 39 From the report, here is an excerpt which described the costs.
Because these task orders provided support to both the Department of
Defense (DOD) and Department of State (DOS) missions in Iraq, DOD and
DOS agreed that the reimbursement of costs associated with these task
orders would be shared 60% by DOS and 40% by DOD. The total cost of40
these four task orders is approximately $1.5 billion.
Overall, the SIGIR’s audit and investigation found that the federal
government and KBR had improved its oversight and management of Task Orders
130 and 151. However, the report identified areas where the government should
make specific improvements in both oversight and management.41
DOD Inspector General. Thomas F. Gimble, Principal Deputy Inspector
General for the Department of Defense, testified at the September 20, 2007 hearing
before the House Armed Services Committee on “Accountability During
Contingency Operations: Preventing and Fighting Corruption in Contracting and42
Establishing and Maintaining Appropriate Controls on Materiel.” In his testimony
he described DOD’s past and present efforts to provide oversight for contracting
during contingency operations.
To date, over $550 billion has been appropriated to the Department of
Defense in support of the men and women of our Armed Forces in
Southwest Asia and the fight against terrorism. To provide oversight, we
have over 225 personnel working on 29 audits and 90 investigations that
address a wide variety of matters to include contracting, accountability, and
required documentation. Additionally, we are working with other DoD
organizations, such as the Army Audit Agency, the Army Criminal
Investigation Command, and the Defense Finance and Accounting Service,
to evaluate and provide recommendations for actions addressing these43
critical mission support areas.
He also described the formation of a new partnership to combine the efforts
of multiple federal agencies to combat both waste, fraud, abuse, and mismanagement
of Iraq reconstruction contracts.
39 Both Task Orders are a continuation of services previously awarded under Task Order
Program Management, Reimbursement, and Transition. SIGIR-08-002, October 30,
2007,Appendix A, Scope and Methodology p. 22, at [http://www.sigir.mil
40 Logistics Civil Augmentation Program Task Orders 130 and 151: Program Management,
Reimbursement, and Transition. SIGIR-08-002, October 30, 2007, pages 1-2, at
41 Ibid, pp. 4-20.
42 Statement of Mr. Thomas F. Gimble, Principal Deputy Inspector General, Department of
Defense, before the House Armed Services Committee, September 20, 2007.
43 Ibid, p. 1.
More recently, as a result of the magnitude of alleged criminal activities
within the Iraqi theater, a group of Federal agencies has formalized a
partnership to combine resources to investigate and prosecute cases of
contract fraud and public corruption related to U.S. Government spending
for Iraq reconstruction. The participating agencies in the International
Contract Corruption Task Force (ICCTF) are DCIS; Army CIDs Major
Procurement Fraud Unit; the Office of the Inspector General, Department
of State; the FBI; the Special Inspector General for Iraq Reconstruction;
and the Office of the Inspector General, Agency for International
The ICCTF has established a Joint Operations Center which is a case
coordination cell and criminal intelligence element aimed at achieving
maximum interagency cooperation to successfully prosecute fraud and
corruption cases in support of the war effort in Iraq. The mission and
objectives of the ICCTF are a shared responsibility of the participating
agencies. Case information and criminal intelligence are shared without
reservation and statistical accomplishments will be reported jointly.
As a result of closed and ongoing investigations, five Federal criminal
indictments and ten Federal criminal information have been issued, and two
Article 32 hearings under the Uniform Code of Military Justice have been
conducted. As a result of the investigations, nine U.S. persons and one
foreign person have been convicted of felonies, resulting in a total of
approximately fifteen years of confinement and eleven years of probation.
Four individuals and one company were debarred from contracting with the
U.S. Government; nineteen companies and persons were suspended from
contracting; and two contractors signed settlement agreements with the
U.S. Government. In all, $9.84 million was paid to the U.S. in restitution;
$323,525 was levied in fines and penalties; $3,500 was forfeited; and44
$61,953 was seized.
Government Accountability Office (GAO). GAO has identified DOD
contract management as a high risk area and monitors DOD’s performance with
periodic progress updates.45 GAO has conducted numerous studies of Iraq
contracting including several studies of logistical support contracts.46 Since 2003
GAO has issued a number of Iraq-related reports and testimonies to Congress.
The Comptroller General David Walker appeared in July 2007 before the
Senate Homeland Security and Governmental Affairs Committee to discuss four
specific challenges facing federal agencies in the oversight and management of
contracts. There he made several important observations:
Managing risks when requirements are in transition requires effective
oversight. DOD lacked the capacity to provide sufficient numbers of
contracting, logistics, and other personnel, thereby hindering oversight
44 Ibid, pp. 11-13.
45 “High Risk Area: Defense Contract Management.” GAO-05-207, February 2005.
46 GAO-04-854, Military Operation. DOD’s Extensive Use of Logistics Support Contracts
Requires Strengthened Oversight. July 2004.
efforts. The challenges faced in Iraq are a symbol of systematic challenges
facing DOD. DOD cannot develop a complete picture of the extent to
which it relies on contractors to support its operations. Information on the
number of contractor employees, and the services they provide, is not
aggregated within DOD or its components. DOD recently established an
office to address contractor support issues, but the office’s specific roles
and responsibilities are under study. DOD and its contractors need to
clearly understand DOD’s objectives and needs. To produce desired
outcomes with available funding and within required time frames, they
need to know the goods or services required, the level of performance or47
quality desired, the schedule, and the cost.
Potential Oversight Issues
Potential contract oversight issues that Congress may choose to examine
include various aspects of contract administration such as contract costs,
development of contract requirements, costs-reimbursement and sole-source
contracts; transparency and the size, shape, and skill diversity of the acquisition
Contract Oversight. One rationale often cited for the outsourcing of
program management to industry is that DOD no longer has the in-house expertise
needed to manage such complicated acquisition programs. Some Members of
Congress may want DOD to develop a long-term plan to restore in-house expertise
to make the government a smarter customer. Because of several cases in which high
profile weapons acquisition programs have been affected by escalating costs and
technical shortcomings, Congress may choose to review the management of
individual programs and the evolution of DOD’s acquisition management processes
with an eye toward using the FY2008 funding bills to strengthen the government’s
hand in dealing with industry. As an example, Secretary of the Navy Donald C.
Winter and Chief of Naval Operations Adm. Michael G. Mullen have reported that
the Navy intends to reclaim some of the authority over ship design it has ceded to
industry. Congress may also choose to study the Army’s Future Combat System
(FCS) and may question the amount of managerial discretion the Army has vested
in the Lead System Integrator (LSI).48
47 GAO-07-358T, p. 13. Also see GAO-07-1098T. Federal Acquisitions and Contracting.
Systemic Challenges Need Attention. Statement of David M. Walker, Comptroller General
of the United States, July 17, 2007; GAO-07-145. Military Operations: High-Level DOD
Action Needed to Address Long-standing Problems with Management and Oversight of
Contractors Supporting Deployed Forces, December 2006, p. 53.; and GAO-04-854.
Military Operations: DOD’s Extensive Use of Logistics Support Contracts Requires
Strengthened Oversight. July 2004, p. 67.
48 For a discussion of the LSI concept, see CRS Report RS22631, Defense Acquisition: Use
of Lead System Integrators (LSIs) — Background, Oversight Issuers, and Options for
Congress, by Valerie Bailey Grasso; CRS Report RL33753, Coast Guard Deepwater
Program: Background, Oversight Issues, and Options for Congress, by Ronald O’Rourke;
and CRS Report RL32888, The Army’s Future Combat System (FSC): Background and
Issues for Congress, by Andrew Feickert.
Contract Administration. Contract administration includes contract
management and contract oversight. FAR Part 37 states that “agencies shall ensure
that sufficiently trained and experienced professionals are available to manage
contracts.”49 The burden rests with the federal government to ensure that enough
appropriately-trained professionals are available to manage contracts. This is
essential, particularly before the requirements generation process, when the
government determines the scope of work to be completed. Contract management
is also described in the Office of Federal Procurement Policy’s (OFPP) “Guide To
Best Practices for Contract Administration” where it states that “The technical
administration of government contracts is an essential activity....absolutely essential
that those entrusted with the duty ensure that the government gets all that it bargains
for...and they must be competent in the practice of contractor administration.”50
Over the past few years the size, shape, and complexity of logistical support
service contracts have grown with the technical requirements. However, the size of
the federal contractor workforce has decreased. There is now an imbalance - there
are fewer federal contracting officials to manage the large-scale contracts and in
some cases the government has sought to hire contractors to do the job that federal
employees use to perform. For example, GAO reported that military officials
utilizing LOGCAP had little understanding of LOGCAP or their contract
management responsibilities. Additionally, some logistical support units intended
to assist military commanders had no prior LOGCAP or contracting experience.51
Two former OFPP administrators, Steven Kelman and Allan Burman, stated
that the current contracting situation creates a crisis. Here they offer their
Hiring contracting officials is hardly the way to dress for political success -
who wants to bring in more “bureaucrats?” — but there can’t be well-
managed contracts without people to manage them. The current situation
creates a vicious circle: Overstretched people make mistakes, producing
demands for more rules, creating additional burdens, giving people even52
less time to plan effective procurement and manage performance.
It is important that both civilian and military procurement sectors have
qualified and experienced contract professionals. In the case of service contracts,
having professionally trained contracting personnel could be even more critical than
contracts for tangible goods. With tangible goods, there is an identifiable product.
In the absence of a product, it becomes even more important that DOD and the
contractor both exercise good stewardship of federally appropriated dollars.
49 FAR Part 37.
50 OFPP Guide at [http://www.acqnet.gov/comp/seven_steps/library/OFPPguide-bp.pdf].
51 Logistical support units write performance statements of work, prepare independent
government cost estimates, and review contractor estimates on behalf of the government.
See GAO-04-854. Military Operations: DOD’s Extensive Use of Logistics Support
Contracts Strengthen Oversight, July 21, 2004.
52 Burman, Allan and Kelman, Steven. “Better Oversight of Contractors,” The Boston
Globe, January 16, 2007, p. A9.
DOD Contracting Officials. Contracting officials are expected to make
tough decisions. As an example, Ms. Bunnatine Greenhouse, formerly the highest
ranking civilian at the U.S. Army Corps of Engineers (USACE), raised important
questions on the rationale for awarding KBR contracts without competition. She
objected to the awarding of one contract award as well as the five-year contract
term.53 The basis for her refusal to approve the proposed five-year, sole-source
contract between KBR and the U.S. Army [for the Restore Iraqi Oil (RIO) contract]
was because: (1) KBR had been paid $1.9 million to draft a contingency plan to
design the “guts” of the contract, including the process, budget, and other details; and
(2) selecting KBR for the five-year contract would violate procurement protocol, as
(reportedly, Ms. Greenhouse stated) contractors who draw up a contingency plan
cannot be allowed to bid on the job to execute the same plan.54 She stated that
bidding on the contract would give KBR an unfair advantage over any competitors.
When pressured to sign the KBR contract, Ms. Greenhouse added the following
contract language: “I caution that extending this sole source effort beyond a one-year
period could convey an invalid perception that there is not strong intent for a limited5556
competition.” The contract was later investigated by the SIGIR. Various media
reports suggested that in the case of Bunnatine Greenhouse, a trained and
experienced senior DOD contract management official was eventually demoted and
later fired for doing her job.57
Another senior DOD civilian testified that he made a decision to award KBR
a task order under the LOGCAP contract without conducting any competition.
Michael Mobbs, then-Special Assistant to the Undersecretary of Defense for Policy,
testified that he made the decision to award KBR the contingency planning contract
over the objections of an attorney with the Army Materiel Command. The attorney
had determined that the oil-related task order was outside of the scope of the
LOGCAP troop support contract. Later, GAO concluded that the lawyer’s position
53 Schnayerson, Michael. “Oh, What a Lucrative War,” Vanity Fair, April 2005, p. 9.
54 For additional information, see CRS Report RL32229, Iraq: Frequently Asked Questions
About Contracting, by Valerie Bailey Grasso (Coordinator).
55 Vanity Fair, p. 149.
56 It should be noted here that the KBR sole-source contract, according to the SIGIR,
complied with applicable federal regulations for sole-source contracts, according to the
SIGIR. The SIGIR concluded that “the justification used was that KBR had drafted the
Contingency Support Plan (CSP), had complete familiarity with it, had the security
clearances necessary to implement it, and the contract needed] to be immediately available
to implement.” Lessons In Contracting and Procurement. Iraq Reconstruction. Special
Inspector General for Iraq Reconstruction. July 2006, p. 20.
57 Witte, Griff. Halliburton Contract Critic Loses Her Job. Washington Post, August 29,
Chairman, Committee on Government Reform, House of Representatives, from Henry A.
Waxman, Ranking Minority Member, House of Representatives, November 10, 2004;
Testimony of Bunnatine Greenhouse before the Senate Democratic Policy Committee, June
Dorgan and Frank Lautenberg, and Representative Henry A. Waxman, August 29, 2005.
was the correct one and that the work “should have been awarded using competitive
Development of Contract Requirements. LOGCAP contracts have
often by-passed the process to define realistic funding, appropriate time frames, and
other important requirements through the use of “undefinitized” contract actions.59
Undefinitized contract actions do not require that the DOD contracting official write
a completed performance work statement before the work is performed. Some
proponents of undefinitized task orders have stated that they give the contractor more
flexibility in getting work started sooner. However, recent DCAA audits have found
that these undefinitized task orders have given KBR a significant cost advantage.
Auditors have found that DOD contracting officials were more willing to rely on
KBR’s costs estimates, estimates later found to be greatly inflated. According to
DCAA auditors, DOD contracting officials rarely challenged these cost estimates.
The estimates became the baseline from which KBR established their costs upon
which to bill the government, which later increased their overall profit.
In testimony before the Senate Armed Services Committee, the SIGIR stated
that contracting personnel must be provided with an adequate description of a
customer’s needs. The inability to properly define and prepare requirements60
appeared to be a significant oversight challenge in the Iraq contracting process.
Use of Indefinite-Delivery/Indefinite-Quantity Contracts. FAR
Subpart 16.5 defines ID/IQ contracts.61 In the case of ID/IQ contracts, task and
delivery orders are issued; these orders do not define a firm quantity of goods or
services.62 Task orders are the “to do” portion of the contract, the contractor’s action
list. LOGCAP contracts allow task orders to be approved as needed without being
subject to competition among multiple contractors. Each task and delivery order acts
like a single contract, potentially allowing costly amounts of work to be performed
58 Briefing by Michael Mobbs, Special Assistant to the Undersecretary of Defense for
Policy, for staff of the House Government Reform Committee, June 8, 2003. Also, see
GAO-04-605. Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and
Management Challenges, June 2004.
59 Also referred to as undefinitized task orders.
60 Testimony of the Special Inspector General for Iraq Reconstruction, before the Senate
Armed Services Committee, February 7, 2006.
61 FAR Subpart 16.5 Indefinite delivery/indefinite quantity contracts, also known as IDIQ
contracts, supply an indefinite quantity of supplies, goods, or materials, for an indefinite
period of time. See FAR, Part 16, Types of Contracts. There are three types of indefinite-
delivery contracts: definite-quantity contracts, requirements contracts, and indefinite-
quantity contracts. The appropriate type of indefinite-delivery contract may be used to
acquire supplies and/or services when the exact times and/or exact quantities of future
deliveries are not known at the time of contract award. Pursuant to 10 U.S.C. 2304d and
section 303K of the Federal Property and Administrative Services Act of 1949, requirements
contracts and indefinite-quantity contracts are also known as delivery order contracts or task
62 Indefinite-quantity contracts are also known as delivery order contracts or task order
on a non-competitive basis. Task Order 59 was one of the largest single task orders
on the LOGCAP III contract. It was issued in May 2003 and includes various
discrete functions, supporting up to 130,000 U.S. troops, and has reportedly resulted
in estimates of charges to the government of about $5.2 billion dollars from June
Costs and the Use of No-Bid and Sole-Source Contracts. Much
has been written in the media about the use of sole-source contracting in Iraq.63 In
general, most authorities believe that government contract costs are influenced
significantly by the degree of competition; that having several competitors will
reduce overall cost. However, questions have been raised as to whether contract costs
in a war zone are inherently uncontrollable. DOD has argued that Iraq contracting
costs are expensive because of the uncertainty of war-related requirements for goods
and services. Government contingency contracting in times of war has often favored
using programs such as LOGCAP because it enables contracting officials to move
quickly to secure contractors, who in turn can be deployed quickly into the combat
While full and open competition is the standard for government contracting,
full and open competition has not been the standard for contracting for troop support
services under LOGCAP. One report stated that of the $145 billion in non-
competitive contracts awarded by the federal government in 2005, $97.8 billion was
awarded in “no-bid” contracts. Of that $97.8 billion in contracts, $63.4 billion was
awarded under the rationale that only one contractor could supply the needed goods
or services. The remaining $34.4 billion was awarded in no-bid contracts under a
variety of other exceptions to full and open competition. $8.7 billion was awarded
for emergency situations, and $2.9 billion was awarded for circumstances where a
statute authorizes or requires restricted competition.64 Finally, $47.2 billion in
contracts was awarded in cases where the competitive range was limited to a small
group of companies (referred to as a “limited”competition).
The Special Investigations Division of the House Government Reform
Committee has issued a report titled “Dollars, not Sense: Government Contracting
Under the Bush Administration.” According to this report, in 2000 the federal
government awarded $67.5 billion in non-competitive contracts; that figure rose to
$145 billion in 2005, an increase of 115%. While the contracts awarded were larger,
the value of contracts overseen by the average government procurement official rose
by 83% (between 2000-2005).
Cost-reimbursement Contracts. Cost-reimbursement contracts can be:
(1) cost-plus award fee; (2) cost-plus incentive fee; or (3) cost-plus fixed fee.65 In
63 Sole-source contracts are contracts which are not subject to competition.
64 Dollars, Not Sense: Government Contracting Under the Bush Administration. United
States House of Representatives, Committee on Government Reform - Minority Staff,
Special Investigations Division, p. 7-9.
65 Cost-reimbursement types of contracts provide for payment of allowable incurred costs,
to the extent prescribed in the contract. These contracts establish an estimate of total cost
2000, the federal government spent $62 billion on cost-plus contracts; in 2005, that
figure increased to $110 billion. Nearly half of all costs-plus contracts ($52 billion)
were costs-plus award fee contracts. LOGCAP was the single largest cost-plus award
fee contract, and at one time was valued at about $16.4 billion.66 In costs-plus
contracts, contractor’s fees rise with contract costs. Increased costs means increased
fees to the contractor. There is no incentive for the contractor to limit the
Use of Overhead Fees. The SIGIR’s past investigations into
reconstruction contracts revealed that, in some contracts, overhead expenses
accounted for more than half of the costs that Kellogg, Brown, and Root (KBR)
billed the federal government. A recent audit report, “Review of Administrative
Task Orders for Iraq Reconstruction Contracts,” found that relatively high overhead
costs were charged, and that these costs were significantly higher than work
performed by other companies in Iraq. For these contracts, overhead costs ranged
from 11% to 55% of projected contract budgets. For example, the SIGIR found that
in five KBR projects, administrative costs outdistanced the costs of the projects
alone. For example, the report cites a project where administrative costs totaled
about $52.7 million, while the actual project costs were about $13.4 million. In
another case, the combined administrative costs for five contractors totaled about $6267
million, while the direct construction costs totaled $26.7 million. The SIGIR found
that overhead expenses accounted for more than half of the costs KBR billed the
Overhead fees can also result as a part of fees passed from one contractor to
another. One such example is the case of Blackwater Security Firm’s contract for
private security services in Iraq. Blackwater’s contract paid workers who guarded
food trucks a salary of $600 a day. The company added overhead costs and a 36%
markup to its bill, then forwarded the bill to a Kuwaiti company. The Kuwaiti
company then added costs and profit, then sent the bill to the food company. The
food company did the same, and finally sent the bill to KBR. KBR passed its cost
to DOD. Yet the U.S. Army stated in a congressional committee hearing that it had
never authorized KBR to enter into a subcontracting relationship with Blackwater.
The matter remains pending.68
Transparency. Transparency allows the federal government to better
administer contracts and oversee contractors. For example, the federal government
has had difficulty getting certain contractors to provide important information on
their invoices and billing statements. The SIGIR released a series of audit and
for the purpose of obligating funds and establishing a ceiling that the contractor may not
exceed (except at its own risk) without the approval of the contracting officer.
66 Army Field Support Command, Media Obligation Spreadsheet, April 20, 2006.
67 Powers, Mary Buckner. Congress Moves To Reinstate Iraq Contracting Overseer.
Engineering News-Record, Vol. 257, No. 19, p. 13. November 13, 2006.
68 “Watching War Costs,” The News & Observer, Raleigh, NC, December 9, 2006.
Retrieved January 21, 2007, at [http://www.nexis.com/research/search/submitViewTagged].
investigative reports which drew attention to barriers that hampered the government’s
efforts. In one report, SIGIR Bowen reported that it was difficult to complete the
investigation into the KBR contracts because KBR “routinely and inappropriately
marked their data as proprietary.”69
Another problem with a lack of transparency is the relationship between the
federal government, the prime contractor, and the subcontractors. The federal
government has a contractual relationship with the prime contractor, not with
subcontractors. Thus the government may be somewhat limited in providing full
accountability for tax-payer dollars. While the prime contractor-subcontractor
relationship is between private sector companies, the monies are from public funds.70
Acquisition Workforce. According to DOD, its acquisition workforce
has been reduced by more than 50 percent between 1994-2005.71 In future years,
between 2006-2010, half of the federal acquisition workforce will be eligible to
retire.72 It has been reported that DOD does not have sufficient numbers of
contractor oversight personnel, particularly at deployed locations. This limits DOD’s
ability to assure that taxpayer dollars are being used in a judicious manner. For
example, in recent testimony before Congress, a GAO official reported that if
adequate staffing had been in place, the Army could have realized substantial savings73
on LOGCAP contracts in Iraq. The GAO official also stated that one DCMA
69 Powers, Mary Buckner. Congress Moves To Reinstate Iraq Contracting Overseer.
Engineering News-Record, Vol. 257, No. 19, p. 13. November 13, 2006.
70 “Commentary: Watching War Costs,” The News & Observer, Raleigh, NC, accessed on
January 10, 2007 at [http://www.nexis.com/research/search/submitViewTagged].
71 In 1998, the House National Security Committee asked GAO to review DOD’s progress
in achieving a 25-percent reduction in the acquisition organizations’ workforce, examine the
potential savings associated with such reductions, determine the status of DOD efforts to
redefine the acquisition workforce, and examine DOD’s efforts to restructure acquisition
organizations. GAO concluded that “DOD has been reducing its acquisition workforce at
a faster rate than its overall workforce and is on schedule to accomplish a 25-percent
reduction by the fiscal year 2000. However, potential savings from these reductions cannot
be precisely tracked in DOD’s budget. In addition, some of the potential savings from
acquisition workforce reductions may be offset by other anticipated costs. Such costs
include those for contracting with private entities for some services previously performed
by government personnel (i.e., substituting one workforce for another.” U.S. Congress.
General Accounting Office. Defense Acquisition Organizations: Status of Workforce
Reductions. Report to the Chairman, Committee on National Security, House of
Representatives. GAO/NSIAD-98-161. June 1998. 20 pages. For another source of data
on the federal acquisition, see Report on the Federal Acquisition Workforce, FY2003-2004,
Federal Acquisition Institute Report, Executive Summary, p. vii.
72 S. Assad, Director, Defense Procurement and Acquisition Policy, in testimony before the
Acquisition Advisory Panel, June 13, 2006, p. 57-58 (excerpted from the Final Panel
Working Draft, Report of the Acquisition Advisory Panel to the Office of Federal
Procurement Policy and the U.S. Congress, December 2006.
73 GAO-07-359T. Defense Acquisitions: DOD Needs to Exert Management and Oversight
to Better Control Acquisition of Services. Statement of Katherine V. Schinasi, Managing
official, who is responsible for overseeing the LOGCAP contractor’s performance
at 27 locations, reported that he was “unable to visit all of those locations during his
six-month tour to determine the extent to which the contractor was meeting the
Earlier mandates to reduce the size of the DOD acquisition workforce
reflected Congress’ view that the workforce had not been downsized enough — that
reductions continued to lag in proportion to the decline in the size of the overall
defense budget, in general, and to the acquisition portion of the defense budget, in
particular. At that time, Congress and DOD were at odds over the need for further
reductions in the defense acquisition workforce. Reducing the defense acquisition
workforce had been viewed by the Congress, in the past, as a necessary requirement
for eliminating wasteful spending, and providing DOD with increased funding for
Staffing shortages in the defense contracting personnel to oversee Iraq
contracts have become part of a larger, systemic problem within DOD.75 In reducing
the size and shape of the federal acquisition workforce, an unanticipated result has
been the increase in the growth of the private sector service contracts. With the
growth in service contracting; the increase in the number of complex, billion dollar
contracts; and the decline in the number of federal acquisition workforce employees,
some officials have asserted that there are not enough DOD contracting officials,
onsite in Iraq, who are available and experienced enough to manage the complexities
of the new acquisition programs, or oversee private sector contractors.
It appears to some that DOD has downsized the federal acquisition workforce,
particularly those that oversee large-scale contracts like LOGCAP, to dangerously
low levels. They note that the past downsizing of the defense acquisition workforce
has resulted in the loss of technical personnel and a talent drain on DOD’s ability to
meet its mission and objectives. There are concerns over potential deficits and
imbalances in the skills and experience levels of personnel who manage large-scale
weapon acquisition programs and defense contracts.
Director, Acquisition and Sourcing Management, before the Subcommittee on Readiness
and Management Support Committee on Armed Services, United States Senate, January 17,
74 GAO-07-359T, p. 8.
75 The same observations were made about the U.S. Coast Guard’s Deepwater contract.
According to Admiral Thad Allen, Commandant, the issue concerns “the capacity of our
acquisition staffs to deal with the myriad definitization of task orders, particular line items,
the ability to interact with the extensive amount of nodes that you have in Integrated Coast
Guard Systems...I’m not sure that we understood going how much we had to be prepared to
handle the work load in terms of capacity and competency in human capital, and that’s one
of the main things I’m focusing on.” Cavas, Christopher P. Millions for Deepwater, No One
to Spend It. U.S. Coast Guard Adds Acquisition Experts for Modernization. Defense News,
Vol. 22, No. 2, January 8, 2007, p. 1.
The Gansler Commission. The Secretary of the Army commissioned a
study headed by former Deputy Secretary of Defense Jacques Gansler to analyze
“structural weaknesses and organizational deficiencies in the Army’s acquisition and
contracting system used to support expeditionary operations.” Dr. Gansler has
recently presented the Commission’s findings and recommendations before
Congress.76 Here is an excerpt of the Commission’s analysis of the acquisition
The expeditionary environment requires more trained and experienced
military officers and non-commissioned officers (NCOs). Yet, only 3
percent of Army contracting personnel are active duty military and there
are no longer any Army contracting career General Officer (GO) positions.
The Army’s acquisition workforce is not adequately staffed, trained,
structured, or empowered to meet the Army needs of the 21st Century
deployed warfighters. Only 56 percent of the military officers and 53
percent of the civilians in the contracting career field are certified for their
current positions. Notwithstanding a seven-fold workload increase and
greater complexity of contracting, the Institutional Army is not supporting
this key capability. Notwithstanding there being almost as many contractor
personnel in the Kuwait/Iraq/Afghanistan theater as there are U.S. military,
the Operational Army does not yet recognize the impact of contracting and
contractors in expeditionary operations and on mission success. What
should be a core competence — contracting (from requirements definition,
through contract management, to contract closeout) — is treated as an77
operational and institutional side issue.
The Commission’s report recommends that the Army makes systemic and
fundamental changes in the way it conducts business, and has divided its
recommendations into four major areas as described here.
!Increase the stature, quantity, and career development of military and
civilian contracting personnel (especially for expeditionary
!Restructure the organization and restore responsibility to facilitate
contracting and contract management in expeditionary and CONUS
!Provide training and tools for overall contracting activities in
expeditionary operations; and
!Obtain legislative, regulatory, and policy assistance to enable78
contracting effectiveness in expeditionary operations.
Independent Panel to Examine the Defense Contract Audit
Agency. DOD has asked the Defense Business Board to examine the performance
76 Senate Armed Services Committee, Subcommittee on Readiness and Management Support
on December 6, 2007. [http://armed-services.senate.gov/e_witnesslist.cfm?id=3048].
77 U.S. Army. Urgent Attention Required: Army Expeditionary Contracting, Report of the
Commission on Army Acquisition and Program Management, November 1, 2007, p. 10, at
[http://www.army.mil/docs/Ga nsler_Commi ssion_Report_Final_071031.pdf].
78 Ibid, p. 13.
of the Defense Contract Audit Agency (DCAA) and report their findings within 60
days.79 DCAA has come under increased scrutiny, in part, because of a July 2008
GAO report which investigated certain complaints it received from the FraudNet
hotline alleging questionable and improper auditing irregularities. GAO found that
the allegations were substantiated; the report concluded with the following
observations, as stated below.
In the cases we investigated, pressure from the contracting community and
buying commands for favorable opinions to support contract negotiations
impaired the independence of three audits involving two of the five largest
government contractors. In addition, DCAA management pressure to (1)
complete audit work on time in order to meet performance metrics and (2)
report favorable opinions so that work could be reduced on future audits
and contractors could be approved for direct-billing privileges led the three
DCAA FAOs to take inappropriate short cuts — ultimately resulting in
noncompliance with GAGAS and internal DCAA CAM guidance.
Although it is important for DCAA to issue products in a timely manner,
the only way for auditors to determine whether “prices paid by the
government for needed goods and services are fair and reasonable” is by
performing sufficient audit work to determine the adequacy of contractor
systems and related controls, and contractors compliance with laws,
regulations, CAS, and contract terms. Further, it is important that managers
and supervisory auditors at the three locations we investigated work with
their audit staff to foster a productive, professional relationship and ensure80
that auditors have the appropriate training, knowledge, and experience.
Potential Options for Congress
Congress may choose to consider the following options when examining
DOD contracts for troop support: (1) implementing of the Gansler Commission’s
recommendations; (2) broadening of the jurisdiction of the SIGIR to include DOD
contracts for troop support services (like LOGCAP contracts); (3) convening of a
study of the federal employee and contractor workforce; (4) requiring more detail to
give Congress better information to perform its oversight role; and (5) establishing
a dedicated office to conduct audits and investigation of DOD contracts.
79 From the Defense Business Board’s website: “The Defense Business Board, under the
provisions of the Federal Advisory Committee Act of 1972, as amended, shall provide the
Secretary of Defense, through the Deputy Secretary of Defense, independent advice and
recommendations on effective strategies for the implementation of best business practices
of interest to the Department of Defense. The ultimate objective of this advice is to enhance
the efficiency and effectiveness of organizational support to the nation’s warfighters.”
Board members are appointed by the President and serve for two-year terms. For further
information, refer to [http://www.defenselink.mil/dbb/charter.html].
80 U.S. Government Accountability Office. DCAA Audits: Allegations That Certain Audits
at Three Locations Did Not Meet Professional Statements Were Substantiated. Report to
Congressional Addressees, GAO-09-857, July 2008, p. 65. Also, see Peters, Katherine
McIntire. Defense Taps Independent Panel to Examine Contracting Agency. Government
Executive, August 12, 1008; and Brodsky, Robert. Defense Audit Agency Maps Out
Response to Damaging Report. Government Executive, August 14, 2008.
Option 1: Implementing the Gansler Commission
Perhaps the most significant recommendation of the Gansler Commission is
that the Army address some institutional and cultural issues that may provide an
obstacle to moving forward. The Commission interviewed a number of
knowledgeable Army officials and concluded with the following observations about
the challenges that the Army will face in making significant improvements in its
business operations, as described here in the report:
Those charged with getting the job done have provided valuable insight
into the doctrine, policies, tools, and resources needed for success. Clearly,
the Army must address the repeated and alarming testimony that detailed
the failure of the institution (both the Institutional Army and the
Department of Defense) to anticipate, plan for, adapt, and adjust acquisition
and program management to the needs of the Operational Army as it has
been transformed, since the end of the Cold War, into an expeditionary
force. The Institutional Army has not adjusted to the challenges of
providing timely, efficient, and effective contracting support to the force in
Operation Iraqi Freedom (more than half of which is contractor personnel).
Essentially, the Army sent a skeleton contracting force into theater without
the tools or resources necessary to adequately support our warfighters. The
personnel placed in that untenable position focused on getting the job done,
as best they could under the circumstances — where support is needed in
a matter of hours, or, at best, days. They used their knowledge, skill,
limited resources, and extraordinary dedication to get contracts awarded.
Alarmingly, most of the institutional deficiencies remain four-and-a-half-81
years after the world’s best Army rolled triumphantly into Baghdad.
Option 2: Expanding the SIGIR’s Jurisdiction
Another option is to give the SIGIR the authority to audit and investigate
DOD logistical support contracts in Iraq. The SIGIR has already established a
presence in Iraq, and has issued more than 150 reports, including audits and
investigations. His efforts have largely resulted in the arrest of five people, and the82
convictions of four of them, with more than $17 million in assets seized. The
SIGIR has made several recommendations related to his audit and investigation of
contracts under his jurisdiction. His observations and insights may be relevant and
appropriate for the contract administration and oversight of DOD contracts for troop83
81 Ibid, p. 16.
82 Senator Collins Works To Extend The Term of the Office that Oversees Billions in Iraqi
Reconstruction Dollars. Press Release of the United States Senate Committee on
Governmental Affairs, November 13, 2006.
83 As an example, the SIGIR recommends the creation of an “enhanced contingency FAR”
to simplify the rules governing contingency contracting. SIGIR, Lessons in Contracting and
Procurement, July 2006, p. 97.
Option 3: Convening a Study of the Federal Employee and
Congress may want to convene a study of the federal employee and contractor
workforce. The study could examine three important questions: (1) Is there an
appropriate balance of federal employee and contractor roles? (2) Is there an
appropriate federal role and presence in the oversight area? and (3) Is the federal
government attracting the right types of acquisition professionals?
Congress could require a separate report, from each military service, on the
size, scope, costs, and structure of its acquisition workforce (including military,
civilian, and contractor personnel).
Option 4: Requiring More Detail for Better Oversight
Congress could require DOD to provide more details for better congressional
oversight. There are five questions that Congress could consider: (1) Should DOD
move to limit sole-source or limited competition for Iraq contracts? (2) Should DOD
use more fixed-priced contracting in Iraq? (3) Should task and delivery orders have
certain dollar constraints? (4) Should task orders be subject to public notice? and
(5) Should larger contracts be divided into smaller contracts, with better-defined,
To create more transparency and openness in defense acquisitions regarding
contract administration, costs, and performance, Congress could require a separate
report from each military service. Each report could include data on the size, scope,
costs, and structure of all contracts, particularly no-bid, sole-source, and costs-
Congress also could require that specific criteria be met before certain
contract arrangements can be approved by DOD or by Congress. In addition,
Congress could require a periodic re-competition of certain types of contracts, like
LOGCAP, that have the potential of spanning for many years. Congress could also
require, for example, that task orders beyond a certain size be treated as a separate
contract, and thus subject to competition among multiple contractors.
And finally, Congress could require that large defense contracts be subject to
competition and that a minimum of three contractors be selected for contracts beyond84
a certain size. Some have suggested based on available press accounts that some
contracts for services in Iraq might have been segregated (into smaller contracts) and
opened for competitive bidding. Financial oversight might be more manageable in
administering smaller contracts. Small businesses may have more of an ability to
compete for contracts.
84 On April 18, 2008, DOD announced that the Army had awarded contracts to three
companies under LOGCAP IV. Each company will compete for task orders.
Option 5: Establishing a Dedicated Office to Conduct Audits
and Investigation of DOD Contracts
One of the recommendations of the SIGIR is to “designate a single, unified
contracting entity to coordinate all contracting in theater.”85 One way to accomplish
this is to establish a Contingency Contracting Corp (a DOD initiative currently
underway is studying the issue) that will deploy to Iraq and establish a standing
presence. However, what additional resources might be necessary in order to provide
better contract management and oversight of DOD-appropriated funds?
Given that the mission of the DOD Inspector General’s office is to promote
“integrity, accountability, and improvement of Department of Defense personnel,
programs and operations to support the Department’s mission and to serve the public86
interest”, should the DOD Inspector General have a stronger presence in Iraq?
Given the many problems associated with LOGCAP contracts, oversight agencies
like the DOD IG could have a pivotal role in preventing future contractor waste,
fraud, or mismanagement.
Congress may want to consider creating a singularly dedicated office for the
audit and investigation of DOD contracts for troop support services.
85 Lessons in Contracting and Procurement, SIGIR, July 2006, p. 95.
86 From the DOD Inspector General’s website at [http://www.dodig.osd.mil/mission.htm].
Appendix A. Selected Reports
During the last four years, the Congressional Research Service, General
Accounting Office, Department of Defense Inspector General, Army Audit Agency,
Air Force Audit Agency, and the Special Inspector General for Iraq Reconstruction
have issued numerous reports on Iraq contracting issues, including those listed
Dollars, Not Sense: Government Contracting Under the Bush Administration.
Prepared by the Special Investigations Division, Committee on Government Reform-
Minority Staff, U.S. House of Representatives, June 2006.
Congressional Research Service
CRS Report RS22923, Department of Defense Fuel Costs in Iraq, by Anthony
Andrews and Moshe Schwartz
CRS Report RL34026, Defense Acquisitions: Overview, Issues, and Options for
Congress, by Moshe Schwartz
CRS Report RL33110, The Cost of Iraq, Afghanistan, and Other Global War on
Terror Operations Since 9/11, by Amy Belasco.
CRS Report RL32419, Private Security Contractors in Iraq: Background, Legal
Status, and Other Issues, by Jennifer K. Elsea and Nina M. Serafino.
CRS Report RS21555, Iraq Reconstruction: Frequently Asked Questions
Concerning the Application of Federal Procurement Statutes, by John R.
CRS Report RL31833, Iraq: Recent Developments in Reconstruction Assistance, by
CRS Report RL32229, Iraq: Frequently Asked Questions About Contracting, by
Valerie Bailey Grasso (Coordinator), Rhoda Margesson, Curt Tarnoff,
Lawrence Kumins, Kyna Powers, Carolyn C. Smith, and Michael
Congressional Budget Office
Contractor’s Support of U.S. Operations in Iraq, Congressional Budget Office,
Government Accountability Office
GAO-08-857. DCAA Audits: Allegations That Certain Audits at Three Locations
Did Not Meet Professional Standards Were Substantiated. Report to
Congressional Addressees, July 2008.
GAO-07-1098T. Federal Acquisitions and Contracting. Systemic Challenges Need
Attention. Statement of David M. Walker, Comptroller General of the
United States, July 17, 2007.
GAO-07-359T. Defense Acquisitions: DOD Needs to Exert Management and
Oversight to Better Control Acquisition of Services. Statement of Katherine
V. Schinasi, Managing Director, Acquisition and Sourcing Management.
Testimony Before the Subcommittee on Readiness and Management Support,
Committee on Armed Services, U.S. Senate, January 17, 2007.
GAO-07-145. Military Operations: High-Level DOD Action Needed to Address
Long-standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces, December 16, 2006.
GAO-06-800T. DOD Acquisitions: Contracting for Better Outcomes. September
GAO-06-838R. Contract Management: DOD Vulnerabilities to Contracting Fraud,
Waste, and Abuse, GAO-06-838R, July 7, 2006
GAO-05-274. Contract Management: Opportunities to Improve Surveillance on
Department of Defense Service Contracts, March 17, 2005.
GAO-05-207. GAO, High Risk Series: An Update, January 2005.
GAO-04-854. Military Operations: DOD’s Extensive Use of Logistics Support
Contracts Requires Strengthened Oversight, July 19, 2004.
Special Inspector General for Iraq Reconstruction
Department of Defense Inspector General, Quarterly Report
to Congress, April 30, 2008
Semi-Annual Report to Congress. October 1, 2006-March 31, 2007
Semi-Annual Report to Congress. April 1, 2006-September 30, 2006.
Semi-Annual Report to Congress. October 1, 2005-March 31, 2006
Semi-Annual Report to Congress. April 1, 2005-September 30, 2005.
Semi-Annual Report to Congress. October 1, 2004-March 31, 2005.
Army Audit Agency
(The website is restricted to military domains (.mil) and to the Government
Report Number A-2005-0043-ALE Logistics Civil Augmentation Program in
Kuwait, U.S. Army Field Support Command, November 24, 2004.
U.S. Army. Urgent Attention Required: Army Expeditionary Contracting, Report of
the Commission on Army Acquisition and Program Management, at
[ http://www.army.mil/docs/Gansler _ C o mmission_Report_Fi nal_071031.pdf].
Published November 2007.
Appendix B. Selected Legislative Initiatives
on Iraq Contracting
Selected Legislation Introduced in the 110th Congress
The House has approved the following bills, as noted below.
H.R. 5658, National Defense Authorization Act for FY2009. Passed
House, 5/22/08; placed on Senate Legislative Calendar, 6/3/08.
H.R. 3033, Contractors and Federal Spending Accountability Act
of 2008. This provision would require the Administrator of General Services to
establish and maintain a database on defense contractors containing updated
information on criminal, civil, or debarment and suspension proceedings as well as
establish the Interagency Committee on Debarment and Suspension. Congress would
require a report within 180 days of the act’s enactment.
H.R. 5712, Close the Contractor Fraud Loophole Act. This provision
would require federal contractors to report violations of federal criminal law and
over-payments on contracts valued greater than $5 million.
H.R. 3928, Government Contractor Accountability Act of 2007.
This provision would require “covered” government contractors to submit
certification and other financial disclosure requirements in cases where the contractor
receives 80 percent or less of their annual gross revenue from federal contracts.
Contractors covered by this provision are those receiving more than $25 million in
annual gross revenues from federal contracts, but are not publicly traded companies
required to file reports with the Security and Exchange Commission.
H.R. 4881. Contracting and Tax Accountability Act of 2008. This
provision would require tax compliance as a prerequisite fo r receiving federal
contracts, and would prohibit contract awards to certain delinquent federal tax
Several other bills have been introduced during the 110th Congress. Each
could potentially impact DOD contracting in Iraq, as described below.
H.R. 4102/S. 2398,Stop Outsourcing Security Act. This provision
would require that only U.S. federal government personnel provide security to
personnel at U.S. diplomatic or consular mission in Iraq by six months after
enactment, and require the President to report to Congress s on “the status of
planning for the transition away from the use of private contractors for mission
critical or emergency essential functions by January 1, 2009, in all conflict zones in
which Congress has authorized the use of force.”
S. 2147, Security Contractor Accountability Act of 2007. This
provision would expand the coverage of the Military Extraterritorial Jurisdiction Act
(MEJA) to include all persons “while employed under a contract (or subcontract at
any tier) awarded by any department or agency of the United States, where the work
under such contract is carried out in a region outside the United States in which the
Armed Forces are conducting a contingency operation.”
H.R. 528, Iraq Contracting Fraud Review of 2007. This provision
would require the Secretary of Defense, acting through the Defense Contract Audit
Agency, to review all Iraq defense contracts for reconstruction or troop support
involving any contractors, subcontractors, or federal officers or employees indicted
or convicted for contracting improprieties.
H.R. 663, New Direction for Iraq Act of 2007. These bill contains
provisions addressing war profiteering, the recovery of funds from terminated
contracts, and other issues A select number of additional legislative initiatives,
proposed during the 110th Congress, that may impact defense contracting will follow.
H.R. 4102, Stop Outsourcing Security Act. This provision would
require that only U.S. federal government personnel provide security to personnel at
U.S. diplomatic or consular mission in Iraq within six months after bill enactment,
and would require that the President report to specified congressional committees on
“the status of planning for the transition away from the use of private contractors for
mission critical or emergency essential functions by January 1, 2009, in all conflict
zones in which Congress has authorized the use of force.”
S. 2147, Security Contractor Accountability Act of 2007. This
provision would broaden the Military Extraterritorial Jurisdiction Act (MEJA) to
include all persons “while employed under a contract (or subcontract at any tier)
awarded by any department or agency of the United States, where the work under
such contract is carried out in a region outside the United Sates in which the Armed
Forces are conducting a contingency operation.”
H.R. 897, Iraq and Afghanistan Contractor Sunshine Act. This
provision would require the Secretaries of Defense, State, Interior, and the
Administrator of the U.S. Agency for International Development to provide Congress
with copies and descriptions of all contracts and task orders valued at over $5
H.R. 3695, Freeze Private Contractors in Iraq Act. This provision
would prohibit an increase in the number of private security contractors employed by
DOD, State, and USAID that perform certain security functions in Iraq.
Selected Legislation Passed in the 110th Congress
P.L. 110-181, the FY2008 National Defense Authorization Act, H.R.
4986 (formerly H.R. 1585). Several provisions contained in H.R. 4986 focus on
the management and oversight of DOD contracts.87 Key provisions are listed below.
87 Excerpts from H.R. 1585 discuss the rationale for legislative initiatives focused on the
oversight and accountability for contracts in Iraq and Afghanistan: “The committee remains
concerned about the level of oversight for contracting in Iraq and Afghanistan. These
!Section 802 prohibits future contracts for the use of new Lead
!Section 813 requires the Comptroller General to report to Congress
on potential modifications to the organization and structure of DOD
Major Defense Acquisition Programs;
!Section 816 directs the Under Secretary of Defense for Acquisition,
Technology, and Logistics to conduct an annual review on the
systematic deficiencies in Major Defense Acquisition Programs;
!Section 830 directs the Comptroller General to report to Congress on
DOD’s use of noncompetitive awards;
!Section 841 establishes a commission to study federal contracting in
Iraq and Afghanistan, called the “Commission on Wartime
!Section 842 requires the DOD Inspector General, the SIGIR for Iraq
Reconstruction, and the SIGIR for Afghanistan Reconstruction to
collaborate on the development of comprehensive plans to perform
a series of audits on DOD contracts, subcontracts, and task and
delivery orders for the performance of logistical support activities of
coalition forces in Iraq and Afghanistan, as well as audits for federal
agency contracts, subcontracts, and task and delivery orders for the
performance of security and reconstruction functions in Iraq and
!Section 851, which would require that the Secretary of Defense (as
part of the Strategic Human Capital Plan for 2008) include a
separate section of the report focused on the military and civilian
!Section 852 establishes a Defense Acquisition Workforce
!Section 861 requires coordination between the DOD, the
Department of State, and the United States Agency for International
countries present uniquely complex challenges for contracting and contract oversight, but
U.S. efforts in these countries will continue to require significant contractor support. The
committee believes that government responsibilities for a range of issues involving
contracting in Iraq and Afghanistan are unclear. The committee believes that clarification
of roles and responsibilities for contracting in Iraq and Afghanistan and increased oversight
will enhance the effectiveness of U.S. Government efforts in both countries.
88 For a brief discussion on the role of the Lead System Integrator, see CRS Report
RS22631, Defense Acquisition: Use of Lead System Integrators (LSIs) — Background,
Oversight Issues, and Options for Congress, by Valerie Bailey Grasso.
Development through the creation of a Memorandum of
Understanding between the three agency heads on matters relating
to contracting in Iraq and Afghanistan;
!Section 862 requires that the Secretary of Defense prescribe, within
equipping, and conduct of personnel performing private security
functions under a covered contract or covered subcontract in a
combat area. These regulations would include processes for
registering, processing, and accounting for such personnel; and
authorizing and accounting for weapons, and investigating the death
and injury of such personnel, their discharge of weapons, and
incidents of alleged misconduct. The regulations would also provide
guidance to combatant commanders on orders, directives, and
instructions to contractors and subcontractors performing private
security functions relating to force protection, security, health,
safety, relations and interaction with locals, and rules of
!Section 863 requires the Comptroller General to review annually all
contracts in Iraq and Afghanistan and report to Congress on the total
number of contracts and task orders, total number of active contracts
and task orders, total value of all contracts and task orders, the
degree to which DOD has awarded noncompetitive contracts, the
total number of contractor personnel (including the total number of
contractor personnel performing security functions and the total
number of contractor personnel killed or wounded); also, Section
863 would require the Secretaries of Defense and State to provide
the Comptroller General full accesses to the database as described
in Section 861;
!Section 871 establishes a Defense Materiel Readiness Board;
!Section 872 grants authority to the Secretary of Defense to designate
critical readiness shortfalls; and
!Section 941 requires the Secretary of Defense to conduct a
comprehensive assessment of the roles and missions of the military
forces, known as a quadrennial roles and missions review.