COMMISSION ON WARTIME CONTRACTING 

IN IRAQ AND AFGHANISTAN 

F I N A L R E P O R T T O C O N G R E S S | A U G U S T 2 0 1 1

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Transforming 

Wartime Contracting

Controlling costs, reducing risks
FOREWORD

Contractors represent more than half of the U.S. presence in the contingency 

operations in Iraq and Afghanistan, at times employing more than a quarter-million 

people. They have performed vital tasks in support of U.S. defense, diplomatic, and 

development objectives. But the cost has been high. Poor planning, management, and 

oversight of contracts has led to massive waste and has damaged these objectives.

The volume and complexity of contract actions have overwhelmed the ability of 

government to plan for, manage, and oversee contractors in theater. Contracting 

decisions made during urgent contingencies have often neglected the need to 

determine whether host-nation governments can or will sustain the many projects 

and programs that U.S. contracts have established in their countries.

Americans’ “Can do!” response to the challenge of contingency operations is 

admirable, but human and financial resources have limits, and long-term costs are 

seldom considered when short-term plans are being framed. Much of the waste, 

fraud, and abuse revealed in Iraq and Afghanistan stems from trying to do too much, 

treating contractors as a free resource, and failing to adapt U.S. plans and U.S. agencies’ 

responsibilities to host-nation cultural, political, and economic settings. 

This final report to Congress summarizes the Commission’s work since 2008 and offers 

15 strategic recommendations that it believes warrant prompt action.

Delay and denial are not good options. There will be a next contingency, whether 

the crisis takes the form of overseas hostilities or domestic response to a national 

emergency like a mass-casualty terror attack or natural disaster.

Reform will save lives and money, and support U.S. interests. Reform is essential. Now.

Continuing access to Commission resources

The Commission on Wartime Contracting in Iraq and Afghanistan will, by statutory 

mandate, cease operations at the end of September 2011.

The Commission’s public website, www.wartimecontracting.gov, will not be 

updated after September, but will continue to provide public access to Commission 

reports, hearing documents, news releases, and other material. 

The Commission’s electronic and paper records will be turned over to the National 

Archives and Records Administration for preservation.
COMMISSION ON WARTIME CONTRACTING 

IN IRAQ AND AFGHANISTAN 

Transforming 

Wartime Contracting

Controlling costs, reducing risks

Final report to Congress

Findings and recommendations for legislative and policy changes

COMMISSION ON WARTIME CONTRACTING IN IRAQ AND AFGHANISTAN

A bipartisan congressional commission

A U G U S T 2 0 1 1

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CONTENTS

FOREWORD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . inside front cover

EXECUTIVE SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

R E CO M M E N D AT I O N S

CHAPTER 1. Agencies over-rely on contractors for contingency operations . . . . . . . . . . . . . . . . . . 16

CHAPTER 2. ‘Inherently governmental’ rules do not guide appropriate use of contractors in 

contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

1. Use risk factors in deciding whether to contract in contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

2. Develop deployable cadres for acquisition management and contractor oversight . . . . . . . . . . . . . . . . . . . . . . 52

3. Phase out use of private security contractors for certain functions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

4. Improve interagency coordination and guidance for using security contractors in contingency operations . . 64

CHAPTER 3. Inattention to contingency contracting leads to massive waste, fraud, and abuse . . . . . 68

CHAPTER 4. Looming sustainment costs risk massive new waste . . . . . . . . . . . . . . . . . . . . . . . . . . 98

5. Take actions to mitigate the threat of additional waste from unsustainability . . . . . . . . . . . . . . . . . . . . . . . . . . 111

CHAPTER 5. Agencies have not institutionalized acquisition as a core function . . . . . . . . . . . . . 114

6. Elevate the positions and expand the authority of civilian officials responsible 

for contingency contracting at Defense, State, and USAID . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 128

7. Elevate and expand the authority of military officials responsible for contingency contracting 

on the Joint Staff, the combatant commanders’ staffs, and in the military services . . . . . . . . . . . . . . . . . . . . 129

CHAPTER 6. Agency structures and authorities prevent effective interagency coordination . . . . . . . . 132

8. Establish a new, dual-hatted senior position at OMB and the NSC staff to provide oversight and strategic 

direction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 144

9. Create a permanent office of inspector general for contingency operations . . . . . . . . . . . . . . . . . . . . . . . . . . . 147
CHAPTER 7. Contract competition, management, and enforcement are ineffective . . . . . . . . . . 150

10. Set and meet annual increases in competition goals for contingency contracts . . . . . . . . . . . . . . . . . . . . . . . . 155

11. Improve contractor performance-data recording and use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 156

12. Strengthen enforcement tools . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160

13. Provide adequate staffing and resources, and establish procedures to 

protect the government’s interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 163

CHAPTER 8. The way forward demands major reforms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 166

14. Congress should provide or reallocate resources for contingency-contracting reform to cure 

or mitigate the numerous defects described by the Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 168

15. Congress should enact legislation requiring regular assessment and reporting of agencies’ progress in 

implementing reform recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 171

APPENDIXES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 174

FIGURES AND TABLES

Figure 1. U.S. Forces Abroad, 1962 through 2011.................................................................................................. 17

Table 1. Defense, State, and USAID contractor personnel.....................................................................................20

Table 2. Total obligations on contracts and grants, FY 2002 through mid-FY 2011............................................22

Table 3. Top 10 services acquired through contingency contracts .....................................................................23

Table 4. Top contingency contractors......................................................................................................................25

Table 5. Contingency contractor concentration .....................................................................................................26 

Table 6. Military and contractor fatalities................................................................................................................ 31

Table 7. Number of open cases by type of fraud.................................................................................................... 91

Figure 2. U.S. Rule of Law structure in Afghanistan...............................................................................................141

Table 8. Federal agencies and departments supporting contingency operations.............................................145
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E X E C U T I V E S U M M A R Y

About the Commission

Congress created the independent, bipartisan Commission on 

Wartime Contracting in Iraq and Afghanistan in 2008 (Public Law 

110-181) to assess contingency contracting for reconstruction, 

logistics, and security functions; examine the extent of waste, 

fraud, and abuse; and provide recommendations to Congress to 

improve the structures, policies, and resources for managing the 

contracting process and contractors.

The Commission filed interim reports to Congress in June 2009 and 

February 2011, and has also issued five special reports. The reports, 

including this final report and other materials such as hearing 

transcripts, are posted at www.wartimecontracting.gov.
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EXECUTIVE SUMMARY

At least $31 billion, and possibly as much as $60 billion, has been lost to 

contract waste and fraud in America’s contingency operations in Iraq and 

Afghanistan. Much more will turn into waste as attention to continuing 

operations wanes, as U.S. support for projects and programs in Iraq and Afghanistan 

declines, and as those efforts are revealed as unsustainable.

This sobering, but conservative, estimate flows from nearly three years’ work by 

the Commission on Wartime Contracting in Iraq and Afghanistan, an independent 

and bipartisan panel created by Congress in 2008 to examine waste, fraud, 

abuse, accountability, and other issues in contingency contracting, and to make 

recommendations for improvement.

Much of the contingency-contract waste and fraud could have been avoided. Unless 

changes are made, continued waste and fraud will undercut the effectiveness of 

money spent in future operations, whether they involve hostile threats overseas or 

national emergencies here at home requiring military participation and interagency 

response. Responsibility for this state of affairs lies with Congress, the White House, 

federal departments, the military services, agency leadership, contractors, and 

individuals who abuse the system.

Contract waste, fraud, and abuse take many forms:

▪ An ill-conceived project, no matter how well-managed, is wasteful if it does 

not fit the cultural, political, and economic norms of the society it is meant to 

serve, or if it cannot be supported and maintained.

▪ Poor planning and oversight by the U.S. government, as well as poor 

performance on the part of contractors, have costly outcomes: time and 

money misspent are not available for other purposes, missions are not 

achieved, and lives are lost.

▪ Criminal behavior and blatant corruption sap dollars from what could 

otherwise be successful project outcomes and, more disturbingly, contribute 

to a climate in which huge amounts of waste are accepted as the norm.

This final report documents the Commission’s extensive research, hearings, 

meetings and briefings, domestic and overseas travel, and the work of professional 

staff stationed full-time at Commission offices in Baghdad and Kabul. The 

Commission’s observations, findings, and key recommendations are organized 

under broad contingency-contracting themes. A complete list of recommendations 

from all of the Commission’s reports to Congress appears in Appendix A. 
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E X E C U T I V E S U M M A R Y

Agencies over-rely on contractors 

for contingency operations

Forced to treat contractors as the default option because federal agencies lack the 

organic capacity to perform some mission-critical functions, the government also 

lacks the acquisition personnel and structures needed to manage and oversee an 

unprecedentedly large contractor force that at times has outnumbered troops in 

the field.

The consequences have been: 

▪ extending contracting to activities that law, policy, or regulation require 

government personnel to perform; 

▪ creating unreasonable risks to mission objectives and other key U.S. 

interests; 

▪ eroding federal agencies’ ability to perform core capabilities; and

▪ overwhelming the government’s ability to effectively manage and oversee 

contractors.

Spending on contracts and grants performed in Iraq and Afghanistan in support of 

operations in those countries is expected to exceed $206 billion through the end of 

fiscal year (FY) 2011. The money goes to two categories of activities: first, support 

of U.S. operations, such as logistics; and second, direct execution of programs like 

training host-country military and police forces. Construction projects fall into both 

categories. Contracts are awarded and managed in various locations—in country, 

in other countries in the region, and at various buying commands in the United 

States. 

The number of Department of Defense (Defense), Department of State (State), and 

the U.S. Agency for International Development (USAID) contractor employees in 

Iraq and Afghanistan has varied, but exceeded 260,000 in 2010. The contractoremployee count has at times surpassed the number of U.S. military personnel in 

the two countries. Most contractor employees are third-country nationals and local 

nationals; U.S. nationals totaled more than 46,000, a minority of those employed. 

Although contract activity has taken on increasing importance, the resources 

devoted to managing contracts and contractors have not kept pace. The number 

of contract specialists—an occupation critical to the execution of contingency 

contracting—rose by only 3 percent government-wide between 1992 and 2009, 

despite an enormous increase in contracting activity during that period.
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E X E C U T I V E S U M M A R Y

Because the heavy reliance on contractors has overwhelmed the government’s 

ability to conduct proper planning, management, and oversight of the 

contingency-contracting function, the Commission concludes that the 

government is over-reliant on contractors.

‘Inherently governmental’ rules do not guide

appropriate use of contractors in contingencies

The “inherently governmental” standard in law, policy, and regulation that 

reserves certain functions for government personnel provides insufficient 

guidance for contracting in contingencies. Nor does it enable officials to decide 

whether contracting for non-governmental functions is appropriate or prudent in 

contingency operations. 

Events in Iraq and Afghanistan have shown that systematic consideration 

of operational, political, and financial risks must be a factor in judging 

appropriateness, as opposed to assuming that any task not deemed inherently 

governmental is automatically suitable for performance by contract.

The Commission endorses the context-sensitive, risk-sensitive, and missionsensitive approach taken by the Office of Federal Procurement Policy’s March 

2010 draft policy letter on this topic, and recommends vigorously applying this 

guidance to the unique contingency-contracting environment. 

Applying risk and other situational considerations to a contingency may indicate 

that a particular task should not be contracted. For such cases, the government 

needs in-house options beyond canceling or postponing activities, such as 

having qualified, expandable, and deployable federal cadres for stabilization-andreconstruction functions. 

In Afghanistan, for instance, carrying out stabilization-and-reconstruction projects 

in insurgent-contested areas with contractor employees has led to deaths, 

delays, and waste. If agencies had trained, experienced, and deployable cadres 

for stabilization-and-reconstruction functions in high-risk areas of contingency 

operations, the government would have an alternative to contracting for those 

functions.

RECOMMENDATION 1

Use risk factors in deciding whether to contract in contingencies
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E X E C U T I V E S U M M A R Y

In those cases where performance by contract is appropriate, the government 

must provide acquisition management and contractor oversight. Relying on 

contractors to perform these functions is especially risky, and can give rise to 

potential or actual conflicts of interest. The use of contractors to manage other 

contractors reveals a failure of government to provide for a sufficient contingency 

workforce. 

 RECOMMENDATION 2

Develop deployable cadres for acquisition management 

and contractor oversight

The use of private security companies can present especially sensitive risks, 

because their armed employees can become involved in incidents that injure or 

endanger innocent civilians. In addition, their use for convoy security in parts of 

Afghanistan invites pay-for-protection extortion that diverts taxpayers’ funds to 

local warlords and insurgents. 

Another essential task would be to assess the risk of using contractors for static 

security at bases and camps, particularly the risk of using local nationals for that 

task. If commanders judge the risks of using contractors, or more specifically using 

local nationals, to be unacceptable, then military forces or third-country nationals 

would provide static security. On the basis of operational, financial, and political 

risks, performance by contractors for some security tasks should be phased out. 

 RECOMMENDATION 3

Phase out use of private security contractors for certain functions

Agencies must provide greater control and accountability for security contracting, 

starting with documenting an interagency understanding of lessons learned in 

Iraq and Afghanistan, agreeing on best practices, and providing overall guidance 

for security functions in future contingencies. 

Defense, State, and USAID should develop and enter into a standing interagency 

Memorandum of Agreement (MOA), incorporating lessons and best practices 

learned in Iraq and Afghanistan, to provide guidance in use of private security 

contractors now and in future contingencies. Such an MOA would be modified as 

needed soon after the start of a declared combat operation or other contingency 

to address the particular circumstances of that operation.
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E X E C U T I V E S U M M A R Y

At the operational level, ambassadors, USAID mission directors, and military 

commanders should be responsible for making, publicizing, and revising their 

determinations of security-contracting appropriateness as conditions change. 

These officials should also apply greater emphasis to security-contractor vetting, 

training, weapons authorization and control, and oversight.

RECOMMENDATION 4

Improve interagency coordination and guidance for using security 

contractors in contingency operations 

Inattention to contingency contracting 

leads to massive waste, fraud, and abuse 

Engaging in contingency operations is not cheap. But U.S. operations in Iraq and 

Afghanistan have entailed vast amounts of spending for little or no benefit. That 

is waste. The Commission’s conservative estimate of waste and fraud ranges from 

$31 billion to $60 billion based on contract spending from FY 2002 projected 

through the end of FY 2011. 

Failure to curb contract-related waste, fraud, and abuse is a breach of agencies’ 

fiduciary duty to efficiently manage budgets and resources. Worse still, it 

undermines U.S. defense, diplomatic, and development missions. 

Waste in contract outcomes has been driven by factors at the host-country level, 

at the program and project level, and at the individual-contract level. 

▪ At the host-country level, U.S. officials lack an understanding of the need 

to reconcile short-term military and longer-term development goals and 

objectives, realistically assess host-country conditions and capabilities, 

and work within the constraints of local economies’ absorptive capacity for 

influxes of cash. These deficiencies have contributed to costly and failed 

contract outcomes. 

▪ At the program and project level, agencies have not sufficiently integrated 

their programs and projects with one another and with other donors, or 

paid adequate attention to the cost and management implications of 

poor security conditions. These shortcomings have doomed numerous 

acquisition strategies. Inadequate competition and lack of knowledge of 

local contractor and sub-contractor companies are major contributors to 

contracting waste. 
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E X E C U T I V E S U M M A R Y

▪ At the contract level, there is a frequent failure to define requirements 

within reasonable timeframes and to assign appropriate management and 

oversight resources. Without sufficient management and oversight, officials 

have been late to identify and correct poor contractor performance. Key 

deficiencies include idle contractor personnel, defective construction, and 

inadequate protection of property and personnel.

Numerous examples from Commission travel, hearings, and research have 

demonstrated serious incidents of waste at every phase of the contingency 

acquisition process, from project selection and requirements definition, through 

solicitation and vetting, to management and oversight. Problems are widespread 

and endemic. 

Looming sustainment costs risk massive new waste

A particularly troubling outcome of the Commission’s examination of waste is that 

billions of dollars already spent, including spending on apparently well-designed 

projects and programs, will turn into waste if the host governments cannot or will 

not commit the funds, staff, and expertise to operate and maintain them.

Money lost as a result of the inability to sustain projects could easily exceed the 

contract waste and fraud already incurred. Examples range from the $35 billion 

that Congress has appropriated since 2002 to train, equip, and support the Afghan 

National Security Forces, to scores of health-care centers in Iraq that far exceed the 

Ministry of Health’s ability to maintain them.

Officials have often not examined programs and projects for sustainability, or taken 

appropriate action to cancel or redesign those that have no credible prospect of 

being sustained. Requirements and acquisition strategies for projects or services 

to be handed over to a host nation have often lacked a detailed assessment of 

long-term costs and of host nations’ ability and willingness to fund them. There 

is, moreover, no current requirement that officials analyze sustainability risks and 

report their findings and risk-mitigation strategies.

RECOMMENDATION 5

Take actions to mitigate the threat of additional waste 

from unsustainability
7

E X E C U T I V E S U M M A R Y

Agencies have not institutionalized acquisition 

as a core function

Acquisition officials have become more knowledgeable and vocal about the 

extent and nature of the problems in contingency contracting, yet agencies are 

slow to change. 

Meaningful progress will be limited as long as agencies resist major reforms 

that would elevate the importance of contracting, commit additional resources 

to planning and managing contingency contracting, and institutionalize best 

practices within their organizations.

Defense has promulgated important policy and doctrinal changes. However, the 

structure needed to force important lessons learned through the system and the 

authority to enable resource shifts to support the acquisition process does not 

exist. More than half of Defense’s contract spending is for services and not for 

hardware procurement. Yet Defense’s culture and processes remain focused on 

weapons systems. This imbalance in focus is particularly risky in the context of 

operations in Iraq and Afghanistan, where 66 percent of contract spending is for 

services.

In contrast to Defense’s omission of contingency contracting in its Quadrennial 

Defense Review, State offered some encouraging comments about the 

importance of contracting in its 2010 Quadrennial Diplomacy and Development 

Review. But State has not fully recognized or implemented many of the needed 

changes. Therefore, significant additional waste—and mission degradation to the 

point of failure—can be expected as State continues with the daunting task of 

transition in Iraq.

USAID has made procurement reform part of its agency-wide improvement 

initiatives. However, it is still far from achieving the cultural change needed 

to make reforms a reality. Both State and USAID will face additional contractmanagement challenges in Afghanistan as U.S. military forces begin to withdraw.

Changes in agency structures and practices affect culture and behavior, but 

cannot have deep and lasting impact without the full involvement of senior 

leadership. Effective leaders provide attention, focus, visibility, motivation, and 

energy to the process of improvement and to the daily work of delivering results. 

They reward success, correct failure, and punish misconduct. 
8

E X E C U T I V E S U M M A R Y

Contingency-contracting reform demands active and sustained attention from 

senior agency leaders that transcends succession in office and changes in 

administration.

Raising the profile and authority of civilian and military leaders responsible for 

contingency contracting would boost the impact of the reform effort and provide 

some measure of accountability.

 RECOMMENDATION 6

Elevate the positions and expand the authority of civilian officials 

responsible for contingency contracting at Defense, State, and 

USAID

 RECOMMENDATION 7

Elevate and expand the authority of military officials responsible 

for contingency contracting on the Joint Staff, the combatant 

commanders’ staffs, and in the military services 

Agency structures and authorities 

prevent effective interagency coordination

The misalignment of organizational structures and authorities impedes 

interagency coordination and cooperation for contingency contracting. This 

misalignment leads to duplication of effort, gaps in continuity, improper phasing 

of operations, and waste. 

Defense has well-established arrangements for ensuring joint operations, but there 

is no effective whole-of-government equivalent, particularly where international 

diplomacy and development are concerned. The Commission proposes new 

positions and authorities that would improve coordination and cooperation, 

including alignment of agency budgets, especially among Defense, State, and 

USAID. 

Currently no one person has the authority to ensure that each relevant agency 

has the necessary financial resources and policy oversight, as appropriate, to carry 

out its contingency-related mission, and to ensure that agencies’ budgets are 

complementary rather than duplicative or conflicting. 

RECOMMENDATION 8

Establish a new, dual-hatted senior position at OMB and the NSC 

staff to provide oversight and strategic direction
9

E X E C U T I V E S U M M A R Y

Improving agency planning, readiness, and performance would be greatly 

facilitated by creating a permanent office of special inspector general for 

contingency operations. The authority of existing inspectors general is either 

limited by department (Defense, State, and USAID) or restricted by time and 

function (the temporary special inspectors general for Iraq and Afghanistan are 

focused on reconstruction). 

Having a small, but expandable, permanent inspector-general staff devoted to 

contingency operations would provide critical monitoring from the onset of a 

contingency, permit collaboration with agency inspectors general to regularly 

assess the adequacy of agency planning and coordination for contingencies, and 

provide a logical center for developing and coordinating needed training among 

agencies. 

RECOMMENDATION 9

Create a permanent office of inspector general for contingency 

operations

Contract competition, management, and enforcement

are ineffective 

Agencies have failed to set and meet goals for competition in Iraq and 

Afghanistan. In particular, they have awarded task orders for excessive durations 

without adequate competition. The agencies have failed to set and meet goals for 

competition and have repeatedly:

▪ awarded long-term task orders that were not recompeted when 

competitive conditions improved; 

▪ extended contracts and task orders past their specified expiration dates, 

increased ceilings on cost-type contracts and modified task orders and 

contracts to add extensive new work; 

▪ favored using existing task- and delivery-order contracts like LOGCAP III 

over creating more competitive and more targeted contract vehicles; and

▪ used cost-reimbursable contract types even though simpler, fixed-price 

contracts could expand the competitive pool.

Dynamic contingency operations generate rapidly changing support 

requirements that must be met within short timeframes. Effective competition 

motivates contractors to provide fair pricing, best value, and quality performance. 

On the other hand, the tension between a contractor’s motivation to make a 
10

E X E C U T I V E S U M M A R Y

profit and the government’s demand for good performance still exists. The lessons 

from contingency contracting in Iraq and Afghanistan are that agencies have not 

effectively employed acquisition-management strategies that balance the United 

States’ interests with contractors’ profitability objectives. 

Several policies and practices hamper competition in a contingency environment. 

Despite a more mature contracting environment in Iraq and Afghanistan today, 

Defense, State, and USAID still do not consistently emphasize competitive 

contracting practices. Some of the agencies’ acquisition strategies have restricted 

competition and favored incumbent contractors, even those with performance 

deficiencies. 

 RECOMMENDATION 10

Set and meet annual increases in competition goals for contingency 

contracts

Monitoring the performance of individual contractors is critical at all stages of 

the contracting process both to allow proper management and oversight and to 

obtain necessary information for making payments. Better collection, recording, 

and use of contractor performance data would significantly improve government 

contracting officials’ ability to weed out poor performers and manage the 

contingency-contracting process. 

 RECOMMENDATION 11

Improve contractor performance-data recording and use

Suspension and debarment can be powerful tools to protect the government’s 

interest in doing business only with contractors capable of performing their 

contractual obligations and maintaining acceptable standards. The opportunity 

costs of a suspension or debarment are very high for government contractors, and 

thus provide incentives for proper behavior. Nevertheless, agencies sometimes do 

not pursue suspensions or debarments in a contingency environment.

The challenge of fostering a culture of contractor accountability is especially 

difficult in war zones, where the contractor community is made up of U.S., local, 

and third-country nationals; where gathering a stable of responsible, competitive 

companies eligible for contract award is a challenge; where security threats 

hamper oversight; and where fluid operations drive changing requirements under 

short timeframes. Enforcement of laws, regulations, and contract terms serves two 

purposes: it addresses wasteful and fraudulent behavior, and it sets a standard for 

future performance.
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E X E C U T I V E S U M M A R Y

More aggressive use of enforcement techniques for contracting would reduce the 

risk of awarding contracts to companies with questionable capability to perform. 

Expansion of investigative authority and jurisdiction would facilitate imposing 

effective accountability on contractors, especially foreign contractors and 

subcontractors who are difficult or impossible to subject to U.S. law. Increasing 

contractor accountability would also enhance protections against exploitation of 

persons.

 RECOMMENDATION 12

Strengthen enforcement tools

A variety of weaknesses frustrate the U.S. government’s ability to protect its—

and federal taxpayers’—interest in economical and effective performance of 

contingency contracting:

▪ Agencies continue to lack sufficient staff and resources to enable adequate 

management of all aspects of contingency contracting. These include: 

financial management, acquisition planning, business-system reviews, 

source selection, incurred-cost audits, performance management, 

property management, contract payment, and contract close-outs. These 

shortfalls have been especially pronounced at key entities like the Defense 

Contract Management Agency and the Defense Contract Audit Agency. 

Indeed, at current staffing levels, DCAA’s backlog of unaudited incurred 

costs will exceed $1 trillion in 2016.

▪ Inadequate contractor business systems for functions such as estimates, 

labor billing, and purchases impede the work of government management 

and oversight officials. Yet the government’s authority to withhold contract 

payments on grounds of business-system inadequacy is limited.

▪ The government faces significant limitations in its authority to access 

contractor records that can be useful or essential for examining matters 

such as supervision of subcontractors.

▪ Agencies continue to struggle with an absence of strategic planning 

and lack a dedicated budget to support related human resources and 

information-systems requirements.

 RECOMMENDATION 13

Provide adequate staffing and resources, and establish procedures 

to protect the government’s interests
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E X E C U T I V E S U M M A R Y

The way forward demands major reforms

The Commission’s authorizing statute requires it to end operations by September 

30, 2011. The work of crafting, securing, and implementing lasting reforms will 

require much more time.

Congress must issue mandates and provide resources for improved planning, 

management, and oversight capabilities if it expects significant change and 

real savings in contingency contracting. Given the federal budget outlook, the 

temptation will be powerful to postpone the investments needed to support 

contingency-contracting reform and thereby to avoid making hard choices. 

Congress must resist that temptation and recognize preparedness for emergencies 

requiring contingency contracting is as much a national-security priority as 

procuring weapons systems. 

RECOMMENDATION 14

Congress should provide or reallocate resources for contingencycontracting reform to cure or mitigate the numerous defects 

described by the Commission 

Continued attention, monitoring, and advocacy may require congressional 

requests for subsequent evaluations and agency reporting, and the engagement 

of governmental or non-governmental organizations to continue to focus on 

contingency-contracting issues.

A forcing function is needed to ensure widespread and effective adoption of 

contingency-contracting reform. Otherwise, agency inertia, resistance to change, 

sporadic attention, personnel turnover, and a lack of sustained and focused 

leadership may combine into a powerful barrier that blocks progress. Effective 

implementation of reform requires establishing a method for periodic reporting 

on the status of the Commission’s recommendations to keep the reform agenda in 

decision makers’ field of vision. 

RECOMMENDATION 15

Congress should enact legislation requiring regular assessment 

and reporting of agencies’ progress in implementing 

reform recommendations 
13

E X E C U T I V E S U M M A R Y

Conclusion

The need for reform is urgent. Over the past decade, America’s military and 

federal-civilian employees, as well as contractors, have performed vital and 

dangerous tasks in Iraq and Afghanistan. Contractors’ support however, has been 

unnecessarily costly, and has been plagued by high levels of waste and fraud.

The United States will not be able to conduct large or sustained contingency 

operations without heavy contractor support. Avoiding a repetition of the waste, 

fraud, and abuse seen in Iraq and Afghanistan requires either a great increase in 

agencies’ ability to perform core tasks and to manage contracts effectively, or a 

disciplined reconsideration of plans and commitments that would require intense 

use of contractors. 

Failure by Congress and the Executive Branch to heed a decade’s lessons 

on contingency contracting from Iraq and Afghanistan will not avert new 

contingencies. It will only ensure that additional billions of dollars of waste will 

occur and that U.S. objectives and standing in the world will suffer. Worse still, lives 

will be lost because of waste and mismanagement. 

The nation’s security demands nothing less than sweeping reform.
U.S. and Iraqi soldiers, Mosul, Iraq. (U.S. Navy photo)
Agencies over-rely on contractors 

for contingency operations

Chapter 1
16

C H A P T E R I

Agencies over-rely on contractors 

for contingency operations

C ontingencies in general—and those in Iraq and Afghanistan in 

particular—are operations involving the U.S. military and civilian agencies, 

often requiring deployment of federal civilians and contractors under 

conditions that make freedom of movement dangerous, and entailing dynamic 

and rapidly changing support requirements.1

Defense undertakes the preponderance of activity in the Iraq and Afghanistan 

contingency operations, executes a majority of the transactions for contractorsupport services, and is therefore the primary focus of the Commission’s 

reform agenda. The Commission also assesses State and USAID, the other two 

federal agencies with a significant role in 

contingency-contracting operations, and 

addresses related areas of concern in this 

final report. 

The Commission’s assessment of 

contingency contracting focuses on the 

formation and execution of contracts and 

grants in support of the wartime missions 

in Iraq and Afghanistan. Despite this focus, 

the Commission’s recommendations for 

reform have broader applications for 

peacetime contracting and affect future 

contingencies.

U.S. agencies engaged contractors at 

unprecedented levels to help achieve 

mission objectives in Iraq and Afghanistan 

and to support U.S. military service 

members and civilian employees deployed there. The failure to effectively 

prepare to rely on contractors became all too clear as these two contingencies 

1. 10 U.S.C. 101(a)(13): This section defines a contingency operation as “a military operation that—(A) 

is designated by the Secretary of Defense as an operation in which members of the armed forces are 

or may become involved in military actions, operations, or hostilities against an enemy of the United 

States or against an opposing military force; or (B) results in the call or order to, or retention on, active 

duty of members of the uniformed services under [other portions of this title] . . . or any other provision 

of law during a war or during a national emergency declared by the President or Congress.” Civilian 

agencies’ definitions of contingencies broadly reflect the language for Defense.

Patrol in Helmand 

Province, Afghanistan, 

2009. (U.S. Marine 

Corps photo)
17

R E L I A N C E O N C O N T R A C T O R S

evolved over the last decade and the number of contractors and the scope of their 

work overwhelmed the government’s capacity to manage them effectively. 

The use of contractors in the United States’ earlier contingencies did not 

overtax agencies’ capacity to support, manage, and oversee them because the 

contingencies’ scope or duration were comparatively smaller or shorter than the 

ongoing operations in Iraq and Afghanistan.2 However, in every year of the past 23 

years, the United States has been engaged in an overseas-contingency operation. 

For the past 12 years, the United States has always and simultaneously been 

engaged in two or more overseas regions. 

The United States has engaged in 56 “ventures abroad” for other than normal 

peacetime purposes since 1962, and Figure 1 illustrates that the United States has 

conducted 10 land-based deployments lasting a year or more during this time 

period. 3

Figure 1. U.S. Forces Abroad, 1962 through 2011

Source: Commission analysis of CRS Report R41677, “Instances of Use of United States Armed Forces 

Abroad, 1798-2010,” March 10, 2011.

2. The scope and duration of previous contingencies are outlined in CRS Report R41677, “Instances of Use 

of United States Armed Forces Abroad, 1798-2010,” March 10, 2011. 

3. Ibid., 1. Note: Ventures abroad include those “instances in which the United States has utilized military 

forces abroad in situations of military conflict or potential conflict to protect U.S. citizens or promote U.S. 

interests.”
18

C H A P T E R I

Preparing to manage contractors for overseas-contingency operations neither 

signals U.S. intent nor creates a momentum to launch a military operation. The 

geopolitical environment of recent years and in the foreseeable future provides 

ample reason to plan for the possibility that the United States may again become 

involved in overseas-contingency operations that require extensive contractor 

support.

The unexpected and swift development of a campaign executed by the United 

States and NATO to suppress the Libyan government’s attacks on its citizens is a 

recent case in point. Unrest in Somalia 

and Yemen also raises the potential 

of a contingency operation that 

might require contractor support 

and stabilization-and-reconstruction 

operations.

The logical implication of this 

geo-political environment is that 

contractors will remain a significant 

element of the U.S. government’s total 

force. The Under Secretary of Defense for Acquisition, Technology, and Logistics 

recently testified before the Commission, saying, “We’re simply not going to go to 

war without contractors.”4

This chapter describes the extent of agencies’ reliance on contractors for support 

in Iraq and Afghanistan; the characteristics of contingency contracting over the 

past ten years; and the serious political, operational, and fiscal risks of reliance on 

contractors during contingency operations.

The extent of reliance on contractors in contingencies

Indicators of over-reliance on contingency contractors

The number of contractor employees supporting Defense, State, and USAID 

operations in Iraq and Afghanistan exceeded 260,000 in 2010—a number larger 

than the U.S. military and federal-civilian workforce in theater. More than 80 

percent of the contractor employees were local or third-country nationals, not U.S. 

citizens.

4. Dr. Ashton B. Carter, Under Secretary of Defense for Acquisition, Technology, and Logistics, Commission 

hearing, March 28, 2011, transcript, 39. Note: A list of all Commission hearings, arranged by date, appears 

in Appendix D of this report. Statements, transcripts, and other hearing materials will remain publicly 

available on the Commission website, www.wartimecontracting.gov.

Preparing to manage contractors for 

overseas-contingency operations 

neither signals U.S. intent nor creates 

a momentum to launch a military 

operation.
19

R E L I A N C E O N C O N T R A C T O R S

The tasks that agencies have relied on contingency 

contractors to perform, coupled with their ineffective 

management of many contractors in Iraq and Afghanistan, 

have bred an unhealthy over-reliance that is too risky and 

costly to repeat.

Contractors are performing functions that law or regulation 

require government employees to perform. The large 

number of contractors erodes federal agencies’ ability to 

self-perform core capabilities, and their presence at times 

has created unacceptable risks to mission or other key U.S. 

objectives. 

The Commission’s hearings, research, and discussions with 

officials at all levels of the acquisition community confirm 

that Defense and civilian agencies do not effectively assess 

the legality or the risks of contracting for functions. 

Agency officials’ decisions to heavily rely on contractors for 

professional and technical expertise has shifted the balance 

of knowledge to the extent that the government has lost 

much of its mission-essential organic capability, making it 

increasingly more difficult to oversee technical performance.

Furthermore, the agencies have demonstrated their 

inability to manage large numbers of contractors effectively. 

Only if government officials 

properly manage and incentivize 

performance would the reliance 

on contractors be a rational 

approach for obtaining quality 

contingency-support services at a 

reasonable price.

The decision to award contracts 

should not merely be based on what the law allows or 

what is cheapest. Instead, the decision should be based 

on a strategic understanding of the functions being performed, a determination 

of the appropriateness of the use of contractors, and in the case when contractors 

are appropriate, the agency must have the ability to ensure effective management 

and oversight of contract performance. This issue is more fully discussed in 

Chapter 2.

What is ‘over-reliance’?

In concluding that the United 

States is “over-reliant on 

contractors,” the Commission is 

not simply looking at metrics 

like the contractor-to-military 

ratio. 

Indicators of over-reliance 

include contracting that:

1. Extends to functions that 

law or regulation require 

government personnel 

perform,

2. Creates unreasonable risks 

to mission objectives or 

other key U.S. interests,

3. Erodes federal agencies’ 

ability to self-perform core 

capabilities, or

4. Overwhelms the 

government’s ability to 

effectively manage and 

oversee contractors.

The decision to 

award contracts 

should not merely 

be based on what 

the law allows or 

what is cheapest.
20

C H A P T E R I

Contractors outnumber service members 

and federal civilians

Table 1 shows that Defense, State, and USAID have awarded contracts to firms that 

have employed in excess of 260,000 persons in Iraq and Afghanistan. Contractor 

workers comprise U.S. nationals, local nationals, and third-country nationals. 

Table 1. Defense, State, and USAID contractor personnel

in Iraq and Afghanistan as of March 31, 2010 

 Defense State USAID Total

U.S. nationals 40,800 4,322 805 45,927

Local nationals 95,692 10,194 32,621 138,507

Third-country nationals 71,061 4,734 1,193 76,988

Unknown --- 60 1,149 1,209

Total 207,553 19,310 35,768 262,631

Source: GAO Report 11-1, “Iraq and Afghanistan: Defense, State, and USAID Face Continued Challenges in 

Tracking Contracts, Assistance Instruments, and Associated Personnel,” October 2010, 44-45.

Defense dominates contracting in Iraq and Afghanistan and manages nearly 80 

percent of the contractor workforce there. Comparisons over time of the number 

of contractors working under Defense contracts with the number of service 

members show that the contractor footprint in Iraq and Afghanistan generally 

has corresponded to the number of deployed service members they support, in 

roughly a 1-to-1 ratio.5

On the other hand, the number of contractor employees compared to the number 

of State and USAID federal civilian employees working in Iraq and Afghanistan 

has varied with the extent and scope of the diplomatic and development 

missions being performed. The number of contractors and grantee employees 

supporting State and USAID in Iraq and Afghanistan greatly exceeds the agencies’ 

employees—18 to 1 for State, and 100 to 1 for USAID.6

5. See Appendix E, Figures E-1 and E-5. 

6. State and USAID federal-employee footprint data collected from State on June 23, 2011. State 

contractor footprint data is current as of the end of FY 2010. State and USAID enter their contractor 

headcount into the Defense database, Synchronized Predeployment and Operational Tracker (SPOT). 

Updates can be obtained through inquiries to the SPOT program manager.
21

R E L I A N C E O N C O N T R A C T O R S

The ratios for State and USAID employees and their contractors/grantees reflect 

both the extent of the agencies’ reliance on contractors and the absence of their 

organic capacity to perform in a contingency environment. The difference in ratios 

between Defense and the two civilian agencies in part reflects 

contractors’ roles: primarily support for Defense, and mission 

execution for State and USAID. The higher ratios at State and 

USAID, however, raise questions about whether these agencies 

have the capacity to effectively oversee and manage this 

enormous component of their workforce in theater.

Based on developments in Iraq, a potential contractor surge 

in Afghanistan is looming after the military withdraws. Given 

the upcoming transition to a diplomatic mission in Iraq and 

the absence of an agreement on the level of U.S. contractor 

presence, the military withdrawal contributed to an increase in 

the ratio of contractors to the service members they support.7

Though the Status of Forces Agreement between the United 

States and Iraq mandates a specific military drawdown from Iraq, there is no 

similar stipulation for withdrawing U.S. contractors. 

Contingency-contracting characteristics

Contingency-contracting characteristics are significantly different from routine 

peacetime contracting:

▪ Contracts are managed under a variety of acquisition procedures by 

multiple organizations from multiple locations: in the overseas area of 

operations, in a nearby foreign country, and in the United States.

▪ An already strained acquisition workforce is further burdened by the need 

to deploy overseas.

▪ Most contracts are for services supporting the U.S. forces and civilians or 

actually carrying out direct-mission objectives. 

▪ The contingency-contractor workforce comprises U.S.-based companies, 

host-nation, and third-country firms.

▪ Most contract dollars are awarded to just a few large U.S. companies.

▪ Much of the work is performed through multiple tiers of subcontractors, 

resulting in a large host- and third-country workforce.

7. See Appendix E, Figure E-1.

The number of contractors 

and grantees supporting 

State and USAID in Iraq 

and Afghanistan greatly 

exceeds the agencies’ 

employees—18 to 1 for 

State, and 100 to 1 for 

USAID.
22

C H A P T E R I

▪ Socio-economic procurement policies such as Iraqi First and Afghan First 

give priority to helping develop local economies and countering the 

insurgency.8

▪ Perhaps the most important characteristic of contingency contracting 

in Iraq and Afghanistan is the sheer volume of contract dollars that will 

have been injected into those underdeveloped economies because of the 

United States’ presence.

Value of contingency contracts and grants

The value of contingency contracts and grants is another relevant measure of the 

extent of agencies’ reliance on contractors in Iraq and Afghanistan. As depicted in 

Table 2, the U.S. has spent more than $192 billion on contracts and grants through 

the first two quarters of fiscal year (FY) 2011.

Table 2. Total obligations on contracts and grants, FY 2002 through mid-FY 2011

Performed in support of operations in Iraq and Afghanistan (in billions)

Defense State USAID Total

Contracts $166.6 $12.2 $8.4 $187.2

Grants 0.4 4.9 5.3

Total $166.6 $12.6 $13.3 $192.5

Source: Commission calculations from: Federal Procurement Data System - Next Generation (FPDS-NG) 

and USASpending.gov, last updated on June 12, 2011 for FY 2002 through the end of the second quarter 

of FY 2011. Includes contracts performed in Iraq, Afghanistan, Bahrain, Kuwait, Qatar, Pakistan, Kyrgyzstan, 

Kazakhstan, Turkmenistan, Tajikistan, and Uzbekistan. Includes grants performed in Iraq and Afghanistan 

only.

The Commission estimates that by the end of FY 2011, an additional $14 billion 

will be obligated under contracts, bringing the estimated total for FY 2002 through 

FY 2011 to $206 billion. Actual expenditures will be even higher because not 

all contracts that support contingency operations in Iraq and Afghanistan are 

identifiable as such.

8. The National Defense Authorization Act for FY 2008, sec. 886, authorized the Secretary of Defense to 

establish preference for the acquisition of products and services from Iraqi and Afghan companies.
23

R E L I A N C E O N C O N T R A C T O R S

Service contracts

Two-thirds of the money spent to date for contingency 

contract support in Iraq and Afghanistan was for 

services.9 Agencies obligated the most dollars for 

logistics support services ($46.5 billion).

The 10 most commonly acquired services are depicted 

in Table 3 below. They account for 44 percent of total 

services obligations.10

Table 3. Top 10 services acquired through contingency contracts

Performed in support of operations in Iraq and Afghanistan, FY 2002 through 

mid-FY 2011

Service description Total (in billions)

Logistics support services $46.5 

Construction of miscellaneous buildings 10.5 

Technical assistance 5.5 

Other professional services 5.2 

Guard services 3.8 

Maintenance and repair, alterations of office buildings 3.5 

Construction of office buildings 2.9 

Lease-rent or restoration of real property 2.8 

Facilities operations support services 2.5

Program management/support services 2.4

Total obligations for top 10 services $85.6 

Top 10 as percentage of total services obligations 44 %

Source: FPDS-NG and USASpending.gov, last updated on June 12, 2011 for FY 2002 through the end of 

the second quarter of FY 2011. Includes contracts performed in Iraq, Afghanistan, Bahrain, Kuwait, Qatar, 

Pakistan, Kyrgyzstan, Kazakhstan, Turkmenistan, Tajikistan, and Uzbekistan. Includes grants performed in 

Iraq and Afghanistan only.

9. Commission calculation from: FPDS-NG and USAspending.gov, last updated on June 12, 2011 for FY 

2002 through the end of the second quarter of FY 2011. 

10. See Appendix E, Table E-5 for a more comprehensive list of most-often procured products and 

services.

Two-thirds of the money spent 

to date for contingency contract 

support in Iraq and Afghanistan 

was for services.
24

C H A P T E R I

Concentration of contingency contracting

Contingency-contract spending in Iraq and Afghanistan is highly concentrated. 

Awards to the largest four individual companies account for more than 40 percent 

of total obligations. 

A total of 22 individually identifiable contractors received at least a billion 

dollars each and account for 52 percent of contract awards. The second-highest 

obligations category, however, is “miscellaneous foreign contractors.” The $38.5 

billion recorded for “miscellaneous foreign contractors” suggests the difficulty of 

compiling reliable, accurate procurement-transaction data. 

Moving military 

equipment through 

the mountains, 

northern Afghanistan. 

(U.S. Army photo) 
25

R E L I A N C E O N C O N T R A C T O R S

Table 4 displays the awards to the top contractors as measured by the value of the 

awards they have received.

Table 4. Top contingency contractors

Performing in support of operations in Iraq and Afghanistan, 

FY 2002 through mid-FY 2011

Vendor Obligations (in billions)

1 KBR $40.8

2 “Miscellaneous foreign contractors” 38.5

3 Agility 9.0

4 DynCorp 7.4

5 Kuwait Petroleum Corporation 5.0

6 Fluor Intercontinental, Inc. 5.0

7 The Bahrain Petroleum Company 5.0

8 Combat Support Associates 3.6

9 ITT Federal Services International 3.4

10 The Louis Berger Group, Inc. 2.3

11 International Oil Trading Company 2.1

12 Readiness Management Support 2.0

13 L-3 Communications 1.7

14 Red Star Enterprises, Ltd. 1.7

15 IAP Worldwide Services 1.5

16 Environmental Chemical Corporation 1.5

17 Perini Corporation 1.5

18 Blackwater Lodge and Training Center 1.4

19 Contrack International, Inc. 1.4

20 Triple Canopy, Inc. 1.2

21 DAI/Nathan Group, LLC 1.1

22 Washington Group, International 1.1

23 Bearing Point, LLC 1.0

Total obligations $139.2

22-firm % of total $192.5B spend, excluding 

“miscellaneous foreign contractors” 52 %

Source: FPDS-NG and USASpending.gov, last updated on June 12, 2011, for FY 2002 through the end of 

the second quarter of FY 2011. Includes contracts performed in Iraq, Afghanistan, Bahrain, Kuwait, Qatar, 

Pakistan, Kyrgyzstan, Kazakhstan, Turkmenistan, Tajikistan, and Uzbekistan. Includes grants performed in 

Iraq and Afghanistan only.

The data in Table 4 illustrate one of the serious aspects of contractor overreliance—52 percent of the total dollars obligated on contract transactions 

performed in support of Iraq and Afghanistan went to only 22 individually 

identifiable contractors. Without proper oversight, this heavy reliance on 
26

C H A P T E R I

contractors has placed the U.S. government in the very risky and costly position for 

many contingency-support functions. The relatively small number of contractors 

performing such a large percentage of the contingency-support mission also 

presents potentially serious implications regarding effective competition and 

support for the U.S. government mission. 

Table 5 illustrates that for certain products or services, the concentration of awards 

is dramatic. 

Table 5. Contingency contractor concentration

Performing in support of operations in Iraq and Afghanistan, 

FY 2002 through mid-FY 2011 

Product or service description

FY 2002 to 

mid-FY 2011 

obligations

(in $ billions)

Low 

concentration

Moderate 

concentration

High

concentration

1 Logistics support services $46.5 X

2 Miscellaneous items 25.7 N/A N/A N/A

3 Liquid propellants-petroleum base 16.7 X

4 Construction of miscellaneous buildings 10.4 X

5 Dairy, foods, and eggs 6.6 X

6 Technical assistance 5.5 X

7 Other professional Services 5.2 X

8 Guard services 3.8 X

9 Maintenance, repair, and alteration of 

office buildings 3.5 X

10 Construction of office buildings 3.0 X

11 Lease-rent of restoration 2.8 X

12 Fuel oils 2.7 X

13 Facilities operations and support services 2.5 X

14 Program management and support 

services 2.4 X

15 Maintenance and repair of vehicles, 

trailers, and cycles 2.4 X

Source: FPDS-NG FY 2002 through end of second quarter FY 2011. Data extracted June 12, 2011. 

Note: Based on obligations to the top four companies. “Low Concentration” indicates top four firms 

account for less than 20 percent of obligations. “Moderate Concentration” means top four firms have 20 to 

80 percent. “High Concentration” means top four firms have more than 80 percent.

For six of the most commonly acquired products and services, no more than four 

contractors accounted for over 80 percent of the awards. For logistics support 

services, a single contractor accounted for nearly 80 percent of the contract dollars. 
27

R E L I A N C E O N C O N T R A C T O R S

The number of Defense 

acquisition professionals 

declined by 10 percent during 

a decade that saw contractual 

obligations triple.

Another individual contractor accounted for 67 percent of the 

funds obligated for the maintenance and repair of vehicles.

The second largest category is for “miscellaneous items,” once 

again suggesting the difficulty of compiling reliable, accurate 

procurement-transaction data.

Acquisition workforce

The federal acquisition workforce includes all officials who 

play a role in the contingency-contracting mission and who 

must now oversee a large number of complex service contracts. The growing 

complexity and volume of the workload has outpaced agencies’ capacity to 

manage it. One critical indicator appears in the Department of Defense’s 2010 

Quadrennial Defense Review, which reported that the number of Defense 

acquisition professionals had declined by 10 percent during a decade that saw 

contractual obligations triple.

While Defense has a dedicated acquisition workforce and a mature process for 

acquiring and managing commodities and major weapons systems, there has 

been no comparable government-wide focus on the acquisition of contingencysupport services. Service contracting has inadequate training programs, and the 

few program-oversight and management processes that are in place have proven 

ineffective.

The significant increases 

in procurement budgets 

since contingency 

operations began in Iraq 

and Afghanistan did not 

effectively translate into a 

heightened emphasis on 

planning, awarding, and 

managing the additional 

billions in contingency 

contracts and grants.11

11. Commission calculation from: FPDS-NG and USAspending.gov, last updated on June 12, 2011 

for FY 2002 through the end of the second quarter of FY 2011. Includes contracts performed in Iraq, 

Afghanistan, Bahrain, Kuwait, Qatar, Pakistan, Kyrgyzstan, Kazakhstan, Turkmenistan, Tajikistan, and 

Uzbekistan. Includes grants performed in Iraq and Afghanistan only.

Provincial 

Reconstruction 

Team members 

with Afghan 

contractors 

at hospital 

expansion site. 

(U.S. Air Force 

photo)
28

C H A P T E R I

Risks of using contingency-support contractors 

There are several reasons agencies rely on contractors for contingency-support 

services: 

▪ statutory and budgetary limits on the number of military service members 

and federal employees; 

▪ military services’ having concentrated limited resources on combat functions, 

which led to a degradation of organic capability;

▪ long lead times for employee recruitment and development;

▪ voluntary deployment conditions for most federal civilian personnel; and 

▪ assumptions of cost-effectiveness for using contractors.

The size of military services and the federal government workforce have long been 

a point of political debate. Given the constant imperative to accomplish more with 

a depleted federal workforce, the result has been a gradual increased reliance on 

contractors. As new and expanded 

missions were added with time-critical 

needs, contracting for contingencysupport services became the default 

option. Awarding contracts to provide 

services also made the federal workforce 

appear smaller, producing what is known 

as the “shadow workforce.” 

In a contingency environment, reliance 

on contractor support may introduce operational, political, and financial risks not 

present in peacetime. 

The underlying truth is that the total cost of using contractors includes more than 

just the price of the contract. Depending on an outside source creates unavoidable 

risks. The risk factors include:

▪ operational risk to achieving the defense or development mission,

▪ political risk to achieving U.S. goals and foreign-relations objectives, and

▪ financial risk of dollars lost to contract fraud and waste. 

The level of risk will depend on many factors, including the culture and 

characteristics of the host country, the location of battles, the phase of the 

contingency, the type of activity, and the quality of government oversight. 

As new and expanded missions 

were added with time-critical needs, 

contracting for contingency-support 

services became the default option.
29

R E L I A N C E O N C O N T R A C T O R S

Fiscal concerns also complicate the success of ongoing and future contingency 

contracting.

Operational risks 

The extensive use of contractors frees the 

military to use service members primarily for 

warfighting. However, relying on contractors 

for so much professional and technical 

expertise eventually leads to the government’s 

losing much of its mission-essential organic 

capability. 

Short-term and inconsistent rotation periods 

across the different military services and civilian agencies contribute their own 

set of problems for continuity of contract management and oversight. During a 

contract-performance period, oversight and management may have been passed 

between multiple contracting officers and contracting officer representatives 

without a thorough transfer of knowledge. Because of the military and civilian 

agencies’ frequent rotations, contractors often become the keepers of historical 

knowledge. Thus, government officials in some cases gradually cede de facto 

control over defense, diplomatic, and development activities to them. 

This heavy reliance on contractors requires a fully capable and 

fully deployable acquisition infrastructure and workforce. In 

addition, non-acquisition officials who possess the necessary 

subject-matter expertise to perform requirement analysis, 

program management, and contractor oversight are especially 

needed. 

Political risks

Particularly important is the impact on U.S. objectives resulting 

from the government’s extensive use of contractors. Using local 

contractors not only supports the local economy, but often 

helps the United States develop a good rapport with the hostnation government and communities. 

However, rapidly pouring large amounts of money into 

Afghanistan’s local economy, which has limited absorptive 

capacity, has contributed to inflation, distorted normal 

economic activity, and encouraged fraud and corruption. Also, once the United 

States leaves, the economy will be disrupted because many of the local nationals 

Relying on contractors for so much 

professional and technical expertise 

eventually leads to the government’s losing 

much of its mission-essential organic 

capability.

Local contractors at 

school construction 

site near 

Mahmudiyah, Iraq. 

(U.S. Army photo) 
30

C H A P T E R I

who are employed by the U.S. government and U.S. contractors may once again 

become unemployed or under-employed. The risk is that the United States 

withdrawal will undermine its objectives by leaving local laborers vulnerable to 

recruitment by the Taliban or other insurgent groups.12

Serious public-opinion backlash in the local communities and governments can 

also occur after contractors are accused of crimes. Public opinion can be further 

inflamed because jurisdiction over contractors is ambiguous, legal accountability is 

uncertain, and a clear command-and-control structure is absent. A prime example 

of this risk becoming reality occurred in 2007 with the killing of 17 Iraqi civilians in 

Baghdad’s Nisur Square by employees of the company then known as Blackwater. 

The armed security guards were under contract by State. Perceptions of improper 

or illegal behavior by contractors who suffer few or no consequences generate 

intense enmity and damage U.S. credibility.13

The extensive use of contractors obscures the full human cost of war. The full cost 

includes all casualties, and to neglect contractor deaths hides the political risks of 

conducting overseas contingency operations. In particular, significant contractor 

deaths and injuries have largely remained uncounted and unpublicized by the U.S. 

government and the media. 

12. U.S. Senate Committee on Foreign Relations, Majority Staff Report, “Evaluating U.S. Foreign assistance 

to Afghanistan,” June 8, 2011. 

13. National Bureau of Economic Research Working Paper Series, Working Paper 16152, “The Effect of 

Civilian Casualties in Afghanistan and Iraq,” July 2010, 1-5.

Preparing an injured 

contractor for 

transport from a 

coalition hospital in 

Herat, Afghanistan. 

(U.S. Air Force photo) 
31

R E L I A N C E O N C O N T R A C T O R S

Table 6 below displays U.S. military fatalities and those reported by foreign and 

domestic contractors supporting the United States in Iraq and Afghanistan.

Table 6. Military and contractor fatalities

Iraq and Afghanistan

Iraq

Mar 2003–Jul 2011

Afghanistan

Oct 2001–Jul 2011

U.S. military fatalities 4,464 1,667

Contractor fatalities 1,542 887

Source: Military casualties reported by the Department of Defense Statistical Information and Analysis 

Division, Defense Manpower Data Center, as of July 25, 2011. Contractor fatalities reported on the 

Department of Labor (DoL) website, Division of Longshore and Harbor Workers’ Compensation, Defense 

Base Act Summary, as of June 30, 2011. Many foreign contractor employee deaths are believed not to 

have been officially reported by the firms that employed them. No definitive accounting for federal 

civilian-employee deaths in Iraq and Afghanistan has been located.

The recent withdrawal of combat units from Iraq and the surge in Afghanistan 

have resulted in increased contractor casualties. Between June 2009 and March 

2011, contractor deaths, including local- and third-country nationals, exceeded 

the military’s in both countries.14 Moreover, contractor 

deaths are undoubtedly higher than the reported total 

because federal statistics are based on filed insurance 

claims, and many foreign contractors’ employees may 

be unaware of their insurance rights and therefore 

unlikely to file for compensation.

Financial risks

There are significant negative financial effects of the 

U.S. government’s current reliance on contractors in the 

Iraq and Afghanistan contingencies. Extensive contingency-contract waste, fraud, 

and abuse are the most obvious. While using contractors for support services can 

lead to lower costs, agencies could save even more if they were to increase the use 

of competitive procedures and improve their contract management. 15

14. Department of Labor, Division of Longshore and Harbor Workers’ Compensation, “Defense Base Act 

Summary,” June 23, 2011. Note: On its website, the Department of Labor disclaims accuracy of these 

numbers, saying, “These reports do not constitute the complete or official casualty statistics of civilian 

contractor injuries and deaths. They are offered as general information to the public who may be 

interested in the scope of civilian government contracting overseas.”

15. Appendix F discusses cost comparisons between contractor and government task performance.

Between June 2009 and March 

2011, contractor deaths in both 

Iraq and Afghanistan exceeded 

military deaths.
32

C H A P T E R I

Most important, the extent of contracts being performed without adequate 

oversight and contract management has resulted in unacceptable vulnerability 

to contract waste and fraud. The Commission estimates that contract waste and 

fraud ranged from $31 billion to $60 billion during military operations in Iraq and 

Afghanistan—at the mid-range of the estimate, 

this amounts to $12 million every day for the 

past 10 years.

Some degree of waste and fraud has always 

accompanied the uncertainties of war. But 

much of the waste and fraud in Iraq and 

Afghanistan that resulted from ineffective 

contingency contracting was foreseeable and 

avoidable. 

The Commission predicts that many programs, projects, and contracts that are 

simply not sustainable by the governments of Iraq and Afghanistan will reveal 

even more waste in the months and years ahead. Another significant cost of 

overseas-contingency contracting is diversion—payments commonly made for 

safe passage of U.S. convoys and for protection of U.S. personnel performing 

reconstruction projects. Contingency-contract waste and fraud are bad enough; 

worse yet is that some of the wasted dollars are diverted to warlords and 

insurgents in Afghanistan.

Fiscal concerns 

For the past 10 years, overseas contingency-operations funding has been 

designated as “emergency spending,” and funded through supplemental 

appropriations. They have been excluded from the regular budgetary process. 

This approach can distort the apparent size of the federal budget submission 

by segregating substantial proposed expenditures as subsequent supplemental 

submissions. 

Seemingly unlimited funding for contingencies through supplemental 

appropriations allows agencies to avoid a prioritization of their program 

requirements in support of the war effort. The supplemental budget also obscures 

the full cost of contracting and creates the illusion that contractors in the war zone 

are a free resource. 

The ongoing debate about the federal budget and the deficit is likely to translate 

into reductions in the size of the military and federal-civilian workforce, but not a 

corresponding reduction in national-security missions. This “do the same with less” 

The Commission estimates 

that contract waste and fraud 

ranged from $31 billion to 

$60 billion during military 

operations in Iraq and 

Afghanistan.
33

R E L I A N C E O N C O N T R A C T O R S

outcome—or an even riskier “do more with less” outcome—may drive an even 

heavier over-reliance on contractors than has been seen in the past decade.

Faced with a mandate to reduce staffing, the bureaucratic instinct is usually to 

put acquisition staff on the chopping block first. Unfortunately, these are the 

same professionals the agencies would need to plan, manage, and oversee 

the additional contracts that would be signed to compensate for a reduced 

federal workforce and keep up with unrelenting mission pressure. Likely result: 

a dangerous spiral of growing over-reliance on contractors and shrinking 

management capability.

Because the U.S. government relies on only a handful of 

contractors to provide most of the support for the contingencies 

in Iraq and Afghanistan, this reliance potentially presents a 

situation analogous to the U.S. financial industry’s “too big to fail” 

calamity.

Another concern could arise from a tension between private 

and public interest. A company’s main motivation—indeed, its 

fiduciary duty—is to produce earnings to compensate its owners 

for the use of and risks to their capital. This is not a judgmental 

statement, simply a factual observation.

 In a competitive market that limits a single firm’s ability to 

raise prices, an obvious way to increase or maximize earnings 

is to cut costs. Cost reduction might take the form of efficiency 

improvements that do not degrade quality, or might even improve it—but 

could also take the form of lower-quality materials, reduced training, or lower 

performance standards that do affect quality. It should be noted that a firm 

operating under a cost-plus government contract may face a different incentive 

structure.

While a company’s self-interest in winning and retaining government contracts 

could prompt it to focus on efficiency, short-term pressures or a profitmaximization drive may lead it to cut corners. By contrast, the public’s interest is 

in maximizing the quality of every good or service being provided under contract. 

This inescapable tension between private and public motivation requires that 

government contract managers carefully monitor and scrupulously evaluate a 

company’s performance. That is a difficult task in the best of circumstances, and an 

extraordinarily difficult one in a wartime setting.

This “do the same with 

less” outcome—or an even 

riskier “do more with less” 

outcome—may drive an 

even heavier over-reliance 

on contractors than has 

been seen in the past 

decade.
34

C H A P T E R I

Lessons from 10 years of contingency contracting in Iraq and Afghanistan have led to 

many legislative, regulatory, and policy changes designed to improve processes and 

outcomes. However, better outcomes from these incremental improvements have in 

some cases not yet materialized, and in other cases have not been fully realized. 

The costs are too great and the risks are too high—both to the outcomes of current 

operations and to future contingencies—for the U.S. government not to commit 

resources to improving the contingency-contract 

function. Because many of the high-risk issues in 

contingency contracting mirror those that have also 

proven problematic in the overall federal acquisition 

system, implementing real improvement to the 

contingency-contracting process could enhance the 

entire federal acquisition system. 

Contingency-contracting improvements are in 

danger of atrophy once operations in Iraq and 

Afghanistan recede and the current leaders who 

champion these improvement initiatives shift their 

attention elsewhere or are replaced. Yet the federal 

government’s current fiscal constraints provide a challenge for ensuring continued 

leadership emphasis and for commitment of the resources necessary for enduring 

improvements to the contingency-contracting mission. 

The government’s options could include a selection or combination of:

▪ increasing the size of the federal workforce;

▪ decreasing the use of contractors; and

▪ reconsidering the number, nature, and scope of the overseas contingency 

operations.

Outline of report content 

The next chapter in this report provides Congress and the contingency-stakeholder 

community with the Commission’s recommendations for determining the appropriate 

use of contractors, including private security contractors. Chapter 3 provides numerous 

examples of waste, fraud, and abuse, and connects them to the problems of agencyoversight and poor contractor performance. 

Because so much of contingency-contract waste has yet to be realized, Chapter 4 

warns of project-sustainability issues and provides recommendations for mitigation. 

Implementing real 

improvement to the 

contingency-contracting 

process could enhance the 

entire federal acquisition 

system.
35

R E L I A N C E O N C O N T R A C T O R S

A major factor in avoiding waste from unsustainable projects in a contingency 

environment is the elevation of the contingency-contracting function and 

interagency coordination. Chapters 5 and 6 provide recommendations 

for agencies to implement a strategic, whole-of-government approach to 

contingency contracting.

Chapter 7 provides recommendations for improving accountability for contracting 

outcomes by strengthening contingency-contract competition, performance 

management, and enforcement. Finally, Chapter 8 provides recommendations 

to advance Congress’ objectives for contingency-contracting reform after the 

Commission’s sunset at the end of the 2011 fiscal year.

Afghans at U.S. 

project site.

(Defense photo)
Afghan road workers at weapons training, FOB Kutschbach. (U.S. Air Force photo) 
Chapter 2

‘Inherently governmental’ rules 

do not guide appropriate use of 

contractors in contingencies
38

C H A P T E R 2

‘Inherently governmental’ rules 

do not guide appropriate use of 

contractors in contingencies

T

en years of war in Iraq and Afghanistan have seen the United States using 

too many contractors for too many functions with too little forethought 

and control. Even if every instance of contracting had satisfied the legal 

restrictions on contractor performance of “inherently governmental functions”—a 

dubious proposition at best—the Commission believes far too little attention has 

been devoted to the question whether all of that contracting was appropriate for 

contingency operations.

Government actions in the 1990s led to reductions in U.S. military force structure 

and civilian agency strength. Given a reduced force structure and a desire to 

maintain levels of combat personnel, 

the military reduced its organic support 

personnel, which increased the need for 

contractor support. 

In addition, there was a general decline 

in federal agencies’ acquisition staff 

and agencies’ ability to perform many 

functions related to their core missions, 

even as the volume and complexity of 

acquisitions were increasing. These trends often left government officials with no 

alternative but to enlist contractor support when a contingency developed. For 

Afghan and U.S. 

soldiers on patrol, 

Pad Khwab-E Rowan, 

Afghanistan. 

(U.S. Army photo) 

Acquisition decisions that are 

expedient in the short term can 

increase costs and constrain 

government’s options in the long 

term.
39

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

many purposes, then, contracting became the default option for Defense, State, 

and USAID, because it was the only realistic option.

Nonetheless, planning, sourcing, and requirements definition must be carried 

out with more attention to appropriateness and risk, including risk mitigation, 

than has been evidenced in the Afghanistan and 

Iraq contingencies. Acquisition decisions that are 

expedient in the short term can increase costs and 

constrain government’s options in the long term. Unless 

contingency-contracting reforms are implemented, 

future contingencies will continue to exhibit 

inappropriate levels of reliance on contractors.

The inherently governmental standard is insufficient, 

offering little or no useful guidance for deciding 

whether contracting for non-governmental functions 

is appropriate or prudent in contingency operations. After determining whether 

the inherently governmental prohibition applies, decisions to contract still need 

a context- and risk-sensitive consideration of appropriateness for contingency 

operations.

Events in Iraq and Afghanistan have shown that systematic consideration 

of operational, political, and financial risks must be a factor in judging 

appropriateness. All too often, officials assume that any task deemed not 

inherently governmental is therefore automatically suitable for performance by 

contractors.

The concept of financial risk requires a word about costs. The Commission has 

done research on the comparative financial costs of using contractors. Appendix 

F of this report lays out a method for identifying and comparing the incremental 

costs of military forces, federal civilians, and contractor personnel. It describes how 

factors such as the contingency duration, rotation policies, and local labor market 

affect comparisons. 

Our research indicates that, under certain, limited circumstances, contractors can 

be a less costly option for extended contingencies. The dominant factor driving 

these reduced costs is lower labor rates paid to local-national and third-country 

national contractor employees.

So to the question “Are contractors cheaper?,” the short answer is: it depends. 

And because it depends upon a whole range of factors, many of them not under 

All too often, officials assume 

that any task deemed not 

inherently governmental is 

therefore automatically suitable 

for performance by contractors.
40

C H A P T E R 2

direct government control, considerations of cost cannot be the driving factor in 

determining whether to contract or what to contract.

Moreover, national security is not a business decision. The Commission firmly 

believes that in matters of national security and foreign policy involving sustained 

combat and arduous diplomatic action overseas, considerations of cost are and 

must be a far less important consideration than mission accomplishment.

Also, and to be absolutely clear: “cost” 

must not be confused with “waste.” Our 

view that cost should not be a decisive 

factor in wartime contracts is absolutely no 

justification for tolerating waste. 

The Commission looked at costs, and 

acknowledges that contractors can be 

cheaper in long wars. Nonetheless, however 

costly or cheap they may be, there are still many circumstances where contractors 

are too risky, where contractors actually induce new risks, and where contractors 

are not appropriate.

In the area of operational and political risks, the Commission’s findings pay special 

attention to contracting for security and acquisition-management functions. 

Much public and political attention has been drawn to private security contractors 

and to the sensitivity of engaging their services:

▪ Iraqi insurgents’ murder and brutalization of four Blackwater guards in 

2004, 

▪ private guards’ shooting of Iraqi civilians in Baghdad’s Nisur Square in 2007, 

▪ the billions of dollars spent on private security contracts, and 

▪ reports of weak oversight of subcontracting for local-national or thirdcountry national security guards.

Acquisition management also deserves special attention because the U.S. cannot 

conduct contingency operations without contractor support. Agencies generally 

consider this function of secondary importance, as opposed to a core capability. 

Furthermore, agencies involve contractors in the acquisition management process 

without paying due regard to the risk of indirect damage. Those risks include the 

relationships and working knowledge a contractor develops while supporting 

acquisition management that may subtly bias a contracting official’s decisions, 

Contracting that is not restricted 

by the inherently governmental 

prohibition may still be 

inappropriate.
41

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

or confer a windfall competitive advantage on the contractor for 

future solicitations.

The treatment of inherently governmental functions in federal 

statute, regulations, and policy is intended to be a critical barrier 

to ensure that only government personnel perform certain 

functions, such as waging war, conducting diplomacy, or making 

commitments that bind the government. The Commission believes, 

however, that:

▪ Contracting that is not restricted by the inherently 

governmental prohibition may still be inappropriate.

▪ Contracting that may be appropriate in routine, peacetime

circumstances can be inappropriate in the urgent, volatile 

setting of a contingency operation.

▪ Contracting that in the long term may be significantly less 

expensive than other options (such as retaining the function 

in-house) may still be inappropriate in a wartime setting.

Current federal guidance on 

inherently governmental functions is not sufficient

The concept of inherently governmental functions appears in a number of sources, 

including the Federal Activities Inventory Reform Act of 1998 (the FAIR Act), the 

Office of Management and Budget’s Circular A-76, and the Federal Acquisition 

Regulation (FAR).1 A number of functions, while not considered to be inherently 

governmental and which thus may be performed by contractors, are denominated 

as “closely associated” with inherently governmental functions, and may only be 

contracted after giving special consideration to using federal employees.2 Not 

addressed are “critical functions” and the need to maintain a sufficient number of 

federal employees to perform them so that the government keeps control over 

agencies’ core missions and operations.

The published guidance reflects much thought and effort. Unfortunately, the 

overall result is muddled and unclear. It is riddled with exceptions, ambiguities, 

and ad hoc legislated interventions. The Commission does not consider it a sound 

1. The FAIR Act, 31 U.S.C. 501 (note); OMB Circular A-76, revised May 29, 2003. The FAR is the core federal 

regulation for use by all federal executive agencies acquiring supplies and services with appropriated 

funds.

2. Sec. 736 of Division D of the Omnibus Appropriations Act, 2009, P.L. 111-8; 10 U.S.C. 2463; 10 U.S.C. 

2330a; FAR 7-503(d). 

Ugandan security 

contractor, Mosul, 

Iraq. 

(U.S. Navy photo)
42

C H A P T E R 2

platform from which to make risk-based or other decisions, beyond those driven 

by statutory or policy mandates, on what functions are appropriate to contract.3

Several laws prohibit certain functions from being contracted, notwithstanding 

their relationship to inherently governmental rules. These laws include:

▪ 5 U.S.C. 306–Prohibits contracting for services to draft strategic plans.

▪ 10 U.S.C. 2464–Requires Defense to maintain a core logistics capability 

to maintain and repair weapon systems and other military equipment 

by assigning government personnel and government-owned facilities 

“sufficient workload to ensure cost efficiency and technical competence 

in peacetime while preserving the surge capacity and reconstitution 

capabilities” defined by the secretary.

▪ 10 U.S.C. 2465–Prohibits, with certain exceptions, contracting for 

firefighting and security guards at domestic military installations.

▪ 31 U.S.C. 1115–Prohibits contracting for services to draft agency 

performance plans.

Agencies violate inherently governmental standards. The law requires Defense 

as well as civilian agencies to survey and report on their services contracting.4 A 

2009 Army base-budget survey of services contracts found some 2,000 contractor 

positions, expressed in full-time equivalents, performing inherently governmental 

functions.5 If this is occurring in base-budget activities, a reasonable assumption 

is that it also occurs in supplementalfunded activities supporting contingency 

operations, perhaps to a greater extent.

It is, of course, essential that contractors 

not perform functions that law, regulation, 

or official policy reserve for government 

employees. But that is a basic principle 

applicable to all government activity, 

contingent or otherwise. Determining that 

3. OMB Circular A-76, revised May 29, 2003. Inherently governmental functions include waging war, 

binding the government to take or not take action, and exercising ultimate authority over federal 

property and funds.

4. Sec. 807 of the National Defense Authorization Act for FY 2008, P.L. 110-181 (for Defense agencies); sec. 

743 of Division C of the Consolidated Appropriations Act, FY 2010, P.L. 111-117 (for civilian agencies).

5. The United States Army, “Army FY 2009 Inventory of Contracts for Services: Enclosure 2,” undated, 

1-12. The Army’s and other Defense efforts to bring such activity in-house have recently been slowed by 

the federal budget situation. On March 14, 2011, Under Secretary of Defense Ashton Carter and Under 

Secretary of Defense Robert Hale issued guidance that all in-sourcing decisions would henceforth be 

made case by case.

Determining that a task is not 

inherently governmental does 

not mean that it is a good idea 

to have contractors perform that 

task in a contingency operation.
43

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

a task is not inherently governmental does not mean that 

it is a good idea to have contractors perform that task in 

a contingency operation. “Permissible” is not a synonym 

for “appropriate.” Deciding whether a function needed or 

contemplated for contractor performance in a contingency

must involve more than applying a binary, yes-or-no filter 

like “inherently governmental.” For a function to be both 

permitted and appropriate for contingency contracting, 

the baseline inherently governmental test must be 

followed by consideration of other factors, the most 

important of which is risk. 

Movement toward a more 

risk-based approach

The Office of Federal Procurement Policy (OFPP) within the Office of Management 

and Budget (OMB) has taken a helpful step in discussing risk factors as part of the 

considerations to be weighed in making decisions on contracting. The OFPP’s 

proposed policy letter on “Work Reserved for Performance by Federal Government 

Employees” responds to congressional direction that tasked OMB with developing a 

“single consistent definition” of “inherently governmental function.”6

Published in draft form in 2010 and still awaiting final release, the Office of Federal 

Procurement Policy letter embodies a single definition of inherently governmental, 

proposes evaluation criteria and risk-mitigation strategies to guide federal officials, 

and includes directives such as this guidance relating to critical functions and risk:

Agencies should be alert for situations where internal control of missions 

and operations is at risk due to overreliance on contractors to perform 

critical functions. ... If an agency has sufficient internal capability to 

control its mission and operations, the extent to which additional work 

is performed by federal employees [rather than contractors] should be 

based on cost considerations unless performance and risk considerations

in favor of federal employee performance will clearly outweigh cost 

considerations.7 [Emphasis added.]

The letter focuses on the inherently governmental standard, and is not designed 

to guide contingency-contracting decisions. But its emphasis on considering risk 

6. National Defense Authorization Act for FY 2009, sec. 321, P.L. 110-417. 

7. Office of Management and Budget, “Notice of proposed policy letter,” Federal Register, 75:61, March 31, 

2010, 16188-16197.

When officials judge that risk 

levels are high for a given task 

and that no practicable and 

effective risk-mitigation strategies 

for contractor performance are 

available, it is appropriate that 

the contract tasks be modified 

or canceled, or that the work be 

brought in-house.
44

C H A P T E R 2

and other factors beyond the baseline legal construct of inherently governmental 

functions is a thoughtful and helpful exercise that can be extended for particular 

use in contingencies.

Risk as a factor in selecting appropriate contracting

For functions performed in a war zone, prudent decisions on contracting include 

assessing the level of risk associated with contracting, and judging whether that 

level is or can be mitigated to an acceptable level. When officials at Defense, 

State, USAID, or other federal agencies judge that risk levels are high for a given 

task and that no practicable and effective risk-mitigation strategies for contractor 

performance are available, it is appropriate 

that the contract tasks be modified or 

canceled, or that the work be brought 

in-house.

The U.S. government has established 

processes for evaluating risk that embody 

this approach. For example, U.S. Army 

Field Manual FM 5-19, “Composite Risk 

Management,” details a risk-assessment 

and control approach that starts by 

weighing the probability of a given 

hazard’s occurrence against its impact on 

the mission. It is a judgmental, iterative, 

and probabilistic process, not a mechanical 

application of rules:

[Once hazards were identified and assessed,] an initial risk level was 

determined. In this step, controls are developed and applied. The hazard 

is reassessed to determine a residual risk. Risk decisions are always 

based on the residual risk. The process of developing and applying 

controls and reassessing risk continues until an acceptable level of risk is 

achieved or until all risks are reduced to a level where benefits outweigh 

the potential cost.8

This process offers a good discipline for operational commanders. However, 

such risk analyses have not driven broad-scale, strategic contracting decisions 

by Defense, State, or USAID in Iraq and Afghanistan, leaving the United States 

ill-prepared to use contractors for the scale and duration seen in those countries. 

8. Department of the Army, Field Manual FM 5-19, “Composite Risk Management,” July 2006, Chapter 1, 10.

Afghan road 

maintenance team, 

Kapisa province, 

Afghanistan. 

(U.S. Air Force photo) 
45

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

When the U.S. government went to war, it did not have enough acquisition 

personnel, the capacity to manage and oversee contracts, adequate training 

on operational contract support for non-acquisition military personnel, or 

core contracting capabilities in crucial areas, including one of the highest-risk 

areas—security.

The Department of Defense “Instruction” (DoDI) on workforce mix also provides 

detailed risk-based guidance on choosing among military, civilian, and contractor 

personnel to perform specific functions. The 55-page instruction provides, among 

other things, that:

▪ “When reviewing the adequacy of critical contract services that support 

the Combatant Commanders’ contingency plans during the deliberative 

planning process of the Joint Strategic Planning System, [the Chairman of 

the Joint Chiefs shall] assess the risks of using contract support consistent 

with this Instruction and require Combatant Commanders to develop 

contingency plans if they have a reasonable doubt that a contractor will 

continue to provide essential services during a mobilization or crisis.”

▪ “When establishing the workforce mix, manpower planners shall review all 

mission requirements and design units and/or organizations to accomplish 

baseline operations and transition quickly and easily to support military 

operations (e.g., contingency, humanitarian, peacekeeping) and crises. 

Manpower analysts also shall use the guidance for risk assessments ... to 

help identify risks.”

▪ “Risk mitigation shall take precedence over cost savings when necessary to 

maintain appropriate control of Government operations and missions ... 

[or] to maintain core capabilities and readiness.”

▪ “Functions that are [inherently governmental] cannot be legally 

contracted” and “Functions that are 

not [inherently governmental] are 

commercial in nature.”

▪ “Security actions that entail assisting, 

reinforcing, or rescuing PSCs [private 

security contractors] or military units 

who become engaged in hostilities 

are [inherently governmental] because 

they involve taking deliberate, offensive 

action against a hostile force on behalf 

of the United States.”

U.S. soldier with 

residents, Nassir Wa 

Salaam, Iraq. 

(Defense photo)
46

C H A P T E R 2

▪ “Security is [inherently governmental] if, in the commander’s judgment, 

an offensive response to hostile acts or demonstrated hostile intentions 

would be required to operate in, or move resources through, a hostile area 

of operation.” 9

The Defense Instruction is carefully constructed, even to the point (as seen in the 

quoted excerpts) of noting that an otherwise commercial activity such as security 

may, in effect, become inherently governmental under particular circumstances. 

Nonetheless, the Instruction is not framed as a guide to contracting decisions for 

contingency operations: the word “contingency” appears only a few times in the 

main narrative of the Instruction, and some of those uses refer to classifications 

rather than criteria for contracting decisions. Further, the implication that, within a 

single department, a particular task may or may not be inherently governmental, 

depending on circumstances, suggests that some conceptual ambiguity lies 

nestled in the meaning ascribed to “inherent.”

The language of the Instruction also serves as an illustration that different agencies 

within the federal government can reach starkly differing conclusions about the 

meaning of “inherently governmental.”

Consider the treatment of quick-reaction forces—usually small light-infantry or 

police units tasked to respond on very short notice to emergencies. The Defense 

guidance quoted above says, “assisting, reinforcing, or rescuing PSCs or military 

9. Excerpts from Department of Defense Instruction 1100.22, “Policy and Procedures for Determining 

Workforce Mix,” April 12, 2010.

Zabul Provincial 

Reconstruction Team, 

Qalat, Afghanistan. 

(U.S. Air Force photo) 
47

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

units who become engaged in hostilities” is inherently governmental because 

doing so involves offensive action. The State Department, on the other hand, has 

used and will use thousands of private contractors for both standard security 

and quick-reaction-force duties in Iraq as U.S. military 

forces withdraw because it does not view those tasks 

as inherently governmental.10 USAID does not enter 

into this discussion: the agency has no organic security 

force and does not contract directly for security. Any 

private security for USAID-funded projects occurs as 

subcontracting activity by USAID’s “implementing 

partners” who receive grants or contracts.

These disparities in definitional treatment illustrate 

that the rules on inherently governmental functions 

do not produce predictable and consistent results on 

the legal baseline of permissibility, much less offer 

guidance on what is appropriate for contracting in 

contingency operations.

Characteristics of risk in contracting for a contingency 

The observations and research of the Commission have identified a number of risk 

factors that should be considered as a guide in determining what is appropriate to 

contract for in a contingency. The following list does not purport to be definitive 

or exhaustive, for there is no apparent standard for judging that all risks have 

been identified, even conceptually. Indeed, presuming that one has identified all 

possible risks is itself likely to be a risky thing to do. Nonetheless, some risk factors 

within the broad areas of operational, political, and financial risks are apparent, 

including risks to:

▪ U.S. goals and objectives, such as from behavior that injures innocent 

members of the local population or outrages their sensibilities;

▪ federal civilians’ or military personnel’s safety, if contractors’ presence or 

performance creates unsafe conditions or invites attack;

▪ managerial control, such as relying on contractors to monitor other 

contractors with no means for government to check their work;

10. See Commission Special Report 3, “Better planning for Defense-to-State transition in Iraq needed 

to avoid mistakes and waste,” July 12, 2010. See also Patrick F. Kennedy, Under Secretary of State for 

Management, Commission hearing, June 6, 2011, transcript, 57: “Even in those circumstances [reference 

to question about a force having to shoot its way into a situation to rescue people], security is not 

inherent in the government.”

The rules on inherently 

governmental functions do not 

produce predictable and consistent 

results on the legal baseline of 

permissibility, much less offer 

guidance on what is appropriate 

for contracting in contingency 

operations.
48

C H A P T E R 2

▪ maintaining agencies’ critical organic or core capabilities;

▪ critical knowledge or “institutional memory” as 

federal personnel rotate in and out of theater so that 

government must rely on long-serving contractors for 

area or subject-matter expertise; 

▪ government’s ability to control costs, waste, fraud, abuse, 

and conflicts of interest; and

▪ mission, such as from contractors walking off the job or 

being unable to perform when there is no timely back-up 

available.

These and other risks can assume greater or lesser salience 

depending upon the circumstances in which a contractor would 

be operating. As an example, recruiting local nationals as private 

security guards in an area where local sympathies are divided 

entails higher risk to the safety of U.S. and allied personnel than 

in a neutral or friendly area. If risk mitigation, such as stricter 

vetting and more vigorous human-intelligence gathering, could not reduce the 

residual risk to an acceptable level, decision makers would then consider not using 

contractors, modifying their use, or canceling or postponing the mission.

Situational risk factors that could affect risk assessment include:

▪ operating in a combat zone or insurgent-threat area;

▪ lack of effective federal oversight in the area of operations;

▪ presence of a culture of corruption;

▪ a host government incapable of enforcing the rule of law;

▪ inadequate accounting, financial, and business systems among contractors 

and subcontractors; and

▪ lack of legal accountability for foreign prime contractors and 

subcontractors.

These situational factors should be considered along with the risks discussed 

earlier as part of the decision on what is appropriate for the government to 

contract for in a particular contingency. If mitigation or control measures leave 

the residual risks of using contractors at a level that outweighs the expected 

benefits, then government needs timely and deployable options to support the 

contingency mission.

If mitigation or control 

measures leave the 

residual risks of using 

contractors at a level 

that outweighs the 

expected benefits, then 

government needs timely 

and deployable options to 

support the contingency 

mission.
49

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

► RECOMMENDATION 1

Use risk factors in deciding whether to contract in contingencies

Heads of agencies involved in a contingency should:

▪ issue and ensure implementation of policy guidance for using risk 

factors such as those listed above, as well as those described in the Office 

of Federal Procurement Policy draft policy letter of March 2010 and 

Department of Defense Instruction 1100.22, to provide guidance on what 

functions are appropriate to contract for in a contingency setting;

▪ provide funding and direction for agencies involved in contingency 

operations to identify a trained, experienced, and deployable cadre 

for stabilization-and-reconstruction functions in areas of contingency 

operations so that the government has an alternative 

to contracting for performance of critical or sensitive 

functions; and

▪ provide a strategic plan for deploying these cadres that 

includes provisions for mandatory deployability of civilian 

members, and is supported by a back-up capability for 

rapidly making temporary hires for large-scale or long-term 

contingency operations.

Contractors and risks 

to proper acquisition management

The government often employs contractors to help evaluate or otherwise support 

its management of other contractors. Doing so, however, can give rise to potential 

or actual organizational conflicts of interest (OCI) that must be avoided or 

mitigated.

The Federal Acquisition Regulation (FAR) requires contracting officers to analyze 

planned acquisitions to identify and evaluate potential organizational conflicts of 

interest as early in the acquisition process as possible, and to avoid, neutralize, or 

mitigate significant conflicts before contract award.11

Common sense, good judgment, and sound discretion are required in deciding 

whether a significant potential conflict exists and, if it does, in developing an 

appropriate means to resolve it. The two underlying principles are to avoid 

11. FAR 9.504.

Heavy reliance on 

contractors can easily 

introduce risk into the 

area of acquisition 

management.
50

C H A P T E R 2

conflicting roles that might bias a contractor’s judgment, and to prevent a 

contractor’s acquiring an unfair competitive advantage.

The risk of organizational conflicts of interest need not be a significant problem 

if handled appropriately. OCI can, however, be a problem when the contracting 

officer is overloaded and his or her support staff are themselves predominantly 

contractors, as has often been the case in the Iraq and Afghanistan contingency 

operations.

Heavy reliance on contractors can, for example, easily introduce risk into the area 

of acquisition management. Several instances of potential organizational conflicts 

of interest were identified in Iraq and Afghanistan. In each case, mitigation was 

attempted. But the appearance of conflicts of interest and the potential for 

problems were there:

▪ The U.S. Army contracted with Serco, Inc. in February 2007 to act as an 

independent stateside contractor to plan and develop performance 

work statements to compete future work among three competing 

contractors under the Army’s Logistics Civil Augmentation Program 

(LOGCAP), a worldwide support contract. A contract clause prohibited 

Serco from working in any capacity under a LOGCAP IV contract. However, 

a Serco subcontractor, Military Professional Resources Inc. (MPRI), 

was drafting statements of work for both LOGCAP and non-LOGCAP 

work. MPRI could have been placed in a position to favor itself when 

developing performance work statements for requirements that it might 

have performed under the LOGCAP program as a subcontractor. After 

an inspector general identified the problem, Serco discontinued the 

subcontract with MPRI.12

In Afghanistan, the firm Aegis Defense Services was selected in 2009 to 

support the Armed Contractor Oversight Directorate (ACOD), with an Aegis 

contractor serving as deputy director and having day‐to‐day responsibility 

for managing the directorate. Aegis’s responsibilities included working with 

the Afghan Ministry of Interior on investigations of PSC escalation‐of‐force 

incidents. The military’s request for expedited assignment of four field‐

grade officers for ACOD went unfilled for months, leaving Aegis effectively 

in charge of making decisions on potential competitors’ conduct. 

Discovering this situation during theater travel, Commissioners concluded 

and reported that it created a potential conflict of interest if Aegis were to 

begin providing security for Defense. The government notified Aegis of the 

potential conflict, and offered Aegis the chance to be able to compete for 

12. DoD IG Report No. D-2011-032, “Logistics Civil Augmentation Program Support Contract Needs to 

Comply with Acquisition Rules,” January 7, 2011, 1, 9-10.
51

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

future security work by withdrawing from the ACOD support contract in 

Afghanistan. The company withdrew, effective November 15, 2009.

▪ The U.S. government contracted with Virginia-based CACI International in 

2004 to provide operations-support services to the Joint Contracting 

Command Iraq/Afghanistan (JCC I/A). Attempts to increase the JCC 

I/A’s military staffing levels and to recruit volunteers had failed, so 

dozens of CACI employees were added and performed work that 

government contract specialists would normally have done. 

By way of organizational-conflict-of-interest risk mitigation, CACI 

undertook not to compete for other JCC I/A solicitations, and to 

“firewall” the JCC I/A-support group from other CACI operations.13

With the government’s approval, this CACI business segment 

continued to act as part of a larger organization that competed 

for other contracts in theater. The Commission has reservations, 

however, whether such firewall arrangements can be effective.

These examples illustrate how easily potential or actual organizational 

conflicts of interest can arise, and to suggest that the urgency of 

contingency operations requires a vigilant and effective risk-identification, 

risk-mitigation, and OCI-enforcement process. When, however, organizational 

conflict of interest cannot be avoided or mitigated to an acceptable level, the work 

must not be done by contractors.

A somewhat different example—contractor work performed in the United States 

in support of the Afghanistan and Iraq operations, rather than in theater—

illustrates a combination of problems that were not mitigated in advance. The 

case involves a $285.5 million contract awarded in 2009 by Army Contracting 

Command to Science Applications International Corporation (SAIC) for follow-up 

maintenance support for the Army’s Mine Resistant Ambush Protected (MRAP) 

vehicles. According to the inspector general of the Department of Defense, Army, 

and Joint Program Office officials

inappropriately allowed the contractor to perform inherently 

governmental functions, such as disciplining DoD employees, and 

to have organizational conflicts of interest, such as helping prepare 

requirements for the follow-on contract that the contractor bid on and 

won. ... This greatly increased the risk for potential waste or abuse on 

the contract.14

13. Dr. Terry Raney, Senior Vice President, CACI International, Inc., Commission hearing, April 19, 2010, 

transcript, 126.

14. DoD IG Report D-2011-081, “Contract Management of Joint Logistics Services in Support of Mine 

Resistant Ambush Protected Vehicles Needs Improvement,” July 11, 2011, i.

The use of 

contractors to 

manage other 

contractors 

reveals a failure 

of government 

to provide for 

a sufficient 

contingency 

workforce.
52

C H A P T E R 2

The use of contractors to manage other contractors reveals a failure of government 

to provide for a sufficient contingency workforce. Personnel shortages are not 

sufficient justification for contracting for high-risk functions after a crisis develops. 

Congress and federal agencies are responsible for structuring the U.S. peacetime 

workforce to deal with projected mobilization and crisis demands. Securing a 

standing capability to deploy at the start of a contingency would reduce contract 

waste, fraud, and abuse, which were a significant 

problem in the early days of the operations in Iraq and 

Afghanistan, as well as help to avoid or mitigate potential 

organizational conflicts of interest.

► RECOMMENDATION 2

Develop deployable cadres for acquisition 

management and contractor oversight

Agency heads should:

▪ Provide funding and direction to establish a 

trained, experienced, and deployable cadre 

for acquisition-management and contractoroversight functions in areas of contingency 

operations so that the government has an alternative to relying on 

contractors for acquisition management and oversight.

Appropriate use of security contractors 

in contingencies

The government uses security contractors in three main ways:

1. Static security for sites like embassies and consulates, for military forward 

operating bases (FOBs), and for construction sites;

2. Personal security details for diplomats and other government personnel, 

and for other persons requiring special protection; and

3. Convoy security for movement of personnel and goods.

Direction regarding the performance of security functions in a contingency came 

with the enactment of the National Defense Authorization Acts for FY 2008 and 

2009, as well as in the 2006 version of DoDI 1100.22, “Guidance for Determining 

Workforce Mix,” which delegated decisions on the use of armed contractors 

Determining whether an 

instance of static, personal, or 

convoy security is appropriate 

for contracting out in a 

contingency environment 

depends upon factors in 

addition to the inherently 

governmental construct.
53

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

to the Combatant Commands (COCOMs)—years after the start of the Iraq and 

Afghanistan contingencies.15

In January 2006, Defense’s general counsel issued a legal opinion concluding that 

the use of PSCs to protect U.S. personnel and property in Iraq and Afghanistan 

was appropriate. This opinion states that it would be inappropriate to use armed 

security contractors in “situations where the likelihood of direct participation in 

hostilities is high.”16

The “likelihood” caveat in the Defense legal opinion underscores the Commission’s 

belief that determining whether an instance of static, personal, or convoy security 

is appropriate for contracting out in a contingency environment depends upon 

factors in addition to the inherently governmental construct. Those factors include 

the type of security, risk of the specific mission, situational conditions, the current 

or potential kinetic environment, and hostnation stability.

The presence and scale of risks can be 

highly context-sensitive. In Afghanistan, 

for example, the difficulties of vetting and 

overseeing Afghan personnel hired for 

security tasks in a zone of contingency 

operations have been illustrated by 

incidents of attacks and fatalities inflicted 

on U.S. and other allied personnel with 

the participation or support of security 

contractor employees—and at least one 

episode of Afghan security guards huddling 

in their beds while insurgents attacked the 

U.S. combat outpost they were hired to guard. 17

It should be noted that members of the Afghan military and police have also 

inflicted U.S. fatalities. Given that avoidable risks of operational, fiscal, and 

15. Secs. 832, 853, National Defense Authorization Act for FY 2009, P.L. 110-417; sec. 862, National Defense 

Authorization Act for FY 2008, P.L. 110-181.

16. Department of Defense, Deputy General Counsel Charles A. Allen, memorandum, “Request to 

Contract for Private Security Companies in Iraq,” January 10, 2006. 

17. MSNBC News, “Afghan security contractor accused of killing US soldiers,” March 21, 2011. The report 

said a recently hired guard with Tundra Security Group opened fire on a group of U.S. soldiers at Forward 

Operating Base Frontenac in Argandab Valley, killing two and wounding four before being shot to death. 

Associated Press, “Probe: Afghan Troops Ran, Hid During Deadly Attack,” June 10, 2011. The story details 

an October 3, 2009 insurgent attack on Combat Outpost Keating in which eight U.S. soldiers were killed 

and 22 wounded, and includes reports on the conduct of both Afghan soldiers and Afghan security 

guards.

Fuel trucks ablaze, 

Oruzgan province, 

Afghanistan. 

(Photo courtesy of 

DCMA)
54

C H A P T E R 2

political failures fall directly on the U.S. government and its policy objectives, the 

Commission believes that risk assessments for using security contractors should be 

a standard, regularly updated exercise, and that agencies involved in contingency 

operations should formally agree on general principles for using security 

contractors.

As Iraq and Afghanistan show, the environments are dynamic and numbers of 

contractors and the scope of their missions can change dramatically from one year 

to the next. This is in contrast to labeling any one type of security as inherently 

governmental, assigning a “bright line” to that function, and prohibiting the U.S. 

government from contracting for such a service in future contingencies.

In a war zone, as troop limitations and expanded agency missions drive manpower 

decisions, a risk-based determination process of whether a function should or 

should not be contracted may take a back seat to 

mission accomplishment. As the Under Secretary 

of State for Management remarked, “The surge 

capability is, in my mind, what contracting is for ... to 

be able to grow the work when you have a particular 

need and then to shrink that work back for the 

benefit of the mission and the American taxpayer.”18

State’s Bureau of Diplomatic Security has limited 

employee resources, yet in Iraq must significantly 

expand its security workforce to develop its 

countrywide presence as Defense continues to 

withdraw troops and resources. Contractors will 

supply much of the increased workforce. 

A realistic risk assessment must consider whether 

contracting for these services, currently performed with limited government 

oversight, is acceptable and whether risk can be brought to acceptable levels. Lack 

of proximity to contracting and oversight authorities and to trained or experienced 

personnel in theater makes this a difficult challenge for State and especially for 

USAID, with its numerous and widely dispersed projects. The Commission has 

expressed concern in hearings and special reports about State’s ability to manage 

and oversee a major expansion of its contracting activity. A similar concern applies 

with more force to USAID, which has an even smaller acquisition staff than State, 

18. Patrick F. Kennedy, Under Secretary of State for Management, House of Representatives Committee on 

Oversight and Government Reform, Subcommittee on National Security, Homeland Defense, and Foreign 

Operations hearing, “U.S. Military Leaving Iraq: Is the State Department Ready?,” March 2, 2011.

A realistic risk 

assessment must 

consider whether 

contracting for these 

services, currently 

performed with limited 

government oversight, is 

acceptable and whether 

risk can be brought to 

acceptable levels.
55

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

no organic security forces, and no direct contractual relationships with security 

contractors that its implementing partners may engage.

State and Defense have made significant progress in implementing standards 

and processes for the selection, training, equipping, accounting for, coordinating, 

monitoring, and investigating private security contractors and their activities. The 

Commission is concerned whether similar risk-mitigation strategies will be applied 

to security subcontractors for USAID implementing partners.

USAID pursues hundreds of projects in Iraq and Afghanistan for traditional 

reconstruction and development goals, as well as “stabilization” goals linked to 

political/military objectives. These efforts have entailed work dispersed among 

many remote locations, often in areas of lethal insurgent activity or at least 

constant threat of attack. USAID does not contract directly for security, and some 

of its implementing partners work without security. But security is an issue. 

As GAO has noted, “U.S. officials cited poor security as having caused delays, 

disruptions, and even abandonment of certain reconstruction projects.”19 USAID’s 

inspector general told the Commission that the agency had cited security as “the 

overriding risk confronting USAID’s ability to manage its assistance activities” as 

early as 2003, then elaborated as recently as 2009:

In addition to causing operating and program costs to increase, the lack 

of security imposes significant constraints on USAID’s ability to monitor 

its programs. USAID officials are unable to make routine site visits, and 

their official counterparts are often reluctant to be seen meeting with 

Americans. Normal branding procedures (e.g., ensuring that USAID’s 

logo is readily visible at project sites and on delivered commodities) 

are sometimes bypassed in order to protect the implementers and the 

beneficiaries. USAID-funded vehicles have been damaged or destroyed 

by insurgents, and implementing partners and host country officials 

have been the targets of threats, kidnappings, and murders.20

Delays, abandonments, threats, and attacks all create an environment which 

contributes to waste. But this outcome is to be expected if U.S. policy departs 

from the maxim of “clear, hold, build.” There may be powerful geopolitical or 

humanitarian reasons to launch large-scale reconstruction projects in unsecured 

or contested areas, but obtaining cost-effective contracting is not one of them. As 

the Special Inspector General for Iraq Reconstruction (SIGIR) told the Commission 

at its first hearing:

19. GAO Report GAO-10-932T, “Afghanistan Development: USAID Continues to Face Challenges,” July 15, 

2010, 4. 

20. Donald A. Gambatesa, Inspector General, USAID, statement, Commission hearing, February 2, 2009, 2.
56

C H A P T E R 2

A successful reconstruction program requires a balancing of security, 

political, and economic interests. Reconstruction cannot proceed on a 

large scale without the requisite security to protect those responsible 

for implementing and overseeing projects. When embarking on a 

contingency relief and reconstruction operation, the U.S. government 

should analyze whether and at what costs those security risks can be 

mitigated. Projects should only proceed when senior leaders determine 

that the strategic objectives they seek to fulfill outweigh the risk of 

failure and the costs of mitigating security risks.21

Officials who take into account the operational and fiscal implications of providing 

the level and duration of security required to complete and operate a project 

might well decide to cancel, postpone, or modify it before the associated costs and 

risks outweigh the presumptive benefits.

Conditions influence appropriate use of contractors

Compared to the scope of contracting in reconstruction or logistics programs, 

contracted security providers are relatively small in number.However, any incident 

involving an armed private security contractor has immediate impact, with even 

minor incidents generating extensive media and host-nation attention. 

Even if permitted by U.S. or host-nation laws, using contractors to provide security 

functions in specific contingency operations may not be the best decision based 

on conditions and risk. President Karzai’s decree to restrict the use of PSCs may 

influence the decision to contract security services even if this is not expressly 

prohibited by the government of Afghanistan.22 Concerns of waste, fraud, and 

indirect insurgent funding in convoy contracts in Afghanistan increase the risk to 

the mission of using PSCs. In these cases contracting for services is not appropriate 

unless the potential benefits outweigh the associated risks. 

Risk evaluations include assessments of PSC use-of-force incidents, illegal activity, 

and implementation of procedures for coordinating, monitoring, reporting, and 

investigating contractor movements and incidents. Options available to mitigate 

risk are necessarily contingency-specific.

Situations vary among contingencies. A core set of mitigation steps, however, 

could be applied to all contingencies, including:

21. Stuart Bowen, Jr., Special Inspector General for Iraq Reconstruction (SIGIR), statement, Commission 

hearing, February 2, 2009, 4.

22. President Hamid Karzai, Presidential Decree 62, “Ordinance of the President of the Islamic Republic of 

Afghanistan About Closing Security Companies,” August 17, 2010. 
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‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

▪ clarifying legal accountability under U.S. and host-nation laws, 

▪ defining agency roles and responsibilities for oversight of all PSCs, 

▪ drafting sufficient policies and procedures, 

▪ securing appropriate funding to sustain management and 

oversight positions, and 

▪ deploying trained or experienced staff in the field to monitor 

performance. 

Additional risk mitigation can be adapted from lessons learned in 

previous or current contingency operations, including the establishment 

of interagency PSC coordination centers such as the Defense-managed 

Contractor Operations Cell (CONOC), clear incident-reporting guidance, 

and doctrine for interagency and bilateral investigations of incidents. 

Reforms implemented since 2007 have contributed to decreasing security 

contractor incidents, yet continued improvement is required.

Risk considerations for contract security in 

Afghanistan 

The scale and intensity of U.S. contingency operations in Afghanistan, the 

challenging security environment, and the Afghan government’s policy 

toward private security contractors all warrant a discussion of contract 

security issues in that country.

As of June 30, 2011, Defense had over 15,000 private security contractor personnel 

working in Afghanistan, more than double the count of June 2009. Of these,

▪ over 13,000 were Afghan nationals,

▪ nearly 1,300 were third-country nationals, and

▪ about 700 were U.S. nationals.23

About 12,000 additional private security contractors and subcontractors were working 

in Afghanistan supporting State and USAID as of fall 2010.24

23. Deputy Assistant Secretary of Defense (Program Support), “Contractor Support of U.S. Operations in the 

USCENTCOM Area of Responsibility, Iraq, and Afghanistan,” July 7, 2011. The numbers are about 4,000 lower 

than the previous quarter’s report as a result of licensing issues with the Afghan government and compliance 

with Presidential Decree 62.

24. GAO Report 11-1, “Iraq and Afghanistan: DOD, State, and USAID Face Continued Challenges in Tracking 

Contracts, Assistance Instruments, and Associated Personnel,” October 1, 2010, 21.

Concerns of waste, 

fraud, and indirect 

insurgent funding 

in convoy contracts 

in Afghanistan 

increase the risk to 

the mission of using 

PSCs. In these 

cases contracting 

for security services 

is not appropriate 

unless the potential 

benefits outweigh 

the associated 

risks.
58

C H A P T E R 2

The security landscape in Afghanistan is in flux. In response to the Afghan 

government’s decree of August 17, 2010, the country’s Ministry of the Interior 

issued a “bridging strategy” implementation plan on March 15, 2011.25 The 

bridging strategy addresses implementation of President Karzai’s decree, 

exempting private companies that provide security for diplomatic organizations. 

Otherwise, PSCs will be unable to provide security for development or 

reconstruction projects after March 2012, and for international-forces’ convoys and 

sites after March 2013.

The Afghan government’s plan is that functions prohibited to foreign PSCs will 

be assumed by an Afghan government-controlled Afghan Public Protection 

Force (APPF). The U.S. government supports the bridging strategy and creation 

of the APPF, but has conditioned its support on the APPF’s ability to assume 

responsibility and on the Afghan government’s establishing acceptable 

administrative procedures.26

Considering the risks and appropriateness of contracting for private security 

in Afghanistan requires noting the distinctions among static security, personal 

security, and convoy security. 

Security for bases, camps, and diplomatic posts

Static security for bases, camps, and diplomatic posts involves considerations 

different from those applicable to convoy security.

The biggest threat is from insurgent attempts to target bases and camps in order 

to inflict casualties on U.S. forces. Other kinds of problems arise from relying upon 

Afghan PSCs who recruit local nationals. A Pashtun PSC guarding a base or camp 

in a contested Pashtun area may have pro-insurgent personnel in its workforce. 

However, bringing in guards from other areas may cause suspicion and friction 

among the local civilians. The Afghan Presidential Decree 62 mandates that static 

security ultimately will be provided by an entity under Afghan governmental 

control. A later decree exempted foreign diplomatic security. 

These considerations suggest selective phasing out of PSCs in the most at-risk 

positions, regions, and contexts. At forward camps in insurgent-controlled areas 

25. Ministry of the Interior, Afghanistan, “The Bridging Strategy for Implementation of Presidential Decree 

62, (Dissolution of Private Security Companies),” March 15, 2011.

26. Special Inspector General for Afghanistan Reconstruction (SIGAR), Audit Report 11-1SP, “Analysis of 

Recommendations Concerning Contracting in Afghanistan, as Mandated by Section 1219 of the Fiscal 

Year 2011 NDAA,” June 22, 2011, 14.
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‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

where there is a significant likelihood of well-planned enemy attacks, military 

forces should provide static security. 

At the other end of the spectrum, PSCs may serve well to guard outer areas and 

perimeter gates for forward operating bases in completely uncontested areas. 

Deciding which PSCs to use requires a challenging calculation involving the risks 

of different kinds of PSCs and the application of the Karzai decrees. The problem is 

not merely that third-country nationals (TCNs) may be costlier than Afghans. Using 

TCNs may erode local support by removing employment opportunities for local 

Afghans. Using PSCs for static security in low-risk areas serves its classic function 

of freeing up troops for combat operations. That said, improvements are needed 

in PSC vetting, training, arming, weapons control, oversight, and management. For 

example, during March 2011 travel in Afghanistan, Commission members and staff 

learned of drug paraphernalia and ingredients for improvised explosive devices 

having been found in hired guards’ possession.

Afghanistan requires a risk-based analysis, with selective 

phasing-out of private security in the riskiest areas. In some 

roles, however, if the benefits associated with PSC use are 

outweighed by the risks, reform rather than phase-out is the 

reasonable approach.

Personal-security details

So long as the U.S. military continues its minimal participation 

in personal-security missions, the State Department has no 

practical alternative to using contractors. State’s Bureau of 

Diplomatic Security has only about 1,800 Diplomatic Security 

agents world-wide, and cannot meet all of the Department’s 

security needs amid the Afghan insurgency without contractor 

support.

Changing State’s personal-security practices in Afghanistan 

would entail heavy burdens, at least in the near term. But 

change in this function does not appear urgent. When the 

Karzai government demanded changes to reduce the presence of foreign privatesecurity companies, it exempted personal-security details used by the Department 

of State. Otherwise, an agreement between the International Security Assistance 

Force and the Afghan government calls for phasing out PSC performance of 

personal-security missions by 2012 and turning responsibility over to the Afghan 

Public Protection Force. It is uncertain whether this process will be completed on 

schedule.

Afghan decree limiting 

foreign security firms. 

(Afghan government 

document)
60

C H A P T E R 2

There is room for improvement. Many important reforms made in Iraq have 

not been implemented in Afghanistan. They include reliable incident-reporting 

mechanisms for all PSCs and compliance 

with arming-authorization and host-nation 

regulations. Documentary requirements 

such as arming authorizations and rosters 

are far from complete. The ACOD in 

Afghanistan does not function at the same 

level as the ACOD has in Iraq. Many other 

inadequacies and needed reforms could 

be cited. These improvements were useful 

in Iraq, and need to be better applied in 

Afghanistan and in future contingencies.

Convoy security

Convoy security in Afghanistan has several features that suggest PSCs should be 

phased out or at least sharply restricted for that function.

The Commission has previously noted that “contractors who perform movement 

security in Iraq and Afghanistan are likely to traverse hostile environments and 

enter into or generate high-risk situations.”27 That concern primarily involved 

potential (and actual) civilian casualties, as well as alienation of the local 

population that could undermine U.S. and allied political initiatives and increase 

sympathy for the Taliban. An additional concern in Afghanistan is that convoys 

have become vulnerable to extortion, generating payments that flow to local 

warlords or to insurgents who control or contest a particular stretch of road.28 On 

high-volume roads, insurgents concentrate their efforts to target convoy traffic. 

The U.S. military has already limited its use of private security for convoys, 

furnishing its own security for convoys carrying critical material such as 

ammunition or military vehicles. Also, American forces provide security when 

convoy contractors identify certain routes as particularly hazardous enemycontrolled roads. 

27. Commission second interim report, “At what risk? Correcting over-reliance on contractors in 

contingency operations,” February 24, 2011, 17. 

28. This issue, as embodied in the Department of Defense’s Host Nation Trucking Program, was explored 

at length by the then-majority staff of the U.S. House Subcommittee on National Security and Foreign 

Affairs, House Committee on Oversight and Government Reform. See U.S. House Committee on Oversight 

and Government Reform, Subcommittee on National Security and Foreign Affairs, Majority Staff Report, 

“Warlord, Inc.: Extortion and Corruption Along the U.S. Supply Chain in Afghanistan,” June 2010. 

Afghanistan requires a riskbased analysis, with selective 

phasing-out of private security in 

the riskiest areas.
61

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

Phasing out PSC convoy security could be selective. Main roads in much of the 

western and northern provinces of Afghanistan are not under insurgent control. 

Convoy-security risks could also be mitigated by replacing PSCs 

with military guards for high-volume movement along the 

contested parts of the most heavily traveled routes such as the 

paved “Ring Road” linking Kabul, Kandahar, Herat, and other 

cities. Also, U.S. and Afghan forces could cooperate in providing 

military security for convoys.

A selective phasing out of PSC-provided convoy security would 

not erase the need for reforms. More rigorous vetting of PSC 

subcontractors and checking of their armed employees would 

help, as would tracking and video records of convoy movements and debriefings 

of convoy personnel.

► RECOMMENDATION 3

Phase out use of private security contractors for certain functions

▪ Phase out use of host-nation private security contractors in Afghanistan 

for the convoys on high-volume roads that the insurgency controls or 

contests. Current alternatives include U.S. military, Afghanistan National 

Army units, the new Afghan government-sanctioned security providers 

established under the Karzai decrees as the Afghan Public Protection 

Force, or some combination of the above.

▪ Evaluate each static-security site to assess the risk associated with the use 

of contractors. Where the military commander determines there is a high 

risk, use military forces. Where the commander determines the high risk 

is specifically the result of using local-national contractors, use military 

forces or third-country national PSCs for security.

Many important reforms 

made in Iraq have not been 

implemented in Afghanistan.
62

C H A P T E R 2

Interagency agreement on security 

in contingency zones is needed

Following the watershed events of Nisur Square in September 2007, a 

Memorandum of Agreement (MOA) between Defense and State was signed 

regarding the use of armed contractors in Iraq.29 This document broadly defined 

procedural requirements and standards in the selection, vetting, training, 

equipping, and accounting for PSCs under Defense and State in Iraq. 

There is no similar interagency guidance applicable to all federal agencies 

regarding the proper use of PSCs in Afghanistan or future contingency operations 

and incorporating lessons learned since December 2007.

The United States has learned lessons, especially in Iraq, regarding effective 

oversight over PSCs. Examples include interagency-coordinated operations 

29. Department of Defense and Department of State, memorandum, “Memorandum of Understanding 

Between the U.S. Department of State and the U.S. Department of Defense and the U.S. Agency for 

International Development Relating to Contracting in Iraq and Afghanistan,” December 5, 2007. 

U.S. Marine convoy, 

Helmand province, 

Afghanistan. 

(U.S. Marine Corps 

photo)
63

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S

centers, command and control authorities, clear policies, and technical monitoring 

of mobile security.

Despite the success of some risk-mitigation strategies, many 

have not been implemented across the agencies or required 

in future contingency or combat operations involving the 

use of PSCs. The U.S. government will likely repeat costly 

mistakes in future contingencies if best practices are not 

institutionalized.

Clearly identifying agency roles and responsibilities in the 

management of PSCs during contingencies allows agencies 

to prepare for their responsibilities in funding, planning, 

staffing, and training prior to the actual requirement. In 

the current military-to-civilian transition in Iraq, State is 

challenged to quickly fill the voids in specific capabilities as Defense draws down 

its forces. In addition to assuming Defense Logistics Agency and Army LOGCAP 

contracts in Iraq, State is adding contracts for support in security, aviation, 

response capabilities, and medical care. State could at some point face similar 

challenges in Afghanistan.

An MOA between federal agencies and applicable to all contingency operations 

regarding the use of PSCs would identify areas that must be addressed by all 

agencies prior to deploying security contractors.

Necessary conditions, such as serious-incident definition and reporting, effective 

incident reporting, points of contact, tactical responsibilities like quick-response 

forces and medevac services, investigative processes, and legal accountability of 

contractors must be identified to determine whether an agency is prepared to 

employ armed contractors in a responsible manner.

The U.S. government will likely 

repeat costly mistakes in future 

contingencies if best practices 

are not institutionalized.
64

C H A P T E R 2

► RECOMMENDATION 4

Improve interagency coordination and guidance for using security 

contractors in contingency operations 

Provide greater control and accountability for security contracting:

▪ Hold the ambassador, USAID mission director, and military commanders 

responsible for making, publicizing, and revising their determinations 

of security-contracting appropriateness as conditions change, giving 

particular consideration to the geographic, temporal, and organizational 

proximity to armed conflict. 

▪ When private security or other contractors are to be armed, they should be 

overseen by government employees and tracked in a centralized system, as 

is done in Iraq.

▪ Reliance on private security contractors should be accompanied by greater 

use and emphasis on vetting, training, authorizing arms, and weapons 

control; post-convoy debriefing, locational tracking and video monitoring; 

and more thorough and comprehensive management.

▪ Execute an interagency agreement to provide guidance on security 

contracting.

▪ Defense, State, and USAID should develop and enter into a standing 

interagency MOA, incorporating lessons and best practices learned in Iraq 

and Afghanistan, to provide guidance in use of private security contractors 

in future contingencies.

▪ This standing MOA should be modified within 90 days of a declared 

combat operation or other contingency to specifically address the needs 

and circumstances of that operation.
65

‘ I N H E R E N T L Y G O V E R N M E N T A L ’ R U L E S
Iraqi contractors on school construction site, Baghdad, Iraq. (U.S Air Force photo) 
Chapter 3

Inattention to contingency 

contracting leads to massive 

waste, fraud, and abuse
68

C H A P T E R 3

Inattention to contingency contracting 

leads to massive waste, fraud, and abuse

C ontingency-contract waste is a breach of agencies’ fiduciary duty to efficiently 

manage budgets and resources. Contract-related fraud undermines the United 

States’ defense, diplomatic, and development missions. Though calculating the 

exact dollar amount lost through waste and fraud is problematic, determining some 

measure of their extent is important in assessing their impact on contingency goals 

and objectives. 

The Commission estimates that waste and fraud together range from $31 billion 

to $60 billion.1

 Given the often chaotic environment in Iraq and Afghanistan, this 

is a conservative estimate of the money that has been lost through contingency 

contracting. The Commission estimates that at the mid-range, waste and fraud during 

contingency operations in Iraq and Afghanistan averaged about $12 million every day 

for the past 10 years.

Qualitative assessments of the impact of waste and fraud are also important because 

losses weigh heavily on political and operational effectiveness.

1. The Commission examined authoritative evidence on waste and fraud. It estimates that wartimecontracting waste in Iraq and Afghanistan ranges from 10 percent to 20 percent of the $206 billion spent since 

fiscal year (FY) 2002, projected through the end of FY 2011. The Commission also estimates that fraud during 

the same period ran between 5 and 9 percent of the $206 billion. 

The Gang That Couldn’t Shoot Straight 

Six billion dollars later, the Afghan National Police 

can’t begin to do their jobs right—never mind 

relieve American forces— Newsweek, March 29, 2010

How the US Funds 

the Taliban —The Nation, November 11, 2009

Weak Oversight Mars Success of Iraq Hotel — AP, July 26, 2009

$40M fuel theft from Army 

prompts global manhunt —Time, April 16, 2009 

US Embassy in Iraq missing 

property worth millions — AP, June 2, 2010

Concerns about wartime contracting have surfaced in numerous media reports.

U
69

W A S T E , F R A U D , A N D A B U S E

Headlines like those below illustrate the media attention given to waste, fraud, and 

abuse in wartime contracting.

Standards for successful contract outcomes are breached in many aspects of the 

contingency-contracting process. Agencies often fail effectively to:

▪ coordinate their project plans with foreign and domestic mission partners;

▪ estimate the costs of performing contracts in dangerous environments when 

making project-selection decisions;

▪ consider the host nation’s ability to finance and sustain stabilization and 

reconstruction projects when developing project requirements and planning 

for effective transfers;

▪ set and meet goals for effective competition;

▪ control contractors’ costs during their performance under undefinitized 

contract actions, even though performance continues without benefit of 

having defined requirements or negotiated terms and conditions; 

▪ assess and mitigate contingency contractors’ potential for organizational 

conflicts of interest; and

▪ monitor and correct poor contractor performance.

Despite years of experience with contingency contracting in Iraq and Afghanistan, 

the root causes of these failures persist. 

Audit: Agencies can’t 

readily account for 

Afghanistan spending — CNN, October 28, 2010

Pentagon Hit for Lax Oversight 

of $4.2 Billion Afghan Food Contract — Bloomberg, March 4, 2011

U.S. pulls $644M Iraq 

jobs program: Fraud, ‘millions’ to insurgents alleged — USA Today, July 27, 2009

Audit: Pentagon overpaid 

oilman by up to $200 million — Washington Post, March 17, 2011 

With U.S. Aid, 

Warlord Builds 

Afghan Empire 

 — New York Times, June 5, 2010 
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C H A P T E R 3

Waste from contingency contracting increases

mission cost and diminishes mission success

 As shown in the Commission’s estimate, the waste incurred in Iraq and 

Afghanistan has added enormously and unnecessarily to the cost of U.S. 

involvement. 

There is no commonly accepted methodology for determining the extent of 

waste. The Commission bases its estimate on information derived from multiple 

sources: 25 hearings; interviews with hundreds of military and civilian officials 

during 15 trips in theater; hundreds of audit 

and inspection reports on projects in Iraq 

and Afghanistan; consultations with scholars 

in academia, policy institutes, and federally 

funded research-and-development centers; 

and a full-time staff presence in Iraq and 

Afghanistan.

The Commission’s estimate of waste does not 

include what is yet to be revealed from expected shortcomings in program and 

project sustainability. The next chapter deals with these sustainability issues.

The Commission’s research and the audits conducted by oversight organizations 

document agencies’ repeated and unacceptable failures to meet standards for 

successful contract outcomes. Examples of poor contract outcomes highlight the 

areas where the risk of waste requires mitigation or prevention.

Wasteful contingency-contract outcomes have three contexts: host-nation issues, 

programs and projects, and individual contracts. 

In Iraq and Afghanistan, significant host-nation issues include:

▪ limited economic-absorptive capacity,

▪ unsustainable development projects,

▪ diversion of contract funding to the insurgency, and

▪ unanticipated security costs. 

At the level of programs and projects execution, significant aspects include limited 

competition and lack of control over poor performance by subcontractors.

The waste incurred in Iraq 

and Afghanistan has added 

enormously and unnecessarily 

to the cost of U.S. involvement.
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W A S T E , F R A U D , A N D A B U S E

At the level of individual contracts, significant aspects include failure to define 

requirements and definitize orders; lack of planning; inadequate oversight of 

construction, and poor oversight of diverse services. All of these are often coupled 

with poor contractor performance and failures often result from several interrelated conditions.

Host-nation issues

Limited economic absorptive capacity

In Afghanistan, the country’s limited absorptive capacity poses a serious problem. 

When U.S. operations began there in 2001, Afghanistan’s per capita gross domestic 

product was $800.2 As part of the counterinsurgency mission, the United States 

has poured more resources and development funding into the country than the 

domestic economy can support. 

$360 million USAID agricultural development project—The Afghan 

Vouchers for Increased Production in Agriculture began as a modest 

$60 million initiative in 2009, distributing vouchers for wheat-seed and 

fertilizer to counteract drought-related food shortages in Afghanistan’s 

north. Under pressure to inject $1 million each day into a dozen or so 

key terrain districts for seeds, fertilizer, 

tools, cash-for-work, and community 

development, USAID within a few weeks 

turned the initiative into a massive $360 

million stabilization program in the 

south and east. The pressure to quickly 

spend the millions of dollars created an 

environment in which waste was rampant. 

Paying villagers for what they used to do 

voluntarily destroyed local initiatives and 

diverted project goods into Pakistan for 

resale.3 

2. Central Intelligence Agency, “World Fact Book for Afghanistan,” 2001.

3. U.S. Senate Committee on Foreign Relations, Majority Staff Report, “Evaluating U.S. Foreign Assistance 

to Afghanistan,” June 8, 2011, 20; Michael Bowers, Regional Program Director for South Asia, Mercy Corps, 

Commission hearing, April 11, 2011, transcript, 9; USAID IG Audit Report No. 5-306-10-008-P, “Audit of 

USAID/Afghanistan’s Vouchers for Increased Productive Agriculture (AVIPA) Program,” April 20, 2010, 7. 

Afghan farmer, 

Helmand province, 

Afghanistan.

(U.S. Marine Corps 

photo)
72

C H A P T E R 3

Unsustainable development projects

The U.S. government built many facilities in Iraq and Afghanistan that proved 

unsustainable. 

$6.4 annual billion Defense (CSTC-A, USACE) Afghan National Security 

Forces—Between FY 2006 and FY 2011, Congress appropriated $38.6 billion, 

an average of $6.4 billion a year, to the 

Combined Security Transition CommandAfghanistan (CSTC-A) program to train, 

equip, and provide other support for 

the Afghan National Security Forces 

(ANSF). Such costs far exceed what the 

government of Afghanistan can sustain, 

so it is unclear how those costs will be 

funded in future. Meanwhile, $11 billion 

of facilities constructed by the U.S. Army 

Corps of Engineers (USACE) for the ANSF 

are “at risk.”4

$82 million Defense Afghan Defense University—Defense awarded a contract 

for about $82 million for the design and construction of Afghan Defense 

University, Afghanistan’s West Point. As the size of the ANSF tripled, the contract 

costs grew.5 During an August 2010 Commission trip to Afghanistan, Defense 

officials said it would cost $40 million per year to operate and maintain—an 

amount possibly beyond the Afghan government’s ability to fund.

4. Major General Arnold Fields, USMC (Ret.), Special Inspector General for Afghanistan Reconstruction (SIGAR), 

Commission hearing, January 24, 2011, transcript, 30-32. 

5. Major General Arnold Fields, USMC (Ret.), Special Inspector General for Afghanistan Reconstruction (SIGAR), 

written statement, Commission hearing, January 24, 2011, 2.

Afghan National Army 

soldier questioning 

villager. 

(U.S. Marine Corps 

photo)

The $6.4 billion per year Combined 

Security Transition CommandAfghanistan program to train, equip, 

and provide other support for the 

Afghan National Security Forces goes 

far beyond what the government of 

Afghanistan can sustain.
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W A S T E , F R A U D , A N D A B U S E

Diversion of U.S. funds 

In Iraq and Afghanistan, U.S. funds have been diverted to insurgents and warlords 

as a cost of doing business in the country. In Afghanistan, insurgents, warlords, 

or other groups control or contest parts of the country. They threaten to destroy 

projects and harm personnel. The Commission finds it particularly alarming 

that Afghan subcontractors on U.S.-funded convoys, road construction, and 

development projects pay insurgent groups for protection. 

Mujahedeen threat letter sent to contractor:

Source: Provided by a representative of a provincial reconstruction team, Afghanistan, January 25, 2011, 

translated for the Commission by a USAID translator/interpreter, June 1, 2011.

While there is no official estimate of the amount of U.S. funds diverted to 

insurgents, it certainly comes to a significant percentage of a project’s cost. 

The largest source of funding for the insurgency is commonly recognized to be 

money from the drug trade. During a March 2011 trip to Afghanistan, experts 

told the Commission that extortion of funds from U.S. construction projects and 

transportation contracts is the insurgent’s second-largest funding source.

Afghan contractors hired under the Host Nation Trucking program have turned to 

Afghan private security contractors. These Afghan subcontractors in turn pay off 

Islamic Imarat of Afghanistan 

Mujahedeen of west area

Letter # 1207

This construction company 

which is working in the 

Jagla area cannot continue 

to work unless it does 

obtain permission from the 

Mojahedeen.

Or else, it does not have the 

right to complain.

Sincerely,

Haqmal Mojahed

You can contact with this phone 

number XXXXXXXXXX.
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C H A P T E R 3

the insurgents or warlords who control the roads their convoys must use.6 Almost 

6,000 Afghan truck movements a month are funded 

under the program. Diversion on this scale did not occur 

in Iraq, where the U.S. military provided most of the 

escorts for similar convoys. 

Many contracts other than transportation provide 

opportunities for diversion: 

▪ Afghan subcontractors on a USAID communitydevelopment program in Kunar Province were 

paying up to 20 percent of their total subcontract 

value to insurgents for “protection.” The USAID IG estimated that over $5 

million of program funding was at risk of falling into insurgents’ hands.7 

▪ A congressional staff report cited Afghan Taliban demands for pay-offs 

from businesses and households for electricity generated by USAID-funded 

projects. This occurs in Taliban-controlled areas like Helmand Province.8

Because they directly strengthen the insurgency, diverted funds pose far more 

danger than other kinds of waste and have a disproportionately adverse impact on 

the U.S. effort. 

Unanticipated security costs 

Agencies continue to take on some projects without 

sufficient regard for the costs of security. Numerous 

audits estimate that unanticipated security costs 

increased expenses by 25 percent.9

Failure to anticipate, estimate, and factor spending on 

security costs into project and program decisions has led 

to massive waste as projects are shut down or abandoned. 

6. U.S. House Committee on Oversight and Government Reform, Subcommittee on National Security and 

Foreign Affairs, Majority Staff Report, “Warlord, Inc.: Extortion and Corruption Along the U.S. Supply Chain 

in Afghanistan,” June 2010, 29.

7. USAID IG Review Report 5-306-10-002-S, “Review of Security Costs Charged to USAID Projects in 

Afghanistan,” September 29, 2010, 6.

8. U.S. Senate Committee on Foreign Relations, Majority Staff Report, “Evaluating U.S. Foreign Assistance 

to Afghanistan,” June 8, 2011, 10. 

9. GAO Report GAO-07-30R, “Rebuilding Iraq: Status of Defense’s Reconstruction Program,” December 15, 

2006, 8; GAO Report GAO-05-737, “Rebuilding Iraq: Actions Needed to Improve Use of Private Security 

Providers,” July 2005, 33; SIGAR Audit 10-4, “Afghanistan Energy Supply Has Increased but an Updated 

Master Plan is Needed and Delays and Sustainability Concerns Remain,” January 15, 2010, 11; World Bank 

Report 34582-AF, “Afghanistan: Managing Public Finances for Development,” 2005, 17, 29.

Extortion of funds from U.S.

construction projects and 

transportation contracts is the 

insurgents’ second-largest 

funding source.

Numerous audits estimate that 

unanticipated security costs 

increased project expenses by 

25 percent.
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W A S T E , F R A U D , A N D A B U S E

$176 million USAID Khost-Gardez road—Costs more than doubled for the 

Khost-Gardez road project built by a Louis Berger Group/Black & Veatch 

joint venture. The project was designed to link southeastern Afghanistan 

to the national highway system. The original USAID contract had a value of 

$86 million.10 High security costs could double that figure by the time the 

contract is complete.

Programs and projects

Inadequate competition for contracts and task orders

Agencies’ procedures failed to generate effective competition. The government 

awarded a large logistics-support contract that ran for a decade without a 

re-competition, with cost-reimbursable task orders that were not subject to 

competition. For different reasons, its replacement contract also failed to provide 

effective competition. 

$36.3 billion Defense (Army) LOGCAP III contract—The Army has awarded 

a number of contracts under its worldwide Logistics Civil Augmentation 

Program (LOGCAP). Of these contracts, the largest is the LOGCAP III 

contract supporting the wars in Iraq and Afghanistan. The base contract 

for LOGCAP III was awarded competitively, but lasted for 10 years without 

competition on any of its task orders. 

Kellogg Brown and Root (KBR) was awarded the LOGCAP III contract 

in December 2001, as sole provider. The contract had one base year 

followed by nine option years. War requirements rapidly and unexpectedly 

expanded the contract value to more than $36.3 billion from the time of 

award. 11

As sole provider, without the discipline of task-order competition, KBR 

proposals included large amounts of questioned and unsupported costs 

identified by the Defense Contract Audit Agency (DCAA). KBR billings also 

included large amounts subject to challenge for disallowance, such as 

unjustified dining-facility costs.12

$6 billion Defense (Army) LOGCAP IV contract—Not until 2009—nearly a 

decade after the start of LOGCAP III—did the Army award task orders for 

Afghanistan under the successor LOGCAP IV contract. Factors contributing 

to the delay included a lack of government acquisition personnel, 

10. Afghanistan Infrastructure and Rehabilitation Program Press Release, “President Karzai and U.S. 

Ambassador Wood Witness Contract Signing for Gardez-Khost Road Construction,” April 26, 2008.

11. Commission analysis of Federal Procurement Data System-Next Generation (FPDS-NG) data. 

12. April G. Stephenson, Director, DCAA, statement, Commission hearing, May 4, 2009, 9-11. 
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C H A P T E R 3

competing priorities, commanders’ resistance to shifting contractors, and 

contractor protests. 

Delay in implementing a competitive strategy for LOGCAP IV, combined 

with a failure to have competition at the task-order level at the outset of 

LOGCAP III, resulted in tremendous waste. The Commission estimates that 

waste from these two factors alone was $3.3 billion.13

The LOGCAP IV task-order competition plan had a number of aspects that 

created “mini-monopolies.” Each geographically 

awarded task order (Fluor in the northern 

Afghanistan provinces, DynCorp in the southern 

provinces) consisted of an initial year and four 

option years, a long period without a new 

competition. This meant that all new work in 

the two regions of Afghanistan went to single 

sources without further competition. The 

Army has in effect awarded two single-source, 

long-term task orders for Afghanistan.

In the first nine months of LOGCAP IV, more 

than $500 million in new work was added to 

the LOGCAP IV Afghanistan task orders awarded 

in 2009—over $235 million to DynCorp for 

Afghanistan South and $270 million to Fluor for Afghanistan North. By 

comparison, over the life of the LOGCAP III task orders for work in Iraq, the 

Army issued 11,000 modifications adding more than $2.7 billion in new 

work.

13. The Commission arrived at this estimate by applying the Army Sustainment Command’s observed 

results of a 9 percent reduction in operating costs from the use of LOGCAP IV in Afghanistan (referenced 

in its business case analysis for transition from LOGCAP III to IV, March 4, 2010) to the $36.37 billion in 

obligations under LOGCAP III as of September 30, 2010.

Contractors preparing 

to move U.S. military 

vehicles, Kuwait. 

(Commission photo)

Delay in implementing a 

competitive strategy for 

LOGCAP IV, combined 

with a failure to have 

competition at the taskorder level at the outset 

of LOGCAP III, resulted in 

tremendous waste.
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W A S T E , F R A U D , A N D A B U S E

Contract extensions limit competition

Another kind of problem can arise at the end of a contract’s period of 

performance when the government issues a long-term sole-source extension 

or contract “bridge” rather than recompeting the requirement. Agencies have 

justified long-term extensions, citing a need to obtain contractor support until 

they can take all the steps required to compete a follow-on contract. However, the 

agencies often have failed either to develop an acquisition strategy to recompete 

the follow-on contract promptly, or to compete a short-term contract that will 

bridge the gap between the expiration date of the incumbent’s contract and the 

award date expected for the follow-on contract. 

Some of the programs extended for long periods or expanded without 

competition are valued at over a billion dollars. 

$3 billion Defense (DLA) food service contract—Supreme Foodservice 

provided about $3 billion in food, water, and non-food supplies for the 

troops in Afghanistan between 2005 and 2010. In December 2010, the 

Defense Logistics Agency (DLA) awarded it a one-year extension contract 

with two six-month option periods, for a total estimated value of $4 billion.

Defense (Army) LOGCAP III base-life services task order—The Army 

awarded KBR, without competition, a task order under LOGCAP III for Base 

Life Services in Iraq in 2010. Commission hearings in spring 2010 raised 

doubts as to why the Army did not compete the task-order award under 

LOGCAP IV instead.14

$1 billion Defense (INSCOM) translation services contract—INSCOM, the 

U.S. Army Intelligence and Security Command, expanded its contract with 

Mission Essential Personnel, LLC for linguist and translator services when 

the contract neared its funding ceiling in 2010, and again in 2011. Together 

these steps increased the contract ceiling by over a billion dollars.

Other problems that inhibit competition 

A serious competition problem occurred with the handoff of the billion-dollar 

program for training the Afghan National Police from State to Defense, resulting in 

lengthy delays before the final contract award.

$1.5 billion Defense (CSTC-A) Afghan National Police training program—

In 2009, the Combined Security Transition Command-Afghanistan 

(CSTC-A) planned to award a task order for training the Afghan National 

14. Commission hearing, March 29, 2010, transcript, 3. 
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C H A P T E R 3

Police (ANP). This indefinite-delivery contract limited competition to five 

contractors who provided the Army with counter-narcoterrorism technology 

but had not provided police training. The competition under this Army 

contract did not include the State Department’s incumbent, DynCorp.

DynCorp protested to GAO, which sustained the protest, finding that the 

new award of a national police training program was outside the scope 

of an indefinite-delivery, indefinite-quantity (IDIQ) contract focused on 

counternarcotics programs. The original date for hand-over from State 

to Defense was mid-November 2009, yet not until December 2010 was 

DynCorp competitively awarded a two-year, $718 million base contract for 

ANP training with a $322 million one-year option. 

Other problems ranged from awards with no justification for the absence of 

competition to awards with no audits of proposals—even for billion-dollar task 

orders. For the Iraqi police training program, State awarded a $1.4 billion task order 

to DynCorp, foregoing competition.

$1.4 billion State Department Iraq police training task order—In February 

2004, State awarded a $2.5 billion contract to DynCorp to support its 

Iraqi police training program. Task Order 1436, worth $1.4 billion, was 

subsequently awarded for only four months as an exception to “fair 

opportunity” to compete without stating a justification for doing so. It 

was extended by modifications through May 2008.15 The Special Inspector 

General for Iraq Reconstruction found no written support for the exception 

to “fair opportunity.”16

The Defense Logistics Agency (DLA) failed to follow proper procedures for the 

procurement of fuel. 

$2.7 billion Defense (DLA) fuel contract—Starting in 2004, DLA Energy 

awarded four contracts totaling $2.7 billion to the International Oil Trading 

Company (IOTC) for delivery of fuel in Iraq. The Defense inspector general 

found that DLA contracting officers improperly determined that adequate 

price competition existed even though only one firm could perform. Since 

the procurements were wrongly deemed “competitive,” IOTC was not 

required to submit certified cost and pricing data. Consequently, DLA did not 

perform a detailed cost analysis of what IOTC charged. DLA paid IOTC about 

$200 million more than a cost analysis could support.17

15. SIGIR Audit Report 10-008, “Long-Standing Weaknesses in Department of State’s Oversight of DynCorp 

Contract for Support of the Iraqi Police Training Program,” January 25, 2010, 7-9.

16. Ibid., i, 2.

17. Defense IG Report D-2011-049, “Competition Issues and Inherently Governmental Functions Performed 

by Contractor Employees on Contracts to Supply Fuel to U.S. Troops in Iraq,” March 15, 2011, 5. 
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W A S T E , F R A U D , A N D A B U S E

The problems with competition and awarding contracts indicate the need for 

reforms to apply the discipline of competition in contingency operations. 

Problems with subcontracting

Subcontracting has posed numerous problems in Iraq and Afghanistan. In these 

countries, key subcontractors came from cultures in which bribes and kickbacks 

are common, and United States’ legal institutions often have little or no leverage 

over foreign subcontractors. 

$400 million Defense (Army) LOGCAP III subcontracts—Starting in 2002, 

the Iraq general manager for Tamimi, a Kuwaiti company, gave kickbacks 

to KBR’s LOGCAP III managers on initial awards of contracts. Subsequently, 

KBR awarded additional subcontracts for dining-facility services to Tamimi 

worth more than $700 million. Later, the general manager of Tamimi was 

convicted of related felonies.18 Finally, in March 2011, the Department of 

Justice filed a claim that KBR had engaged in false claims.

Both DCAA and the Commission demanded more complete records of 

these subcontracts, but at a 2010 Commission hearing Tamimi refused, 

relying on the fact that they performed under a fixed-price contract.19

It is difficult for the government to investigate the circumstances of 

performance by a foreign subcontractor working under a fixed-price 

contract.20

The Commission’s August 2009 hearing examined 

the five-year, nearly $5 billion contract for translator 

services in Iraq between the U.S. Army Intelligence 

and Security Command (INSCOM) and prime 

contractor Global Linguist Solutions (GLS).

$4.6 billion Defense (INSCOM) linguistics 

service subcontracts—GLS subcontracted 

work to Northrop Grumman, L-3 Communications, and other vendors. 

DCAA found that GLS subcontracted almost $3 billion of work, issued 

under a contract with an estimated value of $4.6 billion, to multiple 

subcontractors, some of which merely provided pass-through payments to 

the linguists, adding little value. 

A large subcontract was awarded by GLS to its main competitor L-3, an 

award that appeared to be an accommodation to a firm that had protested 

18. United States of America v. Mohammad Shabbir Khan, Case No. 06-cr-40055 (C.D. Ill. 2006).

19. Commission hearing, July 26, 2010, transcript, 110-111, 182-184. 

20. 10 U.S.C. 2313.

In Iraq and Afghanistan, key 

subcontractors came from cultures 

in which bribes and kickbacks are 

common.
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C H A P T E R 3

the award to GLS. To make up for the contract’s cost increases from this 

“accommodation,” GLS trimmed the salaries of linguists, and led them to 

believe the government had directed the salary reductions.21

The GLS procurement involved two large firms that were expected to 

compete—one of which protested the Army’s contract award and later 

became a subcontractor to the awardee, to their mutual benefit.22

Afghan subcontractors have proved to be unreliable, while agency oversight has 

been especially difficult to implement. 

$5.9 million Defense (USACE) Afghan National Police construction 

project—In 2007, the U.S. Army Corps of Engineers (USACE) was provided 

with $5.9 million to construct seven Afghan National Police (ANP) district 

headquarters in Helmand and Kandahar Provinces. It awarded the contract 

to the Afghan-owned Basirat Construction Company. Basirat subcontracted 

work to two other Afghan-owned construction companies implicated 

in the problems that followed. SIGAR auditors identified construction 

deficiency costs up to $1 million. The flawed work meant contract 

requirements went unmet and that delivery of the facilities to the ANP was 

delayed.23

$17.6 million Defense (AFCEE) infrastructure project—In September 2007, 

the Air Force Center for Engineering and the Environment (AFCEE) awarded 

a $17.6 million construction contract to CH2M HILL for infrastructure 

work at Camp Phoenix, an Army installation in Afghanistan. During the 

months of April and May 2009, ENCORP (a subcontractor to CH2M HILL) 

failed to pay their subcontractors, and the owner fled Afghanistan with 

around $2 million. Later, the second-tier subcontractors walked off the job 

site for lack of payment. One of the second-tier contractors removed two 

750-killowatt generators and other electrical material from the jobsite to 

hold as collateral for the money it was owed by ENCORP until CH2M HILL 

agreed to pay them. Completion of a key center at the camp was delayed 

for over a year, resulting in inadequate housing for several hundred military 

personnel for over 18 months.

21. Commission hearing, August 12, 2009, transcript, 1, 7, 8, 20-21, 28, 32, 35. 

22. Ibid., 1, 7. 

23. SIGAR Audit 11-3, “ANP District Headquarters Facilities in Helmand and Kandahar Provinces Have 

Significant Construction Deficiencies Due to Lack of Oversight and Poor Contractor Performance,” October 

27, 2010, ii, 4.
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W A S T E , F R A U D , A N D A B U S E

Individual contracts

Problems with defining requirements 

and managing contractor performance

At the level of individual contracts, significant factors leading 

to waste include failures to define requirements, poor use of 

management resources, and poor oversight. These shortcomings 

are often linked to poor contractor performance. 

The government accepts great risk when it fails to effectively 

define detailed requirements before it awards a contract. 

Inadequately defined contract requirements are particularly 

vulnerable to waste in construction contracting, since the government often 

provides engineers with little or no guidance. Two Afghanistan projects exemplify 

this failure. 

$57 million USAID health and education construction program—

Afghanistan entered into a cooperative agreement with the International 

Organization for Migration to meet health and education needs through 

the construction of 18 hospitals, midwife-training centers, and colleges 

in Afghanistan.The agreement was 

subsequently modified to conform to 

new, more rigorous international building 

codes and to address security issues, all 

adding to the project’s time and expense.

$24 million State prison renovation 

project—Similarly, planning for the 

Pol-i-Charkhi Prison Renovation 

Project involved mid-course changes 

in requirements. In addition, a poorly 

performing contractor was selected to 

undertake the work. A base contract 

with Al-Watan Construction Company was modified twice by State. 

The first modification, to accelerate the schedule, cost $3.6 million. 

The second modification, for the renovation of the industries building 

and the staff barracks cost $500,000.24 State issued a stop-work order 

effective November 5, 2010, to Al-Watan. Basirat Construction, the design 

consultant and quality-assurance firm, also received a stop-work order in 

November 2010, when the project was 66 percent complete.

24. Narcotics Affairs Section (NAS)/Bureau of International Narcotics and Law Enforcement (INL), “NAS/INL 

Construction Overview,” November 16, 2010, 9. 

The government accepts 

great risk when it fails to 

effectively define detailed 

requirements before it 

awards a contract.

U.S. Air Force and 

USAID personnel at 

school site, Panjshir 

Province, Afghanistan. 

(Defense photo)
82

C H A P T E R 3

Accurate and complete requirements are also essential for non-construction 

projects. When the government does not provide specific requirements, 

contractors sometimes charge excessive or unnecessary costs for the services. 

$3 billion Defense (DLA) subsistence contract—The Defense Logistics 

Agency has paid Supreme Foodservice AG about $3 billion as the 

Subsistence Prime Vendor (SPV) for food, water, and 

some non-food items in Afghanistan. In 2011, the 

Defense inspector general estimated DLA overpaid 

Supreme by about $124 million in transportation (airlift) 

and packaging costs.

Certain items, like fresh fruit and vegetables, required 

airlift to isolated bases, but DLA did not include this 

requirement in the original contract. The contracting 

officer attempted to rectify the omission by tasking 

Supreme with providing “premium airlift,” which it did at 

a total cost of over $450 million. 

DLA failed to ask the U.S. Transportation Command (TRANSCOM), which 

has extensive experience contracting for airlifting in Afghanistan, to review 

the requirement. TheDefense IG recommended that DCAA determine a fair 

and reasonable price for the airlift. Commission inquiries found that DCAA 

is currently working on such a determination, which may lead to retrieving 

excess funding from Supreme. 

Problems with contract definitization

Problems also arise when agencies fail to definitize contract or task-order terms 

and conditions in a timely manner. Acquisition regulations require that when it is 

not possible to negotiate a definitive contract in advance of award, the terms must 

be definitized within 180 days of award or before completion of 40 percent of the 

work.25

Agencies generally avoid using undefinitized orders because they permit a 

contractor to incur significant costs—which at times may be unnecessary and on 

which profit may be based—in the absence of fully defined constraints or contract 

terms and conditions.

In a contingency-contracting environment, agencies have all too often allowed a 

contractor to begin work under an “undefinitized” (nonspecific) contract or order. 

25. FAR 16.603-2(c)(3); FAR 52.216-25; 10 U.S.C. 2326. 

When the government 

does not provide specific 

requirements, contractors 

sometimes charge 

excessive or unnecessary 

costs for the services.
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W A S T E , F R A U D , A N D A B U S E

Waste from KBR support performed in Iraq under the LOGCAP III contract arose 

from billions of dollars of undefinitized task orders. Because of the questionable 

costs charged by the company, the DCAA sought to withhold hundreds of millions 

of dollars from contract payments.

Defense (Army) LOGCAP III undefinitized contracts—During 2003-2005, 

the U.S. Army awarded KBR numerous LOGCAP III task orders in Iraq 

on an undefinitized basis to supply accelerated services, despite the 

unpreparedness of both the officials and the contractor. Moreover, the 

task orders remained undefinitized even after delivery of billions of dollars 

in services. DCAA attributed the delay in definitizing the contracts to 

proposals by KBR that did not have sufficient specifics for negotiation and 

to insufficient staffing on the part of the agency.26

DCAA recommended, and the Army contracting officer agreed, to 

withhold 15 percent of the contract value under the regulations regarding 

undefinitized contracts. However, this was overruled by higher officials. 

$2.5 billion Defense (USACE) fuel importing task orders—In March 2003, 

U.S. Army Corps of Engineers (USACE) awarded the Restore Iraqi Oil 

contract to KBR. USACE considered the $2.5 billion cost-plus award-feetype contract requirement to be urgent, so the contracting officer directed 

KBR to begin work before definitive contract terms, specifications, and 

pricing could be negotiated.

KBR completed work and incurred virtually all costs on each of 10 

task orders before Defense and KBR reached agreement on terms and 

conditions in the wake of changing requirements, funding challenges, and 

inadequate KBR proposals. DCAA questioned $221 million in excess KBR 

fuel payments. Eventually, Defense paid virtually all these costs, since the 

funds had already been expended by the contractor. Defense did, however, 

reduce the cost basis for the award fee by half the cost figure questioned 

by DCAA.

Shortfalls in managing contractor performance

Agency management and oversight of contractor performance is critical even in 

peacetime conditions. In contingency operations, problems in the early stages of 

the contracting process, such as inadequate planning and changing requirements, 

make agency management and oversight doubly important for controlling waste 

and achieving mission objectives. In Iraq and Afghanistan, performance problems 

26. April G. Stephenson, Director, DCAA, Commission hearing, transcript, August 11, 2009, 12, 16-17. 
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C H A P T E R 3

were compounded because agencies failed to assign sufficient resources for 

management and oversight. 

Agencies’ failure to effectively monitor and correct poor 

contractor performance was widespread in both Iraq and 

Afghanistan. Lessons learned were not applied because U.S. 

personnel rotated frequently in and out of theater, staff at 

remote locations knew little about conditions on the ground, 

hundreds of contracts were involved, and for too long U.S. 

officials did not understand the importance of contingencycontracting activities. 

$119 million Defense (USFOR-A) for vehicle leasing— 

Operating units on bases throughout Afghanistan 

require four-wheel drive vehicles. U.S. Forces-Afghanistan 

(USFOR-A) conducted a survey and determined that military units in 

country were leasing about 3,000 vehicles at an annual cost of $119 

million. Because these vehicles are not centrally leased, managed, or 

maintained, the regional contracting commands are burdened with 

hundreds of small-dollar value leases that recur every year. 

Worse still, vendors in Afghanistan were charging grossly exorbitant lease 

rates for the vehicles. According to USFOR-A, “we have driven the [vehicle] 

lease market into a state where vendors are able to charge rates that allow 

them to recoup almost 80% of the procurement cost during the first year 

of the lease.”27

To its credit, USFOR-A took steps to get the costs under control, while also 

improving fleet management. In May 2010, USFOR-A began working with 

the General Services Administration (GSA) on a vehiclelease program and determined that they could lease 

and maintain 1,000 vehicles for about $19 million per 

year. USFOR-A hopes to have the GSA-leased vehicles 

and centralized motor pools in place by November 2011. 

While laudable, the solution is being implemented 10 

years after U.S. operations began in Afghanistan.

Still, USFOR-A’s preferred approach was to purchase the 

vehicles, and not lease them at all. Appropriations law 

requires that operation and maintenance funds be used for vehicle leases, 

and that procurement funds be used for vehicle purchases. But USFOR-A 

27. USFOR-A, “Letter of Justification for CJOA-A Non-Tactical Vehicle Lease and Theater Motor Pool 

Maintenance and Repair Services,” May 6, 2011, 1-2.

In Iraq and Afghanistan, 

performance problems 

were compounded because 

agencies failed to assign 

sufficient resources 

for management and 

oversight.

Vendors in Afghanistan 

were charging grossly 

exorbitant lease rates for 

vehicles.
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W A S T E , F R A U D , A N D A B U S E

was unable to access procurement funds to purchase the vehicles and had 

no choice but to lease the vehicles it needed.

Two instances in the Iraq war illustrate how poor planning and inadequate 

oversight lead to higher than necessary levels of contractor personnel costs.

Defense (Army) LOGCAP III vehicle-maintenance task order—In 2009 

a Defense IG report revealed that the U.S. Army paid for underutilized 

contractor personnel at Joint Base Balad, Iraq who were responsible for 

tactical-vehicle field maintenance. From September 1, 2008, through 

August 31, 2009, the actual utilization rate was just 10-15 percent of the 

requirement. KBR alerted only low-level government officials that the 

actual labor utilization was far below that of the contractor personnel 

being paid. The government did not act on this information. The 

Commission has estimated that for a particular category of labor services, 

almost $400 million paid to KBR was wasted through underutilization.

$193 million Defense (Army) LOGCAP III contractor drawdown—DCAA 

issued a report in October 2009 critical of KBR for not preparing a 

drawdown plan. The agency projected $193 million in savings through 

August 2010 if KBR were to reduce contractor personnel commensurate 

with the military drawdown.28 

KBR accounted for about half of contractor personnel in Iraq. When bases 

closed and its personnel left those bases, KBR merely transferred some of 

them to other bases and continued to bill for their support.

In response to the DCAA report, in November 2009, the U.S. Army directed 

KBR to develop a drawdown plan. A February 2010 Commission trip to 

Iraq and a March 2010 Commission hearing revealed that KBR was slow to 

reduce its Iraq workforce. Moreover, the U.S. Army did not instruct KBR to 

promptly reduce its contractor workforce. The executive director of the U.S. 

Army’s Rock Island Contracting Center testified at a Commission hearing 

that there was no contractual requirement against which to hold KBR 

accountable for the delay.29

Inadequate oversight of construction

In a counterinsurgency operation, contracting performance is particularly 

vulnerable to poor oversight. There may be a shortage of experienced and wellqualified contracting officer’s representatives. Insecure conditions may make it 

28. DCAA Audit Report 2131–2009R10502001, “Report on Audit of Labor Operations Relating to the 

Military Drawdown in Iraq,” October 26, 2009, 2. 

29. Commission hearing, March 29, 2010, transcript, 3, 17, 21, 32.
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C H A P T E R 3

hard for them to check performance on-site. Contractors who are particularly likely 

to perform poorly may obtain contingency contracts or subcontracts due to flaws 

in the awarding process. And contractors may see any slackening of oversight as 

an opportunity to charge more or relax performance standards. 

A substantial subcategory of the instances of poor oversight is construction 

contracts. The work occurs in the field and typically involves numerous 

subcontractors, many of them third- or host-country nationals with cultural 

differences from U.S. subcontractors. 

Poor oversight may even mean rewarding bad work. 

$62 million Defense construction of Baghdad Police College—Despite 

major problems with the work by Parsons Delaware, Inc., on a construction 

contract for Baghdad Police College,Parsons 

was paid $62 million for the work and received 

$5.3 million in award fees. 

$700 million State construction of Baghdad 

Embassy—State awarded a construction 

contract to First Kuwaiti General Trading and 

Contracting Company in July 2007 for the 

new embassy compound in Baghdad. State 

bypassed its traditional contracting office. 

Over $43 million in construction deficiencies 

occurred due to failure to comply with 

specifications, improper construction and 

installation, and use of sub-standard materials and equipment, among 

other defects.30 In late 2009, the State IG recommended recovering $132 

million from First Kuwaiti. State took no steps to recover the sum and 

continued to award contracts to First Kuwaiti through its U.S. partner.31 In 

response to Commission questions, State said it may seek the $132 million 

as a response to claims by First Kuwaiti.

30. Department of State IG Report AUD/IQO-09-25, “Audit of the Design and Construction of the New 

Embassy Compound in Baghdad, Iraq,” October 2009, 1-4. 

31. Commission hearing, June 6, 2011, transcript, 16.

Baghdad Police 

College. (SIGIR photo)
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W A S T E , F R A U D , A N D A B U S E

Poor oversight of diverse services

Poor oversight of services creates different kinds of problems than those that occur in 

construction. 

$2 billion Defense (DLA) fuel supply contract—Huge fuel purchases by the Defense 

Logistics Agency (DLA) pose a challenge because of their large scale and the role 

such purchases play in the political dynamics of Central Asia. DLA contracted for 

fuel supplies at a key air-transport node for Afghanistan in the Kyrgyz Republic. DLA 

and the American embassy ignored the political risk generated by local perceptions 

that the contracts abetted corruption under two successive governments.32

$189 million State Kabul Embassy security contract—State’s oversight efforts over 

two years did not apply enough pressure to stop the many blatant failings of Armor 

Group North America, contracted to protect the Kabul embassy. Examples were 

revealed in a September 2009 Commission hearing.33

$92 million USAID bank-supervision mentoring contract—Since 2003, USAID 

advisers BearingPoint, and later Deloitte, which acquired BearingPoint, provided 

capacity-building support at the Afghanistan Central Bank. The Central Bank 

supervised Kabul Bank, then Afghanistan’s largest private bank, with supposed 

assets of $900 million that included a high percentage of worthless loans. USAID 

believes the advisers had several indications and opportunities to notify the 

agency, contractors, and other interested parties of fraudulent activities at Kabul 

Bank during the two years prior to its collapse. Evidence included death threats to 

the advisers, lack of onsite examinations, and continuous allegations of impropriety 

at the bank.34 

USAID staff learned of serious bank problems from reading about them in the 

Washington Post. Deloitte never notified the agency. The USAID inspector general 

found the oversight by the contracting officer’s technical representative to be 

weak.35 Subsequently, USAID terminated the contract with Deloitte, but not for 

default.36

Contractors in such a position of trust should know that their duty to warn the government 

of impending crises overrides most other considerations. 

32. U.S. House Committee on Oversight and Government Reform, Subcommittee on National Security and Foreign 

Affairs, Majority Staff Report, ”Mystery at Manas: Strategic Blind Spots in the Department of Defense’s Fuel Contracts 

in Kyrgyzstan,” December 2010, 1. 

33. Patrick F. Kennedy, Under Secretary of State for Management, Commission hearing, September 14, 2009, 

transcript, 36, 43. 

34. USAID IG Report F-306-11-003-S, “Review of USAID/Afghanistan’s Bank Supervision Assistance Activities and the 

Kabul Bank Crisis,” March 16, 2011, 1.

35. Ibid.

36. Ibid., 4, 10, 13. 
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C H A P T E R 3

Property and safety issues pose challenges for oversight

 U.S. policy attaches great importance to property and safety issues. Rules require 

rigorous control of inventories and protection of government property. Yet 

in contingencies, the government must entrust large amounts of property to 

contractors in situations rife with numerous threats to the 

condition of property and the problem of keeping track of it in 

a dynamic wartime setting. The Commission has found serious 

deficiencies in current property handling in Afghanistan, 

despite some instances of relatively vigorous oversight. 

$1.5 billion Defense (Army) LOGCAP IV property 

management—In July 2009, DynCorp was awarded an 

Afghanistan task order. DCMA-Afghanistan performed 

a property-management system analysis of this 

contract 15 months later and issued a letter of concern in December 

2010. Key elements deemed inadequate by DCMA included property 

management, acquisition, receiving/records management, physical 

inventories, equipment-utilization reports, and maintenance.37

In Iraq, flawed contractor performance in dealing with the billions of dollars in 

property accumulated during the length of the war and now requiring disposition 

could have been tracked and perhaps mitigated by DCMA. 

$2.9 billion Defense (Army) LOGCAP III property disposition—In Iraq, the 

Defense IG identified systemic issues concerning the management and 

disposition of government-furnished property items located at KBR’s 

property yards. TheDefense IG estimated that KBR could not account for 

3 percent of its government-furnished property, roughly 18,000 line items 

with a potential value of up to $100 million.38

Defense (Army) LOGCAP IV electrical repairs—In Afghanistan, DynCorp 

was not adequately staffed to make the enormous volume of electrical 

repairs needed to get buildings ready in a short time.DynCorp categorized 

repairs as “complete” when the parts were on order but the repairs had not 

been made. In January 2011, DCMA issued a Letter of Concern to DynCorp. 

The Commission pursued the matter, and DynCorp gave assurances of 

correction.39

37. DCMA, “Letter of Concern, Contract W52P1J-07-D-0007, Task Order 0004,” January 7, 2011.

38. DoD IG Report No. D-2010-088, “Accountability and Disposition of Government Furnished Property in 

Conjunction with the Iraq Drawdown - Logistics Civil Augmentation Program,” September 30, 2010, i, 1. 

39. DCMA, “Letter of Concern, Contract W52P1J-07-D-0007, Task Order 0004,” January 7, 2011; DynCorp 

“Response to DCMA ‘Letter of Concern, Contract W52P1J-07-D-0007, Task Order 0004’,” January 31, 2011. 

The Commission has found 

serious deficiencies in 

current property handling in 

Afghanistan.
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W A S T E , F R A U D , A N D A B U S E

Logistics matters of life, health, and safety must receive the highest level of 

performance management and oversight. 

Government oversight was not adequate to deal with the serious risks revealed 

during the Commission’s trip to Spin Boldak, Afghanistan, in March 2011. 

$86 million Defense (Army) LOGCAP IV fire protection—The governmentowned fire equipment from Iraq was transferred to Afghanistan and 

arrived in poor condition. Consequently, DynCorp, the LOGCAP IV 

contractor in Afghanistan, was not provided adequate fire equipment 

and was at risk of providing inadequate fire protection. The DynCorpoperated fire department at Forward Operating Base Spin Boldak had only 

23 firefighters out of 30 authorized and was not equipped with a needed 

“pumper” fire truck. Instead, the base relied on a limited-capacity pickup 

truck. Based on equipment status and staffing inadequacies, the DCMA 

subject-matter expert (SME) rated the contractor’s level of performance at 

10 percent. The poor condition of the 

equipment received from Iraq gave the 

SME great concern about the adequacy 

of future equipment deliveries 

throughout southern Afghanistan.

$204 million Defense (Army) LOGCAP III 

electrical construction and repairs—In 

January 2008, an Army soldier in Iraq 

was electrocuted while showering. The 

Defense IG attributed his death in Iraq 

to multiple systems and organizational 

failures on the part of both the U.S. 

Army and KBR.40

DCMA advised KBR of a Level III 

Corrective Action Request (CAR), DCMA’s most stringent criticism reserved 

for extraordinary contractor failures, identifying serious deficiencies in 

KBR’s inspection system.41

KBR’s poor rating in this instance lowered the evaluation of its past 

performance during the “best value” competition for LOGCAP IV task 

orders in Afghanistan and was a factor in its loss of that award. 

40. Department of Defense IG Report, “Review of Electrocution Deaths in Iraq: Part I - Electrocution of 

Staff Sergeant Ryan D. Maseth, U.S. Army,” January 24, 2009, i-iv.

41. DCMA, “Level III Corrective Action Request (CAR) HQ-08-LOGCAP-QA-001-LIII,” September 11, 2008, 2.

Military interpreter 

and Afghan 

contractor 

discuss a project, 

Helmand province, 

Afghanistan. (U.S. 

Navy photo)
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C H A P T E R 3

Contingency-contract fraud undermines defense, 

diplomatic, and development missions

Fraud associated with federal government contracts in Iraq and Afghanistan has 

been widespread, especially at the beginning of these conflicts when oversight 

was weak and internal controls nonexistent. 

Fraud includes such activities as bribery, gratuities, kickbacks, and conflicts of 

interest, as well as false claims and statements, cost/labor mischarging, bid rigging, 

and undelivered, defective, 

and counterfeit products. 

Fraud undermines programs, 

diverts money, and undermines 

public confidence in the U.S. 

government’s fiduciary duty to 

spend taxpayer dollars wisely.

The Commission’s estimate of 

a 5 percent to 9 percent fraud 

rate would indicate that between $10.3 billion and $18.5 billion of the $206 billion 

in funds spent for contingency contracts and grants has been lost to fraud. This 

estimate is consistent with the estimate of the Association of Certified Fraud 

Examiners, which has reported that 7 percent of commercial revenue is lost to 

fraud.42

42. Association of Certified Fraud Examiners, “2008 Report to the Nation on Occupational Fraud and 

Abuse,” 2008, 4.

The Commission estimates that 5 percent 

to 9 percent of the $206 billion in funds 

spent for contingency contracts and 

grants has been lost to fraud.

Shipping containers, 

Bagram Airfield, 

Afghanistan. 

(Commission photo)
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W A S T E , F R A U D , A N D A B U S E

The Defense Criminal Investigative Service (DCIS) has investigated a total of 500 

cases involving 1,503 subjects for fraudulent activities associated with overseas 

contingency operations in Iraq and Afghanistan. 

As of June 1, 2011, 251 cases were still open. The table below shows the number 

of cases related to each type of fraud.

Table 7. Number of open cases by type of fraud

Type of case Number of open cases

Public corruption 124

Procurement fraud 91

Theft and technology protection 28

Miscellaneous 8

Total open cases 251

Percent of total cases still open 51 percent

Source: DCIS Headquarters, OCO-JOC Program, International Operations Directorate Report, “Overseas 

Contingency Operations (OCO) Monthly Statistics Report,” June 1, 2011, 6.

There is a direct relationship between the level of vulnerability to fraud and 

the phase of war, type of program, and type of contract. For example, contracts 

supporting large troop movements, programs requiring large cash payments, 

and poorly written, undefinitized, or poorly supervised cost-reimbursement-type 

contracts are especially vulnerable. 

In Iraq and Afghanistan, bribery and kickbacks are a way of doing business. 

Despite this, contracting officers must quickly select and 

manage foreign contractors in Iraq and Afghanistan, many 

of whom have no prior experience in working for the U.S. 

government.

The International Contract Corruption Task Force (ICCTF), which 

is composed of nine U.S. criminal investigative organizations, 

told the Commission in June 2011 that its members have 

opened 876 cases related to wartime contracting. These cases 

include public corruption, procurement fraud, theft and technology protection, 

and other categories of fraudulent activities. 

Few cases of wartimecontracting fraud are 

actually prosecuted.
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C H A P T E R 3

The sheer number of contracts for Iraq and Afghanistan points to a high potential 

for fraud. However, of the 332 cases that the task force reported as being 

closed, the Department of Justice told the Commission that it charged only 150 

individuals and companies. Few cases of wartime-contracting fraud are actually 

prosecuted. Many of the cases are closed for a variety of reasons including a lack of 

evidence, the difficulty of investigating them, and the cost of prosecution.

Abuses in contingency contracting 

undermine the United States’ reputation abroad

Contingency-contractor abuse of authority or position involves decisions made 

for personal financial gain, or gains by an immediate or close family member or 

business associate. Abuse does not necessarily involve fraud or the violation of law. 

But trafficking in persons does violate U.S. law and regulations. 

U.S. contingency contractors, opportunistic labor brokers, and international 

criminal organizations have taken advantage of the easy flow of people, money, 

goods, and services to capitalize on this source of revenue and profit.43 Their 

actions bring discredit to the United States and act as a barrier to building good 

diplomatic relations. 

The globalization of the world economy has spurred the movement of people 

across borders, legally and illegally, especially from poorer countries, to fill low-skill 

jobs in support of the U.S. contingencies in Iraq and Afghanistan. Exploitation 

includes forced labor, slavery, and sexual exploitation.44 Findings from one of the 

Commission’s trips to Iraq in April 2009 include: 

▪ A Ugandan security guard working for Triple Canopy at Forward Operating 

Base Delta committed suicide by shooting himself in the head. The guards 

at this base were often ill-equipped and without basic cold-weather gear 

such as gloves.

▪ Contractors withheld pay from third-country nationals until their contract 

term was completed, thereby preventing them from voluntarily returning 

to their homes of record. 

43. Congressional Research Service Report RL34317, “Trafficking in Persons: U.S. Policy and Issues for 

Congress,” August 4, 2010, 9.

44. United Nations Convention against Transnational Organized Crime and the Protocols Thereto, “Annex 

11: Protocol to Prevent, Suppress, and Punish Trafficking in Persons, Especially Women and Children, 

Supplementing the United Nations Convention against Transnational Organized Crime,” Article 3a, 2004.
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W A S T E , F R A U D , A N D A B U S E

▪ Though providing a power generator for guard towers was required in one 

of the security contracts, there was no requirement to ensure they were 

operable, and they actually sat idle during the most frigid weather. 

▪ The third-country national guards worked unusually long tours, sometimes 

12-hour shifts and 72-hour work weeks.

▪ The SABRE International prime contractor paid the Ugandan guards an 

average of $700 per month, but the government paid SABRE $1,700 per 

month for each guard. This $1,000 difference exceeds even the most 

generous indirect contract costs. 

▪ SABRE did not provide many of the third-country nationals with the 

30-day vacation they were promised. The base-contracting officer’s 

representatives said they had no one with experience to consult on 

these labor-related matters. There was no community-of-interest on 

the secure portal where they could communicate, and no recurring 

telecommunication with the installation-security program stakeholders. 

Kabul-to-Kandahar 

road construction, 

2003. (USAID photo)
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C H A P T E R 3

The Commission learned of a number of other cases of exploitation during a trip to 

Afghanistan in August 2010:

▪ Third-country nationals were lured with promises of work in Kuwait at 

good wages, and upon arrival were routed to Afghanistan and paid wages 

lower than promised. 

▪ Numerous Philippine nationals arrived at Kandahar Air Field, but only two 

had jobs lined up. Others stayed on the military base looking for work. 

The air field commander told the Commission that when he first arrived, “a 

couple thousand” unauthorized third-country nationals were on base. 

▪ Living conditions were substandard for third-country nationals at Warrior 

Village at Bagram Air Field.

▪ Third-country nationals at Forward Operating Base Delaram II complained 

of poor living conditions and unfair pay provided by DynCorp’s 

subcontractor, Renaissance.

Root causes of contingency-contract 

waste, fraud, and abuse persist

After 10 years of contingency contracting in Iraq and Afghanistan, the root causes 

of waste, fraud, and abuse persist. These existed well before the contingencycontracting process began and only worsened as it progressed.

The Commission’s observations of the 

contingency-contracting function 

revealed significant shortcomings in 

organizational leadership and alignment, 

management of human resources, 

application and enforcement of policies 

and procedures, management of budgets 

and resources, and management of 

knowledge and information. 

These interrelated causes of the recurring contingency-contracting problems were 

discussed in Chapter 2, and will be further developed in Chapters 4, 5, 6, and 7.

After 10 years of contingency 

contracting in Iraq and 

Afghanistan, the root causes of 

waste, fraud, and abuse persist.
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W A S T E , F R A U D , A N D A B U S E
Road construction, Kapisa province, Afghanistan. (Defense photo)
Chapter 4

Looming sustainment costs 

risk massive new waste
98

C H A P T E R 4

Looming sustainment costs 

risk massive new waste

Withdrawals of U.S. military forces from Iraq and Afghanistan are under way. 

Without effective action, ending the U.S. military presence and related 

contracting activities in those countries may reveal massive new waste 

if host nations are unable to operate and maintain projects and programs started 

and funded by the United States.1

The U.S. military presence in Iraq is scheduled to end by December 31, 2011. U.S. 

troops began leaving Afghanistan in July 2011, the first step in drawing down 

the surge of 2009. “By 2014,” the President 

has said, “this process of transition will be 

complete, and the Afghan people will be 

responsible for their own security.”2

American troops are leaving, but a U.S.-

funded presence will linger in both 

countries in the form of programs, 

schools, clinics, roads, power plants, 

barracks, hospitals, irrigation projects, 

prisons, training centers, and other efforts 

undertaken through U.S. government contracts. These will remain in Iraq and 

Afghanistan, as will the armies and national police forces created and supported 

with U.S. funds, long after U.S. troops and major funding have disappeared.

What will not disappear is the cost of sustaining those projects and programs. As 

the World Bank said of Afghanistan:

These investments and programs are creating substantial expenditure 

liabilities for the future—roads will need to be maintained, teachers 

paid, and the sustaining costs of the Afghan National Army and other 

security services covered. The same will be true of investment programs 

in sectors like electric power and irrigation.3

1. The Commissioners concluded this emerging threat of waste from unsustainable efforts was serious 

enough to warrant a special report to Congress. Special Report 5, “Sustainability: hidden costs risk new 

waste,” was issued June 3, 2011. This chapter expands and updates the report.

2. Remarks by President Barack Obama, Washington, D.C., June 22, 2011. 

3. The World Bank, Afghanistan Public Finance Management Project, Report No. 34582-AF, “Afghanistan: 

Managing Public Finances for Development,” December 22, 2005, 8. 

Enduring costs risk wasting 

billions of dollars of American 

taxpayers’ money—possibly 

dwarfing the tens of billions in 

waste already incurred.
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S U S T A I N A B I L I T Y

These enduring costs risk wasting billions of dollars of American taxpayers’ 

money—possibly dwarfing the tens of billions in waste already incurred—if 

funding from the Iraqi and Afghan governments or the international donor 

community cannot cover them.

Large cash inflows distort host-nation markets

Another challenge to achieving project and program sustainability is dealing 

with the legacy of economic distortions induced by massive inflows of cash into 

a largely agricultural society with an underdeveloped financial infrastructure. 

In addition to concerns about the impact of particular flows of funds within an 

economy, difficulties can arise from the economy’s overall “absorptive capacity”—

its “ability to use additional aid without pronounced inefficiency 

of public spending and without induced adverse effects.”4

Afghanistan’s inflation-adjusted gross domestic product 

(GDP) grew at a 22.5 percent rate in 2009-2010, the World 

Bank reports, driven by “the security economy that generates 

demand for goods and services, equipment and operations and 

maintenance of the national army, as well as higher spending 

by donors, and their large off-budget contributions.”5 Such rapid 

growth, starting from a low base in a country lacking a modern 

financial and technological infrastructure, inevitably risks 

creating disruptions and distortions in the economy.

Iraq faces challenges similar to Afghanistan’s, but Iraq has a 

more developed infrastructure, more diversified markets and 

trade access, and substantial revenue-producing potential from 

its large oil reserves.

Pouring large sums of money into less-developed economies 

with limited absorptive capacity creates both short-term 

and long-lived distortions. As a recent U.S. Senate committee staff report notes, 

“Foreign aid, when misspent, can fuel corruption, distort labor and goods markets, 

undermine the host government’s ability to exert control over resources, and 

contribute to insecurity.”6 For example:

4. World Institute for Development Economics Research, Research Paper No. 2006/47, “Absorptive 

Capacity and Achieving the MDGs [Millennium Development Goals],” May 2006, 1.

5. The World Bank, “Growth in Afghanistan,” updated February 2011. 

6. U.S. Senate Committee on Foreign Relations, Majority Staff Report, “Evaluating U.S. Foreign Assistance 

to Afghanistan,” June 8, 2011, 2.

Street scene, 

Joykhoja, 

Afghanistan. 

(U.S. Air Force 

photo)
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C H A P T E R 4

▪ Foreign-funded contractors in urgent need of fuel, concrete, timber, wire, or 

other goods can bid up prices in local markets, creating hardship for local 

citizens and firms.

▪ Competition for skilled local workers can lure people out of Afghan 

government jobs, companies, or skilled trades, causing staffing and capability 

shortfalls that can affect normal economic activity and output for years.

▪ Foreign money flooding into a culture of widespread acceptance of bribes and 

kickbacks can raise transaction costs and impede competition on merit.

If a host country has limited absorptive capacity, influxes of external aid may reach 

a point at which the net benefit of additional funds turns negative as economic 

distortions proliferate and grow.7

As the Special Inspector General for Iraq Reconstruction testified at the Commission’s 

first hearing:

Absorptive capacity is a key issue to think about in deciding how much 

aid to offer. ... Iraq did not have the absorptive capacity for $25 [billion] 

or $18 billion ... because as I said, their army was fired, most of the 

senior government was fired. It was essentially a U.S.-driven endeavor 

subcontracted out, and that required capacity building, not a focus of 

the IRRF [the $18 billion Iraq Relief and Reconstruction Fund, created by 

Congress in 2003] ...

How it applies to Afghanistan? Hugely important question, because this 

is a country that does not have the kind of bureaucracy or operations or 

resources that Iraq has and, therefore, will have a much more gradual or 

much lower absorptive capacity.8

The Commission sees no indication that Defense, State, and USAID are making 

adequate plans to ensure that host nations will be able to operate and maintain U.S.-

funded projects on their own. Nor are they effectively taking sustainability risks into 

account when devising new projects or programs.

7. See, for example, Paolo De Renzio, “Increased Aid vs. Absorptive Capacity: Challenges and Opportunities 

towards 2015,” Institute of Development Studies Bulletin 36.3 (2005), 20-27.

8. Stuart Bowen, Jr., Special Inspector General for Iraq Reconstruction (SIGIR), Commission hearing, February 2, 

2009, transcript, 115.
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S U S T A I N A B I L I T Y

Threats of unsustainability can be hard to assess

Spotting and assessing the threat of waste from an unsustainable project or 

program is not as simple as examining construction quality, performance of 

services, schedule compliance, or the accuracy of labor and materials billings. An 

investment may be carefully planned, well executed, and economical, but still 

become wasteful if the host nation cannot provide trained staff, afford parts or fuel, 

perform necessary maintenance, or produce intended outcomes. 

U.S.-funded contingency operations in Iraq and Afghanistan have presented and 

will continue to present numerous opportunities for well-conceived and wellexecuted projects and programs to turn into waste. 

▪ In Iraq, U.S. contractors built and equipped 133 primary health-care centers 

for about $345 million.The U.S. paid a contractor to operate and repair the 

facilities for one year, but failed to build the capacity of the Iraqi Ministry of 

Health to sustain the facilities.

▪ In Afghanistan, the United States has contracted for schools and clinics that 

lack adequate personnel, supplies, and security; a large power plant that 

the host country cannot maintain or operate unassisted; roads that will 

need substantial and continuing maintenance; and security-force training 

and support whose costs exceed Afghan funding capabilities.

Afghan men 

working on USAID 

canal restoration 

project, Taktehpol, 

Afghanistan. (U.S. Air 

Force photo)
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C H A P T E R 4

The threat of billions of dollars in new waste through unsustainability stems from, 

among other things:

▪ inadequate assessment of host-country needs and capabilities,

▪ overly ambitious or inappropriate plans,

▪ contractors’ inability or willful failure to 

perform,

▪ projects selected for political/military impact 

rather than for long-term feasibility,

▪ weak interagency coordination for including 

multi-national partners,

▪ poor planning and weak coordination for 

transition hand-off, and

▪ inadequate follow-through by federal officials.

In short, the threat of waste stems from failure to apply realistic analysis and 

effective acquisition discipline in the stress of a contingency setting. 

In overseas contingencies that require funding for contracts, planning for projects 

and programs must take into account the host country’s technical and financial 

capabilities to operate and maintain them once international donors’ support is 

gone. Failure to do so not only wastes U.S. taxpayers’ funds, but undermines localgovernment credibility and impedes progress in reconstruction and stabilization.

Iraq faces unsustainability issues

The United States has committed more than $60 billion to reconstruction 

activities in Iraq since 2003—an average of $17 million a day.9 Projects range from 

universities to rural health clinics, and from rule-of-law programs to training Iraqi 

security forces.

Iraqis face a major transition after 2011, when (barring any changes in the U.S.-

Iraqi arrangements) only a limited number of U.S. military advisers will remain in 

the country, and the U.S. Department of State will take over from the Department 

of Defense as the most conspicuous American presence. Iraqis will also face the 

challenge of paying for the operation and maintenance of many hundreds of 

projects and facilities launched with U.S. funding—sometimes against their wishes.

9. SIGIR Quarterly Report to the United States Congress, April 30, 2011, 3.

The threat of waste stems from 

failure to apply realistic analysis 

and effective acquisition 

discipline in the stress of a 

contingency setting.
103

S U S T A I N A B I L I T Y

In June 2006, the U.S. government terminated for default a contract with Parsons 

Delaware, Inc. to build the Kahn Bani Sa‘ad Correctional Facility in Diyala Province, 

Iraq, northeast of Baghdad. After awarding three additional contracts to complete 

the prison, the U.S. government cited security 

concerns and terminated all remaining work in June 

2007, leaving more than $1.2 million in materials on 

site.10

The United States unilaterally transferred the Kahn 

Bani Sa’ad Correctional Facility to the government of 

Iraq on August 1, 2007, even though that country’s 

Ministry of Justice had made clear it had no intention 

of completing, occupying, or securing the $40 million 

project, which was still unfinished and had major 

construction deficiencies documented by the U.S. 

Army Corps of Engineers.11

The prison project, intended to house 3,600 inmates, remains unused and 

unsecured. It is perhaps the ultimate instance of unsustainability: a project that 

not only might be unusable or unsustainable by the host government, but one 

that the host government didn’t even want.

In another example, the Iraqi government has sought 

American technical and financial assistance for the 

$277 million, U.S.-funded Nassiriya water-treatment 

plant, which was built without an assured source of 

electric power, is frequently off-line, and produces 

murky water that many locals refuse to use. A Special 

Inspector General for Iraq Reconstruction (SIGIR) 

report noted, “Dissatisfaction with the quality of the 

water of the Nassiriya WTP is so profound that only 14 

percent use it as their main source of drinking water; 

the remaining 86 percent either purchase water or use 

water from rivers and streams.”12

Considering that the Nassiriya plant is the largest 

single U.S.-funded reconstruction project in Iraq, and that its goals included 

10. SIGIR Audit Report PA-08-138, “Kahn Bani Sa’ad Correctional Facility, Kahn Bani Sa’ad, Iraq,” July 25, 

2008, i.

11. Ibid., ii.

12. SIGIR Review EV-1002, “Review of Major U.S. Government Infrastructure Projects in Iraq: Nassiriya and 

Ifraz Water Treatment Plants,” October 28, 2010, i.

The Nassiriya watertreatment plant, 

Iraq, 2007. (U.S. Army 

Corps of Engineers 

photo)

Kahn Bani Sa‘ad 

Correctional Facility, 

Iraq, at the time of 

Parsons’ termination, 

2006. (U.S. Army 

Corps of Engineers 

photo)
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C H A P T E R 4

improving public health, building Iraqis’ confidence in their government, 

and supporting U.S. counter-insurgency efforts, this outcome is a major 

disappointment. The decidedly mixed results rest on causes that include 

sustainability issues:

A SIGIR inspection cited the inability of the GOI [Government 

of Iraq] to provide reliable power, improve the old distribution 

network, remove illegal taps in the transmission line, and provide 

a qualified and motivated staff to attend O&M [operations and 

maintenance] training as the main reasons for the water system’s 

poor overall performance.13

On a smaller scale, the story of a $1 million attempt to provide a water park for the 

citizens of Baghdad again illustrates the threat of waste from unsustainability. In 

early 2008, a U.S. Army general ordered an empty lagoon to be refilled and turned 

into a water park using money from the Commander’s Emergency Response 

Program (CERP). New pumps were installed and new amenities put in place. The 

park drew large crowds at first, but the local power supply fell off, the pumps 

stopped working, and required maintenance was not performed.

Park managers refused to commit to keeping the facility operational. As of early 

2011, more than two years after the park’s opening ceremony, “the Baghdad park 

is nearly waterless ... Much of the compound is in ruins, swing sets have become 

piles of twisted steel, and the personal watercrafts’ engines have been gutted for 

spare parts.”14 

Finally, lack of host-country commitment threatens the future of the Iraqi 

International Academy, a $26 million-contract project led by U.S. Forces-Iraq. 

The Academy, under construction on a site near Baghdad’s International Zone, is 

intended to train Iraqi security forces and officials in English and other subjects, 

and to function as a “regional center of excellence” offering instruction in 

international relations, public administration, and related topics.15

The Academy is due to be turned over to the Government of Iraq upon completion 

(scheduled for September 2011), but the SIGIR has reported that the Iraqi 

government “has no plan to fund the operation of the [Academy],” and that an 

13. Ibid., 16.

14. “Demise of Iraqi water park illustrates limitations, abuse of U.S. funding program,” The Washington Post, 

January 3, 2011.

15. SIGIR letter to Commander, U.S. Central Command, SIGIR 11-009, “Iraqi Government Support for the 

Iraq International Academy,” January 26, 2011, 1.
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S U S T A I N A B I L I T Y

Iraqi Ministry of Defense official “simply assumed the United States would fund the 

operation ... for at least a year.”16

Providing additional examples would simply belabor a hard truth: the threat of 

major waste in Iraq is daunting. But circumstances in Afghanistan make the risk of 

emerging, enormous new waste there especially severe.

Sustainment challenges in Afghanistan are daunting

A prime example of unsustainability stands in Kabul, Afghanistan. American 

taxpayers’ dollars paid for building the $300 million Tarakhil Power Plant, 

also known as the Kabul Power Plant. The plant is 

completed. But it is seldom used, and the cost to 

operate and maintain it is too great for the Afghan 

government to sustain from its own resources.

USAID, having agreed to support U.S. political and 

military objectives, awarded contracts to build the 

plant so that reliable electric power could promote 

economic growth and improve the quality of life in 

the Kabul area. The Afghan government committed 

in April 2007 to pay for the plant’s fuel and operating 

costs starting a year after its completion, but later 

advised that it could not afford fuel and would need 

assistance with operating costs.17

By November 2009, however, an audit by USAID’s inspector general found:

The host government may not be able to afford to operate the Kabul 

power plant once it is completed. Specifically, the host government may 

not be able to meet its commitment to pay for diesel fuel to operate 

the plant because of the rising cost of diesel fuel and the government’s 

inability to collect revenue for the generated electricity.18

Part of the problem was that the plant was designed as dual-fueled, able to burn 

either diesel or heavy fuel oil. But diesel fuel is very costly in Afghanistan, while 

16. Ibid., 4.

17. SIGAR Audit Report 10-6, “Contract Delays Led to Cost Overruns for the Kabul Power Plant and 

Sustainability Remains a Key Challenge,” January 20, 2010, 10-11; USAID IG Audit Report 5-306-10-002-P, 

“Audit of USAID/Afghanistan’s Power Sector Activities under its Afghanistan Infrastructure Rehabilitation 

Program,” November 10, 2009, 14.

18. USAID IG Report 5-306-10-002, “Audit of USAID/Afghanistan’s Power Sector Activities under its 

Afghanistan Infrastructure Rehabilitation Program,” November 10, 2009, 2.

Kabul Power Plant, 

Afghanistan, 2010. 

(SIGAR photo)
106

C H A P T E R 4

using the alternative heavy fuel oil entails greater wear and tear on the generators. Further, 

the dual-fuel technology itself complicates maintenance. 

Meanwhile, the Afghan government negotiated electricity purchases from neighboring 

Uzbekistan at a fraction of the cost of Tarakhil energy. The unsustainable Tarakhil Power 

Plant, intended as a reliable, round-the-clock facility, will instead serve as a costly peaking or 

back-up facility—and as a textbook case of poor planning and waste.19

A 2011 USAID contract to build a diesel-fueled power plant in Kandahar faces similar 

sustainability challenges, even if it promotes 

geopolitical and military stabilization objectives. In 

addition, financing plans have not been made for 

the transmission-and-distribution grid that would 

make the plant a useful source of energy. Powerplant sustainability challenges in Afghanistan 

include not only the challenge of the Afghan 

government’s ability to pay for fuel, operations, 

and maintenance, but the more fundamental 

difficulties that it faces in collecting payments 

from customers and finding technically competent 

staff.20

A different USAID-funded project to upgrade the Kajaki Dam on the Helmand River is years 

behind schedule. A huge generator transported in pieces through a bitter firefight with 

insurgents remains unassembled and rusting, partly because the concrete needed for its 

foundation was never delivered. In addition, completing the power-plant upgrade will 

require modernizing the local transmission-and-distribution system. Here again is a project 

that will require large outlays to complete, operate, and maintain.

 As a Special Inspector General for Afghanistan Reconstruction report warns:

Years of neglect cannot be overcome until the Afghanistan government has the 

capability to recover costs, expand its capabilities, and conduct operations and 

maintenance of the energy sector. Until that time, Afghanistan will continue to rely 

19. SIGAR Audit Report 10-6, “Contract Delays led to Cost Overrun for the Kabul Power Plant and Sustainability 

remains a Key Challenge,” January 20, 2010, note 5, 2. Note: As criticism of the project has grown, some U.S. officials 

have claimed the plant was intended only as a back-up or peaking facility. However, the Afghanistan Infrastructure 

and Rehabilitation Program website, which carries a copyright notice for contractors Black & Veatch and Louis Berger 

Group as well as a note about USAID support, contains a legacy page as of mid-July 2011 saying, “Upon completion, 

the 100 MW power plant will provide the people of Kabul with reliable, sustainable power”—not a characterization 

one would expect to be made for a peaking plant. Additionally, the SIGAR report stated at page 2, note 5, “USAID 

officials noted that the Kabul Power Plant will be used sparingly when cheaper sources of power are available, while 

potentially running 24 hours a day, seven days a week when lower cost options are not available (for example, during 

the winter months when water levels are low and hydro electric power is less plentiful)”—that is, it would be a 

base-load plant for months at a time. 

20. SIGAR Audit Report 10-4, “Afghanistan Energy Supply Has Increased but An Updated Master Plan Is Needed and 

Delays and Sustainability Concerns Remain,” January 15, 2010, 2-5.

A huge generator transported 

in pieces through a bitter 

firefight with insurgents remains 

unassembled and rusting, partly 

because the concrete needed for 

its foundation was never delivered.
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S U S T A I N A B I L I T Y

heavily on donor funds in order to ensure that investments do not fall 

to waste.21

The Afghan security force is undermined 

by financial insecurity 

Another formidable example of potential waste is the U.S.-funded contracting 

for training of, and facilities construction for, the Afghan National Security Forces 

(ANSF), comprising the Army, Border Police, and National Police. 

Between FY 2006 and FY 2011, Congress appropriated nearly $39 billion to set up 

and maintain the ANSF; the fiscal year 2012 budget request would add almost $13 

billion to that total. Nearly half of the FY 2012 request—over $5 billion—would go 

toward clothing, equipping, and paying the ANSF.22

Prospects for the Afghan government’s sustaining 

the ANSF are dubious. The entire country’s gross 

domestic product (GDP) for FY 2011 is about 

$16 billion at the official exchange rate, and 

the national government’s domestic revenues 

are about $2 billion.23 The Afghan Ministry of 

Finance budget proposal for 2011-2012 indicates 

that given the increased security costs from 

the increase in size of the ANSF, the Afghan 

government is expected to continue to depend 

on donor grants for up to 30% of its operating 

budget.24

The outlook for sustaining the Afghan army and national police is complicated by 

several factors:

▪ The ANSF, currently numbering about 305,000 personnel, is growing 

toward a newly authorized strength of 352,000, which will increase 

sustainment costs.

21. Ibid., 16.

22. Office of the Secretary of Defense, “DoD Budget for FY 2012: Justification for FY 2012 Overseas 

Contingency Operations Afghanistan Security Forces Fund (ASFF),” February 2011, 2.

23. Islamic Republic of Afghanistan, Ministry of Finance, “1390 National Budget Statement Draft” [1390 is 

the solar Islamic calendar equivalent of years 2011-2012 in the Gregorian calendar], February 2011, 2.

24. Ibid.

DynCorp trainer with 

Afghan National 

Police recruits. (U.S. 

Air Force photo)
108

C H A P T E R 4

▪ The Commission has received a preliminary U.S. military estimate of ANSF 

sustainment costs for just the period 2014-2017 in the neighborhood of 

$30 billion.

▪ The International Monetary Fund has concluded that the Afghan 

government will be incapable of paying ANSF costs until at least 2023.25

▪ Donor-community support depends upon 

unpredictable political decisions that 

may be heavily influenced by severe fiscal 

pressure on most developed countries’ 

budgets.

Meanwhile, Afghanistan’s potential to bolster its 

own revenues in the near future suffers from the 

facts that Afghanistan:

▪ is one of the world’s most 

underdeveloped countries, with a per 

capita gross domestic product (GDP) of 

about $900, a 70 percent illiteracy rate, 

and an average life expectancy of 45 

years;26

▪ lacks the petroleum and natural-gas riches of Iraq; and

▪ is building from a dismal baseline of no effective central government, no 

basic public services, no developed financial system, and no consistent rule 

of law.

Senior U.S. officials have publicly acknowledged that Afghanistan cannot sustain 

its own security budget. Then-Secretary of Defense Robert Gates said in February 

2011:

Let’s not kid ourselves. We are the only ones paying for this in any 

significant way. How long can we sustain it? The Afghan ability to sustain 

a force would be a fraction of what they already have.27

25. International Monetary Fund, Islamic Republic of Afghanistan: Sixth Review Under the Arrangement Under 

the Poverty Reduction and Growth Facility, Request for Waiver of Nonobservance of a Performance Criterion, 

Modification and Performance Criteria, and Rephasing and Extension of the Arrangement, Country Report No. 

10/22: January 2010, 11.

26. Central Intelligence Agency, “World Factbook for Afghanistan,” 2010. 

27. American Forces Press Service (DoD), “Gates: U.S. Must Consider Sustainability of Afghan Forces,” 

February 17, 2011.

Afghan girl 

asking for food, 

Kandahar province, 

Afghanistan. (U.S. 

Army photo)
109

S U S T A I N A B I L I T Y

In a similar vein, the Acting Special Inspector General for Afghanistan 

Reconstruction told the Commission, “The Government of Afghanistan has never 

had the financial resources to sustain ANP [Afghan 

National Police] salaries at either the current or 

projected levels.”28

Besides spending billions on contracts to train, 

clothe, and equip the ANSF, the United States has also 

committed $11.4 billion since 2005 to build bases, 

police stations, border outposts, and other facilities for 

the ANSF. In addition, the U.S. Army Corps of Engineers 

awarded two contracts in 2010 for ITT Corporation to 

provide $800 million in operation-and-maintenance 

services for 663 ANSF facilities over a five-year period.

The Afghan government has already indicated that it cannot pay such costs from 

its resources.29 The Special Inspector General for Afghanistan Reconstruction told 

the Commission at its January 24, 2011, construction hearing that “the entire $11.4 

billion [in construction spending] is at risk,” and “both contracts are expected to 

exhaust their funding well before [the end of] their five-year performance period.”30

Examples can only hint 

at potential unsustainability waste

Because some threats of waste through sustainability have not yet risen to 

detectable levels, there can be no complete tally at this time. But the variety and 

impact of unsustainability risks can be inferred from examples such as these:

▪ Funding outside of the Afghan government’s control, including 16,000 

Commander’s Emergency Response Program (CERP) projects totaling $2 

billion from the U.S. military, has created thousands of projects that lack 

plans for sustaining them.31 CERP project files often lack required letters 

committing local officials to funding, and officials often cannot collect the 

taxes needed to meet their commitments.

28. Herbert Richardson, Acting Special Inspector General for Afghanistan Reconstruction (SIGAR), 

statement, Commission hearing, April 25, 2011, 4.

29. SIGAR Audit Report 11-6, “Inadequate Planning for ANSF Facilities Increases Risks for $11.4 Billion 

Program,” January 27, 2011, 9.

30. Herbert Richardson, Acting Special Inspector General for Afghanistan Reconstruction, (SIGAR), 

statement, Commission hearing, April 25, 2011, 5.

31. SIGAR Audit Report 11-7, “Commander’s Emergency Response Program in Laghman Province Provided 

Some Benefits, but Oversight Weaknesses and Sustainment Concerns Led to Questionable Outcomes and 

Potential Waste,” January 27, 2011.

“The Government of Afghanistan has 

never had the financial resources 

to sustain ANP [Afghan National 

Police] salaries at either the current 

or projected levels.”

— SIGAR
110

C H A P T E R 4

▪ Over the past five years, the State Department has spent about $2 billion 

on counter-narcotics programs in Afghanistan, including support for 

two compounds near the Kabul airport and in Kunduz province. The U.S. 

objective is to transfer the compounds to the Afghan government, but 

State’s Inspector General says the department “has not addressed how and 

when the Afghan Government will be able to assume control and sustain 

day-to-day operations.’’32

Without immediate and effective attention to these and other sustainability 

problems, the United States faces a vast new toll of waste in Iraq and 

Afghanistan. Beyond the potential direct waste of U.S. taxpayers’ money lie 

both the opportunity cost of the foregone projects that might otherwise have 

been completed with the funds and the political cost to U.S. interests if local 

nationals feel betrayal or resentment when 

promised improvements to their lives do not 

materialize.

A recent congressional staff review 

summarized the imperative for change after 

a review of Afghan projects and programs, 

but its advice could apply anywhere that U.S.-

funded contingency projects are to be taken 

over by a host government: “We should follow 

a simple rule: Donors should not implement 

projects if Afghans cannot sustain them.”33

The only alternatives to making effective plans 

for sustainment with the host government 

are to abandon projects in part or whole, 

or to continue tapping U.S. taxpayers for an 

indefinite future—a course that may simply 

postpone abandonment if budget stress and 

voter discontent snap the checkbook shut. 

32. State IG Audit Report MERO-I-11-02, ‘‘Performance Evaluation of PAE Operations and Maintenance 

Support for the Bureau of International Narcotics and Law Enforcement Affairs’ Counternarcotics 

Compounds in Afghanistan,’’ February 2011, 7.

33. U.S. Senate Committee on Foreign Relations, Majority Staff Report, “Evaluating U.S. Foreign Assistance 

to Afghanistan,” June 8, 2011, 4-5. 

Counternarcotics 

operation, 

Zabul province, 

Afghanistan, 2010. 

(U.S. Navy photo)
111

S U S T A I N A B I L I T Y

Avoiding or mitigating such waste requires prompt and effective measures. 

► RECOMMENDATION 5

Take actions to mitigate the threat of additional waste from 

unsustainability

Officials at Defense, State, and USAID should: 

▪ examine both completed and current projects for risk of sustainment 

failure and take appropriate action to cancel or redesign programs and 

projects that have no credible prospect of being sustained; 

▪ ensure that any new requirements and acquisition strategies for 

contingency contracts for projects or services to be handed over to a 

host nation include a detailed assessment of long-term costs and of host 

nations’ ability and willingness to meet those costs; and

▪ report to Congress, by December 31, 2011, and annually thereafter, their 

analysis and proposed actions for mitigating sustainability risks.
Al Fatah Bridge, with oil pipeline, after insurgent attack, Iraq , 2006. (U.S. Army photo) 
Agencies have not institutionalized 

acquisition as a core function

Chapter 5
114

C H A P T E R 5

Agencies have not institutionalized 

acquisition as a core function

T

he Commission’s second interim report to Congress, “At what risk? Correcting 

over-reliance on contractors in contingency operations,” argued for changes 

in how the U.S. government organizes, plans, trains for, and executes 

contractor support for contingency operations. The report cited the Defense policy 

that contractors are an integral part of the total force and emphasized that the 

country cannot undertake large and sustained contingency operations without 

contractor support.

The number of contractors has grown faster than the government’s ability to 

effectively manage and oversee them and their contracts. The government’s 

ad hoc response to the expansion of contracting is ineffective, and agency 

leaders have not recognized the extent of the problem. While noting that some 

initiatives for improvement are under way, 

the Commission warned of shortfalls in policy, 

doctrine, resources, planning, and training 

the federal workforce in ways appropriate for 

supporting contingencies.

Agencies must fully accept contracting as 

a core function if only because of the sheer 

numbers of contingency contracts, their 

value, and the adverse financial, political, and 

operational impacts of failure. 

Acquisition organizations and independent observers have long recognized that 

while contracting has grown in importance, agencies have not taken the steps 

needed to elevate contracting internally.1 The Commission has found that agencies 

engaged in contingency contracting are not organized to promote cross-agency 

communication, to accommodate contractor support in strategic and operational 

force planning and preparation, to foster cost-consciousness, or to address 

acquisition issues and challenges at the highest leadership levels. 

Many military and civilian acquisition professionals believe that significant benefits 

would accrue if a committed and centralized leadership were to provide effective 

1. Defense Science Board Task Force, “Improvements To Services Contracting,” March 2011, 9; Commission 

on Army Acquisition and Program Management in Expeditionary Operations, “Urgent Reform Required: 

Army Expeditionary Contracting,” October 21, 2007, 21-22, 29, 47; Center for a New American Security, 

“Contracting in Conflicts: The Path to Reform,” June 2010, 20-21. 

The government’s ad hoc 

response to the expansion 

of contracting is ineffective, 

and agency leaders have not 

recognized the extent of the 

problem.
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A C Q U I S I T I O N A S A C O R E F U N C T I O N

guidance and support for contingency contracting. As a senior combatant 

command logistics (J4) director told the Commission, “I would like ... contracting 

to be a separate directorate. ... Two CENTCOM planners are not enough. ... They 

are flying the airplane as they build it.”

The Commission’s interim report called for 

contingency contracting to be designated as a 

core function because:

▪ Policy and doctrinal issues on when 

and where, and questions of how to use 

contractors extend beyond individual 

contingencies and must be considered 

holistically, because they cut across 

agency missions.

▪ Advanced and continuous acquisition 

planning will lead to efficiencies.

▪ Restructuring within each agency 

involved is needed to develop an acquisition workforce that is ready for 

and responsive to contingencies when they occur.

The Commission’s recommendations for addressing these problems would 

elevate the role of contingency contracting within Defense, State, and USAID, 

thus recognizing acquisition as a strategic element and giving contracting a 

seat at the table. For Defense, the report called for elevating contracting from a 

subordinate role within the Joint Staff’s logistics directorate (J4) by establishing 

a J10 directorate. This would raise contingency contracting to the level of other 

Joint Staff functions like intelligence, plans, and operations.

Since the Commission’s February 2011 interim report, numerous agency and 

military leaders have acknowledged that organizational changes are needed.2 Yet 

agency leaders have not yet taken steps to address cultural changes needed at 

their agencies. 

This is where leadership is required and bureaucracy must step aside. 

2. Robert M. Gates, Secretary of Defense, Senate Committee on Armed Services hearing, January 27, 2009, 

transcript, 10-11; Patrick F. Kennedy, Under Secretary of State for Management, statement, Commission 

hearing, June 6, 2011, 4-7; Dr. Rajiv Shah, Administrator, United States Agency for International 

Development, Senate Committee on Foreign Relations hearing, April 13, 2011; Dr. Ashton B. Carter, Under 

Secretary of Defense for Acquisition, Technology and Logistics, Commission hearing, March 28, 2011. 

Agencies engaged in contingency 

contracting are not organized to 

promote cross-agency communication, 

to accommodate contractor support 

in strategic and operational force 

planning and preparation, to foster costconsciousness, or to address acquisition 

issues and challenges at the highest 

leadership levels.
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C H A P T E R 5

The need for cultural change

To effect cultural change within an organization, leaders must accept and promote 

it. To achieve cultural change in acquisition, leadership must recognize that 

acquisition is no longer merely a support function, then communicate the importance 

of acquisition as essential to the agency’s 

mission. Then concrete steps must be taken to 

institutionalize the change throughout.

Cultural change affecting acquisition is needed 

at the strategic and operational levels of Defense, 

State, and USAID. The outcomes of contracts 

depend not only on contractors’ performance, but 

also on the government officials who establish 

requirements, write and award the contracts, and 

administer them while overseeing performance. 

Assigning responsibility, allocating resources, and 

demanding accountability are all critical tools for 

ensuring cultural change. 

Urgent needs and an inadequate number of agency contracting personnel create 

pressure to operate without specific contract requirements. Failure to provide clear 

requirements, including requirements that are based on evaluation of program 

or project sustainability, can invite 

wasted effort and frustrate imposing 

accountability.

The past decade has demonstrated that 

failure to recognize the importance 

of acquisition and failure to elevate it 

within each agency perpetuates poor 

planning, aggravates the shortage of 

trained professionals, and contributes 

to runaway costs through inattention 

and poor and inconsistent decision 

making.

Agencies do not adequately plan for operational contract support

More than two decades of budgetary pressure have left Defense, State, and USAID 

with reduced capabilities to manage and oversee contracts even as their missions 

and contract workload have grown. Many related duties and responsibilities were 

To achieve cultural change in 

acquisition, leadership must 

recognize that acquisition is 

no longer merely a support 

function, then communicate 

the importance of acquisition 

as essential to the agency’s 

mission.

Prison planning, 

Paktia, Afghanistan. 

(Defense photo)
117

A C Q U I S I T I O N A S A C O R E F U N C T I O N

contracted out. But the increase in services contracting was not accompanied by 

proportional growth in government’s oversight and management capability. 

Decisions to surge military personnel in Iraq and Afghanistan were made with little 

consideration for the extent of contractor support that would be needed. Field 

commanders were unprepared to provide adequate housing and workspace to the 

growing contractor workforce. Diplomatic missions lost programmatic control of 

major projects.3 Camp “mayors” who administer bases struggled to accommodate 

contractors’ needs for space, energy, and communications, and balance them with 

military requirements.4

Services contracting is not seen as an attractive career 

for advancement to senior levels 

Acquiring services dominates agencies’ contingency contracting. More than half of 

the Defense Department’s annual contract expenditure is for services contracts.5

For the contingencies in Iraq and Afghanistan, services contracts 

accounted for 66 percent of total contract value awarded since FY 

2010. The corresponding FY 2010 proportions of services in total 

contracting were 94 percent for State and over 99 percent for USAID.6

These high proportions underscore the importance of attending to 

the special challenges of managing services contracts.

Services contracting is different from weapon systems contracting. 

Yet agencies act as though nuanced skills, tradecraft, and 

professional experience are not needed for services contracting. Agencies 

provide avenues of career progression for personnel engaged in weaponsystems programs. They have not, however, emphasized the importance of 

services contracting by providing focused training, education, and on-the-job 

opportunities that would prepare contracting officers for the complex and largescale services contracts they will encounter during a contingency.

Another difference is that weapon-systems contracting has a well-established 

and clearly defined management structure with program offices, milestones, and 

defined decision points. Services-contracting offices have not been structured and 

managed in the same fashion. After the Commission’s April 19, 2010, hearing on 

3. William J. McGlynn, Principal Deputy Assistant Secretary of State for International Narcotics and Law 

Enforcement Affairs, statement, Commission hearing, January 24, 2011. 

4. In its interim report, the Commission recommended that the Army’s Installation Management 

Command manage bases and base-support contractors in contingencies.

5. Defense Science Board Task Force, “Improvements to Services Contracting,” March 2011, vii.

6. Commission analysis of FPDS-NG data as of June 12, 2011.

Services contracting is 

different from weapon 

systems contracting.
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C H A P T E R 5

this subject, the Office of the Secretary of Defense and the Army began standing 

up program offices for service contracts, as the Air Force had done earlier.

Many in-theater contract management roles for military and civilian personnel 

during contingencies are temporary or transitory assignments. In Iraq and 

Afghanistan, agencies rely on emergency funds to hire temporary personnel and 

make temporary assignments to fill staffing gaps. This is neither a long-term nor 

sustainable solution: it does not allow 

for having permanent government 

staff on hand to manage and oversee 

contractors and contracts prior to, 

during, and following a contingency.

Short deployment cycles in theater 

also put military and civil-service 

contract managers at a disadvantage 

vis-à-vis contractors, who are likely to 

have more continuity of knowledge of 

contracts and programs.

Insufficient training and lack of program management in services contracting, 

coupled with short personnel-assignment cycle times, leads to inconsistency in 

managing programs and administering contracts. This also creates a high risk of 

mismanaging funds and failing to meet program requirements.

There is no focus on the cost of requirements in a contingency

“Mission needs” too often trump consideration of cost consciousness, practical 

evaluation of project necessity and sustainability, or attention to long-term project 

and program investment. Opportunities for waste thereby increase. For example, in 

Operation Iraqi Freedom, launched in 2003, significant waste was caused by a large 

number of undefinitized contracts, the slow transition from LOGCAP III to LOGCAP 

IV, lack of adequate preparation for the Restore Iraqi Oil (RIO) program, difficulties 

in training Iraqi security forces, and problems in other large reconstruction 

projects.7

7. SIGIR, “Hard Lessons: the Iraq reconstruction experience,” February 2009, 137-138, 175; Lt. Gen. James 

Pillsbury, Army Materiel Command Deputy Commander, Commission hearing, March 29, 2010, transcript, 

58.

Now that contractors have become a 

key component of U.S. military and 

diplomatic strategies, cultural change 

is needed at the core of government 

planning for and execution of a 

contingency operation.
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A C Q U I S I T I O N A S A C O R E F U N C T I O N

Department of Defense and Joint Chiefs of Staff

In the 2010 Quadrennial Defense Review (QDR), Defense reported that the 

number of its acquisition professionals had declined by 10 percent over the 

previous decade, while contractual obligations had 

tripled. The QDR added, “To operate effectively, 

the acquisition system must be supported by an 

appropriately sized cadre of acquisition professionals 

with the right skills and training to successfully perform 

their jobs,” and promised that Defense will “increase the 

number of acquisition personnel by 20,000 positions by 

2015.”8

The Commission endorses this contemplated 

increase—currently threatened by budget pressures—

and believes Defense must commit resources to ensure 

that sufficient services-acquisition personnel are available to meet contingencycontracting needs.

In its second interim report, the Commission recommended that a contingencycontracting directorate be established in the Joint Staff. This would elevate the 

critical role of contingency contracting by establishing a new J10 directorate, 

led by a flag officer with the contracting experience and training necessary 

to promote better visibility, 

planning, and coordination of 

operational contractor support 

issues. 

Defense awards contingency 

contracts for intelligence 

support, translation services, 

communications, construction, 

security, training, and other 

non-logistics services. The 

placement of contracting within 

J4 reflects outdated thinking 

that contracting is only a 

method to achieve logistical 

support—not a full spectrum 

of operational contract support. And too many logistics officers who rise to flag 

rank lack contracting experience and are unfamiliar with the broad range of roles 

8. Department of Defense, “Quadrennial Defense Review Report,” February 2010, 76.

The placement of contracting within 

J4 reflects outdated thinking that 

contracting is only a method to 

achieve logistical support—not 

a full spectrum of operational 

contract support.

Soldiers with 

contractors, Zabul 

province, Afghanistan. 

(U.S. Air Force photo)
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C H A P T E R 5

contractors play in supporting military operations. Contracting should no longer 

be subordinate to logistics.

In response to the J10 recommendation, the Joint Staff said it does not believe 

that a new organizational construct would enhance the current effort to 

institutionalize operational contract support (OCS), and that command and control 

is strengthened by using established, well-understood staff structures. Further, 

the Joint Staff said, the current effort to reduce manpower, including flag officers, 

makes it infeasible to add new structure and a flag officer to the Joint Staff.

A Defense Department analysis identifying operational contract support issues 

listed a number of factors that impede institutionalizing OCS, including:

▪ insufficient awareness and appreciation for the potential significance and 

complexity of OCS;

▪ inability to fully integrate OCS into task planning, operational assessments, 

force development, training, readiness reporting, and lessons learned; and

▪ lack of leadership oversight and awareness to address issues surrounding 

risks and opportunities, resources, communications, transitions, and issues 

that arise between contingencies.

To correct these deficiencies, the director 

of the Joint Staff issued a memo directing 

staff to take specific steps to integrate and 

coordinate operational contract support 

and the Civilian Expeditionary Workforce 

program within the Joint Staff.9 Yet, these 

steps are not sufficient. The importance 

of contracting to Defense and the sheer 

number and dollar value of contracts 

underscore the need to formally elevate 

contracting to a J10 directorate within 

the Joint Staff from which similar positions would “flow down” to the combatant 

commands and the military services. Operational dependence upon contractors 

demands more than an ad hoc response. The size of the contractor force—more 

than one-half of our total force in theater—requires leadership, planning, and 

training beyond a J4 logistics focus. 

9. Office of the Chairman, Joint Chiefs of Staff, memorandum, “Implementation of SecDef Memorandum 

on Strategic and Operational Planning for Operational Contract Support (OCS) and Workforce Mix,” June 1, 

2011.

The size of the contractor 

force—more than one-half of our 

total force in theater—requires 

leadership, planning, and 

training beyond a J4 logistics 

focus.
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A C Q U I S I T I O N A S A C O R E F U N C T I O N

The combatant commanders are understaffed and not organized to follow up 

and maintain the changes in the new OCS doctrine and incorporate them into 

planning. Currently, U.S. Pacific Command has no dedicated staff for 

operational contract support; it uses three logistics officers assigned 

part-time. U.S. Southern Command has assigned responsibility for the 

doctrine to three civilian staff in its finance group (J8). In U.S. African 

Command, two officers are assigned part-time, but are frequently 

unavailable due to deployments. And U.S. Central Command, which 

has arguably the largest and most pressing need, has only five 

personnel assigned within its J4 contracting staff. 

Clearly, there is a disconnect between realizing the importance of 

contracting in operations and taking concrete steps to integrate 

contracting into contingency planning.

As the Joint Staff works through and implements changes in support of future 

priorities (such as reallocating flag officers and eliminating the J6 directorate), now 

is the time to institutionalize progress made in operational contract support and 

enhance the importance given to contingency contracting.

The J10 directorate proposed by the Commission would give contracting visibility 

in discussions on the future, developing doctrine and policy, reviewing planning 

and training, and coordinating plans. Creating a J10 position would prompt 

“flow down” establishment of similar positions at the combatant commands and 

the military services with a “G10” (or equivalents) at operational headquarters. 

Acquisition planning, control, and execution would be firmly institutionalized 

within Defense and would open the door to contractors becoming truly and fully a 

part of the total force—more than two decades after that policy was announced.

Without institutionalizing a J10 directorate 

within the Joint Staff and establishing 

similar staff positions within combatant 

commands and military services, changes 

made for contingency contracting risk being 

ephemeral and subject to budget reductions 

as in the past. The Joint Staff’s effort to 

institutionalize operational contract support 

would be greatly enhanced by a dedicated 

directorate which, with similar acquisition 

directorates, would coordinate through the 

services and unified commands at all levels. 

The Joint Staff’s effort 

to institutionalize 

operational contract 

support would be 

greatly enhanced by a 

dedicated directorate.

Afghan men 

working on USAID 

canal restoration 

project, Taktehpol, 

Afghanistan. (U.S. Air 

Force photo)
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C H A P T E R 5

Department of State 

In its 2010 Quadrennial Diplomacy and Development Review (QDDR), State 

recognized a need for change, noting that contracting for both State and USAID 

has expanded while staffing levels stagnated: “These dual trends have resulted 

in reliance on fewer, larger awards that cover a broad range of activities, with less 

oversight.”10

State’s Under Secretary for Management testified at a Commission hearing that the 

department has made numerous changes in:

▪ contract management;

▪ the number of acquisition professionals, which has increased; and

▪ incorporating lessons learned into growing and evolving missions in Iraq 

and Afghanistan.11

The changes at State are welcome, but as at Defense, they do not go far enough in 

addressing the structural deficit within the executive management structure. 

In a response to the Commission’s recommendation to establish an office of 

contingency contracting, the Under Secretary of State for Management said the 

award from Washington, D.C., of “master 

contracts” for services with subsequent 

task orders for specific contingencies is 

a more efficient and responsive method 

to address the department’s needs 

when responding to a contingency.

In its second interim report, the 

Commission recommended 

establishing offices of contingency 

contracting at Defense, State, and 

USAID, and appointing seniorlevel officials to facilitate planning, 

preparedness, and resource allocation. These individuals would also be the 

focal point for interagency communications and coordinate contracting during 

contingencies. 

10. Department of State, “Leading Through Civilian Power: The First Quadrennial Diplomacy and 

Development Review,” December 15, 2010, 180-181.

11. Patrick F. Kennedy, Under Secretary of State for Management, Commission hearing, June 6, 2011. 

State has experienced significant 

problems with contingency-contract 

waste in both Iraq and Afghanistan 

in areas such as police training, 

construction of the new embassy 

compound in Baghdad, and the 

Pol-i-Charkhi prison in Kabul.
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A C Q U I S I T I O N A S A C O R E F U N C T I O N

State disagreed with the recommendation, saying that its centralized structure 

for acquisition is the most effective and efficient model and that a separate office 

for contingency contracting is not needed. In State’s current configuration, the 

operational acquisition function reports to a Deputy 

Assistant Secretary, while the Chief Acquisition Officer 

(CAO) is an Assistant Secretary of State.

State views establishing a cadre of contracting personnel 

with experience in contingency contracting as inefficient 

and unnecessary. The department told the Commission 

that it can fund a surge capacity to dedicate resources to 

specific contingency operations. State also said training 

specifically for contingency contracting is unnecessary, 

as it can assign unique training requirements to adapt to 

new needs.

The Commission notes, however, that State has 

experienced significant problems with contingencycontract waste in both Iraq and Afghanistan in areas such 

as police training, construction of the new embassy compound in Baghdad, and 

the Pol-i-Charkhi prison in Kabul.12 And in July 2011, Defense recommended that 

State’s contracting officer’s technical representatives (COTRs) receive additional 

training prior to transitioning contracts in Iraq.13 These are not reassuring signs 

that a robust and effective capability to deal with contingency-support needs is in 

place at State. 

While centralized contracting may be a workable organizational structure for 

State, the Commission believes the department is not set up in a way that reflects 

the importance of contracting to State’s mission. Operational acquisition is 

buried within the department as part of logistics management within the Bureau 

of Administration. Operational acquisition is four levels below the Secretary of 

State—an outdated construct if contracting has truly become a mission enabler 

and is indeed a core function.

12. William J. McGlynn, Principal Deputy Assistant Secretary of State for International Narcotics and Law 

Enforcement Affairs, statement, Commission hearing, January 24, 2011; Joint Audit by the Inspectors 

General of Department of State and Department of Defense, DoD Report No. D2001-080 and DoS Report 

No. AUD/CG-11-30, “DoD and DoS Need Better Procedures to Monitor and Expend DoD Funds for the 

Afghan National Police Training Program,” July 7, 2011, I; Department of State IG Report No. AUD/IQO-09-

25, “Audit of the Design and Construction of the New Embassy Compound in Baghdad, Iraq,” October 

2009, 1-4.

13. Defense Procurement and Acquisition Policy, memorandum, “Contracting Officer’s Representative 

Designation – Iraq,” July 11, 2011.

A telling marker of the 

status of acquisition at the 

State Department is that of 

approximately 200 Senior 

Executive Service and senior 

Foreign Service Officers under the 

authority of the Under Secretary 

for Management authority, only 

two are acquisition professionals.
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C H A P T E R 5

A telling marker of the status of acquisition at the department is that of 

approximately 200 Senior Executive Service and senior Foreign Service Officers 

under the authority of the Under Secretary for Management authority, only two are 

acquisition professionals.14

U.S. Agency for International Development

USAID has made procurement reform part of its agency-wide improvement 

initiative. During a hearing before the Commission, the agency’s administrator 

testified that USAID has initiated actions intended to achieve contracting reforms. 

Changes included replacing large multi-year contracts with one-year or 18-month 

contracts to improve competition.

He also stated that USAID has increased its staff by six contracting officers, 

increasing the capacity for management and oversight of programs in Afghanistan. 

Through integration of programs, the agency contract managers have more 

visibility into subcontractors and fewer layers to deal with.

The USAID administrator said procurement reform is central to the agency’s 

success and that funding from budget requests for FY 2012 would enable 

improvements in contracting, oversight, and procurement management.

The Commission has recommended establishing an office dedicated to 

contingency contracting and appointing a senior official to facilitate planning, 

preparedness, and resource allocation, as well as serving as a focal point for 

interagency communications and coordination. The USAID administrator declined 

to endorse the Commission’s recommendations:

USAID seeks to ensure that each and every officer has the capability to 

serve in a country that tomorrow may become our next contingency 

operation. We therefore require all of our contracting and agreement 

officers to maintain the capability to work in a contingency environment. 

At headquarters, we maintain an operations unit for foreign operations 

within the Office of Acquisition and Assistance. Our preference is to 

strengthen this office before devoting resources elsewhere.15

The Commission applauds USAID’s self-assessment and its efforts to effect 

procurement reform. Development in both Iraq and Afghanistan has been seen as 

an essential pillar of U.S. long-term goals in both countries and as a key element 

in counterinsurgency (COIN) strategy, and in this USAID plays a crucial role. But 

14. Patrick F. Kennedy, Under Secretary of State for Management, Commission hearing, June 6, 2011.

15. Dr. Rajiv Shah, Administrator, USAID, letter to Commission, July 8, 2011.
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A C Q U I S I T I O N A S A C O R E F U N C T I O N

with the current pressure for cuts in federal spending, achieving this necessary 

reinforcement of USAID’s capabilities will be a severe challenge. 

As with Defense and State, the cultural change within USAID must go to the top of 

the organization. While requiring all contract-management personnel to maintain 

the capability to work in a contingency is laudable, the decentralized structure has 

not served the agency well. The gravest example is the fallout from the collapse 

of the Kabul Bank, showing that processes and rules that work elsewhere may be 

unsuitable in the midst of wartime operations.16 Problems include over-reliance 

on contractors, missteps in developing requirements, lack of oversight of projects, 

inability to conduct quality assurance in a hostile environment, funds wasted, and 

schedules slipped. 

As USAID reformulates procurement practices and builds its contracting 

workforce, the Commission believes this is an ideal time to adjust the way 

contracts and grants are awarded and managed, and to elevate the role of 

acquisition within the agency to better advise the administrator, as well as allow 

smoother coordination and communication with other agencies. 

Contingency contracting, especially in an interagency operation, greatly benefits 

from contract managers and support staff who are experienced in meeting 

requirements in a restrictive and dangerous environment. The limitations in 

transportation and sources of supply, the lack of a trained local-contractor 

workforce, and the need for carefully vetted and armed security personnel may be 

addressed and mitigated through planning, preparation, and training. 

16. Tim Cox, OIG/Afghanistan Director, USAID memorandum, “Review of USAID/Afghanistan’s Bank 

Supervision Assistance Activities and the Kabul Bank Crisis,” March 16, 2011.

USAID and U.S. 

Department of 

Agriculture officials 

with villagers near 

Qalat, Afghanistan.

(U.S. Air Force photo)
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C H A P T E R 5

Without adequate staffing and training, significant waste and possible failures 

can be expected as State faces the daunting task of the transition in Iraq and 

future transition in Afghanistan. USAID also 

faces uncertainty if it is once again tasked with 

accomplishing its development mission in 

a war zone. Without a focus on contingency 

contracting in both State and USAID, skill sets, 

tradecraft, and knowledge gleaned from lessons 

learned will be soon forgotten and the benefit of 

any staffing gains will be lost. 

Acquisition as a core function

As noted, Defense, State, and USAID are resistant 

to changing the status quo by elevating 

acquisition within each agency. And the Joint 

Staff has resisted calls to elevate contingency contracting from its niche within J4 

(logistics) to a new J10 directorate.

The Services Acquisition Reform Act of 2003 established the position of the chief 

acquisition officer (CAO) at agencies other than Defense that are required to have 

chief financial officers.

17 The Act provided that the CAO shall be a “non-career 

employee” and shall: 

(A) have acquisition management as that official’s primary duty; and

(B) advise and assist the head of the executive agency and other agency 

officials to ensure that the mission of the executive agency is achieved 

through the management of the agency’s acquisition activities.

The Act assigns authority and functions that include monitoring performance 

in acquisition, responsibility for related decision-making within the agency, 

managing the direction of policy, and assessing the skills of acquisition personnel.

The Act also clarified the role of the senior procurement executive (SPE), who 

will either be the CAO or report directly to the chief acquisition officer “without 

intervening authority.”

The committee report for the Act indicated the CAO position was created to 

“eliminate stovepipes and serve as a focal point for acquisition in day-to-day 

17. National Defense Authorization Act for FY 2004, sec. 1421, P.L. 108-136, codified at 41 U.S.C. 1702.

Without a focus on 

contingency contracting 

in both State and USAID, 

skill sets, tradecraft, and 

knowledge gleaned from 

lessons learned will be soon 

forgotten and the benefit 

of any staffing gains will be 

lost.
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A C Q U I S I T I O N A S A C O R E F U N C T I O N

operations as well as in agency-wide strategic planning and performance 

evaluation processes.”18 Yet departmental stovepipes persist. 

At State, the assigned CAO is the Assistant Secretary of State for Administration. 

That official is responsible for procurement—but procurement is just one item in a 

grab-bag of unconnected duties and functions that include records management, 

supply, transportation, logistics, language services, 

and diplomatic-pouch service, among others. 

At USAID, the CAO is a career employee, serves as 

senior procurement executive (SPE), and reports 

to the Bureau for Management. The Bureau also 

oversees the chief information officer (CIO) and the 

chief financial officer (CFO), both of whom have 

“dotted-line” reporting relationships to the agency 

administrator. 

The CAO/SPE is the director of the Office of 

Acquisition Assistance, a career employee within USAID, who has significant 

acquisition experience in the agency. The CAO reports to the Director of the 

Bureau for Management, who also has a background in procurement. While this 

arrangement seems in line with the Act, having 20 direct-report personnel within 

an organization appears managerially unwieldy and procedurally inefficient.

As provided in the Services Acquisition Reform Act of 2003, the chief acquisition 

officers for State and USAID should be appointed and properly placed within 

the agencies in order to effectively “advise and assist the head of the executive 

agency.” The position is responsible for widely varying duties, one being 

procurement, that impact both the headquarters staff and posts around the 

world. The CAO at State is currently positioned three levels below the agency 

head, within the Assistant Secretary of State for Administration’s organization. This 

position has in the past been occupied by persons without acquisition experience. 

The Commission believes that a CAO should have full-time, primary responsibility 

for acquisition, not simply have acquisition as one more duty in a long list 

of unrelated functions. In addition, the CAO needs an extensive background 

in acquisition to carry out the duties and responsibilities the law requires. 

Contingency contracting would then be a key responsibility of this renewed 

position.

18. U.S. House of Representatives, Committee on Oversight and Government Reform, House Report 

108-117, Part 1, May 19, 2003, 32.

The Commission believes that a 

CAO should have full-time, primary 

responsibility for acquisition, not 

simply have acquisition as one 

more duty in a long list of unrelated 

functions.
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C H A P T E R 5

Within Defense, State, and USAID, acquisition management must be given the 

same level of importance as agency offices and directorates dealing with finance, 

information technology, and human capital. Contingency contracting is central 

to an agency’s ability to carry out its mission and pursue U.S. national strategic 

interests. This calls for making sure that agencies’ acquisition executives are well 

positioned and properly staffed to advise and assist the agency head. 

Meaningful progress towards achieving cultural change by recognizing that 

acquisition is a mission enabler will be limited as long as agencies resist major 

reforms that would serve to elevate the role of contracting. Cultural change will 

not occur without being embraced and actively promoted at the highest levels.

RECOMMENDATION 6

Elevate the positions and expand the authority of civilian officials 

responsible for contingency contracting at Defense, State, and USAID 

▪ The Commission endorses the House version of the National Defense 

Authorization Act for FY 2012, H.R. 1540, sec. 967, which would amend 

section 138(b) of Title 10 U.S.C., stating in part:

(a) One of the Assistant Secretaries shall be the Assistant Secretary of 

Defense for Contingency Contracting. The Assistant Secretary of Defense 

for Contingency Contracting is the principal adviser to the Secretary of 

Defense and the Under Secretary of Defense for Acquisition, Technology, 

and Logistics on matters relating to planning, funding, staffing, and 

managing contingency contracting of the Department of Defense.

(b) Requirement to Establish Office of Contingency Contracting - The 

Secretary of Defense shall rename and expand the Office of Program 

Support in the Office of the Under Secretary of Defense for Acquisition, 

Technology, and Logistics as the Office of Contingency Contracting. 

The Office of Contingency Contracting shall be headed by the Assistant 

Secretary of Defense for Contingency Contracting and shall be 

responsible for planning, funding, staffing, and managing contingency 

contracting in the Department of Defense.19

▪ To elevate the role of contingency contracting at the Department of 

State, supporting the department’s mission and ensuring that acquisition 

is viewed as a full business partner and not a back-room administrative 

function, State should:

ūestablish a separate Bureau of Acquisition led by an assistant secretary 

for acquisition who has a background as a qualified acquisition 

19. H.R. 1540, sec. 967 (112th Congress). 
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A C Q U I S I T I O N A S A C O R E F U N C T I O N

professional and who would be designated as the agency’s chief 

acquisition officer,

ūensure that the new bureau would have acquisition as its singular focus 

and primary mission, and

ūestablish additional Senior Executive Service positions to support the 

bureau’s work. 

▪ The chief acquisition officer within USAID should be a non-career 

appointment at an organizational level so as to facilitate advising and 

assisting the agency head. 

▪ In addition, Congress should amend 41 U.S.C. 1702 to provide that the 

CAO’s duties include managing policy and monitoring contingency 

contracting.

▪ To elevate the role of contingency contracting within USAID, the CAO 

should be identified as a “direct adviser” to the Administrator, a similar 

position to that of the chief financial officer and the chief information 

officer. 

► RECOMMENDATION 7

Elevate and expand the authority of military officials responsible 

for contingency contracting on the Joint Staff, the combatant 

commanders’ staffs, and in the military services

Defense should:

▪ extract operational contract support and other contract-support duties 

and responsibilities from J4 (Logistics) and create a J10 Directorate of 

Contingency Contracting at the Joint Staff in order to better support 

contracting in other directorates and missions such as intelligence, 

communications, linguistic support, and security; and

▪ create functional alignment by establishing similar J10 organizations at the 

combatant commands and in the four military services.
U.S. military and civilians with villagers near Kandahar, Afghanistan. (U.S. Air Force photo)
Chapter 6

Agency structures and 

authorities prevent effective 

interagency coordination
132

C H A P T E R 6

Agency structures and 

authorities prevent effective 

interagency coordination 

C ontingencies involve interagency operations. For Iraq and Afghanistan, 

those operations have been poorly managed in Washington and in the field. 

The result has been failed and costly contract implementation. Government 

agencies have taken on responsibilities for which they were not prepared—

through new missions, expansion of traditional missions, or both—and often have 

carried them out with only a cursory regard for what other agencies were doing. 

Mission responsibilities have not been matched to resources. Blurred roles 

and demanding timelines for contracting support of expanded missions have 

contributed to unsatisfactory outcomes. Too often, contracts have been awarded 

without advance knowledge of specific requirements and without recognition of 

the importance of having adequate government resources for management and 

oversight. 

Without more rational assignment of responsibilities and distribution of resources, 

agencies’ stark differences—in philosophies, approaches to contingency tasks, 

management structures, and resource allocations—will continue to spill over into 

the contracting arena, wasting dollars and losing opportunities. Moreover, without 

an integrated audit and investigative capability, much of this waste will likely go 

undetected.

The contingency mission stretches core competencies

Defense, State, and USAID have built their core competencies over decades, but 

the Iraq and Afghanistan contingencies 

have presented new demands on these 

competencies in type, tempo, and 

especially in order of magnitude. In 

both Iraq and Afghanistan, traditional 

civilian and military missions and core 

competencies have collided.

Defense has become heavily engaged in 

stabilization and reconstruction—tasks seen as more akin to development than 

warfighting. USAID has struggled to adapt its longer-term development practices 

USAID has struggled to adapt 

its longer-term development 

practices to the military’s shorterterm objectives and timelines.
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I N T E R A G E N C Y C O O R D I N A T I O N

to the military’s shorter-term objectives and timelines. And State’s diplomatic 

and governance missions have called for costly and substantial contingencycontracting programs such as police training and major wartime construction, the 

scopes of which are well beyond its in-house experience base. 

The following discussion outlines some of the “contingency unique” activities 

undertaken in Iraq and Afghanistan by Defense, USAID, and State.

Department of Defense

Defense views contingency challenges through a short-term prism, filling any and 

all perceived needs as they are identified. It has a highly centralized management 

structure beginning in Washington and 

branching regionally through the combatant 

commands. Since 2001, in Afghanistan and 

Iraq, Defense’s engagement in governance, 

reconstruction, and development is 

substantial, far-reaching, and extends 

beyond its core mission:

▪ Commander’s Emergency Response 

Program (CERP)—Conceived as a 

program of modest, communityfocused activities to fund 

immediate humanitarian relief 

and reconstruction needs, CERP 

appropriations since 2003 are 

approaching $6.5 billion for Iraq and Afghanistan.1 CERP has financed 

activities from small-scale community activities costing a few hundred 

dollars to large-scale power-generation and maintenance programs 

costing hundreds of millions of dollars. In the first quarter of fiscal year 

2011 alone, Defense programmed more than 4,000 projects in Afghanistan 

costing $67 million dollars.

▪ Task Force on Business Stability Operations/Iraq (TFBSO)—As the “de 

facto primary tactical economic development resource for the U.S. 

mission in Iraq,” TFBSO deployed more than 600 business specialists to 

work throughout Iraq. The task force has promoted private investment, 

1. Special Inspector General for Iraq Reconstruction (SIGIR) 11-012, “Letter for the U.S. Secretary of 

Defense Director, Office of Management and Budget, subject: Commander’s Emergency Response 

Program Obligations Are Uncertain,” January 31, 2011, 1; Special Inspector General for Afghanistan 

Reconstruction (SIGAR) Audit Report 11-7, “Commander’s Emergency Response Program in Laghman 

Province,” January 27, 2011, i. 

Afghan district and 

provincial leaders at 

a CERP workshop, 

Nangarhar Province. 

(U.S. Army photo)
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C H A P T E R 6

re-started industrial and agricultural production, 

strengthened banking networks, and reformed budget 

and procurement policies.2

▪ National Guard Agri-business Development Teams 

(ADT)—National Guard units from nine states are 

mobilizing hundreds of soldiers each year to provide 

agricultural expertise in a dozen key Afghan provinces.

▪ Village Stability Operations—The special-operations 

command in Afghanistan is contracting for a multimillion dollar effort to field civilian agriculture experts in 

support of its teams seeking to establish security and promote stability and 

governance in key villages.

▪ AfPak Hands—A 250-strong cadre of career military officers who serve 

multiple tours in theater, some as embedded civilian advisers to senior 

Afghan civil servants, operates completely outside of the military’s 

traditional civil-affairs mission.

U.S. Agency for International Development

In contrast to Defense, USAID’s principal focus has been humanitarian relief and 

long-term, sustainable development. It is highly decentralized, normally operating 

at the country level. It is severely resource-constrained and thinly 

staffed both in Washington and in the field. Consequently, it 

generally seeks to focus and concentrate its efforts within a given 

country. In Iraq and Afghanistan, USAID’s traditional development 

approaches have been severely distorted in those fast-paced, 

highly insecure contingency environments.

▪ Afghan Vouchers for Increased Production in Agriculture 

(AVIPA)—In urgent need of a large stabilization capacity to 

support the troop surge, USAID dramatically expanded a 

modest $60 million food-security initiative to provide seed 

and fertilizer into an extensive $360 million stabilization 

project that included equipment purchases, cash for work, 

and community development in 2009. As noted in Chapter 

3, the consequence was rampant waste and fraud.3

2. Task Force for Business Stability Operations, “Enabling Security through Economic Opportunity: Iraq 

Final Impact Summary,” January 31, 2011, 1. 

3. U.S. Senate Committee on Foreign Relations, Majority Staff Report, “Evaluating U.S. Foreign Assistance to 

Afghanistan,” June 8, 2011, 11-12.

Defense’s engagement in 

governance, reconstruction, 

and development is 

substantial, far-reaching, 

and extends beyond its core 

mission.

In Iraq and Afghanistan, 

USAID’s traditional 

development approaches 

have been severely 

distorted in those 

fast-paced, highly 

insecure contingency 

environments.
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▪ Strategic Provincial Roads (SPR)—In contrast to its normal practice of not 

undertaking development projects in insecure areas, USAID launched 

SPR in 2008 as its component of an interagency counterinsurgency 

(COIN) effort to strengthen security and promote stability in marginal and 

insecure areas by engaging communities and using Afghan contractors to 

construct gravel roads. Three years and $270 million later, 

the program is being closed down, having completed 

only a third of the planned 1,500 kilometers of roads, 

due mostly to the challenges of a steadily deteriorating 

security environment.4

▪ Kajaki Dam—The restoration activity was conceived and 

launched during the 2003-2005 period of relative calm 

and stability. Since then, a dramatic deterioration in 

security has essentially brought progress at the dam site 

to a halt.5

Because Defense, State, and the International Security Assistance Force 

(ISAF) coalition deemed progress on the dam a vital COIN interest, USAID 

has been spending millions of dollars in an attempt to keep the project 

moving forward. By the time it is completed, USAID will have spent a 

substantial amount of money trying to maintain project momentum: 

paying for helicopters to fly in heavy construction materials and 

equipment, fielding numerous armed guards, and sustaining a barebones 

construction crew on site, all in addition to what was budgeted for the 

entire project at its inception.

Department of State

State, while maintaining strong central direction, operates with a country focus, 

and often establishes special representatives to lead contingency efforts (for 

example, the Special Representative for Afghanistan and Pakistan). Its resources in 

people and funds, however, fall well short of the levels it seeks from Congress. 

In Iraq and Afghanistan, State’s core governance and diplomacy competencies 

have been severely stretched, being tasked to undertake training and capacitybuilding contracts, award and oversee high-dollar construction contracts, and 

manage large numbers of security contractors. While State has performed 

all of these tasks world-wide for years, the efforts in Iraq and Afghanistan are 

4. USAID, Strategic Provincial Roads-Southern and Eastern Afghanistan (SPR-SEA) Program presentation, 

March 21, 2011, 1.

5. U.S. Senate Committee on Foreign Relations, Majority Staff Report, “Evaluating U.S. Foreign Assistance 

to Afghanistan,” June 8, 2011, 10.

Kajaki Dam, Helmand 

Valley, Afghanistan, 

2004. (U.S. Army 

photo)
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C H A P T E R 6

considerably larger than those it usually takes on. The following projects in the two 

theaters illustrate these concerns:

▪ Pol-i-Charkhi Prison—One of Afghanistan’s main detention facilities, this 

construction project valued at $24 million has been plagued by faulty 

requirements preparation, poor subcontractor selection, and problematic 

performance by the State Contracting Officer’s Representative.6

▪ Iraq Police Training Contract—In June 2004, State awarded DynCorp a 

$188.7 million task order for police training and support equipment. State 

paid $43.8 million to manufacture, store, and provide security for trailers 

that were not used, and $36 million for weapons and training equipment 

that could not be accounted for.7

▪ Kabul Embassy New Housing and Office Expansion Construction—

The 1,000-plus civilians who were part of the 2009 U.S. surge—and 

the temporary housing and work space to accommodate them—are a 

mission-critical element of the U.S. transition strategy for Afghanistan. 

Unfortunately, due to poor contractor performance, the housing has only 

recently become available, roughly one year late and 18 months after the 

civilian surge began.

Broken interagency processes 

hamper operations

The previous examples show Defense, 

State, and USAID extensively engaged in 

activities beyond their core competencies 

and capacities, and struggling to perform 

many of them. Even more serious are interagency operations, where two or more 

agencies are working in concert to accomplish a COIN objective. When interagency 

operations are built upon a divergent understanding of roles and missions, failure 

and waste often follow. 

6. Narcotics Affairs Section (NAS)/Bureau of International Narcotics and Law Enforcement (INL), “NAS/INL 

Construction Overview,” November 16, 2010, 9; William J. McGlynn, Principal Deputy Assistant Secretary 

of State for International Narcotics and Law Enforcement Affairs, statement, Commission hearing, January 

24, 2011, 3.

7. SIGIR Audit Report 6-029, “Review of DynCorp International, LLC, Contract Number S-LMAQM04-C-0030, Task Order 0338, for the Iraqi Police Training Program Support,” January 30, 2007, i-ii.

When interagency operations 

are built upon a divergent 

understanding of roles and 

missions, failure and waste 

often follow.
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Police training in Iraq and Afghanistan 

This mission is claimed by both Defense and State, but each views it differently. 

In Iraq, Defense’s short-term view has emphasized completing the mission 

and deploying 135,000 trained and equipped Iraqi police officers as quickly 

as possible. State has viewed police training as a subset of long-term criminaljustice and rule-of-law development. The departments’ metrics for success could 

not be more different. Defense focused on “hitting 

the numbers,” while State stressed integrating the 

effort into overall development of Iraqi government 

capacity.8

In reality, the Iraq requirement has been for both 

objectives, yet neither Defense nor State has brought 

the full package of capabilities to the table. Defense 

had the lead for police training, but lacked significant 

capabilities in nation building and civil governance. It 

depended on State to fulfill this role through sizeable 

police-training contracts.

State struggled to manage these contracts effectively. 

An Assistant Secretary of State said the mission in 

Iraq had “often outstripped our staffing and oversight 

capabilities, both domestically and in the field.”9

Moreover, no mechanisms have existed that could 

effectively integrate the planning and management 

of the overall police training program. Numerous 

audits and reviews have documented the ineffective 

contracting and waste that ensued.10

In Afghanistan, training the police is a monumental 

task due to high attrition rates, corruption, illiteracy, 

and sustainability challenges. Adding to the 

complexity, Defense and State initially spread these 

responsibilities across three contracts: training conventional police, training 

border police, and building capacity at the Ministry of Interior. 

8. Department of State, Report No. ISP-IQO-05-72, and Department of Defense, Report No. IE-2005-002, 

“Interagency Assessment of Iraq Police Training,” July 15, 2005, 3, 43-45.

9. Ambassador Anne Patterson, Assistant Secretary of State, Bureau for International Narcotics and 

Law Enforcement Affairs, House Committee on Armed Services, Subcommittee on Oversight and 

Investigations hearing, April 25, 2007, 4-5.

10. Department of State, Report No. ISP-IQO-05-72, and Department of Defense, Report No. IE-2005-002, 

“Interagency Assessment of Iraq Police Training,” July 15, 2005, 43-45.

Iraqi police trainees, 

Basra, Iraq, 2011. (U.S. 

Army photo)
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C H A P T E R 6

In 2009, faced with a challenge to dramatically expand the size of the police force, 

Defense moved to consolidate these disjointed contracts into a single program 

that it would manage and execute itself. Despite this effort to rationalize the 

contracts, Defense’s flawed acquisition strategy resulted in a protest and solesource extension to the State contract, and in a lengthy delay in mobilizing the 

new contract, all costly and detrimental to the mission.11

The Defense–to–State transition in Iraq

In two special reports and two congressional hearings, the Commission signaled 

its concern about lack of progress in the Iraq transition from Defense to State, 

while emphasizing that the rapidly approaching transition in Iraq is vital to stability 

in the region.

Expanding and sustaining State’s presence in Iraq would be a huge undertaking 

in the best of circumstances. But circumstances are not the best, or even good. 

Iraq is a heavily damaged country confronting challenges that include a dynamic 

insurgency and substantial turmoil in the region. A pressing need is to complete 

arrangements for handing over the many support functions that the U.S. military 

has been performing as part of its mission. 

Many of these duties will continue to be 

required after the U.S. military’s scheduled 

departure from Iraq by the end of December 

2011, but as part of State’s mission.

State has turned to contracting in the face 

of this huge new security, governance, 

and development mission. It is struggling 

to resolve budget issues and prepare 

requirements for awarding a large number 

of contracts, along with mobilizing the 

many U.S. government civilians needed to effectively manage these contracts. 

This transition faces continuing challenges due to the magnitude and speed with 

which the handover is approaching, plus the uncertainty created by the possibility 

that a new intergovernmental agreement may extend some U.S. military presence 

beyond 2011. 

11. Commission hearing, December 18, 2009, transcript, 16-17, 35, 63, 88, 95-96; GAO Report B-402349, 

“DynCorp International, LLC protest,” March 15, 2010.

Expanding and sustaining 

State’s presence in Iraq would 

be a huge undertaking in the 

best of circumstances. But 

circumstances are not the best, 

or even good.
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I N T E R A G E N C Y C O O R D I N A T I O N

Other examples of broken interagency processes

Kabul–Kandahar highway bridges

In summer 2008, insurgents destroyed numerous bridges on the Kabul–Kandahar 

Ring Road constructed by USAID. Three years after an interagency consensus 

on the counterinsurgency imperative of reconstructing the bridges as soon as 

possible, agreement on using CERP for funding, and on USAID serving as the 

executing agency, none of the bridges is complete. The 

promise of this interagency consensus was frustrated 

by the slow transfer of funds from Defense to USAID, 

among other problems. 

Private security contractor oversight 

Agencies have been working for many months 

to address the problem of vetting, training, and 

registering private security contractors and 

sub-contractors. The lack of common protocols for 

sharing resources and responsibilities among Defense, 

State, and USAID entails the risk of thousands of 

Afghan nationals receiving weapons without proper 

vetting, training, registering, or effective oversight.

Counterinsurgency contracting 

 Throughout the spring of 2010, numerous U.S. and International Security 

Assistance Force entities and the Afghan government began to question how best 

to stem the leakage of funds from badly written and poorly overseen logistics, 

security, and reconstruction contracts.

After more than a year, agencies are finally beginning to arrive at a consistent 

interagency approach to contractor and subcontractor vetting, stronger contract 

clauses regarding contractor behavior, and limits on the layers of subcontracting, 

among other steps. In the meantime, however, hundreds of millions of dollars 

have flowed out to the networks of warlords, criminals, and insurgents, at huge 

cost to the COIN mission.12

12. USAID, “Accountable Assistance for Afghanistan white paper,” June 21, 2011; GAO Report 11-355, “U.S. 

Efforts to Vet Non-U.S. Vendors Need Improvement,” June, 2011, 1; GAO Report 11-771T, “Operational 

Contract Support, Actions Needed to Address Contract Oversight and Vetting of Non-U.S. Vendors in 

Afghanistan,” June 30, 2011.

The lack of common protocols 

for sharing resources and 

responsibilities among Defense, 

State, and USAID entails the risk 

of thousands of Afghan nationals 

receiving weapons without proper 

vetting, training, registering, or 

effective oversight.
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C H A P T E R 6

Challenges of in-country coordination

Effective in-country coordination requires clear delineation of roles and 

responsibilities for achieving mission objectives, effective interagency processes, 

and sufficient staff to perform the coordination tasks.

Roles and responsibilities are poorly defined

The government has recently devoted much effort to identifying, clarifying, and 

implementing agency and personnel roles and responsibilities. One strategiclevel success in this effort is the Interagency Agriculture Strategy for Afghanistan, 

which clearly identified the roles and responsibilities of the U.S. Department of 

Agriculture (USDA), USAID, National Guard Agri-business Teams and the Afghan 

government.13

Other key development sectors, however, do not have such well-delineated 

strategies, whether developed outside or inside Afghanistan, for economic growth, 

infrastructure, health, education, or democracy and governance. Nor is interagency 

coordination effectively implemented in theater. Nevertheless, agencies plan, 

award, and manage high-dollar acquisitions in these sectors every month in 

Afghanistan.

The coordination process is exceedingly complex

The need for interagency coordination, particularly among Defense, State, and 

USAID, is not new. Processes exist that can execute interagency contingency 

operations during the early stages of a humanitarian contingency such as the 

recent earthquake in Haiti. However, facing the fast operational tempo and 

timelines of a military contingency, and absent a deployable cadre, the various 

entities create their own processes from scratch. The result is a proliferation of ad 

hoc, complex, and time-consuming inter-agency and civilian-military coordination 

groups. 

In a typical U.S. embassy, the USAID mission director—along with small attaché 

offices for Treasury, Agriculture, Justice, and other agencies—normally serves 

under the aegis of the deputy chief of mission. With the advent of the spring 2009 

Afghanistan surge, though, the Kabul embassy became responsible for planning, 

coordinating, managing, and reporting on an interagency portfolio of several 

billion dollars of stabilization, governance, and development programs. It was 

charged with overseeing the day-to-day operations of 14 federal agencies, four 

regional platforms in the battlefield, and more than 1,000 new civilians arriving 

as part of the surge. In addition, the embassy faced a massive challenge in 

13. USAID, “The US–Afghan Agriculture Partnership,” November 2010, 5, 10.
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I N T E R A G E N C Y C O O R D I N A T I O N

coordinating the activities of these civilian agencies with the U.S. and coalition military, 

other donors, and the Afghan government. 

For almost all of the entities involved, this was a dramatically new way of doing business. 

Unfortunately, at the outset the embassy did not have either the personnel or standard 

operating procedures for taking on such a complex coordination role, and much valuable 

and expensive time was lost. 

Figure 2 depicts the breadth of the interagency challenges arising from just one major 

element of the civilian mission, rule of law and law enforcement. State named a seasoned 

diplomat with ambassadorial rank to lead this effort. He created a complex rule-of-law 

(ROL) command-and-control structure over a six-month period to bring some order to a 

multi-faceted and fluid environment. Behind each box in this figure are numerous people 

working to keep up with meetings and a continuous flow of communications. 

Figure 2. U.S. Rule of Law structure in Afghanistan

Source: U.S. Mission to Afghanistan, U.S. Embassy, Kabul, Afghanistan, Rule of Law (ROL) Organizational Chart, 

November 5, 2010.

The U.S. ROL group is not an isolated case. Each development sector—economic growth, 

health, education, infrastructure, democracy, and governance—has its interagency 

working group. Additional groups have been created to coordinate critical cross-cutting 

issues, such as COIN contracting, anti-corruption, threat finance, stabilization, major 
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C H A P T E R 6

crimes, Afghan First, the Afghan Presidential Decree 62, and the 2014 ISAF-toAfghan government transition. 

Moreover, none of these efforts includes the interagency coordination required to 

manage the efforts of the 49 participants in the NATO/ISAF mission, or relations 

with the multilateral donors or the Afghan government. 

More daunting yet is the fact that most interagency-coordination elements in 

theater may or may not be mirrored by counterparts in Washington. This raises 

the possibility that the interagency-coordination structure may be marred by 

gaps, duplications, and cross-purposes. Further, a score of immature interagency–

coordination mechanisms can easily become costly drains on personnel and 

financial resources.

Essential elements for effective 

interagency coordination are missing

Chapter 5 stressed the urgency of strengthening contingency contracting 

capabilities and capacities at the agency level, and called for elevating the 

authority and responsibility to place them much closer to the agency heads. This is 

a necessary but not a sufficient step toward better coordination.

Agency heads perform strategic functions in their separate venues, but a single 

point of interagency-coordination authority with accountability is lacking. It is at 

this level that the essential elements for effective interagency coordination can be 

enforced and ensured by providing: 

▪ a clear policy that identifies the accountable authority for overseeing 

interagency coordination and planning preparedness; 

▪ a delineation of agency roles, responsibilities, and contingency core 

competencies, as well as a dispute resolution mechanism and associated 

funding commitments; 

▪ an effective interagency contingency–planning process; and

▪ a mechanism for institutionalizing interagency coordination capability, 

through dedicated funding and a set of standard operating procedures.

In the absence of these elements, interagency coordination will remain ineffective.
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I N T E R A G E N C Y C O O R D I N A T I O N

Policy and authorities

Strategic direction must be provided by one individual to and through an 

interagency structure. Officials from each of the agencies constituting that 

structure need to perform the same strategic function within their own agencies. 

In addition, officials need to translate strategic direction into operational direction 

for the field. A field-based structure therefore must be created to ensure parallel 

integration and coordination. That field-based structure, created with appropriate 

authority, must also have the resources necessary to manage the process.

Defense uses a common operating picture to ensure unity of command and 

purpose as the basis for its operations in the field. A field-based common 

operating picture for all agencies can enhance the interagency and multilateral 

process as well, particularly the effective and efficient use 

of contracted resources. 

Roles and responsibilities

Effective interagency coordination demands that roles 

and responsibilities be clearly defined and assigned 

to the appropriate agency or mix of agencies. In both 

Washington and the field, interagency operations need to 

be staffed with the appropriate mix of civilian and military 

personnel. Yet no existing interagency process can assess arguments for or against 

substantial involvement of organizations operating in virtually identical spheres 

of activity. With billions of taxpayer dollars involved, this is a situation ripe for 

overlaps or gaps and the waste that comes with them.

Clearly delineating roles and responsibilities may involve 

reallocating resources, authorities, and responsibilities 

among agencies. Military and civilian staffing should 

include not only enough resources to conduct assigned 

missions, but equally important, enough to manage and 

oversee the contractors hired to fill government gaps. 

Effective interagency planning

Much of the wasteful contracting in Afghanistan and Iraq 

can be attributed to poor interagency planning. Effective interagency planning 

takes time to arrive at a consensus, yet each of these contingencies was marked by 

little advance planning, ad hoc decision-making, and hurried implementation.

With billions of taxpayer dollars 

involved, this is a situation ripe 

for overlaps or gaps and the 

waste that comes with them.

Much of the wasteful contracting 

in Afghanistan and Iraq can be 

attributed to poor interagency 

planning.
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C H A P T E R 6

The existing planning vehicle in the Afghanistan theater 

is the Integrated Civilian-Military Campaign Plan, the first 

version of which was signed in August 2009 after months 

of preparation. Immediately after signing it, the principals 

launched an update process, coordinated by a seasoned 

military planner. In February 2011, they signed the 

Integrated Civilian-Military Campaign Plan, Revision 1, and 

immediately launched the planning process for Revision 2.

Having an integrated plan is commendable, assuming that 

it is disseminated, understood, and faithfully executed. 

What is troubling from the viewpoint of interagency 

coordination is that it took nearly eight years from the 

start of U.S. military operations in Afghanistan to get to an 

agreed-upon plan, then another year and a half to make 

the first revision.

Institutionalizing the interagency capability

The previous examples also contain the seeds of improvement for interagency 

operational readiness for the current contingencies and for those to come. Lessons 

can be harvested as they emerge from the Afghan and Iraq contingencies. In 

the absence of an overriding policy and body of operating procedures, however, 

members of the interagency community are doomed to re-create processes and 

procedures once a new contingency begins.

There are substantial opportunities both to deploy the resources of the whole of the 

U.S. government more effectively and to avoid repeating past contracting failures. 

But in a time of shrinking budgets and tight competition for resources, sustaining the 

hard-won interagency capability will be a challenge. A dedicated funding stream, a 

core set of standard operating procedures, and a central decision-making authority 

are essential to institutionalizing these capabilities.

► RECOMMENDATION 8

Establish a new, dual-hatted senior position at OMB and the NSC staff 

to provide oversight and strategic direction 

Congress should create a position in the Administration for a single dual-hatted 

official to: 

▪ Serve at OMB and on the NSC staff.

▪ Ensure that each relevant agency has the necessary financial resources and 

policy oversight, as appropriate, to carry out its contingency-related mission, 

In the absence of an 

overriding policy and 

body of operating 

procedures, members 

of the interagency 

community are 

doomed to re-create 

processes and 

procedures once 

a new contingency 

begins.
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I N T E R A G E N C Y C O O R D I N A T I O N

and that agencies’ budgets are complementary rather than duplicative 

or conflicting. In OMB, this official should be a deputy director and thus a 

presidential appointee confirmed by the Senate.

▪ Oversee and ensure coordination of interagency contingency operations, 

including contracting-related matters. At the NSC, this senior official shall 

attend and participate in the meetings of the NSC as the principal advisor 

to the NSC on interagency contingency operations. This official should be a 

deputy national security adviser and deputy assistant to the President.

Oversight agencies—a special challenge

in interagency coordination

Audit and investigative oversight is a critical component of effective contingency 

contracting. Given the dramatic increases in resources, personnel, and 

contingency contracts being deployed in the two theaters, no agency operating 

in Afghanistan and Iraq has sufficiently bolstered its audit and investigation 

capabilities. 

Table 8. Federal agencies and departments supporting contingency operations in 

Iraq and Afghanistan through contracts and grants

Source: www.USAspending.gov, last updated February 15, 2011.

Given the plethora of federal agencies and departments spending money 

for contracts and grants to support operations in Iraq and Afghanistan, it is a 

challenge to coordinate the efforts of five inspectors general, the Army Audit 

Agency, Defense Contract Audit Agency (DCAA), Defense, and service investigative 

agencies (Defense Criminal Investigative Service, Naval Criminal Investigative 

Service, among others), and the Government Accountability Office (GAO). 

1. Department of Defense 7. Department of the Interior 13. Peace Corps

2. Department of State 8. Department of Homeland Security 14. Social Security Administration

3. U.S. Agency for International Development 9. Department of the Treasury 15. Department of Commerce

4. Department of Justice 10. Department of Agriculture 16. Department of Veterans Affairs

5. Department of Health and Human Services 11. Department of Transportation 17. Environmental Protection Agency

6. General Services Administration 12. Broadcasting Board of Governors
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C H A P T E R 6

None of these audit or investigative agencies, except GAO, has the authority to 

look at all aspects of contingency operations, and the coordination mechanism 

mandated by Congress has been ineffective.14 In addition, when uncoordinated 

oversight occurs it leads to overlapping requests to the overseen entities for 

information, interviews, meetings, and reports. A permanent contingency 

inspector general could reduce the burden on entities operating in-country of 

multiple and duplicative requests for information and support.

Representatives of the audit community meet regularly in Washington and 

Afghanistan to share audit schedules and other matters. This has served primarily 

as an information-sharing meeting, and is insufficient to the task at hand. 

Audits and investigations oversight requirements in Afghanistan and Iraq are 

mission-critical, given the scope, scale, and impact of waste and corruption in 

the two theaters and their pernicious effects on the U.S. mission. Civilian and 

military program managers acknowledge the critical value–added of the audit and 

investigative oversight, and seek timely feedback on what they might be doing 

better; all they ask is that they get the feedback in a timely manner so they can 

catch problems early. 

The special inspectors general for reconstruction in both Iraq and Afghanistan, 

unlike the other inspectors general, have an interagency mandate. They have 

helped focus oversight attention and resources on contingency reconstruction 

problems. But their mandates do not include other important areas such as 

logistics or language services. Moreover, these offices did not exist at the 

beginning of the wars, were slow to get started, had problems in recruiting trained 

personnel with experience in a war zone, 

and operate under a statutory mandate for 

closing down.

Contingencies present unique risks and 

challenges to the oversight community 

requiring interagency-specific expertise in: 

contractor vetting, overseas investigations, 

the civilian-military interface, multilateral and coalition complexities, 

and host–nation relations. Given the 

heightened risk of waste, fraud, and 

abuse in contingencies, ensuring proper oversight has the potential to reduce 

vulnerabilities, save dollars, and hasten the accomplishment of the mission. 

14. Sec. 842, National Defense Authorization Act for FY 2008, P.L. 110-181.

The work of the Special Inspector 

General for Iraq Reconstruction 

and other audit organizations 

has demonstrated the value of 

having oversight capabilities and 

a visible presence in theater.
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I N T E R A G E N C Y C O O R D I N A T I O N

No entity exists with sufficient resources, experience, 

and audit and investigative capabilities to transcend 

departmental and functional stovepipes and develop 

experienced audit and investigative staff to ensure 

visibility into contingency contracting waste, fraud, and 

abuse. In addition, no inspector general organization has 

been able to deploy and execute operations at the outset 

of contingency. The work of the Special Inspector General 

for Iraq Reconstruction and other audit organizations has 

demonstrated the value of having oversight capabilities 

and a visible presence in theater.

In addition, there are no standardized certification requirements and training 

for auditors and investigators in contingency operations. A central office within 

a permanent inspector general that develops, plans, and delivers training for 

auditors and investigators who may be required to work in contingencies could 

help resolve this problem.

► RECOMMENDATION 9

Create a permanent office of inspector general 

for contingency operations

Congress should establish and fund a permanent inspector general for 

contingency operations to:

▪ Operate with a small staff in collaboration with agency inspectors general 

to regularly assess the adequacy of agency planning and readiness for 

contingencies, to be ready to deploy at 

the outset of a new contingency, and to 

expand as necessary.

▪ Exercise audit and investigative authority 

over all functions (such as logistics, 

security, and reconstruction) and across 

Defense, State, USAID, and other agencies 

participating in contingency operations. 

▪ Develop, plan, and, as appropriate, deliver 

investigative and oversight training 

targeted to contingency operations.

No entity exists with sufficient 

resources, experience, and audit 

and investigative capabilities 

to transcend departmental and 

functional stovepipes.

Advisors from 

Departments of State 

and Agriculture meet 

with Afghan locals, 

Panjshir Province, 

Afghanistan. (U.S. Army 

photo)
Provincial Reconstruction Team with contractors at bridge-repair job site, Zabul province, Afghanistan. (U.S. Air Force photo)
Chapter 7

Contract competition, management, 

and enforcement are ineffective
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C H A P T E R 7

Contract competition, management, 

and enforcement are ineffective

A gencies have faced unique challenges in trying to make peacetime practices 

regarding contract competition, management, and enforcement apply in 

Iraq and Afghanistan. They will likely face the same challenges in future 

contingencies. The need to accomplish missions in Iraq and Afghanistan with 

constrained resources has led to the award of contracts using procedures that have 

not resulted in effective competition. 

The federal-procurement system is founded on three fundamental tenets that are 

as relevant in contingency contracting as in peacetime operations: 

▪ full and open competition under which all responsible firms are allowed to 

participate;

▪ transparency through public notice of the U.S. government’s requirements 

and awards; and 

▪ process-integrity that is consistently enforced through policies and laws on 

ethical behavior, timely audits, and contract oversight.

Acquisition managers, overloaded with work, have not focused on recording and 

using contractor-performance evaluations as they might in peacetime, with the 

consequence that local, third-country, and U.S. contractors performing in Iraq 

and Afghanistan may escape agency oversight and law enforcement. The current 

contingencies have created a number of distinct problems: 

▪ Unprecedented reliance upon a single-award task-and-delivery-order 

contract—such as the Logistics Civil Augmentation Program (LOGCAP) 

III contract—often undermines effective competition. Unless multiple 

contractors compete for task orders, it 

is difficult to obtain the best pricing or 

performance.

▪ The Defense Contract Audit Agency (DCAA) 

has accumulated a backlog of billions of dollars 

in unaudited contingency-contract costs. 

▪ Portions of contract payments made to 

Afghan subcontractors were diverted to the 

insurgency—a problem that U.S. enforcement 

efforts are not yet equipped to handle.

Acquisition managers, 

overloaded with work, have 

not focused on recording and 

using contractor-performance 

evaluations as they might in 

peacetime.
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▪ Agencies’ failure to record contractor-performance assessments has serious 

consequences. Without the necessary insight into contractor performance, 

the risk of agencies’ awarding contracts to habitual poor performers 

increases.

▪ For contractors performing in Iraq and Afghanistan, the United States may 

have no tool better than effective use of the suspension or debarment 

process; however, full-scale suspension and debarment procedures cannot 

be applied effectively in contingency environments. 

In its second interim report and again here, the Commission recommends a 

number of improvements to contingency contracting to promote adherence to 

the fundamental tenets of the procurement process.

Contingency-contracting competition is ineffective

Dynamic contingency operations generate rapidly changing support requirements 

that must be met within short timeframes. Effective competition motivates 

contractors to provide fair pricing, best value, and quality performance. On the 

other hand, the tension between a contractor’s motivation to make a profit and the 

demand for good performance still exists. 

The lessons from contingency 

contracting in Iraq and Afghanistan 

are that agencies have not 

effectively employed acquisitionmanagement strategies that 

balance the United States’ interests 

with contractors’ competing 

objectives. 

Afghan contractors 

registering so they 

can compete for 

contracts, Lashkar 

Gah, Afghanistan. 

(U.S. Marine Corps

photo) 
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C H A P T E R 7

Policies and practices hamper competition

Several policies and practices hamper competition in a contingency environment. 

Despite a more mature contracting environment in Iraq and Afghanistan today, 

Defense, State, and USAID still do not consistently 

emphasize competitive-contracting practices. Some of 

the agencies’ procurement and acquisition strategies have 

restricted competition and favored incumbent contractors, 

even those with demonstrated performance deficiencies. 

Agencies have repeatedly:

▪ awarded long-term task orders that were not 

recompeted when competitive conditions 

improved; 

▪ extended contracts and task orders past their 

specified expiration dates, increased ceilings on 

cost-type contracts, and modified task orders and 

contracts to add extensive new work;

▪ favored using existing task- and delivery-order 

contracts like LOGCAP over creating more 

competitive and targeted contract vehicles;

▪ used cost-reimbursable contract types even though simpler, fixed-price 

contracts could expand the competitive pool; and 

▪ failed to record incumbent contractors’ performance assessments in the 

federal past-performance database.

Federal agencies often rely on pre-existing task-order contracts and 

non-competitive awards to meet urgent, mission-critical needs. Agencies award 

“base” contracts for an indefinite quantity or schedule of work, then issue task 

orders against the contracts that include specific requirements and detailed terms 

and conditions. Inadequate competition is the result of awarding both the base 

contracts and the task orders issued against these contracts. 

Contracting officers and contractors alike find it convenient to award task orders 

even though they often are awarded with inadequate competition, involve 

non-competitive sole-source contract modifications that extend the period of 

performance, and are awarded after only a single acceptable offer.

Much of the contingency-support requirements in Iraq and Afghanistan and 

in future contingencies will be met through the use of task- and delivery-order 

Defense, State, and USAID 

still do not consistently 

emphasize competitivecontracting practices. Some 

of the agencies’ procurement 

and acquisition strategies 

have restricted competition 

and favored incumbent 

contractors, even those with 

demonstrated performance 

deficiencies.
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contracts. Failure to maximize the use of multiple-award task- and delivery-orders 

rather than single-award contracts and to establish requirements that increase the 

ability of more than one contractor to compete meaningfully is simply inefficient. 

Competition advocates have not effectively enhanced 

contingency-contract competition

As contingency operations have stabilized, agencies have not adequately revised 

their traditional contingency-contracting approaches to introduce competition into 

many long-term support contracts. 

▪ In Afghanistan, the Army twice modified its 2007 contract for interpreters 

instead of recompeting new requirements worth billions of dollars.1

Contracting officers’ ad hoc decisions to extend 

contracts demonstrated a failure to consider overall 

competition goals.

▪ Under State’s critical Iraq police training contract, 

the agency circumvented the requirement for “fair 

opportunity” by awarding task order 1436, worth $1.4 

billion, without competition. 

▪ Under the terms of the multiple-award LOGCAP IV 

contract, task orders are awarded for five-year periods 

(a base year plus four one-year options). Although 

DynCorp, KBR, and Fluor compete for task orders 

under the contract, the competition is limited and 

inadequate. The LOGCAP IV acquisition strategy 

provides little incentive for contracting officers to break out subcontracts or 

separately compete new requirements. 

▪ For many years, the U.S. Army used the LOGCAP III contract for its logistics 

support in Iraq. LOGCAP III was a competitively awarded contract that 

was awarded to a single firm. Under this long-term contract, agencies’ 

requirements were met through non-competitive task orders. Single-award 

task order contracts and frequent exceptions to competition illustrate the 

need to set and meet competition goals for contingency contracts. 

Agency competition advocates are responsible for monitoring and reporting 

aggregate rates of competition. Yet current reporting requirements do not carve 

out separate categories for contingency construction, services, or supplies. 

Combining these categories for measurement purposes misstates the true extent 

1. The Federal Business Opportunities website has posted justification and approval documents for both 

extensions. 

As contingency operations 

have stabilized, agencies 

have not adequately revised 

their traditional contingencycontracting approaches to 

introduce competition into 

many long-term support 

contracts.
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of competition and prevents officials from focusing on those areas that need 

improvement.

Competition can be enhanced by looking for opportunities to transition cost-type 

to fixed-price contracts that may broaden the pool of qualified contractors to 

include those whose business systems do not meet the standards for a cost-type 

contract. The prospect of enhanced competition can motivate contractors to 

continuously improve their performance. 

The House of Representatives, in its version of the National Defense 

Authorization Act for FY 2012, H.R. 1540, included key Commission competition 

recommendations regarding the establishment of competition goals and 

measures, as well as reviews and reports on competition levels. The Senate Armed 

Services Committee’s version of the 

Act for FY 2012, S. 1253, section 821, 

also included a provision addressing 

the Commission’s recommendations 

concerning past performance. The Office 

of Federal Procurement Policy also 

supports the Commission’s competition 

recommendations.

State and USAID have recognized 

the merits of the Commission’s 

competition recommendations, but 

both agencies questioned the practicality of applying the procedures during 

contingency operations. Therefore, the Commission re-emphasizes the need for 

competition reform. Prompt development of acquisition strategies along the lines 

of the Commission’s reform proposals will lead to greater competition during 

contingencies. 

Competition that is merely illusory undermines the U.S. government’s ability 

to obtain the best value for taxpayers’ money and to foster excellent contractor 

productivity and performance innovation. Defense recognized that it had not 

been taking advantage of the potential savings and performance improvements 

provided by effective competition. In September 2010, Defense implemented 

reforms to reduce the incidence of one-offer competitions. Other agencies have 

yet to place a similar emphasis on competition policy.

Competition that is merely illusory 

undermines the U.S. government’s 

ability to obtain the best value for 

taxpayers’ money and to foster 

excellent contractor productivity 

and performance innovation.
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Accordingly, the Commission reiterates its previous recommendations for 

congressional direction to agency heads:

► RECOMMENDATION 10

Set and meet annual increases in 

competition goals for contingency contracts

Agency heads should:

▪ require competition reporting and goals for 

contingency contracts;

▪ break out and compete major subcontract 

requirements from omnibus support contracts;

▪ limit contingency task-order performance 

periods;

▪ reduce one-offer competitions; and 

▪ expand competition when only one task-order 

offer is received.

Current contract enforcement tools 

are inadequate to protect government interests 

Agencies can improve their ability to conduct meaningful contract competitions if 

they consistently conduct and record contractors’ performance assessments in the 

federal past-performance database, and use the performance information when 

making source-selection or suspension-and-debarment decisions. 

Agencies do not effectively use

past-performance data in contingencies 

A Commission hearing in early 2011 confirmed its earlier conclusion that the 

required performance assessments are not completed and that contractors’ 

performance in a contingency is not adequately shared across agencies.2 Because 

of agencies’ failure to conduct contractor-performance assessments or record 

them in government-wide databases, agencies lack the necessary insight into 

contractor performance and have an increased risk of awarding contracts to 

habitual poor performers.

2. Commission hearing, February 28, 2011.

Because of agencies’ failure to 

conduct contractor-performance 

assessments or record them in 

government-wide databases, 

agencies lack the necessary insight 

into contractor performance 

and have an increased risk of 

awarding contracts to habitual poor 

performers.
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Contractor appeals of performance assessments distract contracting officers in 

contingencies and effectively discourage candid evaluations. Senior leaders have failed 

to enforce the requirement to conduct or record contractor assessments. 

After considering comments received from contractors and agency officials, the 

Commission reiterates its previous recommendations that Congress direct agency heads 

to:

► RECOMMENDATION 11

Improve contractor performance-data recording and use

▪ Allow contractors to respond to, but not appeal, agency performance 

assessments.

▪ Align past-performance assessments with contractor proposals.

▪ Require agencies to certify use of the past-performance database.

Agencies do not use suspension-and-debarment

processes to full effect 

Suspension and debarment can be powerful tools to protect the government’s interest 

in doing business only with contractors capable of performing their contractual 

obligations and maintaining acceptable standards of behavior. The opportunity costs of 

a suspension or debarment are very high for government contractors. 

Nevertheless, agencies sometimes do not pursue suspensions or debarments in a 

contingency environment, preferring instead to enter into administrative agreements. In 

November 2010, the Louis Berger Group entered into a deferred-prosecution agreement 

with the Department of Justice after allegations of massive fraud. USAID did not suspend 

the firm. Instead, the agency entered into an administrative agreement which allowed 

the firm to continue competing for federal contracts. 

When agencies fail to suspend contractors from participating in the federal marketplace 

despite chronic misconduct, criminal behavior, or repeated poor performance, the 

deterrent threat is lost.

Agency officials cite the complexity of suspension-and-debarment procedures as a 

reason for not using the tools as often as they could. In some circumstances, regulations 

provide contractors who have been proposed for suspension or debarment the 

opportunity to request a hearing on disputed facts before the agency takes final action. 

The Commission found that it is extremely difficult, if not impossible, to locate and 
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present witnesses and essential evidence in support of a suspension or debarment 

based on disputed facts in a contingency environment. 

In addition, when officials determine that a recommendation to suspend or debar 

a contractor will not be pursued, they often do not record their justification. 

Documenting determinations and findings is not a burden, and is standard 

practice for most agencies. Further, the requirement for a written justification 

for not taking action applies only to official recommendations such as those by 

inspectors general or contracting officials. 

U.S. government has limited jurisdiction 

over criminal behavior of foreign contractors

Contingency operations and programs that expend huge sums of money over a 

short period of time have not employed effective tools and oversight techniques 

to minimize contract waste, fraud, and abuse. Contingency operations in 

Afghanistan are under special pressure to control the diversion of funds from 

contractors or subcontractors to insurgents. 

In contingencies, the government depends on foreign contractors to a degree 

never seen in normal contracting, yet lacks the strong legal tools to deal with 

them. At a Commission hearing in June 2011, the Under Secretary of State agreed 

to pursue recovery of $132 million from 

the firm First Kuwaiti for deficiencies in 

contracts for the design and construction of 

the new embassy compound in Baghdad. 

This was first reported in 2009. State’s failure 

to recover the money points to a need 

for stronger tools for dealing with foreign 

contractors. 

The government has not made full use of 

its recently developed system for vetting 

contractors to determine if they have 

known connections with the insurgency. 

The current Joint Contingency Contracting 

System tracks prime contracts, but not subcontractors. Subcontractors in 

Afghanistan are often small Afghan firms that pose a risk of being connected with 

“bad actors.” 

Termination of contracts and subcontracts with insurgent-connected firms 

without further payments being made to them is difficult. However, the House 

Afghan contractors, 

Musa Qa’leh, 

Afghanistan. 

(U.S. Marine Corps

photo)
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C H A P T E R 7

of Representatives has included a provision in its version of the National Defense 

Authorization Act for FY 2012, H.R. 1540, section 821, that would void contracts 

with such entities. The Senate Armed Services Committee’s version of the 

Authorization Act, S. 1253, contains a similar provision at section 861.

Investigating and prosecuting 

procurement-related crimes and 

other misconduct serve as powerful 

deterrents to contingency-contract 

waste, fraud, and abuse. This deterrent 

effect is especially important in the 

early stages of a contingency, when 

contractors perform in a rapidly 

changing environment and under 

limited government oversight. 

Deterrence is especially critical in 

large-scale contingencies, such as 

Afghanistan, where agencies need reliable investigation and prosecution tools to 

deal with a number of big contractors whose inadequate business systems put 

large-scale contracts at risk. 

Claims against foreign prime contractors and subcontractors have gone 

unaddressed because the U.S. courts lack personal jurisdiction over the foreign 

defendants. Without establishing personal jurisdiction, attempts by the United 

States and other parties to recoup damages for civil-contract claims, and for private 

parties to recover on tort claims arising out of conduct related to government 

contracts, are protracted and expensive for all parties involved. Foreign courts may 

Claims against foreign prime 

contractors and subcontractors 

have gone unaddressed because 

the U.S. courts lack personal 

jurisdiction over the foreign 

defendants.

Iraqi children 

surround donkey cart, 

Biaj, Iraq. 

(U.S. Navy photo)
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be unavailable, unreliable, or otherwise unable to hear these claims. United States 

criminal jurisdiction over non-Defense contractors and subcontractors operating 

overseas also remains uncertain. 

Contributing to the difficulty of prosecuting procurement-related crimes is the 

challenge of gathering evidence in contingency environments. The chaotic 

conditions of war zones often impede quick investigative responses. Investigative 

agencies are often unable to access information, physical evidence, and witnesses 

in a timely manner.

Contracting officers need a full array of tools for dealing with foreign or local 

contingency subcontractors. These firms come from an entirely different culture 

than that of the United States and they perform in a chaotic and unpredictable 

environment. Contracting officers need better visibility into subcontractor 

performance, as well as tools for intervening to avoid contract waste and fraud 

such as these: 

$400 million Defense (Army) LOGCAP III contract—The Tamimi 

subcontractor-kickback scandal detailed in Chapter 3 provides a strong 

example of the difficulties of investigating foreign subcontractors. 

$17.6 million Defense (AFCEE) infrastructure project—The Air Force 

subcontractor, ENCORP, failed to pay its second-tier subcontractors, and 

the ENCORP owner fled the country with around $2 million. As detailed 

in Chapter 3, poor oversight and management of foreign subcontractors 

resulted in a delay of this important project for more than a year.

Exploitation of persons in contingency contracting 

remains a serious problem in Iraq and Afghanistan

At many times during its travels and hearings, the Commission uncovered tragic 

evidence of the recurrent problem of trafficking in persons by labor brokers 

or subcontractors of contingency contractors.3 Existing prohibitions on such 

trafficking have failed to suppress it. Labor brokers or subcontractors have an 

incentive to lure third-country nationals into coming to work for United States 

contractors, only to be mistreated or exploited. 

Some prime contractors, although not themselves knowingly violating the 

prohibitions on trafficking, have not proactively used all their capacities to 

supervise their labor brokers or subcontractors. For such prime contractors, 

3. Commission hearing, July 26, 2010.
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agencies have not effectively applied positive and negative incentives in the 

contracts they award. 

The Commission identified the need for a number of important changes to 

foster competition, improve contract management, and assure compliance in 

a contingency environment. If implemented, these changes will save billions of 

dollars and lead to more effective contingency contracting and accountability. 

Accordingly, the Commission reiterates several recommendations from its second 

interim report and offers two new recommendations to strengthen contractenforcement tools.

► RECOMMENDATION 12

Strengthen enforcement tools

▪ Facilitate the increased use of suspensions and debarments for 

contingency contractors by revising regulations to lower procedural 

barriers and require a written rationale for not pursuing a proposed 

suspension and debarment.4

▪ Make consent to U.S. civil jurisdiction a condition of contract award.

▪ Expand the power of inspectors general.

▪ Amend acquisition regulations to require contracting-officer consent 

for the award of subcontracts valued at or above $300,000 to foreign 

companies when performance will predominantly be conducted overseas 

in support of contingency operations. 

▪ Direct agencies to incentivize contingency contractors to end trafficking in 

persons by labor brokers and subcontractors by requiring prime contracts 

to include performance incentives, such as award fees, and mandate that 

an assessment of contingency contractors’ management of trafficking in 

persons be included in performance assessments.

4. In its February 2011 interim report, the Commission recommended mandatory suspension for 

contractors indicted on contract-related charges. Following additional research and deliberation, the 

Commission has withdrawn that provision from its recommendations to strengthen enforcement.
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Contract management and administration resources 

are insufficient to conduct 

overseas-contingency operations 

Contingency-contract management problems extend far beyond contract 

auditing within a single department. As previously established in Chapter 2, 

affected federal agencies do not have adequate and deployable contracting 

capabilities. They continue to struggle with an absence of strategic planning 

and the lack of a dedicated budget to support related human-resources and 

information-systems requirements. Significant monetary returns will be realized by 

investment in additional staff and resources to conduct contingency contracting.

Contractor business systems and access 

to contractor records are ineffectual

Following a Commission hearing and special report in 2009, Congress 

in the National Defense Authorization Act for FY 2011 authorized 

Defense to withhold payment to contractors with inadequate business 

systems as a means of protecting U.S. government interests and 

compelling contractor compliance. Still, the new rules under that Act 

cannot serve as a meaningful incentive unless payments are actually 

withheld upon the recommendation of auditors. 

Authorizing civilian agencies to take similar measures regarding 

payment withholds would promote a government-wide approach to 

addressing problems related to contractor business systems. Withholds in defense 

and civilian agencies alike would also motivate contractors to shift priorities and 

make necessary business-system investments to assure agencies that contractor 

costs are accurate and reliable. 

Access to contractor records and review of contractor business systems can also 

serve the government well in overseeing contractors, an always-challenging task 

in the chaos of contingencies. 

In addition, expanding access to contractor records will help ensure that 

government audits are performed more efficiently and effectively and are directed 

at areas of greatest risk to the government in contingencies. Auditors could use 

such information to reduce the amount of labor-intensive audit-testing required 

to accept contractor costs. Benefits would include reducing resource requirements 

for both government and industry, as well as reducing the potential for contract 

waste and fraud. 

Significant monetary 

returns will be realized 

by investment in 

additional staff 

and resources to 

conduct contingency 

contracting.
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DCAA and DCMA are understaffed 

to support operations in Iraq and Afghanistan

The benefit of conducting contingency-contractor performance oversight more 

effectively was reported recently by the Defense Contract Audit Agency (DCAA): a 

net savings of $2.9 billion that equates to a return on investment of $5.20 for every 

$1 invested in the agency. 

The current unaudited backlog stands at 

$558 billion, having risen sharply from 

$406 billion in only nine months. At current 

staffing levels, DCAA has reported that the 

backlog will “continue to grow virtually 

unchecked” and will exceed $1 trillion in 

2016.5

DCAA reports that long delays in 

performing audits increase the difficulty of 

locating the documentation necessary to 

conduct incurred-cost audits and further 

postpones the recovery of any unjustified 

payments on behalf of the taxpayers. Contractors are also concerned by long 

delays as the burden falls on them to maintain and produce records covering many 

years, and complicates their own cash management because of potential future 

outlays that may result from long-overdue audits. Since the historical return on 

incurred cost audits ranges from 0.2 percent to 0.4 percent of total dollars audited, 

reducing the entire $558 billion backlog would 

save $1.1 billion to $2.2 billion. 

A recent independent study by the Army Force 

Management Support Agency recommended 

that DCAA would need a total workforce 

of 6,250 by 2015 to accomplish its mission. 

Defense is committed to fund additional staff 

for DCAA by that date, which would bring its 

total workforce to 5,700 personnel, of which 

5,100 would be auditors. These increases 

would help reduce the backlog by providing 

the additional auditors who would be needed in a contingency environment. 

Nevertheless, Defense has not funded these increases for fiscal year 2012; 

5. Defense Contract Audit Agency Manpower Study, 9.

At current staffing levels, 

DCAA has reported that the 

backlog will “continue to 

grow virtually unchecked” 

and will exceed $1 trillion in 

2016.

Civilian contractor, Al 

Asad Air Base, Iraq. 

(U.S. Marine Corps 

photo)
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moreover, the contemplated increases still appear to be insufficient to meet DCAA’s needs, and 

funding could be reduced as a result of any future cuts in the Defense budget. 

State and USAID have well-documented requirements for additional contingency staff to perform 

program management, contract oversight, and related activities. They rely upon their existing 

resources and in some cases on DCAA and Defense Contract Management Agency (DCMA) for 

operational contract support. 

DCMA needs more deployable administrative contracting officers, contract administrators, 

quality-assurance representatives, and other technical personnel to effectively meet their 

customers’ requirements. Given the current environment, in which the career workforce is 

shrinking, it will be necessary to draw military and civilian contracting officers, contract specialists, 

cost and price analysts, and procurement attorneys from various acquisition commands and U.S.-

based procurement organizations to fill critical slots overseas. 

Executive agency and military leadership, with the support of Congress, must effectively address 

contingency contracting as a core function and provide the requisite management changes and 

funding support for all agencies participating in the national-security mission. The initiatives 

set forth in this chapter represent a substantial investment in capabilities for future operations 

for all affected agencies and organizations. To reach full effect, these changes should be made 

from a whole-of-government standpoint, increasing each element’s ability to support the other. 

A piecemeal approach will result in piecemeal solutions that will not bring about meaningful 

change.

► RECOMMENDATION 13

Provide adequate staffing and resources, and establish procedures to protect 

the government’s interests

▪ Strengthen authority to withhold contract payments for inadequate business systems.

▪ Amend access-to-records authority to permit broader government access to contractor 

records.

▪ Increase agencies’ staff and resources to enable adequate management of all aspects of 

contingency contracting: financial management, acquisition planning, business-system 

reviews, source selection, incurred-cost audits, performance management, property 

management, contract payment, and contract close-outs.
Afghan contractors and U.S. Army Corps of Engineers representative, near Mazar-e-Sharif, Afghanistan. (U.S. Army photo)
The way forward 

demands major reforms

Chapter 8
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The way forward 

demands major reforms 

T

he United States was not prepared to go to war using contractors in Iraq and 

Afghanistan. As a result, tens of billions of dollars were lost to waste, fraud, 

and abuse.

Lulled by the quick success of the 1991 Gulf War and the Balkans deployments 

of the mid-‘90s, we did not notice how great our reliance on contractors had 

become—or that some contractors themselves were so extensively involved in 

contract management.

Some members of the acquisition community and independent experts warned 

that the new pattern of heavy reliance could stress and break the contract 

management-and-oversight system operated by a depleted federal acquisition 

workforce. 

The acquisition community, however, had no seat at the table in deciding whether 

to use contractors, and no voice in budgetary debates on how big the federal 

acquisition workforce should be to manage the 

hundreds of billions of dollars in contracts for 

which it was responsible. No serious reforms or 

resource commitments were made before the 

Iraq and Afghanistan contingencies laid bare the 

weakness.

Nearly a decade later, the importance of 

reform in contingency contracting still remains 

insufficiently appreciated. Meanwhile, the 

combined force of budgetary pressures and war 

weariness threatens to push cost-control initiatives for contingency contracting 

into the background once again.

Much of the waste seen in Iraq and Afghanistan was preventable. Much that is 

occurring now can still be mitigated. And much that could occur in the future can 

be avoided. All it takes is the refusal to repeat mistakes, and the will to act.

Much of the waste seen in 

Iraq and Afghanistan was 

preventable. Much that is 

occurring now can still be 

mitigated.
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T H E W A Y F O R W A R D

Reform will require resources and sustained effort

Despite some improvements in structures and practices, major problems exist, 

and much work remains to be done. The Commission’s recommendations 

detail that work. Making these recommendations a reality, however, requires a 

collaborative, dedicated, and sustained effort by all participants in the process—

contractors, Congress, the White House, and Executive Branch agencies including 

the Departments of Defense and State, USAID, the Office of Management and 

Budget, and the National Security Council.

Each participant in the contingencycontracting universe must recognize 

and take seriously its responsibility for 

supporting, implementing, or abiding by 

the reform recommendations that the 

government adopts. Contractors must 

act on the premise that they will truly be 

held accountable for their performance. 

Departments and agencies must realize 

that they need to do a better job of 

selecting projects and programs, defining 

the work to be done, coordinating their 

efforts, and managing the contractors they 

engage.

The role of Congress is critical. The problems identified in this report will not 

fix themselves, and cannot be fixed for free, or even cheaply. It is not enough 

for Congress to say, “There are too many contractors,” or “Some contractors are 

performing tasks reserved to the government,” or “We need better oversight of 

contractors,” or “We won’t have another big contingency operation.” Congress 

must direct and participate in serious reform. 

Paying lip service to reform will not cure problems such as the Defense Contract 

Management Agency (DCMA) being under-staffed and at the mercy of temporary 

funding for many of its contract-management professionals. Nor will lip service 

help the Defense Contract Audit Agency (DCAA), whose backlog of incurred-cost 

contract audits has now grown to more than $550 billion and will require years of 

work to reduce even if hundreds of new auditors were hired.

Unless Congress provides money and issues mandates for improved planning, 

management, and oversight capabilities there will be no significant change or 

real savings in contingency contracting. Given the current outlook for a crisis in 

U.S. Army interpreter, 

Afghan National 

Police officer, 

and contractors, 

Wardak province, 

Afghanistan. 

(U.S. Army photo)
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C H A P T E R 8

the federal budget, the temptation will be powerful to postpone the investments 

needed to support contingency-contracting reform and to avoid making hard 

choices. 

Congress must resist that temptation and recognize that preparedness for 

contingency contracting is as much a national-security priority as procuring 

weapons systems.

► RECOMMENDATION 14

Congress should provide or reallocate resources for contingencycontracting reform to cure or mitigate the numerous defects 

described by the Commission 

Elements needed to be ready for the next contingency 

The convergence of emergency responders in New York City and Washington after 

the 9/11 attacks, the speedy overthrow of the Taliban regime in Afghanistan that 

was harboring al Qaeda terror plotters, the response of U.S. military units to the 

Hurricane Katrina disaster, and other episodes in modern American history confirm 

that energy, ingenuity, and resolve can improvise solutions and cobble together 

working arrangements to tackle vast challenges.

Unfortunately, that ad hoc approach is costly, inefficient, and a threat to mission 

objectives. The Commission’s work, reports by federal inspectors general, and 

congressional investigations have demonstrated that improvised arrangements 

risk duplication, gaps, delays, inadequate oversight, poor coordination, and threats 

to mission success that can carry harsh price tags in money and lives.

Considering that the United States has at all 

times since 1988 been involved in at least one 

overseas military deployment (see Chapter 

1), and that the country chronically faces 

unpredictable threats of national emergencies 

and international humanitarian disasters, the 

high cost of repeating ad hoc arrangements 

for contract support is unacceptable. In 

addition, a potentially large but hidden cost of 

recreating contingency-support arrangements 

is the risk that lessons learned and institutional memory will dissipate between 

contingencies—another problem that the Commission’s recommendations 

address.

The United States has 

at all times since 1988 

been involved in at least 

one overseas military 

deployment.
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T H E W A Y F O R W A R D

Enactment or adoption of Commission recommendations presented in previous 

reports or introduced in this report would provide the United States with a readyto-roll capability to address new contingencies from the outset. This capability 

would ensure better contract management and oversight, promote better selection 

and coordination of agencies’ efforts, and avoid a great deal of waste. The reform 

recommendations creating this capability include:

▪ giving recognition to “total force” doctrine by including clear contracting 

guidance in planning, training, exercises, doctrine, and in policy documents 

like Defense’s Quadrennial 

Defense Review and State’s 

Quadrennial Diplomacy and 

Development Review;

▪ requiring metrics for readiness 

and performance reports for 

Defense, State, and USAID unit 

preparedness;

▪ applying risk-based staffing 

assessments to determine 

organic agency resources 

needed to preserve core 

capabilities, including 

managing contractors;

▪ creating a trained, experienced, expandable, and deployable cadre for 

contingency acquisition-support functions;

▪ preparing more competitive contract vehicles and better enforce rules for 

contracting;

▪ establishing a senior federal position responsible for overall strategic 

direction, mission alignments, and interagency coordination for contingency 

operations to provide a whole-of-government approach; 

▪ establishing senior agency positions responsible for contingency 

contracting;

▪ elevating the role of contingency contracting by establishing a new J10 

(operational contract support) directorate headed by a flag officer on the 

Joint Staff; and

▪ creating a permanent office of inspector general for contingency operations 

whose staff would be ready to deploy at the onset of a contingency, and 

who would monitor agencies’ planning and preparedness activities between 

contingencies.

U.S.–Iraqi patrol, 

Mosul, Iraq. (U.S. Navy 

photo) 
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C H A P T E R 8

The combined effect of these measures would be to create a pre-packaged set 

of capabilities so that, for example, plans for implementing operational contract 

support could be quickly adapted to local conditions, and so that contract 

managers and auditors would arrive in theater with operational personnel and 

contractors, not months or years later.

A forcing function is needed

The Commission has offered a number of recommendations in this final report, as 

well as in its February 2011 second interim report and five special reports. Agencies 

have adopted some and are considering others. Lawmakers have supported a few, 

in whole or part, in proposed legislation. These are encouraging signs.

But the breadth and depth of problems in contingency contracting dash any 

hope of quick and easy fixes. Some needed reforms will take years of effort to 

arrange and implement—a time span that not 

only exceeds the life of this Commission, but 

probably the terms in office of many current 

decision makers.

Some agencies have recognized the need to 

document the lessons of Afghanistan and 

Iraq, and to make changes in the aspects of 

their doctrine and operations that they can 

influence. The U.S. Army and the U.S. Air Force 

have active lessons-learned centers, and USAID 

has taken some useful steps as well. The Army, 

for instance, has set up a Peacekeeping and 

Stability Operations Institute at the Army War College and an Irregular Warfare 

Fusion Cell at its Combined Arms Center, among other initiatives. The challenge 

of preserving lessons learned and advocating change could also benefit from 

sustained attention from a federally funded research institute, an independent 

think tank, or similar entity. 

The Center for Complex Operations at the National Defense University could be 

another logical nexus of thinking and advocacy for contingency-contracting 

reform. It has already published useful examinations of the impact of Provincial 

Reconstruction Teams, implications of the end of the nation-state monopoly on 

war, and other topics bearing on contingency operations. 

U.S. Army soldier with 

contractors, near 

Baghdad, Iraq. 

(Defense photo)
171

T H E W A Y F O R W A R D

These initiatives are helpful and encouraging. Nonetheless, the main responsibility 

for driving change lies with the leadership of Congress and the Executive Branch. 

A forcing function is needed to ensure widespread and effective adoption of 

contingency-contracting reform.

Without a forcing function, agency inertia, resistance to change, sporadic 

attention, personnel turnover, and a lack of sustained and focused leadership will 

weave a heavy blanket that smothers progress. Effective implementation of reform 

requires establishing a method for periodic reporting on the status of Commission 

recommendations to keep the reform agenda in decision makers’ field of vision. 

► RECOMMENDATION 15

Congress should enact legislation requiring regular assessment 

and reporting of agencies’ progress in implementing 

reform recommendations 

The legislation should require:

▪ The Secretaries of Defense and State and the Administrator of USAID to 

submit reports detailing their plans for implementation of Commission 

recommendations, commencing 180 days from enactment of the 

legislation, with annual reporting thereafter.

▪ Agencies’ reports shall be submitted to congressional committees of 

jurisdiction (armed services, homeland security, government oversight, 

and foreign affairs); to the inspectors general of the Departments of 

Defense and State, and of USAID; and to the officials holding the proposed 

new positions at OMB/NSC and the permanent inspector general for 

contingency operations, all of whom would be required to review and 

validate the reports.

▪ Reporting requirements that include:

−actions taken or planned to implement recommendations, including 

an implementation schedule with milestones and assignments of 

responsibility;

−explanations for non-implementation of recommendations, including 

counter-measures for barriers to implementation; and

−evaluation within 120 days by the Comptroller General of the United 

States and agency inspectors general (and the permanent contingency 

inspector general when available) of the agencies’ reports and their 

compliance with requirements.
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C H A P T E R 8

The government cannot afford 

denial and complacency

American and allied involvement in hostilities in Iraq and Afghanistan is declining. 

But it would be the height of folly to suppose that the many documented 

difficulties with contingency contracting will decline and disappear as that 

involvement ends. If anything, as troop numbers decline, the number of 

contractors may increase, at least in the short term, for it may be many years—

if ever—before the United States fully withdraws from operations in Iraq and 

Afghanistan.

Even if hostile forces, whether insurgents or terrorists, were to lapse into a 

prolonged period of inactivity, mass-casualty natural or humanitarian disasters 

such as floods, hurricanes, or earthquakes in the United States or elsewhere will 

surely require new contingency-contract support.

Still, the prospect of purely military contingencies recurring with little warning 

cannot be discounted or dismissed. The unexpected and swift development in 

spring 2011 of a campaign of United States and NATO suppression of Libyan 

government attacks on civilians is a recent case in point. It illustrates how quickly 

unanticipated responses that include contractor support may be required. Unrest 

in Somalia or Yemen, or the aftermath of the 

“Arab Spring” popular uprisings of 2011 could 

also present U.S. decision makers with conditions 

requiring consideration of a contingency response.

The United States will not be able to conduct large 

or sustained contingency operations without 

major contractor support. Avoiding a repetition 

of the waste, fraud, and abuse seen in Iraq and 

Afghanistan requires either a great increase 

in agencies’ ability to perform core tasks and 

to manage contracts effectively, or a disciplined reconsideration of plans and 

commitments that would require intense use of contractors. 

Failure by Congress and the Executive Branch to heed a decade’s lessons 

on contingency contracting from Iraq and Afghanistan will not avert new 

contingencies. It will only ensure that additional billions of dollars of waste will 

occur and that U.S. objectives and standing in the world will suffer. Worse still, lives 

will be lost because of waste and mismanagement. 

The nation’s security demands nothing less than sweeping reform.

The United States will not 

be able to conduct large 

or sustained contingency 

operations without major 

contractor support.
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T H E W A Y F O R W A R D

U.S. soldiers 

with Provincial 

Reconstruction Team 

Kapisa and local 

contractors, near 

Durnama village, 

Afghanistan.

(U.S. Air Force photo) 
Commissioners at April 19, 2010 hearing. Left to right: Robert Henke, Grant Green, Dov Zakheim, 

Christopher Shays, Michael Thibault, Katherine Schinasi, Clark Kent Ervin, Charles Tiefer.

Appendixes

A. Commission recommendations............................................................................................ 176

B. Authorizing statute and extension........................................................................................182 

C. Summary of Commission reports..........................................................................................187

D. Hearings, travel, and meetings.............................................................................................190

E. Military and contractor headcounts and contract data..........................................................198

F. Cost comparison report .......................................................................................................224

G. Commissioners ...................................................................................................................236

H. Commission staff ................................................................................................................237

I. Acronyms.............................................................................................................................238

Continuing access to Commission information on the web........................................................240
Appendixes
176

Appendix A

Commission recommendations

In addition to this final report, the Commission’s second interim report, “At what risk? Correcting 

over-reliance on contractors in contingency operations,” and its five special reports included 

recommendations for improving contingency contracting. 

Summaries of these reports are found in Appendix C. All Commission reports are available on its public 

website, www.wartimecontracting.gov. 

An overview of all Commission recommendations follows. Note that some of the recommendations 

made in the second interim report are repeated in this final report.

FINAL REPORT

Transforming Wartime Contracting: Controlling costs, reducing risks

The key recommendations in the Commission’s final report, arranged by chapter, are:

R E CO M M E N D AT I O N S

Chapter 1. Agencies over-rely on contractors for contingency operations

This chapter contains no recommendations.

Chapter 2. ‘Inherently governmental’ rules do not guide appropriate use of contractors in 

contingencies

1. Use risk factors in deciding whether to contract in contingencies

2. Develop deployable cadres for acquisition management and contractor oversight

3. Phase out use of private security contractors for certain functions

4. Improve interagency coordination and guidance for using security contractors in contingency 

operations

Chapter 3. Inattention to contingency contracting leads to massive waste, fraud, and abuse

This chapter contains no recommendations.

Chapter 4. Looming sustainment costs risk massive new waste

5. Take actions to mitigate the threat of additional waste from unsustainability

Chapter 5. Agencies have not institutionalized acquisition as a core function

6. Elevate the positions and expand the authority of civilian officials responsible for contingency 

contracting at Defense, State, and USAID

7. Elevate and expand the authority of military officials responsible for contingency contracting on 

the Joint Staff, the combatant commanders’ staffs, and in the military services
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A P P E N D I X A

Chapter 6. Agency structures and authorities prevent effective interagency coordination

8. Establish a new, dual-hatted senior position at OMB and the NSC staff to provide oversight and 

strategic direction

9. Create a permanent office of inspector general for contingency operations

Chapter 7. Contract competition, management, and enforcement are ineffective

10. Set and meet annual increases in competition goals for contingency contracts

11. Improve contractor performance-data recording and use

12. Strengthen enforcement tools

13. Provide adequate staffing and resources, and establish procedures to protect the government’s 

interests

Chapter 8. The way forward demands major reforms

14. Congress should provide or reallocate resources for contingency-contracting reform to cure or 

mitigate the numerous defects described by the Commission

15. Congress should enact legislation requiring regular assessment and reporting of agencies’ 

progress in implementing reform recommendations
178

SECOND INTERIM REPORT

At what risk? Correcting over-reliance on contractors in contingency operations 

ISSUED FEBRUARY 24, 2011

In this report, the Commission made recommendations to address the underlying causes of poor 

outcomes in contracting and to institutionalize changes for lasting effect.

Section I. Contractors have become the default option

1. Grow agencies’ organic capacity

2. Develop a deployable contingency-acquisition cadre

3. Restrict reliance on contractors for security

Section II. Agencies do not treat contingency contracting as a core function

4. Designate officials with responsibility for cost consciousness

5. Measure senior military and civilian officials’ efforts to manage contractors and control costs

6. Integrate operational contract support into plans, education, and exercises

7. Include operational contract support in readiness and performance reporting

8. Establish a contingency-contracting directorate in the Offices of the Joint Chiefs of Staff

9. Establish offices of contingency contracting at Defense, State, and USAID

10. Direct the Army’s Installation Management Command to manage bases and base-support 

contractors in contingencies

Section III. Interagency organizational structures do not support contingency operations

11. Establish a new, dual-hatted position at the OMB and the NSC to provide oversight and strategic 

direction for contingency operations

12. Create a permanent office of inspector general for contingency operations

13. Establish interagency certification requirements and training curricula for contingency acquisition 

personnel

14. Create a committee to integrate the individual authorities, resources, and oversight of contingency 

operations

Section IV. Policies and practices hamper contingency competition

15. Require competition reporting and goals for contingency contracts

16. Break out and compete major subcontract requirements from omnibus support contracts

17. Limit contingency task-order performance periods

18. Reduce one-offer competitions

19. Expand competition when only one task-order offer is received

20. Allow contractors to respond to, but not appeal, agency performance assessments
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A P P E N D I X A

21. Align past-performance assessments with contractor proposals

22. Require agencies to certify use of the past-performance database

Section V. Enforcement policies and controls fail to ensure contractor accountability

23. Require a written rationale for not pursuing a proposed suspension or debarment

24. Increase use of suspensions and debarments

25. Revise regulations to lower procedural barriers to contingency suspensions and debarments

26. Make consent to U.S. civil jurisdiction a condition of contract award

27. Clarify U.S. criminal jurisdiction over civilian-agency contractors operating overseas

28. Establish a permanent organization to investigate international-contract corruption

29. Expand the power of inspectors general

30. Raise the ceiling for access to the Program Fraud Civil Remedies Act

31. Strengthen authority to withhold contract payments for inadequate business systems

32. Amend access-to-records authority to permit broader government access to contractor records
180

Recommendations in special reports

SPECIAL REPORT 1

Defense agencies must improve their oversight of

contractor business systems to reduce waste, fraud, and abuse 

ISSUED SEPTEMBER 21, 2009

The Commission learned that unreliable data from business systems produced billions of dollars 

in contingency-contract costs that government auditors often could not verify. The Commission 

recommended that:

1. DoD needs to ensure that government speaks with one voice to contractors 

2. DoD needs to improve government accountability by rapidly resolving agency conflicts on 

business systems 

3. Defense Contract Audit Agency (DCAA) needs to expand its audit reports to go beyond rendering 

a pass/fail opinion 

4. Defense Contract Management Agency (DCMA) needs to develop an effective process that 

includes aggressive compliance enforcement 

5. DCAA and DCMA need to request additional resources and prioritize contingency-contractor 

oversight workload 

SPECIAL REPORT 2

Lowest-priced security not good enough for war-zone embassies 

ISSUED OCTOBER 1, 2009

The Commission urged that Congress change a statutory restriction on the State Department’s 

ability to choose security contractors for its overseas Foreign Service buildings. The Commission 

recommended that Congress:

1. Amend the law to permit best-value competition

SPECIAL REPORT 3

Better planning for Defense-to-State transition in Iraq needed

to avoid mistakes and waste

ISSUED JULY 12, 2010

The Commission found that planning for transitioning vital functions in Iraq from the Department of 

Defense to the Department of State was not adequate for effective coordination of billions of dollars in 

new contracts, and recommended that: 

1. The Departments of Defense and State accelerate, intensify, and better integrate their joint 

planning for the transition in Iraq 

2. All levels of Defense and State immediately initiate and complete planning with the Government 

of Iraq to address critical security functions now performed by Defense 

3. State use, on a reimbursable basis, DoD’s LOGCAP IV contract 

4. Congress immediately provide additional resources to State to support its increased contracting 

costs and personnel needs 
181

A P P E N D I X A

SPECIAL REPORT 4

Iraq—a forgotten mission? 

The United States needs to sustain a diplomatic presence to preserve gains and avoid waste 

as the U.S. military leaves Iraq 

ISSUED MARCH 1, 2011

The Commission recommended that:

1. Congress ensure adequate funding to sustain State Department operations in critical areas of Iraq, 

including its greatly increased need for operational contract support 

2. The Department of State expand its organic capability to meet heightened needs for acquisition 

personnel, contract management, and contractor oversight 

3. The Secretaries of State and Defense extend and intensify their collaborative planning for the 

transition, including executing an agreement to establish a single, senior-level coordinator and 

decision-maker to guide progress and promptly address major issues whose resolution may 

exceed the authorities of departmental working groups 

SPECIAL REPORT 5

Sustainability: hidden costs risk new waste 

Preparations for ending U.S. military presence and contracting activities in Iraq 

and Afghanistan must include action to avoid waste from host nations’ inability 

to operate and maintain projects and programs

ISSUED JUNE 3, 2011

 The Commission recommended that:

1. Officials at the Department of Defense, the Department of State, and USAID examine both 

completed and current projects for risk of sustainment failure and pursue all reasonable strategies 

to mitigate risks 

2. Officials ensure that any new requirements and acquisition strategies regarding contingency 

contracts for projects or services to be handed over to a host nation include a detailed assessment 

of that host nation’s ability and will to meet the out-year costs essential for long-term success 

3. Officials take appropriate action to cancel or redesign projects or programs that have little or no 

realistic prospect for achieving sustainability 

4. Officials report to Congress by December 31, 2011, and annually thereafter, their analysis of 

current and proposed projects and their planned actions for mitigating sustainability risks 
182

Appendix B

Authorizing statute and extension

NATIONAL DEFENSE AUTHORIZATION ACT (NDAA) FOR FISCAL YEAR 2008

[110th Congress, Public Law 110‐181, Section 841 (January 28, 2008)]

SEC. 841. COMMISSION ON WARTIME CONTRACTING IN IRAQ AND AFGHANISTAN.

(a) ESTABLISHMENT.—There is hereby established a commission to be known as the 

“Commission on Wartime Contracting” (in this section referred to as the “Commission”).

(b) MEMBERSHIP MATTERS.—

(1) MEMBERSHIP.—The Commission shall be composed of 8 members, as follows:

(A) 2 members shall be appointed by the majority leader of the Senate, in 

consultation with the Chairmen of the Committee on Armed Services, the 

Committee on Homeland Security and Governmental Affairs, and the Committee 

on Foreign Relations of the Senate.

(B) 2 members shall be appointed by the Speaker of the House of Representatives, 

in consultation with the Chairmen of the Committee on Armed Services, the 

Committee on Oversight and Government Reform, and the Committee on Foreign 

Affairs of the House of Representatives.

(C) 1 member shall be appointed by the minority leader of the Senate, in 

consultation with the Ranking Minority Members of the Committee on Armed 

Services, the Committee on Homeland Security and Governmental Affairs, and the 

Committee on Foreign Relations of the Senate.

(D) 1 member shall be appointed by the minority leader of the House of 

Representatives, in consultation with the Ranking Minority Member of the 

Committee on Armed Services, the Committee on Oversight and Government 

Reform, and the Committee on Foreign Affairs of the House of Representatives.

(E) 2 members shall be appointed by the President, in consultation with the 

Secretary of Defense and the Secretary of State.

(2) DEADLINE FOR APPOINTMENTS.—All appointments to the Commission shall be 

made not later than 120 days after the date of the enactment of this Act.

(3) CO‐CHAIRMEN.—The Commission shall have two co-chairmen, including—

(A) a co‐chairman who shall be a member of the Commission jointly designated by 

the Speaker of the House of Representatives and the majority leader of the Senate; 

and

(B) a co‐chairman who shall be a member of the Commission jointly designated by 

the minority leader of the House of Representatives and the minority leader of the 

Senate.

(4) VACANCY.—In the event of a vacancy in a seat on the Commission, the individual 

appointed to fill the vacant seat shall be—

(A) appointed by the same officer (or the officer’s successor) who made the 

appointment to the seat when the Commission was first established; and

(B) if the officer in subparagraph (A) is of a party other than the party of the 

officer who made the appointment to the seat when the Commission was first 

established, chosen in consultation with the senior officers in the Senate and the 
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A P P E N D I X B

House of Representatives of the party which is the party of the officer who made 

the appointment to the seat when the Commission was first established.

(c) DUTIES.—

(1) GENERAL DUTIES.—The Commission shall study the following matters:

(A) Federal agency contracting for the reconstruction of Iraq and Afghanistan.

(B) Federal agency contracting for the logistical support of coalition forces 

operating in Iraq and Afghanistan.

(C) Federal agency contracting for the performance of security functions in Iraq 

and Afghanistan.

(2) SCOPE OF CONTRACTING COVERED.—The Federal agency contracting covered by 

this subsection includes contracts entered into both in the United States and abroad 

for the performance of activities described in paragraph (1).

(3) PARTICULAR DUTIES.—In carrying out the study under this subsection, the 

Commission shall assess—

(A) the extent of the reliance of the Federal Government on contractors to perform 

functions (including security functions) in Iraq and Afghanistan and the impact of 

this reliance on the achievement of the objectives of the United States;

(B) the performance exhibited by Federal contractors for the contracts under 

review pursuant to paragraph (1), and the mechanisms used to evaluate contractor 

performance;

(C) the extent of waste, fraud, and abuse under such contracts;

(D) the extent to which those responsible for such waste, fraud, and abuse have 

been held financially or legally accountable;

(E) the appropriateness of the organizational structure, policies, practices, and 

resources of the Department of Defense and the Department of State for handling 

program management and contracting for the programs and contracts under 

review pursuant to paragraph (1);

(F) the extent to which contractors under such contracts have engaged in the 

misuse of force or have used force in a manner inconsistent with the objectives of 

the operational field commander; and

(G) the extent of potential violations of the laws of war, Federal law, or other 

applicable legal standards by contractors under such contracts.

(d) REPORTS.—

(1) INTERIM REPORT.—On March 1, 2009, the Commission shall submit to Congress an 

interim report on the study carried out under subsection (c), including the results and 

findings of the study as of that date.

(2) OTHER REPORTS.—The Commission may from time to time submit to Congress 

such other reports on the study carried out under subsection (c) as the Commission 

considers appropriate.

(3) FINAL REPORT.—Not later than two years after the date of the appointment of 

all of the members of the Commission under subsection (b), the Commission shall 

submit to Congress a final report on the study carried out under subsection (c). The 

report shall‐
184

(A) include the findings of the Commission;

(B) identify lessons learned relating to contingency program management and 

contingency contracting covered by the study; and

(C) include specific recommendations for improvements to be made in—

(i) the process for defining requirements and developing statements of work for 

contracts in contingency contracting;

(ii) the process for awarding contracts and task or delivery orders in contingency 

contracting;

(iii) the process for contingency program management;

(iv) the process for identifying, addressing, and providing accountability for 

waste, fraud, and abuse in contingency contracting;

(v) the process for determining which functions are inherently governmental 

and which functions are appropriate for performance by contractors in a 

contingency operation (including during combat operations), especially 

whether providing security in an area of combat operations is inherently 

governmental;

(vi) the organizational structure, resources, policies, and practices of the 

Department of Defense and the Department of State for performing 

contingency program management; and

(vii) the process by which roles and responsibilities with respect to 

management and oversight of contracts in contingency contracting are 

distributed among the various departments and agencies of the Federal 

Government, and interagency coordination and communication mechanisms 

associated with contingency contracting.

(e) OTHER POWERS AND AUTHORITIES.—

(1) HEARINGS AND EVIDENCE.—The Commission or, on the authority of the 

Commission, any portion thereof, may, for the purpose of carrying out this section—

(A) hold such hearings and sit and act at such times and places, take such 

testimony, receive such evidence, administer such oaths (provided that the 

quorum for a hearing shall be three members of the Commission); and

(B) provide for the attendance and testimony of such witnesses and the 

production of such books, records, correspondence, memoranda, papers, and 

documents; as the Commission, or such portion thereof, may determine advisable.

(2) INABILITY TO OBTAIN DOCUMENTS OR TESTIMONY.—In the event the Commission 

is unable to obtain testimony or documents needed to conduct its work, the 

Commission shall notify the committees of Congress of jurisdiction and appropriate 

investigative authorities.

(3) ACCESS TO INFORMATION.—The Commission may secure directly from the 

Department of Defense and any other department or agency of the Federal 

Government any information or assistance that the Commission considers necessary 

to enable the Commission to carry out the requirements of this section. Upon 

request of the Commission, the head of such department or agency shall furnish 

such information expeditiously to the Commission. Whenever information or 

assistance requested by the Commission is unreasonably refused or not provided, the 

Commission shall report the circumstances to Congress without delay.
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A P P E N D I X B

(4) PERSONNEL.—The Commission shall have the authorities provided in section 3161 

of title 5, United States Code, and shall be subject to the conditions set forth in such 

section, except to the extent that such conditions would be inconsistent with the 

requirements of this section.

(5) DETAILEES.—Any employee of the Federal Government may be detailed to the 

Commission without reimbursement from the Commission, and such detailee shall 

retain the rights, status, and privileges of his or her regular employment without 

interruption.

(6) SECURITY CLEARANCES.—The appropriate departments or agencies of the Federal 

Government shall cooperate with the Commission in expeditiously providing to 

the Commission members and staff appropriate security clearances to the extent 

possible pursuant to existing procedures and requirements, except that no person 

shall be provided with access to classified information under this section without the 

appropriate security clearances.

(7) VIOLATIONS OF LAW.—

(A) REFERRAL TO ATTORNEY GENERAL.—The Commission may refer to the 

Attorney General any violation or potential violation of law identified by the 

Commission in carrying out its duties under this section.

(B) REPORTS ON RESULTS OF REFERRAL.—The Attorney General shall submit to 

Congress a report on each prosecution, conviction, resolution, or other disposition 

that results from a referral made under this subparagraph.

(f) TERMINATION.—The Commission shall terminate on the date that is 60 days after the 

date of the submittal of its final report under subsection (d)(3).

(g) DEFINITIONS.—In this section:

(1) CONTINGENCY CONTRACTING.—The term “contingency contracting” means 

all stages of the process of acquiring property or services during a contingency 

operation.

(2) CONTINGENCY OPERATION.—The term “contingency operation” has the meaning 

given that term in section 101 of title 10, United States Code.

(3) CONTINGENCY PROGRAM MANAGEMENT.—The term “contingency program 

management” means the process of planning, organizing, staffing, controlling, and 

leading the combined efforts of participating personnel for the management of a 

specific acquisition program or programs during contingency operations.
186

NATIONAL DEFENSE AUTHORIZATION ACT (NDAA) FOR FISCAL YEAR 

2010

[111th Congress, Public Law 111-84, Section 822 (October 28, 2009)]

SEC. 822. EXTENSION AND ENHANCEMENT OF AUTHORITIES ON THE 

COMMISSION ON WARTIME CONTRACTING IN IRAQ AND AFGHANISTAN.

(a) DATE OF FINAL REPORT.—Subsection (d)(3) of section 841 of the National Defense 

Authorization Act for Fiscal Year 2008 (Public Law 110-181; 122 Stat. 230) is amended 

by striking `two years’ and inserting “three years”.

(b) ASSISTANCE FROM FEDERAL AGENCIES.—Such section is further amended—

(1) by redesignating subsections (f) and (g) as subsections (g) and (h), 

respectively; and

(2) by inserting after subsection (e) the following new subsection (f):

(f) Assistance From Federal Agencies—

(1) DEPARTMENT OF DEFENSE.—The Secretary of Defense shall provide 

to the Commission administrative support for the performance of the 

Commission’s functions in carrying out the requirements of this section.

(2) TRAVEL AND LODGING IN COMBAT THEATERS.—The administrative 

support provided the Commission under paragraph (1) shall include 

travel and lodging undertaken in combat theaters, which support shall 

be provided through funds made available for that purpose through the 

Washington Headquarters Services or on a non-reimbursable basis, as 

appropriate.

(3) OTHER DEPARTMENTS AND AGENCIES.—In addition to the support 

required by paragraph (1), any department or agency of the Federal 

Government may provide to the Commission such services, funds, facilities, 

staff, and other support services for the performance of the Commission’s 

functions as the head of such department or agency considers advisable, or 

as may otherwise be authorized by law.
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A P P E N D I X C

Appendix C

Summary of Commission reports

In addition to this final report, the Commission has issued two interim reports to Congress and 

five special reports. Each special report addresses an issue that the Commission believed required 

immediate attention.

All Commission reports are available on its public website, www.wartimecontracting.gov. Capsule 

summaries follow.

FIRST INTERIM REPORT

At what cost? Contingency contracting in Iraq and Afghanistan

ISSUED JUNE 10, 2009

This report described the Commission’s operations during its first year, identified areas for research, 

and flagged eight issues of immediate concern for lawmakers to consider. The eight issues included 

the risk of potential waste to be incurred by the drawdown of U.S. forces in Iraq; the critical shortage 

of qualified contract-management personnel in theater; the lack of competition in the transition from 

LOGCAP III to IV; inadequate contractor business systems; the need for greater accountability in the 

use of subcontractors; the failure to apply lessons learned in Iraq to Afghanistan; the lag in plans to 

establish a Defense Department contracting command in Afghanistan; and the need to ensure that 

contractors providing security for operating bases are well trained and equipped.

SECOND INTERIM REPORT

At what risk? Correcting over-reliance on contractors in contingency operations 

ISSUED FEBRUARY 24, 2011

In this report, the Commission made recommendations that it believed addressed the underlying 

causes of poor outcomes in contracting, and had the potential of institutionalizing changes for lasting 

effect. The recommendations included growing agencies’ organic capacity; developing a deployable 

contingency-acquisition cadre; restricting reliance on contractors for security; and establishing a 

contingency-contracting directorate in the Office of the Joint Chiefs of Staff, as well as Offices of 

Contingency Contracting at Defense, State, and USAID.

Other major recommendations included asking the President and Congress, respectively, to establish a 

new, dual-hatted position at the Office of Management and Budget and the National Security Council 

to provide oversight and strategic direction for contingency operations, and create a permanent 

office of inspector general for contingency operations. Efforts to encourage competition were central 

to one set of recommendations. Finally, another set of recommendations focused on improving the 

suspension-and-debarment processes.

SPECIAL REPORT 1

Defense agencies must improve their oversight of

contractor business systems to reduce waste, fraud, and abuse 

ISSUED SEPTEMBER 21, 2009

At a hearing on August 11, 2009, the Commission learned that unreliable data from business systems 

produced billions of dollars in contingency-contract costs that government auditors often could 

not verify. The government’s ability to detect contract cost errors and material misstatements was 

seriously impeded by contractors’ inadequate internal controls over their business systems. Further, 
188

the two primary government agencies involved, the Defense Contract Management Agency (DCMA) 

and the Defense Contract Audit Agency (DCAA), were not working together effectively to protect 

government interests.

The Commission recommended that: (1) Defense needs to ensure that government speaks with one 

voice to contractors; (2) Defense needs to improve government accountability by rapidly resolving 

agency conflicts on business systems; (3) DCAA needs to expand its audit reports to go beyond 

rendering a pass/fail opinion; (4) DCMA needs to develop an effective process that includes aggressive 

compliance enforcement; and (5) DCAA and DCMA need to request additional resources and prioritize 

contingency-contractor oversight workload.

SPECIAL REPORT 2

Lowest-priced security not good enough for war-zone embassies 

ISSUED OCTOBER 1, 2009

This report urged that Congress change a statutory restriction on the State Department’s ability to 

choose security contractors for its overseas Foreign Service buildings based on any considerations 

other than lowest price and technical acceptability (LPTA). The Commission believed that the 

unintended consequences of the mandate were illustrated in poor contract performance and widely 

publicized misconduct by guards for the embassy in Kabul. The State Department is on record saying 

that contractor performance endangered the embassy and its personnel. The report urged allowing 

use of the “best-value” standard for evaluating contractors’ offers. (Congress responded by enacting a 

temporary lifting of the LPTA mandate in Iraq and Afghanistan.)

SPECIAL REPORT 3

Better planning for Defense-to-State transition in Iraq 

needed to avoid mistakes and waste

ISSUED JULY 12, 2010

Planning for transitioning vital functions in Iraq from the Department of Defense to the Department 

of State was not adequate for effective coordination of billions of dollars in new contracts, and risked 

both financial waste and undermining U.S. policy objectives.

The Commission recommended that Defense and State accelerate, intensify, and better integrate their 

joint planning for the transition in Iraq; that all levels of Defense and State immediately initiate and 

complete planning with the Government of Iraq to address critical security functions now performed 

by Defense; that State use, on a reimbursable basis, Defense’s LOGCAP IV contract; and that Congress 

immediately provide additional resources to State to support its increased contracting costs and 

personnel needs.

SPECIAL REPORT 4

Iraq—a forgotten mission? 

The United States needs to sustain a diplomatic presence 

to preserve gains and avoid waste as the U.S. military leaves Iraq 

ISSUED MARCH 1, 2011

State’s Iraq mission after 2011 will require using thousands more contractors. Yet State is short 

of needed funding and program-management staff. Very little time remains for State to develop 

requirements, conduct negotiations, and award competitive contracts for work that must begin at 
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once. Inadequate support risks waste of funds and failure for U.S. policy objectives in Iraq and the 

region.

The Commission recommended that Congress ensure adequate funding to sustain State’s operations 

in critical areas of Iraq, including the Department’s greatly increased needs for operational contract 

support. The Commission recommended that the State Department expand its organic capability to 

meet heightened needs for acquisition personnel, contract management, and contractor oversight; 

and the Secretaries of State and Defense extend and intensify their collaborative planning for the 

transition, including executing an agreement to establish a single, senior-level coordinator and 

decision-maker to guide progress and promptly address major issues whose resolution may exceed 

the authorities of departmental working groups.

SPECIAL REPORT 5

Sustainability: hidden costs risk new waste 

Preparations for ending U.S. military presence and contracting activities in Iraq 

and Afghanistan must include action to avoid waste from host nations’ inability 

to operate and maintain projects and programs

ISSUED JUNE 3, 2011

Billions of U.S. taxpayers’ dollars will be wasted in Iraq and Afghanistan if the host-nation governments 

cannot take over the operation, maintenance, and security of efforts undertaken to reconstruct, 

stabilize, and develop those countries. Potential waste from unsustainable projects exceeds $11 billion 

for just one program in Afghanistan—facilities construction for the national security forces. But time is 

growing short. Without prompt and decisive action, the biggest waste in Iraq and Afghanistan may be 

yet to come.

The Commission recommended that officials at Defense, State, and USAID examine both completed 

and current projects for risk of sustainment failure and pursue all reasonable strategies to mitigate 

risks; that officials ensure that any new requirements and acquisition strategies regarding contingency 

contracts for projects or services to be handed over to a host nation include a detailed assessment of 

the host nation’s ability and commitment to meet the out-year costs essential for long-term success; 

that officials take appropriate action to cancel or redesign projects or programs that have little or 

no realistic prospect for achieving sustainability; and that officials report to Congress by December 

31, 2011, and annually thereafter, their analysis of current and proposed projects and their planned 

actions for mitigating sustainability risks.
190

Appendix D

Hearings, travel, and meetings 

Hearings

The Commission conducted 25 public hearings on Capitol Hill on a range of contingency-contracting 

issues, hearing sworn testimony from and conducting discussions with witnesses from Defense, State, 

and USAID, including acquisition and oversight-agency officials, as well as high-level administrators 

from these and other federal agencies. Other hearings featured contractors, scholars, and experts from 

think tanks. In addition, Commissioners appeared as witnesses at three congressional hearings.

2009 Commission hearings

February 2: Lessons from the inspectors general: improving wartime contracting 

Panel 1: Senator James Webb, Senator Claire McCaskill, and Senator Susan Collins 

Panel 2: Special Inspector General for Iraq Reconstruction

Panel 3: Inspectors general of Defense, State, and USAID

May 4: LOGCAP: Support-contracting challenges in Iraq and Afghanistan

Panel: Director, U.S. Army Contracting Command; Director, Defense Contract Management 

Agency; Director, Defense Contract Audit Agency; LOGCAP Program Manager, U.S. Army 

Logistics Civil Augmentation Program Office

August 11: Contractor business systems

Panel 1: Executive Director, Defense Contract Management Agency; Director, Defense Contract 

Audit Agency; Executive Director, U.S. Army Contracting Command 

Panel 2: President and CEO, DynCorp International LLC; Executive Director of Compliance, Fluor 

Corporation’s Government Group; Senior Vice President of Compliance, KBR

August 12: Linguist support services 

Panel 1: Director, Defense Contract Audit Agency; Deputy Director of Contracting, U.S. Army 

Intelligence Security Command 

Panel 2: General Manager, Global Linguist Solutions, LLC; Vice President, Northrop Grumman 

Technical Services; General Counsel, L-3 Communications Services Group

September 14: State Department oversight and contractor-employee conduct

Panel 1: Under Secretary of State for Management

Panel 2: A private citizen; Executive Director, Project on Government Oversight 

Panel 3: President, International Peace Operations Association; President and CEO, DynCorp 

International LLC; Vice President of Homeland and International Security Services, Wackenhut 

Services, Inc.

November 2: Counting contractors: where are they and what are they doing?

Panel 1: Deputy J-4, Department of Defense, U.S. Central Command; a director, Government 

Accountability Office; Assistant Deputy Under Secretary of Defense for Program Support 
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A P P E N D I X D 

Panel 2: a director, Government Accountability Office; Vice Director for Logistics, Joint Staff; 

Executive Director, U.S. Army Logistics Civil Augmentation Program Office 

Panel 3: Acting Deputy, Defense Procurement and Acquisition Policy; Director, Defense 

Contract Management Agency; Director, Defense Contract Audit Agency

December 18: Contractor training of Afghan National Security Forces

Panel 1: Assistant Inspector General for Special Plans and Operations, Department of Defense 

Panel 2: Former Commanding General, Combined Security Transition Command-Afghanistan; 

Assistant Secretary of State for International Narcotics and Law Enforcement; Program 

Executive, Department of Defense Counter Narcoterrorism Technology Program Office 

Panel 3: Vice President and Program Manager, DynCorp International LLC; Executive Vice 

President of Contracts and Sales, Xe Services LLC (formerly Blackwater Worldwide); Program 

Manager, MPRI, a division of L-3 Communications 

2010 Commission hearings

February 22: An urgent need: coordinating reconstruction and stabilization in contingency operations

Panel 1: Special Inspector General for Iraq Reconstruction; Special Inspector General for 

Afghanistan Reconstruction 

Panel 2: Director, U.S. Institute of Peace; Senior Vice President, International Crisis Group; Senior 

Political Scientist, RAND Corporation

March 1: An urgent need: coordinating reconstruction and stabilization in contingency operations, continued

Panel: Executive Director of the Afghanistan-Pakistan Task Force, U.S. Agency for International 

Development; Coordinator for Reconstruction and Stabilization, Department of State; Deputy 

Assistant Secretary, Department of Defense

March 29: Rightsizing and managing contractors during the Iraq drawdown

Panel 1: Deputy Commanding General, U.S. Army Materiel Command; Director, Defense 

Contract Audit Agency; Executive Director, U.S. Army Rock Island Contracting Center 

Panel 2: Vice President of Operations, KBR

April 19: Oversight of service contracts

Panel 1: Director, Defense Procurement and Acquisition Policy; Principal Military Deputy to the 

Assistant Secretary of the Army for Acquisition, Logistics, and Technology; Deputy Assistant 

Secretary of the Army for Procurement 

Panel 2: Senior Vice President, CACI International, Inc.; Chief Operating Officer, AECOM 

Government Services

May 24: How good is our system for curbing contract waste, fraud, and abuse? 

Panel 1: Assistant Inspector General, Special Inspector General for Afghanistan Reconstruction; 

Deputy Inspector General, Special Inspector General for Iraq Reconstruction; Assistant Director, 

Criminal Investigative Division of the Federal Bureau of Investigation; Deputy Inspector 

General for Investigations, Defense Criminal Investigative Service 

Panel 2: Inspector General, U.S. Agency for International Development; Deputy Inspector 

General for Auditing, Department of Defense; Deputy Inspector General, Department of State
192

June 18: Are private security contractors performing inherently governmental functions? 

Panel: President, Jefferson Solutions; Professor and Director of the Rohatyn Center for 

International Affairs, Middlebury College; President and CEO, Professional Services Council; 

Executive Director, Project on Government Oversight; Professor and Director of the Center for 

Research on International and Global Studies, University of California, Irvine; President, Center 

for a New American Security

June 21: Private security contractors in Iraq: where are we going? 

Panel 1: Assistant Deputy Under Secretary of Defense for Program Support; Deputy Assistant 

Secretary of the Army for Procurement; Deputy Assistant Secretary for International Programs, 

Department of State; Chief, International Security Programs Division, Office of Security, 

U.S. Agency for International Development; Director, Office of Security, U.S. Agency for 

International Development 

Panel 2: Vice President and Program Manager of Civilian Police Programs, DynCorp 

International LLC; President, Aegis Defense Services LLC; Director and CEO, Triple Canopy, Inc.

July 12: Total force policy, the Quadrennial Defense Review, and other Defense and operational planning: 

why does planning for contractors continue to lag? 

Panel: Deputy Under Secretary of Defense for Strategy, Plans, and Forces; Director for Logistics, 

Joint Staff; Director of Requirements, Office of Secretary of Defense for Personnel and 

Readiness; Assistant Deputy Under Secretary of Defense for Program Support

July 26: Subcontracting: who’s minding the store?

Panel 1: Deputy Assistant Secretary of the Army for Procurement; Director, Defense Contract 

Audit Agency; Director, Acquisition Management, Department of State; Acting Assistant 

Administrator for Management, U.S. Agency for International Development

Panel 2: Global Director Procurement and Supply Management, KBR; Vice President 

and Government Business Executive, Fluor Corporation; Senior Vice President, Business 

Administration, DynCorp International LLC; CEO, Mission Essential Personnel, LLC

Panel 3: President, Government Facilities Infrastructure, CH2M HILL Constructors, Inc.; Manager 

and Ethics Committee Director, Tamimi Global Company, Ltd; CEO, Symbion Power LLC; COO, 

McNeil Technologies, Inc.; CFO, The Diplomat Group LLC; President and CEO, Torres Advanced 

Enterprise Solutions, LLC 

September 16: The contingency acquisition workforce: what is needed and how do we get there? 

Panel 1: Professor, Center for Public Policy and Private Enterprise, School of Public Policy, 

University of Maryland; Administrator, Office of Federal Procurement Policy; Deputy Associate 

Director for Employee Services, Office of Personnel Management; Acting Deputy Under 

Secretary of Defense for Civilian Personnel Policy; Acting President, Defense Acquisition 

University 

Panel 2: Director, Defense Contract Management Agency; Director, Defense Contract Audit 

Agency; Principal Military Deputy to the Assistant Secretary of the Army for Acquisition, 

Logistics, and Technology; Military Deputy to the Assistant Secretary of the Air Force for 

Acquisition; Commanding General, U.S. Army Corps of Engineers; Executive Director, U.S. Army 

Contracting Command 
193

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2011 Commission hearings

January 24: Recurring problems in Afghan construction

Panel 1: Special Inspector General for Afghanistan Reconstruction 

Panel 2: Deputy Commanding General, Military and International Operations, U.S. Army 

Corps of Engineers; Deputy Assistant Administrator, Afghanistan Pakistan Task Force, U.S. 

Agency for International Development; Deputy Director, Air Force Center for Engineering 

and the Environment; Principal Deputy Assistant Secretary, International Narcotics and Law 

Enforcement Affairs, Department of State 

February 14: Recurring problems in Afghan construction, continued 

Panel: President, Government, Environmental & Nuclear Division, CH2M HILL Constructors, Inc.; 

Executive Vice President, AMEC Earth and Environmental, Inc.; President, Black & Veatch Special 

Projects Corporation; Regional Director, United Nations Office for Project Services

February 28: Ensuring contractor accountability: past performance and suspensions and debarments

Panel 1: Commander, Defense Contract Management Agency, International; Deputy Inspector 

General for USAID; Commanding Officer, Naval Sea Logistics Center; General Counsel, Project 

on Government Oversight 

Panel 2: Administrator, Office of Federal Procurement Policy; Deputy Director, Contingency 

Contracting and Acquisition Policy, Defense Procurement Acquisition Policy; Procurement 

Executive, Department of State; Chief Acquisition Officer, U.S. Agency for International 

Development; U.S. Navy Associate Counsel and Chair, Interagency Suspension and Debarment 

Committee; Director, Office of the Judge Advocate General, U.S. Army 

March 28: Better buying power in Defense spending

Witness: Under Secretary of Defense for Acquisition, Technology, and Logistics

April 1: USAID plans for improved contracting performance

Witness: Administrator of U.S. Agency for International Development 

April 11: Non-governmental organizations’ lessons for contingencies

Panel: Country Manager, Catholic Relief Services; Vice President, International Rescue 

Committee; Regional Program Director for South Asia, Mercy Corps; Vice President, Save the 

Children; Director of Intergovernmental Affairs, U.S. Institute of Peace 

April 25: Implementing improvements to Defense wartime contracting

Panel 1: Professor, Center for Public Policy and Private Enterprise, School of Public Policy, 

University of Maryland; Managing Director for Acquisition and Sourcing Management, 

Government Accountability Office 

Panel 2: Special Inspector General for Iraq Reconstruction; Deputy Inspector General 

for Auditing, Department of Defense; Acting Special Inspector General for Afghanistan 

Reconstruction 

June 6: State Department contracting, response to Commission recommendations, and transition effort in 

Iraq and Afghanistan

Witness: Under Secretary of State for Management 
194

Travel 

Commissioners, accompanied by professional staff, made numerous trips to Iraq, Afghanistan, and 

Kuwait over the last three years, as well as several trips to Europe and Canada. Our work in theater was 

supplemented by a “forward team”—two professional staff members based in Baghdad and two in 

Kabul serving as eyes and ears on the ground, coordinating travel in theater, and managing requests 

for information from our home office. In addition, the Commission traveled to numerous government 

venues, contractor locations, training centers, and think tanks throughout the United States.

Overseas trips

In overseas travel, the Commission focused on theater contracting issues, construction projects, 

organizational alignment and structure, requirements generation, interagency coordination, and 

lessons learned. The Commission also traveled to NATO and coalition-partner countries to learn about 

best practices and issues those governments faced similar to those of the United States in managing 

contracts in a contingency environment. 

2008

December 2–8: Afghanistan and Iraq

2009

March 30–April 11: Afghanistan and Iraq

June 14–19: Kuwait and Iraq 

July 19–August 1: Iraq and Kuwait 

August 23–September 2: Afghanistan 

October 30–November 6: Kuwait and Iraq

November 30–December 8: Afghanistan

December 14–16: Canada

2010

February 8–15: Kuwait and Iraq

May 13–22: Iraq and Kuwait 

July 17–23: United Kingdom, Switzerland, and Denmark

August 7–16: Afghanistan

August 20–28: Kuwait and Afghanistan

October 8–15: Turkey and England

November 8–18: Afghanistan

November 30–December 8: Iraq

December 5–10: Germany

2011

January 22–28: Afghanistan 

March 5–10: Qatar

March 14–26: Afghanistan and Kuwait 
195

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Domestic trips

2009

Lowell, Massachusetts, Defense Contract Audit Agency 

Dallas, Texas, Defense Contract Audit Agency 

Rock Island, Illinois, U.S. Army Logistics Civil Augmentation Program 

Indianapolis, Indiana, Defense Finance and Accounting Service 

Orlando, Florida, Department of Defense Procurement Conference

Atlanta, Georgia, U.S. Army Central Command, G-7

Tampa, Florida, U.S. Central Command 

Orlando, Florida, Program Executive Office for Simulation, Training, and Instrumentation 

Baton Rouge, Louisiana, Triple Canopy, Inc.

Irving, Texas, Defense Contract Audit Agency 

Ft. Worth, Texas, DynCorp International LLC

Rock Island, Illinois, U.S. Army Rock Island Contracting Center

Philadelphia, Pennsylvania, Defense Logistics Agency (Troop Support)

Tampa, Florida, U.S. Central Command

Atlanta, Georgia, Defense Contract Management Agency

Huntsville, Alabama, U.S. Army Aviation and Missile Command

Warren, Michigan, U.S. Army Tank and Automotive Command

San Antonio, Texas, Air Force Center for Engineering and the Environment

Panama City, Florida, Air Force Contract Augmentation Program

Moyock, North Carolina, Xe Services LLC

Ft. Monmouth, New Jersey, U.S. Army Communications and Electronics Command

Ft. Leavenworth, Kansas, U.S. Army Combined Arms Center, School of Command Preparation

Houston, Texas, Defense Contract Audit Agency

2010

Tampa, Florida, U.S. Central Command

Tampa, Florida, U.S. Special Operations Command

Springfield, Virginia, Defense Contract Management Agency

Houston, Texas, KBR 

San Antonio, Texas, U.S. Air Force Air Education and Training Command Contracting Squadron

San Antonio, Texas, Joint Contracting Command-Iraq/Afghanistan Contract Closeout Task Force

Daytona Beach, Florida, Defense Contract Management Agency 

San Diego, California, National Contract Management Association Conference 

Las Vegas, Nevada, DoD Past-Performance Conference

Ft. Leavenworth, Kansas, U.S. Army Combined Arms Center, Center for Army Lessons Learned

Orlando, Florida, Department of Defense Procurement Conference

Monterey, California, Naval Postgraduate School

Carlisle, Pennsylvania, U.S. Army War College, U.S. Army Peacekeeping and Stability Operations Institute
196

Rock Island, Illinois, U.S. Army Rock Island Contracting Center

Monterey, California, Naval Postgraduate School 

Philadelphia, Pennsylvania, Defense Logistics Agency (Troop Support)

Burlingame, California, Environmental Chemical Corporation

Chambersburg, Pennsylvania, 3rd Expeditionary Sustainment Command, U.S. Army

Kettering, Ohio, U.S. Air Force Institute of Technology

San Antonio, Texas, Air Force Center for Engineering and the Environment

Englewood, Colorado, CH2M HILL, Inc.

Suffolk, Virginia, U.S. Joint Forces Command

Springfield, Virginia, Defense Contract Management Agency

Ft. Lauderdale, Florida, National Contract Management Association 

Ft. Drum, New York, U.S. Army Battle Command Training Center

Tampa, Florida, U.S. Central Command J4 Contracting

San Francisco, California, American Bar Association

Chantilly, Virginia, National Contract Management Association Legislative Update 

Ft. Bragg, North Carolina, U.S. Army 18th Airborne Corps

Philadelphia, Pennsylvania, National Procurement and Grant Fraud Conference

2011

Ft. Leavenworth, Kansas, U.S. Army Combined Arms Center, Command and General Staff College

Rock Island, Illinois, U.S. Army Sustainment Command

Scott Air Force Base, Illinois, U.S. Transportation Command

Rock Island, Illinois, U.S. Army Logistics Civil Augmentation Program

Scottsdale, Arizona, Professional Services Council Conference 

Huntsville, Alabama, U.S. Army Materiel Command 

Miami, Florida, U.S. Southern Command

Orlando, Florida, Department of Defense Procurement Conference

Monterey, California, Naval Postgraduate School Acquisition Research Symporium

Grapevine, Texas, Society of American Military Engineers Conference 
197

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Additional meetings and briefings

Commissioners and professional staff participated in more than 1,000 meetings and briefings with 

officials from agencies engaged in contingency contracting, with think tanks, scholars and experts, 

and with contractors and representatives of the contracting community. We invited representatives 

of federal agencies with a stake in contingency contracting to meet monthly and review and discuss 

tentative findings.

Contractors and professional associations with whom the Commission met to discuss their 

experiences and observations included: 

AECOM Government Services; Aegis Defense Services LLC; Agility Defense & Government Services, 

Ltd; AMEC Earth & Environmental, Inc.; ANHAM; ArmorGroup North America, Inc.; Black & Veatch 

Special Projects Corporation; Blackwater Worldwide; CACI International, Inc.; CH2M HILL, Inc.; 

Compass Integrated Security Solutions; Contrack International; DAI; The Diplomat Group LLC; 

DynCorp International LLC; Environmental Chemical Corporation; Fluor Corporation; General 

Dynamics Information Technology; Global Linguistic Solutions, LLC; International Stability 

Operations Association; ITT Systems Corporation; KBR; L-3 Communications Services Group; 

Lakeshore Engineering Services, Inc.; The Louis Berger Group, Inc.; ManTech International Corp.; 

McNeil Technologies, Inc.; Mission Essential Personnel, LLC; MPRI; Nathan Associates, Inc.; National 

Association of Government Contractors; Northrop Grumman Corporation; Professional Services 

Council; RA International Services; Raytheon Company; Red Sea Company; Red Star Enterprises; 

Sabre International; Serco Inc.; Serka Construction; Shee Atika, Inc.; Supreme Group; Symbion Power 

LLC; Tamimi Global Company, Ltd; Stanley Baker Hill, LLC; Technologist, Inc.; Tetra Tech, Inc.; Torres 

Advanced Enterprise Solutions, LLC; Triple Canopy, Inc.; Xe Services LLC; Zafer Construction Co.
198

Appendix E

Military and contractor 

headcounts and contract data 

This appendix is divided into three broad parts—military and contractor headcounts, supplier data, 

and contract-characteristics data. 

The headcount data indicate the number of contractor personnel employed in Iraq and Afghanistan 

to accomplish contract requirements pursuant to awards made by the U.S. government. We compared 

the number of Defense contractor personnel with the corresponding number of military in theater 

(boots on the ground) and found approximately as many of the former as the latter. Further, the 

number of Defense contractor personnel varies directly with the number of military personnel, 

indicating the supporting nature of Defense contractors. Currently, contractor personnel are 

predominantly third-country nationals (TCNs) in Iraq and local nationals (LNs) in Afghanistan. Our data 

also include the functions performed by contractor personnel.

The data indicate that at least $192.5 billion was obligated for contracts and grants in support of the 

contingencies in Iraq and Afghanistan from FY 2002 to the end of the second quarter FY 2011. We 

project FY 2011 second-half spending will increase total obligations and grants since FY 2002 to a total 

of $206 billion.

The contract awards were heavily concentrated. Out of over 7,000 companies, the top 23 account 

for approximately 75 percent of the contract dollars.1 The top 15 product or service categories 

account for approximately 75 percent of contract obligations. Logistics-support services account for 

approximately 25 percent of contract obligations.

The final section on contract characteristics reinforces the notion of concentration. For example, in 

FY 2010, the largest 1.3 percent of total actions accounted for 80 percent of total contract spending 

in Iraq and Afghanistan. The dominant form of contract awards is delivery orders placed under 

indefinite-delivery contract vehicles. Our analysis of the statistics also includes the use of various 

contract vehicles, the number of offers received, and the extent of competition. 

1. The 23 include one multi-vendor entry coded as “miscellaneous foreign contractors.”
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SOURCES OF DATA

Unless otherwise noted, the sources for the data in this appendix are:

Continuously updated headcount sources

	 Military Boots on the Ground—Congressional Research Service Request 

for Boots-on-the-Ground (BOG) for Iraq/Operation New Dawn (OND) and 

Afghanistan/Operation Enduring Freedom (OEF), prepared by Office of the 

Chairman, Joint Chiefs of Staff.

	 Defense Contractor employees—Contractor Support of U.S. Operations in the 

USCENTCOM area of responsibility, Iraq and Afghanistan, prepared by Deputy 

Assistant Secretary of Defense (Program Support) quarterly February 2009 to 

present, prepared by Under Secretary of Defense for Acquisition, Technology 

and Logistics (AT&L) prior to February 2009.

	 State/USAID Contractors—U.S. Government Accountability Office (GAO) 

Reports 10-1 and 11-1, “Contingency Contracting: DOD, State and USAID 

Continue to Face Challenges in Tracking Contractor Personnel and Contracts in 

Iraq and Afghanistan,” October 2009 and October 2010. 

One-time headcount studies

	 Brig. Gen. William N. Phillips, Commanding General, Joint Contracting 

Command–Iraq/Afghanistan, memorandum, “Contractor Support of MultiNational Force-Iraq (MNF-I) Operations,” July 17, 2009.

	 Chairman of the Joint Chiefs of Staff (CJCS), Dependence on Contractor Support 

in Contingency Operations Task Force report, “An Evaluation of the Range 

and Depth of Service Contract Capabilities in Iraq and Implications for OCS 

[Operational Contract Support] Planning,” presented to Commission by CAPT 

Pete Stamatopoulos, Supply Corps, U.S. Navy JS J-4 Chief, Logistics Services 

Division, March 24, 2010, 21.

Contracts data

	 Federal Procurement Data System-Next Generation (https://www.fpds.gov/

fpdsng_cms/). Data extracted on June 12, 2011 for actions where place of 

performance equaled Afghanistan, Iraq, Kuwait, Bahrain, Qatar, Pakistan, 

Kyrgyzstan, Kazakhstan, Turkmenistan, Tajikistan, and Uzbekistan. Dates of 

actions include FY 2002 through the end of the second quarter FY 2011.

Grants data

	 USAspending.gov (http://www.usaspending.gov/). Data extracted on June 12, 

2011 for actions where place of performance equaled Afghanistan and Iraq. 

Dates of actions include FY 2002 through the end of the second quarter FY 

2011.

All dollar values are in then-year dollars.
200

Part I: Military and contractor headcounts

IRAQ

“Boots on the Ground” vs. contractor personnel in Iraq

For Iraq, Figure E-1 depicts the number of U.S. military personnel (Boots on the Ground–BOG) and the 

number of Defense contractor personnel, both on a quarterly fiscal-year basis. Reporting of contractor 

census began in the first quarter FY 2008. As can be seen from the figure, Defense military personnel 

and contractor personnel closely track one another, in nearly a 1:1 ratio, although in the last few 

quarters as the number of military has drawn down, contractor personnel have declined at a slower 

pace, so now they substantially outnumber the military personnel.

Figure E-1. Boots on the Ground vs. contractor personnel in Iraq2

Source: Military Boots on the Ground—Congressional Research Service Request for Boots-on-the-Ground (BOG) for Iraq/

OND and Afghanistan/OEF, prepared by Office of the Chairman, Joint Chiefs of Staff (JCS). Final two BOG data points are 

for January 10, 2011 and May 11, 2011 as reported by Defense, Joint Staff, Summary and Monthly Boots on the Ground 

Reports to Congress; Defense Contractor employees—Contractor Support of U.S. Operations in the USCENTCOM area of 

responsibility, Iraq and Afghanistan, prepared by DASD (Program Support) quarterly February 2009 to present, prepared by 

Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) prior to February 2009. 

2. “Boots on the Ground” denotes a series of monthly data reports sent to Congress by the Department of Defense since 2008. 
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JCS military and contractor personnel by function in Iraq 

Third quarter FY 2008 

Figure E-2 shows the results of a one-time Joint Chiefs of Staff (JCS) study of reliance on Defense 

contractor personnel. It compares the number of military and Defense contractor personnel 

performing each of 15 functions during the third quarter FY 2008. Clearly the number of Defense 

contractor personnel is much higher than the number of military personnel in Logistics Services, 

Installation Support, Maintenance, and Corporate Management and Support. Defense contractors are 

also significant percentages of the total workforce in Building Partnerships, Net-Centric, Distribution, 

and Engineering.

Figure E-2. JCS military and contractor personnel by function in Iraq

Third quarter FY 2008

Source: CJCS Dependence on Contractor Support in Contingency Operations Task Force Report, “An Evaluation of the Range 

and Depth of Service Contract Capabilities in Iraq and Implications for OCS Planning,” presented to Commission by CAPT Pete 

Stamatopoulos, Supply Corps, U.S. Navy JS J-4 Chief, Logistics Services Division, March 24, 2010, 21.
202

Defense contractor personnel by function in Iraq

Figure E-3 depicts the breakdown by type of work performed by Defense contractor personnel in 

Iraq. These breakouts have been available quarterly since the second quarter FY 2008. It shows that 

the bulk of Defense contractor workforce, between about 55 and 65 percent, has been providing 

base-support services. Construction workers have declined in number and as a percentage of the 

workforce. The number and percentage of security workers, however, generally has risen.

Figure E-3. Defense contractor personnel by function in Iraq

Source: Defense Contractor employees—Contractor Support of U.S. Operations in the USCENTCOM area of responsibility, 

Iraq and Afghanistan, prepared by Deputy Assistant Secretary of Defense (Program Support) quarterly February 2009 to 

present, prepared by Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) prior to February 2009.
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Defense contractor personnel by nationality in Iraq

Figure E-4 depicts Defense contractor personnel by nationality in Iraq starting with the first quarter FY 

2008 census. While the number of U.S. citizens has remained relatively constant over the period, their 

percentage has increased as other workers have left during the drawdown of troops. In particular, the 

number and percentage of LNs has dropped fairly dramatically both in number and as a percentage of 

the workforce.

Figure E-4. Defense contractor personnel by nationality in Iraq

Source: Defense Contractor employees—Contractor Support of U.S. Operations in the USCENTCOM area of responsibility, 

Iraq and Afghanistan, prepared by DASD (Program Support) quarterly February 2009 to present, prepared by Under Secretary 

of Defense for Acquisition, Technology and Logistics (AT&L) prior to February 2009.
204

Workforce nationality by activity performed in Iraq 

Table E-1 is a one-time-only snapshot of the workforce in Iraq as of June 20, 2009. While it shows that 

U.S. citizens work in all areas, they are dominant in maintenance, training, communications support, 

and other, although the overall percentage of U.S. citizens is only 26 percent. Nearly half the workforce 

is TCNs, who primarily work in base support and security. LNs dominate in construction, as translators/

interpreters, and in transportation. Note that the division of personnel by nationality in this June 20, 

2009 breakout conforms closely to that shown for the third quarter FY 2009 in Figure E-4. 

Table E-1. Workforce nationality by activity performed in Iraq

As of June 20, 2009

Mission Category Total

(% of total) U.S. TCN Iraqi LN

Base life support 71,783 (60%) 18,093 43,821 9,869

Security 13,145 (11%) 773 8,686 3,686

Construction 10,090 (8%) 184 1,609 8,297

Translators/interpreters 9,128 (8%) 2,390 0 6,738

Log/maintenance 3,800 (3%) 2,778 708 314

Training 2,694 (2%) 2,397 243 54

Communications support 2,183 (2%) 2,070 65 48

Transportation 1,616 (1%) 28 224 1,364

Other 5,267 (4%) 2,828 769 1,670

Total 119,706 31,541

(26%)

56,125 

(47%)

32,040 

(27%)

Source: Brig. Gen. William N. Phillips, Commanding General, Joint Contracting Command—Iraq/Afghanistan, memorandum, 

“Contractor Support of Multi-National Force-Iraq (MNF-I) Operations,” July 17, 2009.

Civilian agency contractor and assistance personnel in Iraq

Table E-2 lists the headcount of contractor and assistance personnel in Iraq for USAID and State. USAID 

and State contractor and assistance personnel have remained nearly constant.

Table E-2. Civilian agency contractor and assistance personnel in Iraq

Fiscal Year USAID State

2010* 3,409 9,591

2009 3,347 10,606

2008 2,707 ----

*USAID and State numbers as of March 31, 2010. 

Source: GAO Report 11-1, “Iraq and Afghanistan: DOD, State, and USAID Face Continued Challenges in Tracking Contracts, 

Assistance Instruments, and Associated Personnel,” October 2010, 44-45; GAO Report 10-1, “Contingency Contracting: DOD, 

State, and USAID Face Challenges in Tracking Contractor Personnel and Contracts in Iraq and Afghanistan,” October 2009, 13.
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AFGHANISTAN

“Boots on the Ground” vs. contractor personnel in Afghanistan

For Afghanistan, Figure E-5 depicts the number of U.S. military personnel and the number of Defense 

contractor personnel, each on a quarterly fiscal-year basis. The contractor census data for Defense 

started in the second quarter FY 2008. For several reports in FY 2009 and FY 2010, data problems 

resulted in an over-count of Defense contractor personnel. The numbers displayed here for that period 

contain the over-count since there is no way for Defense to correct the error. We believe that the 

values reported in the last three quarters are correct.

Figure E-5. Boots on the Ground vs. contractor personnel in Afghanistan

Source: Military Boots on the Ground—Congressional Research Service Request for Boots-on-the-Ground (BOG) for Iraq/

OND and Afghanistan/OEF, prepared by Office of the Chairman, JCS; Defense Contractor employees—Contractor Support 

of U.S. Operations in the USCENTCOM area of Responsibility, Iraq and Afghanistan, prepared by DASD (Program Support) 

quarterly February 2009 to present, prepared by Under Secretary of Defense for Acquisition, Technology and Logistics (AT&L) 

prior to February 2009.
206

Defense contractor personnel by nationality in Afghanistan 

Figure E-6 depicts Defense contractor personnel by nationality in Afghanistan starting with the second 

quarter FY 2008 census. As noted above, for several reports in FY 2009 and FY 2010, data problems 

resulted in an unknown over-count of Defense contractor personnel and are displayed as reported. 

The numbers and percentage of the workforce of U.S. citizens and of TCNs has grown from period to 

period, with the number of LNs remaining somewhat more constant.

Figure E-6. Defense contractor personnel by nationality in Afghanistan 

Source: Defense Contractor employees—Contractor Support of U.S. Operations in the USCENTCOM area of responsibility, 

Iraq and Afghanistan, prepared by DASD (Program Support) quarterly February 2009 to present, prepared by Under Secretary 

of Defense for Acquisition, Technology and Logistics (AT&L) prior to February 2009.
207

A P P E N D I X E

Civilian agency contractor and assistance personnel in Afghanistan

Table E-3 lists the headcount of contractor and assistance personnel in Afghanistan for USAID and 

State. Growth in USAID contractor and assistance personnel since 2008 has been substantial.

Table E-3. Civilian agency contractor and assistance personnel in Afghanistan

Fiscal Year USAID State

2010* 32,359 9,719

2009 34,237 8,846

2008 12,955 ---

*USAID and State numbers as of March 31, 2010.

Source: GAO Report 11-1, “Iraq and Afghanistan: DOD, State, and USAID Face Continued Challenges in Tracking Contracts, 

Assistance Instruments, and Associated Personnel,” October 2010, 44-45; GAO Report 10-1, “Contingency Contracting: DOD, 

State, and USAID Face Challenges in Tracking Contractor Personnel and Contracts in Iraq and Afghanistan,” October 2009, 13.
208

Part II: Supplier data 

The data presented in the next two sections were obtained from the Federal Procurement Data SystemNext Generation (FPDS-NG) and USAspending.gov.

FPDS-NG is the single authoritative repository for federal procurement-award data and 

USAspending.gov is a searchable website which includes information on grants and cooperative 

agreements. We used FPDS-NG to identify contract actions undertaken in support of contingency 

operations in Iraq and Afghanistan. We extracted contract-action data covering the time period 

October 1, 2001 through March 31, 2011 (FY 2002–first half of FY 2011) for those actions coded as 

place of performance in Iraq, Afghanistan, Kuwait, Bahrain, and Qatar, as well as Pakistan, Uzbekistan, 

Kazakhstan, Kyrgyzstan, Tajikistan, and Turkmenistan, which are referred to later in this section as 

“other.”

Obligations and grants

Figure E-7 shows annual contract obligations from FPDS-NG. It is based on the place of performance 

in one of the aforementioned countries during FY 2002 through the end of the second quarter FY 

2011. While some spending in the countries outside of Afghanistan and Iraq would be for indigenous 

support, the bulk of the obligations during this time period are believed to have resulted from support 

to Iraq and Afghanistan, and therefore we included these obligations. Figure E-7 also depicts grants 

data from USAspending.gov, where the place of performance was indicated as Iraq or Afghanistan. 

Grants and assistance performed outside of Iraq and Afghanistan are not included in the grants value 

shown.

Note that our estimate of spending in support of contingency operations in Iraq and Afghanistan is 

based on actions with place of performance in Iraq, Afghanistan, or the other neighboring countries 

indicated above. This estimate is conservative because it omits spending elsewhere, where some or all 

of the spending was for contingency support. For example, mine-resistant, ambush-protected (MRAP) 

vehicles and tethered-aerostat radar systems for surveillance that are produced in the U.S. but used in 

Iraq and/or Afghanistan would not be included in our total spending estimate using this methodology. 

Defense, State, and USAID contract and grant spending total about $192.5 billion, of which about 

$187.2 billion is contracts and $5.3 billion is grants and assistance by State and USAID.

Figure E-7. Summary of contract obligations and grants in support of Afghanistan and Iraq

Source: FPDS-NG and USAspending.gov, FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.
209

A P P E N D I X E

Top contractors

As shown in Table E-4 below, the top 23 companies (out of over 7,000), each with more than $1 

billion in obligations, account for approximately 75 percent, or $139 billion, of the $187.2 billion 

obligated on contracts from FY 2002 through the end of the second quarter FY 2011 as reported in 

the FPDS-NG (not including $5.3 billion in grants). The “Miscellaneous Foreign Contractors” category, 

which is second largest, represents an unknown number of individual companies. This category is 

often used for the purpose of obscuring the identification of the actual contractor. Where possible, 

we consolidated company totals to take into account misspellings or different spellings that occur in 

FPDS-NG. For example, DynCorp; DynCorp International; DynCorp Technical Services, Inc.; DynCorp 

International Limited Liability Company; DynCorp International LLC; and DynCorp Intl were various 

“vendor names.” They were consolidated to arrive at a total award amount for the company.

Table E-4. Top contractors 

Contractor Obligations

Kellogg Brown & Root $40,809,523,872 

“Miscellaneous Foreign Contractors” 38,469,964,913 

Agility 8,997,331,923 

DynCorp 7,400,931,324

Kuwait Petroleum Corporation 4,996,816,548 

Fluor Intercontinental, Inc. 4,980,491,549 

The Bahrain Petroleum Company 4,972,411,826 

Combat Support Associates 3,574,716,549 

ITT Federal Services International 3,373,303,718 

The Louis Berger Group Inc. 2,334,985,976 

International Oil Trading Company, LLC 2,132,465,619 

Readiness Management Support, LC 2,025,615,609 

L-3 Communications 1,724,298,992 

Red Star Enterprises LTD 1,662,505,265 

IAP Worldwide Services, Inc. 1,512,551,618 

Environmental Chemical Corporation 1,496,535,802 

Perini Corporation 1,475,913,905 

Blackwater Lodge and Training Center, Inc. 1,457,774,831 

Contrack International Inc. 1,357,523,598 

Triple Canopy Inc. 1,167,982,337 

DAI/Nathan Group LLC 1,092,399,269 

Washington Group International 1,082,488,343 

BearingPoint, LLC 1,029,116,382 

Total $139,127,649,771 

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.
210

Top goods and services purchased

Table E-5 below shows the 15 largest categories of products and services bought in support of 

operations in Iraq and Afghanistan from FY 2002 through the end of the second quarter FY 2011. The 

$139.7 billion in obligations represented by these top products and services as reported in FPDS-NG 

add up to approximately 75 percent of the total obligations. Such data can provide a useful guide 

for future planning purposes. The use of product or service code “9999” by government contracting 

personnel for miscellaneous items has been widely used and limits our ability to accurately portray all 

categories of war spending. 

Table E-5. Largest categories of products and services acquired for Iraq and Afghanistan

Code Product or service code description Obligations % of Total 

obligations

R706 Logistics support services $46,501,547,395 25%

9999 Miscellaneous items 25,732,014,855 14%

9130 Liquid propellants or fuel-petroleum base 16,652,161,060 9%

Y199 Construction of miscellaneous buildings 10,463,213,899 6%

8910 Dairy foods and eggs 6,623,554,123 4%

R421 Technical assistance 5,503,840,044 3%

R499 Other professional services 5,237,673,990 3%

S206 Guard services 3,806,774,413 2%

Z111 Maintenance, repair, or alteration of office buildings 3,526,532,535 2%

Y111 Construction of office buildings 2,991,904,074 2%

X300 Lease or rental of restoration of real property 2,782,985,687 1%

9140 Fuel oils 2,689,797,800 1%

S216 Facilities operations support services 2,469,785,092 1%

R408 Program management/support services 2,371,459,280 1%

J023

Maintenance and repair of ground effect vehicles, 

motor vehicles, trailers, and cycles 2,369,125,809 1%

Largest categories of products and services acquired for 

Iraq and Afghanistan, total

$139,722,370,056 74.6%

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011. 
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A P P E N D I X E

Concentration ratios for top four contractors by product or service code

Table E-6 below shows the concentration of vendors as measured by the percentage of total awards 

to the top four firms in each product or service code listed. Concentration ratios showing the 

market share of the top firms are often used as an indication of market power when considering the 

competitive characteristics of a market. A concentration ratio of over 80 percent by the top four firms 

indicates a very highly concentrated market. As noted below, many of the top product or service-code 

categories are highly concentrated with the top four firms receiving over 80 percent of the contracts in 

each category. In some cases a single firm alone has over 80 percent of the market share.

Table E-6. Concentration ratios for top four contractors by product or service code

Code Product or service code 

description

FY 2002-end of 

2nd Quarter

FY 2011 

Obligations

Low

concentration

Moderate

concentration

High

concentration

R706 Logistics support services $46,501,547,395 X1

9999 Miscellaneous items 25,732,014,855

9130

Liquid propellants or fuelpetroleum base 16,652,161,060 X

Y199

Construction of miscellaneous 

buildings 10,463,213,899 X

8910 Dairy foods and eggs 6,623,554,123 X2

R421 Technical assistance 5,503,840,044 X

R499 Other professional services 5,237,673,990 X

S206 Guard services 3,806,774,413 X

Z111

Maintenance, repair, or alteration 

of office buildings 3,526,532,535 X

Y111 Construction of office buildings 2,991,904,074 X

X300

Lease or rental of restoration of 

real property 2,782,985,687 X3

9140 Fuel oils 2,689,797,800 X

S216

Facilities operations support 

services 2,469,785,092 X4

R408

Program management/support 

services 2,371,459,280 X

J023

Maintenance and repair of 

ground-effect vehicles, motor 

vehicles, trailers, and cycles 2,369,125,809 X5

1. One vendor accounts for 79 percent of the obligations. 

2. One vendor accounts for 92 percent of the obligations.

3. One vendor accounts for 99 percent of the obligations.

4. One vendor accounts for 73 percent of the obligations.

5. One vendor accounts for 67 percent of the obligations.

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.

Note: Based on obligations to the top four companies. “Low 

Concentration” indicates top four firms account for less than 20 

percent of obligations. “Moderate Concentration” means top four 

firms have 20 to 80 percent. “High Concentration” means top 

four firms have more than 80 percent.
212

Largest contracts

Tables E-7 through E-9 depict the largest contracts in support of Iraq and Afghanistan. Consolidating 

all the actions (delivery orders, task orders, and modifications) under the contract to which they relate 

shows the high dollar value of a few contracts. For example, the largest 15 contracts in Iraq account for 

over 48 percent of the total contract dollars obligated in Iraq.

Table E-7. Largest 15 contracts in Iraq

Iraq

IDV/contract # Code Product or service 

code description Contractor

Product or 

service code 

subtotal

IDV/contract total

DAAA0902D0007 AD23 Services (advanced)

Kellogg Brown & 

Root $576,026 

R706

Logistics support 

services 30,272,068,379 

DAAA0902D0007 Total  $30,272,644,405 

DACA6303D0005 3835

Petroleum 

production-dist eqpt

Kellogg Brown & 

Root (3,195,723)

X300

Lease-rent of 

restoration 2,779,891,885 

Y300 Construct/restoration 5,322,398 

Z299

Maint, rep/alter/all 

other 244,800,000 

Z300

Maint, rep-alt/ 

restoration (942,737)

DACA6303D0005 Total $3,025,875,823 

SLMAQM04C0030 AD25 Services (operational) DynCorp 58,398,484 

R408

Program 

management/

support services 789,477,225 

R499

Other professional 

services 1,293,398,272 

Z169

Maint-rep-alt/other 

residential bldg 1,406,636 

SLMAQM04C0030 Total $2,142,680,617 

SP060007D0483 9130

Liquid propellantspetroleum base

International Oil 

Trading Company 

Limited 1,081,175,104 

W91GXX05D0001 9999 Miscellaneous items

Miscellaneous 

Foreign Contractors 1,068,938,580 

SP060009D0515 9130

Liquid propellantspetroleum base

International Oil 

Trading Company 

Limited 1,051,290,515 

W91GY005D0001 9999 Miscellaneous items

Miscellaneous 

Foreign Contractors 1,036,119,038 

SAQMPD05D1098 S206 Guard services

Blackwater Lodge 

and Training 

Center, Inc. 976,971,154 

Continued on next page
213

A P P E N D I X E

W912ER04D0004 AD25 Services (operational)

Fluor 

Intercontinental, 

Inc. 8,028,049 

Y199 Construct/misc bldgs 387,948,951 

Z299

Maint, rep/alter/all 

other 448,532,115 

W912ER04D0004 Total $844,509,116 

FA890304D8672 C119 Other buildings

Environmental 

Chemical 

Corporation 10,193,659 

C130 Restoration 3,332,433 

C219

Other architects & 

engin gen 142,290,826 

Y199 Construct/misc bldgs 38,505,763 

Z111

Maint-rep-alt/office 

bldgs 619,648,232 

FA890304D8672 Total $813,970,913 

W91GXY05D0001 9999 Miscellaneous items

Miscellaneous 

Foreign Contractors 713,018,409 

W912ER04D0008 Y112

Construct/conf space 

& facilities Perini Corporation 25,385,608 

Y159

Construct/other 

industrial bldgs 184,085,287 

Y199 Construct/misc bldgs 503,341,340 

Z199

Maint-rep-alt/misc 

bldgs (304,336)

W912ER04D0008 Total $712,507,899 

AIDDFDI000500221 R421 Technical assistance

Management 

Systems 

International, Inc 633,766,006 

W91GDW07D7001 9999 Miscellaneous items

Miscellaneous 

Foreign Contractors 596,142,189 

SAQMPD05D1100 S206 Guard services Triple Canopy Inc. 587,587,401 

Largest 15 contracts in Iraq, total $45,557,197,168

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.

Table E-7. Largest 15 contracts in Iraq (continued)
214

Similarly, Table E-8 shows that the largest 15 contracts in Afghanistan represent 35 percent of the total 

contract obligations there.

Table E-8. Largest 15 contracts in Afghanistan

Afghanistan

IDV/contract # Code Product or service 

code description Contractor

Product or 

service code 

subtotal

IDV/contract total

DAAA0902D0007 R706

Logistics support 

services

Kellogg Brown & 

Root $3,289,414,148 

W52P1J07D0008 R706

Logistics support 

services

Fluor 

Intercontinental, 

Inc. 3,148,524,268 

SLMAQM04C0030 R408

Program management/

support services DynCorp 614,914,064 

R499

Other professional 

services 1,025,555,185 

R699

Other administrative 

support services 294,415,830 

R706

Logistics support 

services 35,199,129 

U003

Reserve training 

(military) 27,025,878 

SLMAQM04C0030 Total $1,997,110,086 

W52P1J07D0007 R706

Logistics support 

services DynCorp 1,838,598,750 

SP060008D1017 9130

Liquid propellantspetroleum baseRed Star 

Enterprises LTD 1,288,961,591 

F3460197D0425 J015 Maint-rep of aircraft

L-3 

Communications 

AeroSpace LLC 637,066,104 

J016

Maint-rep of aircraft 

components 457,218,165 

F3460197D0425 Total $1,094,284,269 

AID306I000600517 AD66

Construction 

(management/support)

The Louis Berger 

Group Inc. 112,107,761 

C123

Electric power 

generation (EPG) 12,476,186 

C214

A&E management 

engineering services 2,542,200 

R421 Technical assistance 851,455,607 

R425

Engineering and 

technical services 7,886,941 

R499

Other professional 

services 7,040,000 

AID306I000600517 Total $993,508,695 

W912ER04D0003 R799

Other management 

support services

Contrack 

International Inc. 13,638,172 

Y124

Construction of airport 

runways 2,242,231 

Continued on next page
215

A P P E N D I X E

Y129

Construct/other airfield 

structures 5,702,355 

Y199 Construct/misc bldgs 692,178,813 

W912ER04D0003 Total $713,761,571 

AID306C000700508 R421 Technical assistance BearingPoint, LLC 597,114,315 

W9113M07D0006 AC23

R&D-missile & space sys 

- advanced dev

Lockheed Martin 

Integrated 

Systems Inc. 528,784,882 

W912BU05D0004 C123

Electric power 

generation (EPG)

Inglett & Stubbs, 

LLC 423,123,517 

C124 Utilities 22,039,134 

S112 Electric services 31,544,664 

Y127

Construct/elct & comms 

systems facilities 14,391,473 

Y249

Construction of other 

utilities 5,046,427 

W912BU05D0004 Total $496,145,214 

W91CRB05D0014 R499

Other professional 

services MPRI, Inc. 471,952,442 

FA890306D8505 Y111

Construction of office 

buildings

Lakeshore 

Engineering 

Services 0 

Y199 Construct/misc bldgs 320,216,734 

Z111

Maint-rep-alt/office 

bldgs 116,100,017 

FA890306D8505 Total $436,316,751 

SAQMMA10C0255 Y111

Construction of office 

buildings

Caddell 

Construction Co., 

Inc. 416,029,000 

SLMAQM04C0033 6910 Training aids

PAE Government 

Services Inc. 52,196,215 

R408

Program management/

support services 168,156,608 

R421 Technical assistance 83,742,733 

R499

Other professional 

services 103,118,225 

SLMAQM04C0033 Total $407,213,781 

Largest 15 contracts in Afghanistan, total $17,717,719,763

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.

Table E-8. Largest 15 contracts in Afghanistan (continued)
216

Finally, Table E-9 shows the largest five contracts in Kuwait, Bahrain, Qatar, and “other.” The majority of 

the contracts are for fuel or liquid propellants-petroleum base.

Table E-9. Largest five contracts in Kuwait, Bahrain, Qatar, and other

Kuwait, Bahrain, Qatar, and other

Place of 

Performance IDV/contract # Code

Product or 

service code 

description

Contractor

Product or 

service code 

subtotal

IDV/PIID Total

Kuwait DASA0299C1234 M199

Oper of govt 

misc bldgs

Combat 

Support 

Associates $68,331,285 

R706

Logistics 

support 

services 3,506,385,264 

DASA0299C1234 Total  $3,574,716,549 

Kuwait SPM30008D3196 8910

Dairy foods and 

eggs Agility 2,377,326,181 

8920

Bakery and 

cereal products 350,190,025 

SPM30008D3196 Total $2,727,516,206 

Kuwait DAAA0902D0007 R706

Logistics 

support 

services

Kellogg 

Brown & 

Root 2,501,808,816 

Kuwait W91RUS06C0002 D304

ADP svcs/

telecomm & 

transmission

ITT Federal 

Services 

International 1,293,597,404 

Kuwait W52P1J05D0003 J023

Maint-rep 

of vehiclestrailers-cycles

ITT Federal 

Services 

International 1,234,539,376 

Bahrain SP060009D0453 9130

Liquid 

propellantspetroleum base

The Bahrain 

Petroleum 

Company 1,750,998,108 

Bahrain SP060008D0455 9130

Liquid 

propellantspetroleum base

The Bahrain 

Petroleum 

Company 533,399,399 

Bahrain SP060006D0453 9140 Fuel oils

The Bahrain 

Petroleum 

Company 391,156,700 

Bahrain SP060007D0461 9130

Liquid 

propellantspetroleum base

The Bahrain 

Petroleum 

Company 380,279,157 

Bahrain SP060005D0454 9140 Fuel oils

The Bahrain 

Petroleum 

Company 295,697,846 

Qatar SP060008D1033 9140 Fuel oils Qatar Fuel 405,688,867 

Qatar DAAA0902D0007 R706

Logistics 

support 

services

Kellogg 

Brown & 

Root 277,947,505 

Qatar SP060003D0455 9130

Liquid 

propellantspetroleum base

National Oil 

Distribution 

Comp 219,749,735 

Continued on next page
217

A P P E N D I X E

Qatar F0863702D6999 S202

Fire-protection 

services

Readiness 

Mgt Support 128,205 

S216

Facilitiesoperations 

support svcs

Readiness 

Mgt Support 212,470,358 

F0863702D6999 Total $212,598,563 

Qatar SP060002D0454 9130

Liquid 

propellantspetroleum base

National Oil 

Distribution 

Comp 178,003,450 

Pakistan SAQMMA10C0284 Y111

Construction of 

office buildings

BL Harbert 

International 

LLC 487,282,331 

Krygyzstan SP060007D1007 9140 Fuel oils

Mina Corp 

LTD 354,025,588 

Krygyzstan SP060011D1000 9130

Liquid 

propellantspetroleum baseMina Corp 

LTD 315,180,960 

Pakistan SP060008D0484 9130

Liquid 

propellantspetroleum baseNordic Camp 

Supply ApS 221,575,373 

Pakistan SP060005D0496 9130

Liquid 

propellantspetroleum baseShell Aviation 

LTD 128,514,940 

Largest five contracts in Kuwait, Bahrain, Qatar, and other, total $17,484,276,875

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.

Table E-9. Largest five contracts in Kuwait, Bahrain, Qatar, and other (continued)
218

Part III: Contract characteristics 

FPDS-NG enables us to describe a number of the characteristics of the contracts in support 

of operations in Iraq and Afghanistan. The characteristics measured include an analysis of the 

concentration of contract actions, a separate analysis of contract types, contract methods, number of 

offers received, and extent competed. Generally we note that there are high concentrations of dollars 

in most areas. 

Concentration analysis

Table E-10 shows the spending by place of performance for each year, as well as the number of 

actions and values that represent 80 percent of total spending. For example, in FY 2010 there were 

17,224 contract actions reported in Iraq totaling nearly $7.7 billion, but only 255 of those actions 

(1.48 percent) accounted for 80 percent of the dollars obligated (about $6.1 billion). The same 

calculation annually for each place of performance shows that this pattern is fairly typical. In FY 

2005-FY 2007, there is a reporting difference that could not be explained, but the overall finding is of 

extremely heavy concentration of dollars in a tiny fraction of the actions. Also note that a “record” in 

FPDS-NG may contain more than a single contract action.
219

A P P E N D I X E

Table E-10. Proportion of contract actions accounting for 80 percent of dollar obligations 

in Iraq and Afghanistan

Iraq

Total 80% of Dollars

Fiscal Year

# of 

FPDS-NG 

records

Actions Obligations Actions Obligations % of 

Actions

2011

(End of 2nd qtr.) 3,202 3,210 $2,308,956,728 119 $1,849,043,783 3.71%

2010 16,184 17,224 7,671,900,609 255 6,137,520,487 1.48

2009 16,899 17,926 11,153,301,471 127 8,927,882,099 0.71

2008 27,185 27,920 16,224,162,355 409 12,979,483,463 1.46

2007 20,894 31,432 14,292,190,498 5,602 11,445,562,753 17.82

2006 9,755 15,440 14,177,539,877 3,076 11,345,131,907 19.92

2005 2,702 17,874 15,693,369,788 5,448 12,553,417,248 30.48

2004 979 979 9,761,432,534 74 7,820,128,426 7.56

2003 184 201 3,598,256,148 11 2,899,502,303 5.47

2002 4 4 43,062 1 32,702 25.00

Grand total 97,988 132,210 $94,881,153,070 15,122 $75,957,705,171 11.44%

Afghanistan

Total 80% of Dollars

Fiscal Year

# of 

FPDS-NG 

records

Actions Obligations Actions Obligations % of 

Actions

2011

(End of 2nd qtr.) 16,151 16,173 $5,020,984,358 218 $4,017,309,090 1.35%

2010 30,950 32,745 13,549,009,354 391 10,839,492,854 1.19

2009 21,733 22,618 8,863,512,182 411 7,093,279,759 1.82

2008 14,564 15,474 7,713,535,401 225 6,173,744,559 1.45

2007 10,753 14,873 4,224,077,192 1,926 3,380,470,849 12.95

2006 5,360 12,905 3,101,921,547 4,521 2,484,023,289 35.03

2005 992 7,809 2,267,422,186 6,480 1,820,071,625 82.98

2004 444 444 998,376,485 37 801,341,438 8.33

2003 274 274 493,715,724 25 395,300,989 9.12

2002 31 31 146,785,849 2 124,391,000 6.45

Grand total 101,252 123,346 $46,379,340,278 14,236 $37,129,425,452 11.54%

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.

Note: Data do not include grants of under $500 million in Iraq and nearly $5 billion in Afghanistan.
220

Contract types

Table E-11 shows that the vast bulk of contract actions are fixed price, but the small number of 

contract actions that are cost-type account for a disproportionate amount of the dollars obligated. 

For example, in Iraq over 93 percent of the actions are fixed price, but they only represent 46 percent 

of the dollars, while only 3 percent of the actions are cost-type contracts and they also represent 46 

percent of the dollars.

Table E-11. Contract type by place of performance

Place/contract type Total actions Obligations % of 

actions

% of 

obligations

Iraq 132,210 $94,881,153,070

Fixed 123,322 44,005,960,544 93.28% 46.38%

Cost 4,234 43,968,769,624 3.20 46.34

Time and materials 961 3,417,970,079 0.73 3.60

Combination 685 1,999,100,088 0.52 2.11

Labor hour 669 1,432,789,136 0.51 1.51

(Blank) 2,316 33,190,703 1.75 0.03

Other 23 23,372,896 0.02 0.02

Afghanistan 123,346 $46,379,340,278

Fixed 117,677 27,079,281,409 95.40 58.39

Cost 2,193 13,776,023,410 1.78 29.70

Time and materials 659 2,372,816,813 0.53 5.12

Combination 440 1,968,678,001 0.36 4.24

Labor hour 149 1,203,154,950 0.12 2.59

Other 19 72,888,385 0.02 0.16

Order dependent 2 13,740,388 0.00 0.03

(Blank) 2,207 (107,243,077) 1.79 -0.23

Other 157,640 $45,961,057,913

Fixed 141,755 33,372,872,577 89.92 72.61

Cost 3,031 11,755,559,493 1.92 25.58

Combination 413 530,398,985 0.26 1.15

Time and materials 375 158,531,434 0.24 0.34

(Blank) 11,292 93,477,858 7.16 0.20

Labor hour 743 49,596,501 0.47 0.11

Other 31 621,065 0.02 0.00

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.
221

A P P E N D I X E

Contract methods

Table E-12 depicts the contract methods used from FY 2002 through the end of the second quarter FY 

2011 and shows that the vast bulk of them were delivery orders against indefinite-delivery vehicles 

(IDVs). The next biggest category as measured by actions is purchase orders, which are typically used 

for lower-value obligations. In Iraq, for example, 40 percent of actions were completed by purchase 

order, but these actions only represented 4 percent of the dollars obligated.

Table E-12. Actions and dollars by award type and place of performance

Place/award type Total actions Total obligations % of actions % of total 

obligations

Iraq 132,210 $94,881,153,070 

Delivery order 59,074 76,244,664,906 44.68% 80.36%

Definitive contract 16,916 14,435,561,970 12.79 15.21

Purchase order 52,767 4,119,258,556 39.91 4.34

BPA call 3,453 81,667,637 2.61 0.09

Afghanistan 123,346 $46,379,340,278 

Delivery order 50,076 32,864,923,266 40.60 70.86

Definitive contract 18,707 10,797,334,364 15.17 23.28

Purchase order 47,927 2,176,077,903 38.86 4.69

BPA call 6,636 541,004,745 5.38 1.17

Other 157,640 $45,961,057,913 

Delivery order 113,866 33,171,469,990 72.23 72.17

Definitive contract 5,954 10,265,792,650 3.78 22.34

Purchase order 21,885 2,494,607,739 13.88 5.43

BPA call 15,935 29,187,533 10.11 0.06

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.
222

Number of single offers received

Table E-13 displays the number of times single offers were received and the extent of competition for 

definitive contracts as reported in FPDS-NG for FY 2002 through the end of the second quarter FY 

2011. Data are presented for each agency and for the grand total on an action-count basis. We count 

only definitive contracts that are initial-award actions and exclude actions that represent modifications 

to initial awards. Also excluded are the large volume of delivery orders and other awards made 

as purchase orders and Blanket Purchase Agreements (BPAs).

Table E-13 shows there are 19,666 initial-award definitive contracts by Defense over this period. Of this 

total, 16,232 (or 82.5 percent) were awarded based on Defense receiving only a single offer. Yet, 15,778 

out of the 16,232 single offers were coded as full and open competition because a competitive process 

was followed. [Note: We do not know whether the benefits of following a competitive process are 

realized by the government when only a single offer is received.]

Table E-13. Number of single offers received and competitive status of new definitive contracts

Department/

initial award 

(Mod = 0)

number of 

offers received 

= 1

Competed 

under 

simplified 

acquisition 

procedures 

(SAP)

Follow 

on to 

competed 

action

Full and 

open 

competition

Full and 

open competition 

after exclusion of 

sources

Not 

available 

for competition

Not 

competed

Not 

competed 

under 

SAP

Blank

Total 

initial 

awards - 

definitive 

contracts1 offer 

received

Total initial 

awardsdefinitive 

contracts

USAID 1 47 54 19 1 196 318 828

Defense 10 3 15,778 112 86 234 8 1 16,232 19,666

State 10 20 8 10 56 17 121 508

Grand total 21 50 15,852 139 97 486 25 1 16,671 21,002

Source: FPDS-NG FY 2002 through end of second quarter FY 2011, data extracted June 12, 2011.

Contract method and extent of competition

Table E-14 shows the contract methods and extent of competition from FY 2002 through the end 

of the second quarter FY 2011, as reported in FPDS-NG. Notable is the large dollar-value of delivery 

orders that are reported as full and open competition. This is the result of a reporting convention 

that reported all delivery orders under an IDV based on the way the original IDV was reported. So, if a 

cost-type IDV was originally competed, then each cost-type delivery order under that IDV would also 

be reported as full and open competition, although the benefits of competition may not have accrued 

to each delivery order. 

Now newer coding conventions—competitive delivery order (CDO) and non-competitive delivery 

order (NDO)—are to be used. The CDO code is used when firms under a multiple-award IDV are given 

a fair opportunity to compete on a delivery order. Until the new coding is widely implemented, the 

true extent of delivery order competition will be hard to determine.
223

Table E-14. Extent of competition by contract method and by place of performance (obligations)

Place/contract 

method

Competed 

under 

simplified 

acquisition 

procedures 

(SAP)

Competitive 

delivery 

order

Follow on to 

competed 

action

Full and open 

competition

Full and open 

competition after 

exclusion of 

sources

Noncompetitive 

delivery 

order

Not 

available 

for 

competition

Not 

competed

Not 

competed 

under 

SAP

Unspecified Grand Total

Iraq $97,279,585 $2,462,132,024 $115,261,989 $79,939,453,733 $2,735,764,053 $2,064,635,501 $405,526,427 $6,457,531,871 $58,030,955 $545,536,930 $94,881,153,070Delivery order 23,258,384 2,462,132,024 109,839,403 64,594,271,887 1,765,237,958 2,064,635,501 33,733,971 4,684,447,364 507,108,412 76,244,664,906Definitive contract 16,474,980 4,367,464 11,457,419,292 903,663,500 357,863,323 1,688,459,529 6,629,432 684,450 14,435,561,970Purchase order 46,834,255 1,037,405 3,887,496,553 66,862,595 11,997,293 84,242,746 20,718,159 69,550 4,119,258,556BPA call 10,711,966 17,717 266,000 1,931,840 382,233 30,683,364 37,674,518 81,667,637

Afghanistan $686,291,601 $3,964,704,486 $6,057,563 $35,199,473,932 $1,466,105,751 $1,060,426,723 $876,643,674 $2,512,476,885 $464,860,708 $142,298,955 $46,379,340,278Delivery order 7,090,358 3,964,704,486 5,400,064 23,909,839,557 1,171,361,900 1,060,426,723 734,298,571 1,884,419,638 3,120 127,378,850 32,864,923,266

Definitive contract 632,092,604 9,203,442,295 258,875,257 123,195,835 579,692,700 35,672 10,797,334,364Purchase order 43,284,894 3,390 2,025,493,198 35,868,594 16,626,957 48,325,547 6,475,324 2,176,077,903BPA call 3,823,745 654,110 60,698,883 2,522,311 39,000 458,346,591 14,920,105 541,004,745Other $928,473,541 $178,732,988 $52,227,768 $37,618,912,866 $1,271,553,682 $47,570,237 $786,750,703 $5,017,816,464 $17,762,973 $41,256,690 $45,961,057,913Delivery order 4,042,826 178,732,988 40,399,315 27,698,937,019 926,639,052 47,474,653 112,800,604 4,126,994,683 35,448,850 33,171,469,990Definitive contract 18,587,821 4,509,576 9,157,175,191 329,086,368 77,789 146,325,431 602,039,756 7,990,718 10,265,792,650Purchase order 894,232,617 7,318,877 759,715,616 15,828,262 17,795 519,898,367 288,317,845 9,270,572 7,788 2,494,607,739BPA call 11,610,277 3,085,040 7,726,301 464,180 501,683 5,800,052 29,187,533Grand total $1,712,044,727 $6,605,569,499 $173,547,320 $152,757,840,531 $5,473,423,487 $3,172,632,461 $2,068,920,805 $13,987,825,221 $540,654,636 $729,092,575 $187,221,551,260

Source: FPDS-NG FY 2002 through end of second quarter FY 2011 data, extracted June 12, 2011.
224

Appendix F

Comparing costs of contingency-support 

services performed by military service 

members, federal civilians, and contractors 

One factor in determining the optimal workforce mix 

for providing support services in a contingency is the 

incremental cost of using military service members, 

federal civilians, and private-sector contractors. But 

cost-comparison methodologies are controversial and 

often yield disparate results. 

This appendix presents an analysis of the comparative 

costs of these support options under a number of 

possible circumstances, including who performs the 

function, the characteristics of the function, and the 

characteristics of the particular contingency operation. 

The analysis leads to three general conclusions:

1. For contingency operations that can be supported 

by standing military capabilities, the military is 

generally the most cost-effective solution.

This follows since regular pay and benefits of deployed 

military service members are “sunk” costs—that is, 

they must be paid whether the person is deployed on 

contingency duty in Haiti or is training in Alabama. 

They are not an addition to the overall cost of the contingency mission. Transport costs and special 

pay and benefits are incremental costs of the mission. In contrast, the full cost incurred for contractors 

or new federal civilian hires supporting a contingency operation would be included in the cost of the 

contingency.

2. For larger, prolonged contingencies that would require recruiting and hiring additional civilian 

personnel or increasing military-force strength to meet support needs, contractors are generally 

more cost effective when employing lower wage local- or third-country nationals.

For example, in Iraq about 60 percent of contractor personnel perform life- and installation-support 

work, and another 25 percent or more are engaged in security or construction, or act as translators/

interpreters. The vast majority of these personnel are local or third-country nationals (LNs, TCNs), not 

U.S. citizens. The comparatively low pay and benefits for LNs and TCNs, as compared to military or U.S.-

national federal civilians, enable contractors to be less costly than government in such settings. 

3. In other instances, when contractors rely on U.S. citizens to acquire specialized skills or meet 

other requirements not available from LNs or TCNs, contractor and federal civilian personnel costs 

are roughly comparable.

In these circumstances, criteria other than costs will influence the preferred workforce mix between 

private-sector contractors and federal civilian personnel. Because military “dwell-time” costs—the costs 

of maintaining back-up personnel to rotate into and out of the contingency area—must be recognized 

when a contingency is prolonged, the U.S. military will be the most expensive option.

NOTE: This research appendix makes no 

recommendation for or against using 

contractors. It addresses only the question 

of comparing costs between contractors and 

government personnel. It notes that such 

comparisons involve distinctions among 

the types of costs compared, the duration 

of the contingency, local labor markets, and 

other factors. The analysis is based on critical 

assumptions, and in some cases, limited 

availability and utility of important data 

elements.

 This appendix does not address policy 

or legal restrictions, risks, appropriateness, 

mission criticality, organizational efficiency 

and effectiveness, desired levels of federal 

control, or other considerations that 

either could or must take precedence over 

straightforward cost comparisons.
225

A P P E N D I X F

Background and introduction

This analysis of the incremental costs incurred to support warfighters in a contingency operation 

compares the costs of using full-time equivalent (FTE) military members, federal civilians, and 

contractor personnel. Incremental costs are added costs at the margin, not sunk costs that are 

included in program or budget totals. Because contingencies are not the same, the composition of 

incremental costs is not the same either. The costs depend not only on the function to be performed, 

but also on who performs it, the duration and intensity of the operation, and the force structure 

available when the contingency begins. 

Relatively small-scale/short-lived contingencies, such as the recent contingency in Haiti, can use 

support capabilities that exist within available expeditionary forces. That is, the lowest-cost solution is 

to use existing military forces. 

The incremental costs of deploying an available military-support capability include transportation, 

hazardous-duty pay, and other operating costs, but exclude regular pay and benefits. Pay and benefits 

already incurred by the government are sunk costs: they will not change if deployment for a short 

contingency is required. 

After initial deployment, the military continues to be the lower-cost option if combat-support 

capability is already available within the military. The incremental operating cost to deploy a military 

member is estimated to be about $10,000 per year, depending on distance traveled and family status. 

Table F-1 shows the incremental costs to deploy a military member. This is far less than hiring a new 

federal civilian or obtaining support from a contractor. 

Table F-1. Annual incremental costs to deploy a military service member 

Transportation

Hostile fire/

imminentdanger pay

Family separation 

allowance 

(if service member 

has dependents)

Hardship-duty pay: 

Location, mission, 

involuntary 

extension in Iraq

Total

$2,500 $2,700 $3,000 $2,000 $10,200

Source: Summary of Commission calculations based on Defense data as of July 29, 2011, http://militarypay.defense.gov.

Larger-scale/prolonged contingencies, such as those in Iraq and Afghanistan, require recruiting 

and hiring additional civilian personnel or growing the military force structure because support 

requirements exceed available government resources. In these cases, contractors are generally more 

cost-effective. Military and civilian pay and benefits for new recruits/hires under these circumstances 

are included in incremental government costs. Dwell or rotation costs for the military would also be 

included to the extent that additional recruitment of personnel is required to fill those positions as the 

contingency extends beyond established rotation times.

Contractors are especially cost-effective when performing basic life-support functions if lower-priced 

LNs or TCNs constitute most of a contractor’s workforce.1 In Iraq, for example, three quarters of the 

contractor workforce consists of LNs and TCNs, who provide nearly all contracted life- and installationsupport, security, and construction services.

1. The use of FTE cost comparisons assumes that government and contractor organizations are equally efficient in their use of 

personnel and other necessary resources. In other words, if a function required 100 military or 100 federal civilian employees 

to perform, we assume it would require 100 contractor employees. This assumes equivalent skill sets and task proficiency, 

which is not necessarily true. For example, suppose guarding a forward base requires 100 highly skilled and proficient U.S. 

military troops. If skill sets or proficiency differ, to provide the same or a comparable level of security, the same function may 

require 75 or 300 contractor employees (numbers are for illustration only).
226

Table F-2 summarizes the study findings. For lower- and mid-level-worker skills, contractors employing 

local or third-country nationals are less costly than military or federal civilian employees. However, 

when contractors employ U.S. citizens in higher-skill positions (as may be the case with communications 

support and professional services), their costs are roughly equivalent to military and federal civilians in 

comparable grade levels. The military is substantially more expensive when the contingency extends 

beyond rotation cycles and dwell costs are recognized. 

Table F-2. Annual cost comparison for larger scale/prolonged contingency

Skill

level Work example Contractor billing rate Military FTE costs Federal civilian FTE costs

Lower Food service LN = $35,700

TCN = $67,600

E-3 (Private 1/C) = $86,671 

($251,758 with dwell)

WG (wage-grade, $13/

hr base) = $81,189

Middle Construction: 

plumber, electrician

LN = $35,700

TCN = $67,600

E-4 (Corporal) = $97,439 

($283,037 with dwell)

WG ($22/hr base) = 

$137,397

Higher Communications 

support

U.S. citizen = 

$185,700 to $231,600

0-3 (Army Captain) = 

$175,335 ($509,309 with 

dwell) 

GS-12, Step 5 = 

$178,502

Source: Contractor billing rate, see Table F-7; Military FTE costs, see Table F-4; Federal civilian FTE costs, see Table F-5. 

Conclusions are based on the comparative cost of FTE workers supporting a large-scale/prolonged 

contingency. Comparative costs for military, federal civilian, and private-sector contractor FTEs are an 

approximation for the total organizational cost of performance for an activity. Data to compare the 

total organizational cost of performance, which depends on relative overall efficiency, are generally not 

available. 

Cost differences can be substantial in their impact and are very sensitive to Defense’s practice with 

regard to deployment times and refresh/training times at home, termed “dwell times,” as discussed 

below.

Methodology: Cost-concepts and scenarios

Our general concept for measuring support costs associated with a contingency is to count those 

incremental costs that would be incurred in supporting a contingency operation—costs that would 

otherwise be absent. Costs included in this concept depend on the nature of the contingency, 

particularly its intensity and duration. Two possible scenarios are set out below.

	Small-scale/short contingency: Here the contingency can be carried out by deployment of 

available government resources (military and federal civilians) and even if rotation of original 

personnel/units occurs, replacement personnel/units are available in the existing force. In this 

scenario, incremental costs for government personnel include transportation, hazardous-duty 

pay, and post-differential/danger/overtime pay for civilians, but exclude normal military and 

civilian salary and benefits. Salary and benefits for existing military and civilians are incurred 

irrespective of whether there is a contingency operation.

Substituting contractors would imply incurring incremental costs representing the full personnel 

costs involved (salary and benefits), plus overhead and profit, the cost of contract administration, 

and operating costs similar to those incurred by the government. In this situation, the use 

of government-only deployable resources without contractor support would be the most 
227

A P P E N D I X F

cost-effective alternative for support during the contingency. Of course, when no contingency 

exists, peacetime costs of the government forces would continue to be incurred.2

	Large-scale/prolonged contingency: The contingency operation in this second scenario is 

so extensive that the available force structure would have to be augmented by new recruits, 

civilian hires, or contractors to meet the support requirement. 

First, the operation would be sufficiently long that stateside rotation of military personnel 

to fulfill dwell requirements becomes necessary and thus substantial dwell costs would be 

incurred. Dwell costs depend on the length of deployment, rotational time at home, and 

the length of the contingency. For example, one-year deployments followed by a two-year 

rotation require three FTEs to support a contingency lasting three years or more. 

Extending deployments and reducing rotation time reduces dwell costs but creates issues 

for retention, recruiting, and morale. Also, using personnel during stateside rotation 

to satisfy requirements that otherwise would require a new hire reduces dwell costs. 

Calculations were made using a dwell-multiple of three assuming a one-year deployment 

followed by a two-year rotation. 

Second, in the case of the federal civilian solution, incremental costs include salary and 

benefits of the new civilian hires required to backfill the deployed civilian’s position at 

home. Civilian costs would also include overtime, post differential, and danger pay.

The third alternative would be to contract for the required support. The cost of this 

alternative would include contractor personnel pay and benefit costs, overhead, profit, 

and contract administration costs incurred by the government. 

Findings

The following cost analysis applies to a large-scale/prolonged-contingency scenario. It is based on 

current policy that the combat-support and combat service-support portion of standing military 

forces be maintained at a low level (to avoid high peacetime costs and maximize combat capabilities) 

and augmented as needed by contractors. Under this policy, providing support services by using 

government personnel (military or civilian) would require increasing the force structure or hiring 

additional civilian employees, or both. All cost elements (especially pay and benefits) would be 

incurred for the contingency and are thus used in our comparisons.

Military costs

Determining the cost of military personnel is complex because of the variety of special-pay 

categories—benefits that extend beyond the affected military department, even beyond Defense, and 

family situations of military members. Military compensation is unusual in that a high proportion is 

paid in the form of benefits—some paid out for a lifetime—rather than cash. The cash-compensation 

portion is relatively modest, so the actual cost used in comparative analysis depends heavily on which 

benefits are included. In general, military personnel receive base pay according to their rank and years 

of service. They also receive allowances for subsistence and housing (adjusted for locality), and may 

also be entitled to other special types of pay. 

2. An exception to this concept would be the deployment of Guard and/or Reserve units. Their personnel would be paid on 

a full-time basis as opposed to much lower pay and benefit expenses during non-active status. Thus, most of their pay and 

benefits would be incremental in a contingency operation.
228

There are several alternatives typically used to determine the cost of a military member: cash 

compensation, regular military compensation, composite (also called programmed) rate, and the 

full cost to the government. In 2007, the Congressional Budget Office (CBO) summarized the most 

common methods of determining military compensation.3 The most comprehensive method was 

used in this study: the full cost to the government.

Cash compensation: This typically includes basic pay, plus the basic allowance for subsistence, plus 

the basic allowance for housing (based on location and dependent status). 

Regular military compensation: This includes basic pay, housing, and subsistence allowances, plus 

the tax advantages (foregone government revenue) on those allowances. This can also be extended to 

include state and local tax benefits. Benefits are added to these cash amounts. According to the CBO, 

“Data suggest that military personnel receive about 50 percent of their total compensation in such 

benefits.”4

Composite Rate (or Programmed Amount): This consists of average basic pay plus retired-pay 

accrual, Medicare-Eligible Retiree Health Care (MERHC) accrual, basic allowance for housing, basic 

allowance for subsistence, incentive and special pay, permanent change of station expenses, 

and miscellaneous pay. It includes a per capita cost of $5,560 of MERHC accrual.5 These rates are 

summarized in the Annual Defense Composite Rate (also known as the Programmed Amount).6

Full cost to Defense: Directive-Type Memorandum (DTM) 09-007 adds other factors to the composite 

rate to present a fuller accounting of the cost of military personnel. It adds costs for recruitment and 

advertising, training, subsidized groceries (commissaries), education assistance, child-development 

services, and other costs that are incurred through the provision of non-monetary benefits to military 

members.7 This equates to the full cost to Defense. 

Full cost to the government: The referenced DTM 09-007 defines full cost to the government by 

adding other departments’ costs to those shown above. Included are:

▪ Department of Education for impact aid to schools,

▪ Department of Labor for training and employment of veterans,

▪ Department of the Treasury payments into the Military Retirement Fund, and

▪ Department of Veterans Affairs for veterans’ benefits.8

3. Congressional Budget Office Pub. No. 2665, “Evaluating Military Compensation,” June 2007, 2.

4. Ibid.

5. Office of the Under Secretary of Defense, Program/Budget, memorandum, “Department of Defense (DoD) Military 

Personnel Composite Standard Pay and Reimbursement Rates FY 2009.” 

6. Office of the Secretary of Defense, Cost Assessment and Program Evaluation, Directive-Type Memorandum (DTM) 09-007, 

“Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contract Support,” January 29, 2010, 23.

7. Ibid., 24.

8. Ibid., 24-25.
229

A P P E N D I X F

These military cost concepts are summarized in Table F-3.

Table F-3. Summary of cost concepts for military members

Military Cost Concept Definitions

Cash compensation Basic pay, basic allowance for housing (BAH), basic allowance for subsistence 

(BAS)

Regular military 

compensation

Adds to above: Federal-tax advantage on BAH, BAS

Composite Rate Adds to above: Retired-pay accrual, MERHC accrual, incentive and special pay, 

permanent change-of-station expenses, and miscellaneous pay

Deletes from above: Federal tax advantage on BAH, BAS

Full cost to Defense Adds to above: Costs for recruitment and advertising, training, subsidized 

groceries (commissaries), education assistance, child-development services, and 

other costs that are incurred through the provision of non-monetary benefits to 

military members

Full cost to the 

government

Adds to above: Department of Education for impact aid to schools, Department 

of Labor for the training and employment of veterans, Department of the 

Treasury payments into the Military Retirement Fund, and Department of 

Veterans Affairs for veteran’s benefits

Sources: Office of the Secretary of Defense, Cost Assessment and Program Evaluation, Directive-Type Memorandum (DTM) 

09-007, “Estimating and Comparing the Full Costs of Civilian and Military Manpower and Contract Support,” January 29, 2010, 

24-25; Congressional Budget Office Pub. No. 2665, “Evaluating Military Compensation,” June 2007, 2.

The total amount of overhead cost, such as that for headquarters operations, incurred by the 

government for each service member is not included in any of the cost definitions above. While 

presumably small for each individual, it is an unknown factor when comparing military to contractor 

costs, where all such costs are included in the contractor’s billing rates. OMB Circular A-76, in the 

computations program COMPARE, uses a factor of 12 percent for overhead for government employees. 

We have adopted this rate as a starting point in our analysis.

Although none of the basic costing methodologies discussed above focus on the special-pay rates 

that are likely applicable in contingency operations, we need to include them in our discussion. In 

certain areas, a member of the uniformed services may be entitled to Hostile Fire/Imminent Danger 

pay at the rate of $225 per month.9 This would be $2,700 over 12 months.

A service member with dependents who serves an unaccompanied tour of duty may be entitled to a 

family-separation allowance (FSA) of $250 per month. FSA accrues from the day of departure from the 

home station and ends the day prior to arrival at the home station.10 This would total $3,000 over 12 

months.

Military Hardship Duty Pay (HDP) is based on several considerations. HDP based on location (HDP-L) 

is intended to recognize extraordinarily arduous living conditions, excessive physical hardship, 

or unhealthy conditions, and ranges from $50 to $150 per month based on the level of hardship. 

HDP based on mission (HDP-M) is paid for performing designated hardship missions. HDP of $200 

per month based on involuntary extension in Iraq is paid to those serving beyond a 12-month 

deployment. The maximum total of all three HDPs cannot exceed $1,500 per month.11

9. Office of the Under Secretary of Defense, Personnel and Readiness, Military Compensation, “Hostile Fire/Imminent Danger 

Pay (HFP/IDP),” as of July 29, 2011, http://militarypay.defense.gov. 

10. Office of the Under Secretary of Defense, Personnel and Readiness, Military Compensation, “Family Separation Allowance,” 

as of July 29, 2011, http://militarypay.defense.gov. 

11. Office of the Under Secretary of Defense, Personnel and Readiness, Military Compensation, “Hardship Duty Pay (HDP),” as 

of July 29, 2011, http://militarypay.defense.gov. 
230

In its military-compensation study, CBO added about 5 percent to total pay for these special pay rates, 

and we are adopting the same approach. 

Based on the above, we recommend estimating military pay as shown in Table F-4. This starts with 

the readily available Annual Defense Composite Rate. It adds the adjustments to calculate the cost to 

Defense and the overall cost to the government for the military member. Then we add the factors for 

overhead and special-pay rates typical of a contingency operation. We did not include any treatment 

of the revenue consequences for the government of not taxing military benefits. 

A major factor in the cost of the military is dwell time, or the time spent between deployments. This 

time is necessary for rest, recovery, and family time following a combat deployment, and for training 

and preparation time for the next deployment. At times, for example, the Army’s goal has been to have 

12-month deployments with 24 months of dwell time, or a 1-to-2 dwell ratio. In order to always have a 

unit deployed, an additional two units are required to provide sufficient dwell time. However, the Army 

has sometimes only been able to achieve a 1–to-1.2 dwell ratio and has said that in the future it wants 

to have a 1-to-2.5 dwell ratio. The calculations below used the 1-to-2 dwell ratio, but the total cost 

changes considerably if either 1–to-1.2 or 1-to-2.5 were used. In addition to length of deployment and 

dwell time, dwell costs are reduced if personnel are used during home rotation to satisfy home-based 

requirements that would otherwise require a new hire or a private contractor.

Table F-4. Example of military FTE cost estimates

O-3

(Army Captain)

E-4

(Corporal)

E-3

(Private 1/C)

Annual Defense Composite Rate (2010 dollars) $122,616 $56,378 $47,221 

Adjustments from DTM 09-007 for Defense costs 

(2008 dollars)*

16,997 16,997 16,997

Additional adjustments from DTM 09-007 for other 

costs to the government (2008 dollars)**

12,659 12,659 12,659

Overhead (12 percent on Composite Rate) 14,715 6,765 5,667

Total FTE cost in United States $166,987 $92,799 $82,544 

Contingency special pay (5 percent) 8,349 4,640 4,127 

Total FTE cost for year deployed $175,335 $97,439 $86,671 

Total with dwell ratio at 1-to-2*** $509,309 $283,037 $251,758

Notes: *Adjustments include costs for health care, education assistance, discount groceries, child development, training, 

recruitment and advertising, defense education activity and family assistance, manpower management, and other personnel 

support.

**Child education-impact aid ($928), Veterans’ employment and training ($9), Treasury contribution to retirement ($7,119), 

Treasury contribution for concurrent receipts ($1,236), Veterans’ benefits ($3,367), totaling $12,659. 

*** Total costs include special pay for the one year deployed.

Sources: Office of the Under Secretary of Defense, Program/Budget, memorandum, “FY 2009 Department of Defense (DoD) 

Military Personnel Composite Standard Pay and Reimbursement Rates,” August 18, 2008; Office of the Secretary of Defense, 

Cost Assessment and Program Evaluation, Directive-Type Memorandum (DTM) 09-007, “Estimating and Comparing the Full 

Costs of Civilian and Military Manpower and Contract Support,” January 29, 2010.
231

A P P E N D I X F

Federal civilian costs

Federal civilian employee costs in an overseas contingency are primarily driven by six factors: grade/

step/salary, benefits, post differential, danger pay, overtime hours, and overhead. We used all six 

factors to develop the total cost to the government for federal civilian employees.

The grade and step of federal civilian employees under the General Schedule (GS) establishes their 

basic pay rates. When stationed overseas, they are to receive the base pay for their current grade and 

step.12 For personnel stationed in the United States, those rates often have locality pay added. When 

a person is overseas on a temporary basis or may still have dependents living in the United States, 

employees may still draw locality pay based on the rate for their home station.

Some blue-collar employees in the United States are under the federal wage system of the Office of 

Personnel Management, which sets their pay based on pay in their local area as determined by the 

Department of Labor. This group would typically include such trades as plumbers and electricians, and 

its members are often referred to as wage-grade (WG) employees.

Benefits for federal civilian workers including retirement, health care, Medicare, and insurance are 

36.25 percent of an employee’s base pay.13

When overseas, a federal civilian employee is entitled to post-differential pay established by the 

Department of State. Typically, the highest rate—35 percent—will apply to a post in a contingency 

area. Danger pay at 35 percent, also set by the Department of State, will typically apply in a 

contingency area. An employee may also receive a post cost-of-living allowance; however, there 

currently is no additional amount for Iraq or Afghanistan.14

Overtime pay for work above a regular 40-hour work week is also a part of the compensation for 

some federal civilian employees. In the early days of a contingency operation, the number of hours 

may be established as a programmed amount. This may be as high as 40 hours of overtime per week. 

Overtime is usually paid at a rate of time-and-a-half for the employee, but is capped at the GS-9 step 5 

rate of $32.90 (2010) or the person’s regular hourly rate, whichever is more.15

It is reasonable to count as an incremental contingency-related cost all of the federal civilian’s full 

salary and benefits while deployed, as the work being done prior to deployment must presumably 

be done by those remaining, possibly using overtime hours. Funds may be provided to replace the 

federal civilians at their home stations, but such backfills are problematic because of the difficulties 

of the federal hiring system and the difficulty of finding new hires with the right skills. If such backfills 

do occur, we assume the cost of this new hire would generally be the same as the cost of the person 

replaced. Given this assumption, the deployed civilian’s salary and benefits are attributable to the 

cost of the contingency. As noted, OMB Circular A-76 uses a factor of 12 percent for overhead for 

government employees. 

Finally, because federal civilian employees’ compensation is subject to federal income tax, a 

recoupment of 20 percent (the average tax rate according to the Internal Revenue Service), should be 

deducted from the compensation costs of these employees to place federal civilian employees on a 

basis comparable to U.S.-citizen contractor employees or military personnel.

12. Office of Personnel Management, Salary Table 2010-GS, as of July 29, 2011, http://www.opm.gov.

13. Office of Management and Budget memorandum M-08-13, “Update to Civilian Position Full Fringe Benefit Cost Factor, 

Federal Pay Raise Assumptions, and Inflation Factors used in OMB Circular No. A-76, ‘Performance of Commercial Activities’,” 

March 11, 2008.

14. Department of State, “Summary of Allowances and Benefits for U.S.G. Civilians under Department of State Standardized 

Regulations (DSSR),” as of August 3, 2009, http://aoprals.state.gov.

15. Office of Personnel Management, Salary Table 2010-GS, as of July 29, 2011, http://www.opm.gov.

Note: Another factor to consider is that these special-payment situations are likely to drive the employee’s total 

compensation above the level of the salary of the Vice President of the United States, $230,700 for 2010, which is not 

normally allowed. However, in a contingency operation, it may be likely that this limitation will be waived by Congress, at 

least for Defense employees. Otherwise, a federal civilian employee reaching this ceiling would have to be replaced in theater 

with a comparable employee with resulting disruption and additional relocation costs. These costs are not considered in our 

analysis.
232

In Table F-5 below we provide some examples of total government costs for federal civilian workers 

using the above assumptions. The GS-12 step 5 is treated as a skilled journeyman-level grade in and 

among the general-schedule workers. The wage-grade base-pay examples are typical hourly rates the 

government is currently offering for plumbers, electricians, and food-service workers.16

Table F-5. Examples of total costs for federal civilians in contingency operations

Row Item GS-12, 

step 5

Wage grade

 at $22/hour 

(plumber/

electrician)

Wage grade 

at $13/hour

(food service)

1 Annual salary (base) $68,310 $45,914 $27,131 

2 40 hours of overtime (50 weeks) 65,800 66,000 39,000 

3 Post differential pay (35 percent) 23,909 16,070 9,496 

4 Danger pay (35 percent) 23,909 16,070 9,496 

5 Benefits (36.25 percent of row 1) 24,762 16,644 9,835 

6 Overhead (12 percent of row 1) 8,197 5,510 3,256 

7 Total $214,887 $166,208 $ 98,214 

8 Deduct federal taxes recouped

(rows 1 to 4 at 20 percent) ($36,385) ($28,811) ($17,025) 

9 Total after taxes $178,502 $137,397 $81,189 

Source: Office of Personnel Management, Salary Table 2010-GS, as of July 29, 2011, http://www.opm.gov.

Contractor costs

The cost of contractor support depends critically on the skill level needed, location, labor-market 

supply, and other characteristics of the particular contingency operation. Those characteristics 

influence how much a contractor pays to attract U.S. citizens, as well as the cost and availability of local 

and third-country nationals. Our comparisons are based on the government’s actual experience for 

obtaining contractor support in Iraq.

Workforce Composition: In Iraq, about 25 percent of the contractor workforce consists of LNs. 

Approximately 25 percent of the workforce are U.S. citizens and the remaining 50 percent TCNs. The 

vast majority of the contractor workforce (60 percent) is engaged in base-support activities, mainly 

under the LOGCAP program. Another large portion, nearly 30 percent, divides roughly evenly among 

security, construction, and translation services.17

Services Performed: The contract workforce involved in providing support functions tends to be 

concentrated in one of the nationality categories. Third-country nationals dominate life-support and 

security services. Iraqi nationals dominate construction and translation services. U.S. citizens dominate 

16. Office of Personnel Management, Salary Table 2010-GS, as of July 29, 2011, http://www.opm.gov.

17. Brig. Gen. William N. Phillips, Commanding General, Joint Contracting Command-Iraq/Afghanistan, memorandum, 

“Contractor Support of Multi-National Force-Iraq (MNF-I) Operations,” July 17, 2009; Brig. Gen. John F. Wharton, Chief of Staff, 

U.S. Army Materiel Command, briefing to Commission, January 12, 2009.
233

A P P E N D I X F

communications support. See Table F-6 below for data on headcounts as of June 20, 2009. Shaded 

cells indicate the numerically dominant value.

Table F-6. Contractor workforce by activity performed in Iraq 

As of June 20, 2009

Mission Category Total 

(% of total) U.S. citizen Iraqi LN TCN 

Base life support 71,783 (60%) 18,093 9,869 43,821 

Security 13,145 (11%) 773 3,686 8,686 

Construction 10,090 (8%) 184 8,297 1,609 

Translators/interpreters 9,128 (8%) 2,390 6,738 0 

Logistics/maintenance 3,800 (3%) 2,778 314 708

Training 2,694 (2%) 2,397 54 243

Communications support 2,183 (2%) 2,070 48 65 

Transportation 1,616 (1%) 28 1,364 224 

Other 5,267 (4%) 2,828 1,670 769 

Total 119,706

(100%) 

31,541

(26%) 

 32,040

(27%)

 56,125 

(47%) 

Note: Shaded cells represent the leading source of the workforce in each category.

Source: Brig. Gen. William N. Phillips, Commanding General, Joint Contracting Command-Iraq/Afghanistan, memorandum, 

“Contractor Support of Multi-National Force-Iraq (MNF-I) Operations,” July 17, 2009, 1. 
234

Table F-7 displays data on contractor FTE costs in Iraq—both direct-labor only, and fully loaded and 

billed. Billable rates per FTE are broken out by workforce nationality, but are reported only for a single 

point in time and are based on a sample of 1,000 contracts. Billable rates are a representation of the 

contractor’s full cost to the government and include the contractor’s overhead, other direct costs, and 

fee. Thus, billable rates are the best basis to compare contractor costs to our computation of military 

and federal-civilian FTE costs.

FTE Costs: Cost information is based on actual contract data on two alternative FTE cost measures: 

direct-labor cost per FTE and billing-cost per FTE. 

The first, direct-labor cost per FTE, comes from the Army Contractor Manpower Reporting Application, 

where contractors are required to report direct-labor costs per FTE, exclusive of benefits, overhead, 

general and administrative, and other direct costs.18 These costs are self-reported by the contractors 

and vary widely, with an unknown amount for the benefits that would make them more comparable 

to costs used elsewhere in our analysis. As a result, full use of these data was not possible.

The second measure, billing-cost per FTE, is taken from a July 17, 2009 memorandum from the 

Commanding General, Joint Contracting Command-Iraq/Afghanistan (JCC I/A) and are partially 

reproduced in a briefing presented to the Commission by the Chief of Staff, U.S. Army Materiel 

Command. Billing costs per FTE are based on a data sample of 1,000 contracts compiled by the Theater 

Financial Management Cost Team. The values presented by these sources coincide, with the exception 

of the FTE billing costs for U.S. citizens. For U.S. citizens, the two reported values, depending on the 

source, are $185,700 or $231,600.19

Table F-7. Contractor costs in Iraq

As of June 20, 2009

U.S. citizen Iraqi LN TCN All

Direct labor costs per FTE 

(excludes benefits, overhead, 

general and administrative, and 

other costs)

NA NA NA $66,709 = 

FY 2008

$78,228 = 

FY 2009 

Contract billing costs per FTE $185,700 or

$231,600 

$35,700* $67,600 NA

* To the extent that LNs live off base and depend on the local economy for housing and subsistence rather than having 

government-furnished housing, they represent an even lower relative cost to the government.

Sources: Brig. Gen. William N. Phillips, U.S. Army, Commanding General, Joint Contracting Command-Iraq/Afghanistan, 

memorandum, “Contractor Support of Multi-National Force-Iraq (MNF-I) Operations,” July 17, 2009, 1; Brig. Gen. John F. 

Wharton, Chief of Staff, U.S. Army, U.S. Army Materiel Command, briefing to Commission, January 12, 2009.

18. U.S. Army, “FY 2009 Inventory of Contracts for Services.”

19. Tyler Stopa and Karl Kalb, Calibre, Theater Financial Management Cost Team, telephone interview with Commission, 

March 9, 2010.
235

A P P E N D I X F

Conclusions

Based on the cost assumptions and data analyses presented above, heavy reliance on local nationals 

and third-country nationals (especially for logistics services and installation support) leads to 

considerable cost savings compared to the military, federal government civilians, or U.S. citizens used 

by contractors. Local and third-country nationals also offer significant cost advantages. 

For the balance of activities that rely on contractor support using U.S. citizens, the cost advantages of 

contracting versus performing the function using military or federal civilians is less clear.

▪ For longer-term contingency operations where dwell costs are recognized, contractors are 

more cost-effective than military personnel.

▪ U.S. citizens employed by contractors are cost-comparable with the use of federal employees in 

similar skill or occupational categories. The relative advantage of one over the other would rest 

on factors other than FTE (labor) cost. The relative efficiency of the government or contractor 

organization performing the work in question would determine the more cost-effective source. 
236

Appendix G

Commissioners

Michael J. THIBAULT, Co-Chair. Appointed by Speaker of the House. Jointly designated as Co-Chairman by Speaker 

of the House and Senate Majority Leader. Director, Navigant Consulting, 2007–2008; Chief Compliance Officer, Unisys 

Federal Systems, 2005–2006; Deputy Director, Defense Contract Audit Agency, 1994–2005. BA, Southern Oregon; MA, 

Central Michigan, 1984; CPA (retired); U.S. Army, 173rd Airborne Brigade, 1965–1968. 

Christopher SHAYS, Co-Chair. Appointed by House Minority Leader. Jointly designated as Co-Chairman by House 

Minority Leader and Senate Minority Leader. Member, U.S. House of Representatives, for Connecticut’s 4th District, 

1987–2009. Formerly Chairman, then Ranking Member, Subcommittee on National Security and Foreign Affairs of the 

Oversight and Government Reform Committee; member, Committees on Homeland Security and Financial Services. 

Representative, Connecticut General Assembly, 1975–1987. Peace Corps volunteer, 1968–1970. BA, Principia College; 

MBA, MPA, New York University.

Clark Kent ERVIN. Appointed by Speaker of the House. Director, Homeland Security Program, Aspen Institute, 2005–

present; appointed by Secretary of Homeland Security Janet Napolitano to Homeland Security Advisory Council; 

Member, Board of Directors, Clear Path Technologies, LLC; Inspector General, United States Department of Homeland 

Security, 2003–2005; Inspector General, United States Department of State, 2001–2003; Deputy Attorney General and 

General Counsel of Texas, 1999–2001; Assistant Secretary of State of Texas, 1995–1999; Locke, Liddell, & Sapp, LLP, 

Lawyer, 1993–1995; Associate Policy Director, White House Office of National Service, 1989–1991; Vinson & Elkins, LLP, 

Lawyer, 1985–1989. AB, Harvard; MA, Oxford; JD, Harvard.

Grant S. GREEN. Appointed by the President. Chairman, 2005–present, Chairman and President, 1996–2000, Global 

Marketing and Development Solutions Inc.; President, “America Supports You Fund,” 2007–2009; Under Secretary 

of State for Management, 2001–2005; Executive Vice President and Chief Operating Officer, major consulting and 

marketing company, 1989–1996; Assistant Secretary of Defense, 1988–1989; Special Assistant to the President, 

Executive Secretary for the National Security Council, 1986–1988; senior management positions, Sears World Trade, 

1983–1986. BA, Arkansas; MS, George Washington, 1979. Retired colonel, U.S. Army. Formerly Acting Co-Chair of the 

Commission.

Robert J. HENKE. Appointed by Senate Minority Leader. Assistant Secretary for Management (Chief Financial 

Officer and Chief Acquisition Officer), Department of Veterans Affairs, 2005–2009; previously, Principal Deputy 

Under Secretary of Defense (Comptroller); Professional Staff Member, U.S. Senate Committee on Appropriations, 

Subcommittee on Defense; Presidential Management Intern with the Office of the Assistant Secretary of the Navy 

(Financial Management & Comptroller); General Electric Company; U.S. Navy. BA, Notre Dame; MPA, Syracuse.

Katherine V. SCHINASI. Appointed by Senate Majority Leader, 2010, replacing Linda J. GUSTITUS, who served 

2008–2009. Senior advisor to The Conference Board, a non-profit research organization, 2009–2010. Government 

Accountability Office, 1978–2009, retired as managing director for acquisition and sourcing management. Portfolio 

included operations in Departments of Defense, State, and Homeland Security, and cross-governmental acquisitions. 

Past lecturer at Defense Acquisition University, Industrial College of the Armed Forces, and Naval Postgraduate 

School. Appointed to federal Senior Executive Service, 1998. BA, government and politics, University of Maryland; MA, 

international relations, School of International Service, American University.

Charles TIEFER. Appointed by Senate Majority Leader. Professor of Law, University of Baltimore School of Law, 1995–

present (government contracts, contracts, and legislation); U.S. House of Representatives, General Counsel (Acting), 

1993–1994; Solicitor and Deputy General Counsel, 1984–1995. Assistant Senate Legal Counsel, U.S. Senate, 1979–1984; 

Trial Attorney, Civil Rights Division, U.S. Department of Justice, 1978–1979; Law Clerk, U.S. Court of Appeals for the D.C. 

Circuit, 1977–1978. BA, Columbia summa cum laude; JD, Harvard magna cum laude.

Dov S. ZAKHEIM. Appointed by the President. Senior Vice President, Booz Allen Hamilton, 2004–2010; Senior Fellow, 

CNA Corporation, 2010–present; Senior Advisor, Center for Strategic and International Studies, 2010–present; Under 

Secretary of Defense (Comptroller) and Chief Financial Officer, 2001–2004 (coordinator of Department of Defense 

civilian programs in Afghanistan, 2002–2004); Corporate Vice President, System Planning Corporation, and Chief 

Executive Officer, SPC International Corporation, 1987–2001; Deputy Under Secretary of Defense (Planning and 

Resources), 1985–1987; Department of Defense, various senior executive service positions, 1981–1985; Congressional 

Budget Office, 1975–1981. BA, Columbia; DPhil, Oxford.

Note: Appointing officials were those occupying office in 2008–2009.
237

Marshall Adame

Professional Staff Member

Jessica Baker

Program Analyst

Bill Barclay

Professional Staff Member

Steve Bassermann

Program Analyst

Captain Tina Benivegna

Detailee-DCMA, Air Force

Richard Beutel

General Counsel

Kathryn Bloomberg

Program Analyst

Cynthia Bodnar

Program Analyst

Anthony Box

Professional Staff Member

John Brosnan 

Senior Counsel

Rosemary Byrd

Deputy Study Director 

Catherine Carrell

Detailee-DCAA

Tara Chapman

Program Analyst

Marquittia Coleman

Executive Assistant

Morgan Cosby

Counsel

Gray Coyner

Team Lead 

Robert Curtis

Professional Staff Member 

Stephen Dillard

Professional Staff Member 

Norbert Doyle

Group Lead

James Durso

Team Lead

David Fitzgerald

Group Lead

Garrett Golubin

Program Analyst

Joe Graziano

Team Lead

Gloria Greenhow

Executive Assistant

Alicia Haley

Program Analyst

Marian Harvey

Professional Staff Member

William “Mike” Hatchett

Detailee-USACE

Donna Heivilin

Professional Staff Member

Megan Herberger

Program Analyst

Clark Irwin

Communications Director

James Jeffery

Professional Staff Member

David Johnson

Detailee-DCAA

Parker Laite

Program Analyst 

Philip Lee

Legal Intern 

Denean Machis

Group Lead

Kevin Maloy

Team Lead, Detailee-Department of State

Curt Malthouse

Detailee-DoD IG

Ambassador Gary Matthews

Professional Staff Member

Robert Melby

Professional Staff Member

Anne McDonough

Research Librarian and Archivist

Zen McManus 

Program Analyst

Clark Mercer

Program Analyst 

George Mong

Professional Staff Member

Myron Myers

Professional Staff Member

Appendix H

Commission staff

Kristen Nelson

Team Lead

Brendan Orsinger

Program Analyst

Denis Orsinger

Professional Staff Member

Gregory Picur

Detailee-USAID

David Reed

Professional Staff Member 

Frank Sailer

Technical Support

Don Schlienz

Professional Staff Member

Major Benjamin Sherrill

Detailee-DCMA, Air Force

Lane Smith

Professional Staff Member

Karen Sorber

Study Director

Steven Sternlieb

Team Lead

Ronald Straight

Professional Staff Member

Jazather Thompson

Office Manager

Jo-Ann Thompson

Administration Assistant 

Adam Weaver

Counsel

Diana White

Executive Administrator

Carmen Williams

Technical Support, Detailee-DoD IG 

Linda Williams

Professional Staff Member 

Barbara Wolfson 

Senior Editor

Colonel Kel Wood

Group Lead, Detailee-Army

Anthony Wubbena

Program Analyst

Susan Yarbrough

Detailee-USACE

Robert B. Dickson, Executive Director Jeffrey Brand, Deputy Executive Director
238

ACOD Armed Contractor Oversight 

Division or Directorate

AFCEE U.S. Air Force Center for 

Engineering 

and the Environment

AMC U.S. Army Materiel Command

ANA Afghan National Army

ANP Afghan National Police

ANSF Afghan National Security Forces

APPF Afghan Public Protection Force

CAO Chief Acquisition Officer

CENTCOM U.S. Central Command

CERP Commander’s Emergency 

Response Fund

CFO Chief Financial Officer

CIO Chief Information Officer

COCOM Combatant Command

COIN Counterinsurgency

CONOC Contractor Operations Center

COR Contracting Officer’s 

Representative

COTR Contracting Officer’s 

Technical Representative

CSTC-A Combined Security Transition 

Command–Afghanistan

DCAA Defense Contract Audit Agency

DCIS Defense Criminal 

Investigative Service

DCMA Defense Contract Management 

Agency

DLA Defense Logistics Agency

DoD Department of Defense

FAR Federal Acquisition Regulation

FOB Forward Operating Base

FPDS-NG Federal Procurement 

Data System–Next Generation

FTE Full-time equivalent

GAO Government Accountability 

Office

GDP Gross domestic product

ICCTF International Contract 

Corruption Task Force

IDIQ Indefinite delivery/indefinite 

quantity

IG Inspector General

INL U.S. Department of State, 

Bureau of International 

Narcotics and Law Enforcement 

Affairs

IMCOM U.S. Army Installation 

Management Command

INSCOM U.S. Army Intelligence 

and Security Command

ISAF International Security 

Assistance Force

JCC-I/A Joint Contracting CommandIraq/Afghanistan

LN Local national

LOGCAP Logistics Civil Augmentation 

Program

MEJA Military Extraterritorial 

Jurisdiction Act

NSC National Security Council

Appendix I

Acronyms
239

A C R O N Y M S

OCI Organizational conflict 

of interest

OCS Operational Contract Support

OFPP Office of Federal Procurement 

Policy

OMB Office of Management 

and Budget

OTI USAID, Office of Transition 

Initiatives

PSC Private security contractor

QDDR Quadrennial Diplomacy and 

Development Review

QDR Quadrennial Defense Review

SIGAR Special Inspector General for 

Afghanistan Reconstruction

SIGIR Special Inspector General 

for Iraq Reconstruction

SME Subject–matter expert

SPE Senior Procurement Executive

SPOT Synchronized Predeployment 

and Operational Tracker

TCN Third–country national

TRANSCOM U.S. Transportation Command

UCMJ Uniform Code of Military Justice

USACE U.S. Army Corps of Engineers

USAID U.S. Agency for International 

Development

USFOR–A U.S. Forces–Afghanistan
240

Continuing access to 

Commission information on the web

When the Commission on Wartime Contracting sunsets on September 30, 

2011, the Commission’s website will be frozen as it then exists. The University 

of North Texas, an affiliate of the government’s National Archives and Records 

Administration, will maintain a publicly available record of the site’s contents.

The web address or URL for the archived site will not change:

www.wartimecontracting.gov

Information available on the Commission website includes:

▪ this final report to Congress, plus the previously submitted two interim 

and five special reports;

▪ public hearing transcripts, testimony, and videos;

▪ news releases; and 

▪ a list of meetings held by Commissioners and staff.
COMMISSION ON WARTIME CONTRACTING

IN IRAQ AND AFGHANISTAN

C O M M I S S I O N E R S

Michael J. Thibault, Co-Chair

Christopher Shays, Co-Chair

Clark Kent Ervin

Grant S. Green

Robert J. Henke

Katherine V. Schinasi

Charles Tiefer

Dov S. Zakheim

Robert B. Dickson, Executive Director

Jeffrey A. Brand, Deputy Executive Director

1401 Wilson Boulevard, Suite 300 

Arlington, VA 22209

703-696-9362 

W W W . W A R T I M E C O N T R A C T I N G . G O V
COMMISSION ON WARTIME CONTRACTING

1401 Wilson Boulevard, Suite 300 

Arlington, VA 22209

703-696-9362

W W W . W A R T I M E C O N T R A C T I N G . G O V