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i 

51–916 2010

[H.A.S.C. No. 111–82] 

MANAGING SERVICE CONTRACTS: WHAT 

WORKS AND WHAT DOESN’T? 

HEARING 

BEFORE THE

PANEL ON DEFENSE ACQUISITION REFORM 

OF THE

COMMITTEE ON ARMED SERVICES 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

FIRST SESSION 

HEARING HELD 

JULY 16, 2009 
(II) 

PANEL ON DEFENSE ACQUISITION REFORM 

ROBERT ANDREWS, New Jersey, Chairman 

JIM COOPER, Tennessee 

BRAD ELLSWORTH, Indiana 

JOE SESTAK, Pennsylvania 

K. MICHAEL CONAWAY, Texas 

DUNCAN HUNTER, California 

MIKE COFFMAN, Colorado 

CATHY GARMAN, Professional Staff Member 

JOHN WASON, Professional Staff Member 

ALICIA HALEY, Staff Assistant 
(III) 

C O N T E N T S 

CHRONOLOGICAL LIST OF HEARINGS 

2009 

Page 

HEARING: 

Thursday, July 16, 2009, Managing Service Contracts: What Works and What 

Doesn’t? ................................................................................................................. 1 

APPENDIX: 

Thursday, July 16, 2009 .......................................................................................... 27 

THURSDAY, JULY 16, 2009 

MANAGING SERVICE CONTRACTS: WHAT WORKS AND WHAT 

DOESN’T? 

STATEMENTS PRESENTED BY MEMBERS OF CONGRESS 

Andrews, Hon. Robert, a Representative from New Jersey, Chairman, Panel 

on Defense Acquisition Reform ........................................................................... 1 

Conaway, Hon. K. Michael, a Representative from Texas, Ranking Member, 

Panel on Defense Acquisition Reform ................................................................ 3 

WITNESSES 

Masiello, Brig. Gen. Wendy M., USAF, Air Force Program Executive Officer 

for Combat and Mission Support, U.S. Air Force .............................................. 4 

Parsons, Jeffrey P., Executive Director, Army Contracting Command, U.S. 

Army Materiel Command, U.S. Army ................................................................ 6 

Punderson, Jerome F., Director of Contracts, Naval Sea Systems Command, 

U.S. Navy .............................................................................................................. 9 

APPENDIX 

PREPARED STATEMENTS: 

Andrews, Hon. Robert ...................................................................................... 31 

Conaway, Hon. K. Michael .............................................................................. 33 

Masiello, Brig. Gen. Wendy M. ........................................................................ 36 

Parsons, Jeffrey P. ............................................................................................ 46 

Punderson, Jerome F. ...................................................................................... 58 

DOCUMENTS SUBMITTED FOR THE RECORD: 

[There were no Documents submitted.] 

WITNESS RESPONSES TO QUESTIONS ASKED DURING THE HEARING: 

Mr. Andrews ..................................................................................................... 67 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING: 

Mr. Andrews ..................................................................................................... 71 

(1) 

MANAGING SERVICE CONTRACTS: WHAT WORKS AND 

WHAT DOESN’T? 

HOUSE OF REPRESENTATIVES, COMMITTEE ON ARMED SERVICES, PANEL ON DEFENSE ACQUISITION REFORM, Washington, DC, Thursday, July 16, 2009. 

The panel met, pursuant to call, at 8:03 a.m., in room 2212, Rayburn House Office Building, Hon. Robert Andrews (chairman of the 

panel) presiding. 

OPENING STATEMENT OF HON. ROBERT ANDREWS, A REPRESENTATIVE FROM NEW JERSEY, CHAIRMAN, PANEL ON 

DEFENSE ACQUISITION REFORM 

Mr. ANDREWS. Good morning ladies and gentlemen. Welcome to 

the panel. We appreciate the attendance of our colleagues and our 

witnesses and the ladies and gentlemen of the public and media 

that are here. 

In the last decade or so, the amount of money that the Department of Defense (DOD) spends on service procurement has doubled 

from around $100 billion a year to about $200 billion a year, and 

as the panel has progressed, we have learned a couple things about 

that. 

The one is that you really are comparing apples and oranges 

when you look at weapon systems versus services. They are very 

different kinds of procurement. They call for different needs and 

different skill sets and frankly different metrics to measure the 

success or lack thereof in buying them. 

We also learned that there is a wide array of types of services 

that the Department of Defense buys. Everything from car washing 

services to very detailed software consulting. You might be buying 

group services would help you move a tremendous amount of stuff 

a lot of miles or you might be buying someone who is going to fix 

light fixtures on a base. 

A lot of things happen, and therefore there is a huge variety of 

systems that are in place, some good, some bad, some indifferent. 

As we have discussed before, the panel’s work program is the first 

to define metrics to measure the difference between the cost that 

we are paying and the value that we are getting, which we have 

completed that part of our effort. 

And then to move onto a series of hearings that are hypotheses 

really about what might explain the difference between the cost we 

are paying and the value that we are getting. 

This morning, our hypothesis essentially is that service contracts 

that have well-defined objectives, and that are carefully monitored 
2 

provide much better value for the taxpayer than those that have 

neither of those characteristics. 

So a service contract, where the needs are very clearly spelled 

out, the expectations are very clearly contracted, and where there 

is in place an evaluative mechanism to protect the taxpayer and 

monitor the contractor, the results tend to be quite good and that 

the taxpayers get the value that we are seeking and we pay the 

cost or less than the cost that we have contracted for. 

The other end of the spectrum are contracts where the requirements are ill-defined or rushed through, and where there is minimal oversight of the work that goes on. The record tends to show 

that we do not receive sufficient value and we overpay for such 

services. 

So with that generic framework in mind, we are going to look 

this morning at three examples of service contracts, some of which 

have great strength, some of which have great weaknesses, and try 

to use those contracting experiences as a learning experience for 

the panel so that when we prepare our legislative recommendations 

to the full committee in the spring of 2011, we can draw from those 

experiences. 

We are going to be looking at an Air Force contract and a Navy 

contract and an Army contract, but that frankly is not meant to 

suggest we think that any of those branches has the corner on the 

market or on the good, the bad or the indifferent. 

The fact that we have chosen what we think is a very positive 

example from the Navy doesn’t mean that we imply that we think 

the Navy does a better job than the other branches, the more controversial one is in the realm of the Army and conversely we don’t 

think the Army does a poorer job. We just happened to choose 

those contracts for purposes of exploration today. 

Obviously, the contract that has drawn the most attention is the 

Logistics Civil Augmentation Program (LOGCAP) contract and that 

is the one that frankly is more rife with trouble. The Government 

Accountability Office (GAO) found that that contract had insufficient personnel to manage it. The planning guidance was ignored. 

There was a failure to define or definititize, which I don’t actually 

think is a verb, but a failure to define the task orders in a timely 

manner, poor requirements definition and contractor problems, 

making management difficult. 

The other end of the spectrum, the Navy contract that we are 

going to look at this morning, seems to have achieved high value 

and high efficiency and seems to be a role model for what we might 

want to do in the future. 

But I do want to emphasize from the outset, this is a very small 

sample in a very large universe. We do not by any means mean to 

imply that the positive example is characteristic of that branch or 

the negative example is characteristic of the other one. We want 

to learn from these experiences and use that learning to make good 

recommendations to our colleagues on the full committee and in 

the House. 

With that in mind, I am going to turn to my friend, the ranking 

member from Texas, Mr. Conaway, for his opening statement. 

[The prepared statement of Mr. Andrews can be found in the Appendix on page 31.] 
3 

STATEMENT OF HON. K. MICHAEL CONAWAY, A REPRESENTATIVE FROM TEXAS, RANKING MEMBER, PANEL ON DEFENSE 

ACQUISITION REFORM 

Mr. CONAWAY. Thank you. Good morning, Mr. Chairman. Thank 

you for holding this hearing, and ladies and gentlemen, thank you 

for being with us today. I appreciate that. 

This is our second panel on service contracting. Our first hearing 

was in April which looked at the issue of measuring value for service contracts. The focus of today’s hearing is to learn what works, 

what doesn’t work in regards to managing these service contracts. 

As mentioned in our April hearing, the Department of Defense 

now spends more than—on its budget on services than on products 

which includes weapon systems. The GAO has reported numerous 

reports that the management and execution of service contracts is 

obviously not like managing and executing weapon systems contracts; master of the obvious. 

In its 2006 report, GAO noted that the successful service acquisition management requires attention to the organization’s ability to 

move from a fragmented manner of doing business to one that is 

more coordinated and strategically oriented; wonderful phraseology, hard to get to. 

Primarily, this involves changing out services that are required 

in terms of business processes, organizational structures, their 

roles and responsibilities. In your submitted testimony, one thing 

that stood out was a need for oversight management after the contract is awarded. This could mean focus on efforts on adding more 

qualified and trained personnel, but not necessarily. 

I look forward to hearing from the witnesses have to say and 

helping us gain some insight into how we spend taxpayer dollars 

better than we have been doing it. So with that, Mr. Chairman, I 

yield back and I look forward to our testimony of our witnesses. 

[The prepared statement of Mr. Conaway can be found in the Appendix on page 33.] 

Mr. ANDREWS. Well, thank you, and without objection opening 

statements from any member of the panel will be included in the 

record. Well, welcome. I know that each of the three of you is a veteran of these kind of hearings and I won’t spend too much time describing the rules. We would simply ask you to summarize your 

written testimony in about a five-minute oral synopsis. 

Without objection, the full extent of your written testimony is a 

part of the record. We have had a chance to read it. The panel tries 

to maximize question and answer dialog between the witnesses and 

the panel so we can learn more. I am going to begin by reading 

brief biographies of the three witnesses, and then we will get to the 

statements and then we will get to the questions from the members. 

We will start with Brigadier General Wendy M. Masiello. Is that 

correct, General? A very distinguished career; she is the program 

executive officer for Combat and Mission Support in the Office of 

the Assistant Secretary of the Air Force for Acquisition here in 

Washington. 

She leads the acquisition of Air Force services and is responsible 

for more than $100 billion in existing and planned contracts across 

the Air Force. She earned her bachelor’s of business administration 
4 

degree in marketing from Texas Tech University in Lubbock. Her 

master’s from the Air Force Institute of Technology, the WrightPatterson Air Force Base in Ohio. 

She is a distinguished graduate of the Squadron Officers School. 

And I do want to read her major awards and decorations because 

they are very impressive and significant. Legion of Merit, the 

Bronze Star Medal, the Defense Meritorious Service Medal with an 

oak leaf cluster, the Meritorious Service Medal with two oak leaf 

clusters, the Air Force Commendation Medal, the Joint Service 

Achievement Medal with an oak leaf cluster, the Air Force Achievement Medal, and the Global War on Terrorism Service Medal. 

General, thank you for your years of service and devotion to your 

country. We are glad that you are with us here this morning. 

We want to welcome back Mr. Jeffrey Parsons who was with us 

a few months ago. We are happy to have him with us again. Mr. 

Parsons is the executive director of the U.S. Army Contracting 

Command, a new major subordinate command of the U.S. Army 

Materiel Command (AMC). 

Prior to assuming his current position, Mr. Parsons served as the 

director of contracting, Office of Command Contracting Headquarters AMC at Fort Belvoir, Virginia. Prior to his appointment 

to the Senior Executive Service, Mr. Parsons was the director of 

Contracting Headquarters, U.S. Air Force Materiel Command at 

Wright-Patterson Air Force Base in Ohio where he retired from active duty as an Air Force Colonel after 26 years of service. 

Mr. Parsons is a graduate of St. Joseph’s University, as I noted 

before, and we are very happy to have him with us again. Mr. Parsons, thank you. 

And finally, Mr. Jerome Punderson is the director of contracts for 

Naval Sea Systems Command (NAVSEA). He has the full authority 

and responsibility for one of the largest and most responsible procurement organizations in the Federal Government or the world for 

that matter. 

His duties involve the obligation and expenditure of billions of 

dollars annually. He is a member of the Senior Executive Service 

(SES). Members of the SES serve in the key positions just below 

the top presidential appointees. 

He was born in Lakewood, New Jersey about an hour from where 

I live, Mr. Punderson, and the important—he attended Rutgers 

University where in 1979 he earned his bachelor’s of arts in biology. 

In 2003, he earned a master’s of science in national resource 

strategy from the Industrial College of the Armed Forces. Mr. 

Punderson is a recipient of the Navy Meritorious Civilian Service 

Medal and numerous special act awards. Thank you for your service to our country, and welcome to the panel. 

General, we are going to begin with you. We will ask if you will 

give us about a five-minute synopsis and we will go to questions. 

STATEMENT OF BRIG. GEN. WENDY M. MASIELLO, USAF, AIR 

FORCE PROGRAM EXECUTIVE OFFICER FOR COMBAT AND 

MISSION SUPPORT, U.S. AIR FORCE 

General MASIELLO. Okay. Chairman Andrews, Congressman 

Conaway, distinguished members of the Defense Acquisition Re-
5 

form Panel, I thank you for the opportunity to share with you the 

latest efforts in Air Force oversight and management. 

I would like to set the stage if I could with where my role is and 

what the parameters of my responsibilities are. The Air Force Program Executive Office (PEO) for Combat Mission Supporter Services Acquisition was established in February of 2002 in response to 

the fiscal year 2002 National Defense Authorization Act (NDAA– 

02) expectation that the services create a management structure 

for procurement of services comparable to the structure for procurement of supplies. 

My office provides the dedicated management structure for pre- and post-award service programs greater than or equal to $100 million. Currently we track 170 programs with a potential contract 

value of $150 billion. 

The scope of our portfolio is broad, includes everything from base 

operating support to weapon system sustainment, information technology and advisory and assistance service efforts. But what makes 

us different from other PEOs is that we work through at least 

seven different major command chains and contracting authorities 

with none of them reporting to me or my subordinates. 

We are not directly affiliated with any weapon system, installation or specific war fighting mission, and we have no budget input 

or control, yet we own all the acquisition responsibility for services 

over $100 million worldwide and I have 17 people on staff to help 

make that happen. 

Initially, our office focused on acquisition strategy and contract structure for programs over $100 million, leaving post-award oversight to the owning organization. The theory was that if we got the 

contract right, then everything else would fall into place. 

In the pre-award stage, we started doing things like moving from 

time and materiel to firm fixed-price agreements or cost fixed-fee 

arrangements when it was possible. We have weaned our teams for 

the most part off cost-plus award fee contracts. We shortened the 

length of our services contracts, beefed up government program 

teams overseeing multiple award indefinite delivery, indefinite 

quantity (IDIQ) contracts. 

We have also enticed some flag officers from various major commands to assist us in the service program oversight by offering delegation of acquisition authority. And the delegation program has 

enabled our office now to reinstitute our post-award review, and 

these post-award reviews we have made our biggest shift of all 

where we think of service not as contracts but as programs. 

And as we look at things with programs, that means we engage 

not just our contracting officer, but we get our quality assurance 

representatives, we get auditors, we get our financial advisors, and 

we get the commanders who own the mission being performed by 

the service provider at the table with us to talk about it. 

During our annual post-award reviews, we examine contractor’s 

performance and also discuss the government team’s execution 

oversight of the programs they are responsible for. Here are some 

of the things that we have learned in that process. 

In some cases, the teams responsible for the program’s reviewing 

had never talked to each other until they prepared the briefing for 

our review. Some commanders were very frustrated with their con-
6 

tractors but didn’t know how to get it fixed so they were just living 

with the problems. 

Some organizations had great Web-based quality assurance reporting tools to facilitate good tracking, even in the worldwide environment, so we are stealing those ideas to share across the Air 

Force. 

Just because we move from a time and materiel contract to a 

cost-plus-fixed-fee contract doesn’t necessarily mean the team is 

managed that way. We found that in some cases, even with a costplus-fixed-fee contract, there is a tendency to still manage it as 

though it is a time and materiel effort. 

Adding more contractors to a multiple award IDIQ contract isn’t 

necessarily a good thing, and we have challenges managing IDIQ 

ceilings and growth on individual task orders in those types of contracts too. 

Our contracts are not always living up to the commitments that 

they have made, especially with regard to small business subcontracting. But the bottom line, as well constructed as our contract 

might have been, the success of the effort depends on the postaward involvement and the multi-functional government team and 

the preparedness of that team for the roles they must play. 

In conclusion, laws and regulations will describe the continuum 

of the contracts that are available to us. Service actions often fall 

into a fixed price or the fixed price end of the spectrum, but it 

takes discipline to get there and sometimes the requirement legitimately needs the flexibility of the time and materiel cost-reimbursable effort. 

So rather than defining preferred contract types, we have worked 

in the Air Force for more oversight and a multifunctional role and 

the post-award environment and we found that, as we get the 

teams involved, in the end they realize the benefit of their participation in the beginning as they define those requirements and we 

actually begin to improve our source selections in both the pre- and 

post-award environment. 

We have improved competition. We are getting better prices with 

that greater discipline. We have increased attention on our small 

business participation with that and we have begun to link our 

large dollar service acquisitions with Air Force strategic vision and 

enterprise solutions in a way we haven’t been able to before 

I previously submitted my statement about the individual contracts, Mr. Chairman, and this concludes my statement. Thank 

you. 

[The prepared statement of General Masiello can be found in the 

Appendix on page 36.] 

Mr. ANDREWS. General, thank you very much. We appreciate it. 

Mr. Parsons, welcome back to the committee. 

STATEMENT OF JEFFREY P. PARSONS, EXECUTIVE DIRECTOR, 

ARMY CONTRACTING COMMAND, U.S. ARMY MATERIEL COMMAND, U.S. ARMY 

Mr. PARSONS. Yes, thank you, Chairman Andrews, Congressman 

Conaway and distinguished members of the Defense Acquisition 

Reform Panel. Thank you for this opportunity to discuss the Army’s 

initiatives to improve service contracting. 
7 

The Army has undertaken initiatives that enable our contracting 

mission to be agile, expeditionary and responsive to our warfighters 

while ensuring proper fiscal stewardship of taxpayer dollars. 

We use metrics to collect information about program performance 

and contract execution and use that information to improve how we 

structure future contracts. We use this approach to improve the acquisition strategy for our recent LOGCAP IV acquisition. A Logistic 

Civil Augmentation Program known as LOGCAP, is one of the primary service contracts the Army uses to support deployed 

warfighters. 

LOGCAP is an initiative by the United States Army to pre-plan 

during peacetime for the use of civilian contractors to perform selected services in wartime and other contingencies to augment U.S. 

forces in support of DOD missions. 

LOGCAP can also provide support to coalition or multi-national 

forces in other government and non-government agency components in support of joint combined coalition and multi-national operations. 

This includes operations other than war such as disaster relief, 

peacekeeping or humanitarian assistance missions. We are pleased 

to report that the Army, through LOGCAP, is providing quick reaction support for operations worldwide including operations in very 

austere conditions. 

The LOGCAP III contract was awarded on December 14, 2001 

soon after 9/11, to Kellogg Brown & Root Services as a result of a 

competitive best value source selection. The contract is an indefinite delivery, indefinite quantity contract with one base year and 

nine option years. 

When the Army awarded LOGCAP III, there was no prediction 

that we would execute the level of requirements that we have experienced to date. The requirements placed on LOGCAP III contract 

to support the overseas contingency operations have dwarfed the 

combined efforts of all previous LOGCAP contracts. 

In the first 4 years of LOGCAP III, obligations exceeded previous 

efforts by almost 300 fold and grew to over $14 billion by October 

2005. These dramatic increases in the level of effort of the 

LOGCAP III contract, coupled with the challenges and problems 

that resulted from this rapid expansion, made it clear to the Army 

that it needed to develop and execute a new contract strategy to 

support the soldier. 

The Army carefully considered the lessons learned from 

LOGCAP III execution and consulted with the Department of Defense, sister services, combatant commands and industry as the 

new acquisition strategy was developed. 

The primary objectives of the new LOGCAP IV acquisition strategy were to reduce program risk, increase capacity, and incentivize 

contract performance. After considering how best to achieve these 

objectives, the Army made changes in strategy and organization 

structure to provide better service delivery to the war fighter and 

value to the taxpayer. 

Four examples of these improvements include the following. The 

Army now uses deputy program directors stationed forward to support operations in Iraq, Kuwait and Afghanistan, and support the 

execution of theater support contracting. 
8 

These individuals serve as the senior LOGCAP advisor to the 

combatant commanders. These individuals also lead the team 

LOGCAP effort in the operational area. The LOGCAP deputy director’s specific duties include overseeing LOGCAP contract management and administration, conducting task order change management, assisting in requirements planning and providing cost management acquisition information as required. 

Secondly, the Army now has senior executives in charge of the 

LOGCAP program office and contracting office to ensure better 

communication and access with the war fighting commands. The 

appointment of Senior Executive Service (SES) to these key positions demonstrates the Army’s commitment to ensuring that 

LOGCAP is properly managed. These positions are now at the 

same relative level as those controlling similar war fighting resources. 

Thirdly, the Army uses multiple award indefinite delivery, indefinite quantity contracts to eliminate a single point of failure. Having three LOGCAP IV contractors lessens the probability that contractors will become overwhelmed by increases in requirements. 

It also allows the Army to take advantage of competition 

throughout the life of the contracts. This helps keep prices down 

and quality and responsiveness up. One of the reasons for re-competing the LOGCAP requirements prior to the expiration of 

LOGCAP III, was to reduce the risk inherent in having only one 

contractor providing services. 

When the Army competed LOGCAP III, this risk did not appear 

to be excessively high when viewed in the context of the level of 

services requested under LOGCAP I and LOGCAP II. However, as 

I mentioned before, due to the tremendous increase in services required by the overseas contingency operations, the Army 

Sustainment Command incorporated into LOGCAP IV this multiple award portfolio approach that mitigates the risk of any one 

of the three failing to perform. 

Should any contractor fail to perform any task order it receives 

under the indefinite delivery, indefinite quantity arrangement, the 

other two contractors will serve as built-in backstops to allow ongoing mission support. The new business arrangement substantially 

reduces the risk of contractor non-performance. 

Department of Defense is executing more control over LOGCAP 

requirements by a validation through a joint acquisition review 

board. This board ensures consistency and support levels across operating locations, and allows funds to be spent where they will provide the maximum benefit, given current mission requirements. 

The supporting units have the planners and organizations that 

define the requirements to meet the needs of the U.S. forces. In addition, in an attempt to determine the proper use of LOGCAP as 

a capability in future contingencies both in continental United 

States (CONUS) and abroad, headquarters department in the 

Army G4 recently established the LOGCAP 2010 Strategy General 

Officers Hearing Committee which includes Army-wide representatives as well as participants from the Assistant Deputy Under Secretary of Defense for Program Support and the J4 from the Joint 

Chiefs of Staff. 
9 

The purpose of this committee is to address key program issues 

and collaboratively develop strategy for future LOGCAP utilization 

policy. Let me assure you that the Army contracting command is 

committed to excellence in all contracting, including these very 

complex and critical LOGCAP contracts. 

We continue to collect lessons learned and make improvements 

and adjustments along the way to ensure mission success and protection of the interests of the government and the taxpayer. Thank 

you for inviting me to speak with you today. This concludes my 

statement. 

[The prepared statement of Mr. Parsons can be found in the Appendix on page 46.] 

Mr. ANDREWS. Thank you very much, Mr. Parsons. 

Mr. Punderson, welcome. 

STATEMENT OF JEROME F. PUNDERSON, DIRECTOR OF 

CONTRACTS, NAVAL SEA SYSTEMS COMMAND, U.S. NAVY 

Mr. PUNDERSON. Thank you. Good morning. Mr. Chairman and 

distinguished members of the Defense Acquisition Reform Panel, 

thank you very much for this opportunity to testify on Navy contracting, particularly as it pertains to the SeaPort Enhanced or the 

Seaport-E Program. 

I am here as the director of contracts for the Naval Sea System 

Command, NAVSEA. I am responsible for the warranting of all 

contracting offices throughout the NAVSEA claimancy. I have 

worked in the contracting field for the Navy for the last 28 years 

including multiple leadership positions at NAVSEA responsible for 

the procurement of major weapons. 

I also served as the program manager for the SeaPort-E which 

is a strategic approach to acquisition of services, employing affordable and timely procurement of services for a completely electronic 

Web-based marketplace. 

While I am no longer the SeaPort-E program manager, as director of contracts, I oversee the SeaPort-E program to ensure appropriate management of this contract vehicle within the NAVSEA 

claimancy. 

The SeaPort-E program is a follow-on to the original Seaport program which we initiated in NAVSEA in 2001. That program was 

started at NAVSEA headquarters as a means to rationalize spending across four common support service areas who were using 

many inefficient—we had some vehicles over at the General Services Administration, some were individual contracts. 

But we were able to go from 350 separate contracts to 21 multiple award contracts. SeaPort did not provide as much opportunity 

for small businesses to compete as we desired because even though 

they held a third of the contract, they were only winning about 10 

percent of the business. 

So we created SeaPort-E in order to provide increased opportunity for small businesses and to expand the functional areas of 

those contracts to address the needs of our field activities and 

eventually the whole Navy. 

We expanded to 22 functional areas of professional support services and engineering services and added the capability, set requirements aside, for small business, service disabled veteran-owned 
10 

small business and Small Business Administration (SBA) approved 

8(a) contract. 

We compete all requirements under the vehicle and we use the 

zone-based approach. These services are primarily CONUS services. There are some non-CONUS, but I would say it is 99 percent 

for CONUS. These geographic zones help small businesses compete 

in as small an area as they want or across the country if they desired. 

We didn’t want to take a small business that might support one 

of Indian Head’s in ordnance expertise and think that they had to 

compete nationwide to get any business. Nearly 85 percent of the 

SeaPort-E contract holders are small businesses. 

SeaPort-E portal provides a standardized sufficient means of soliciting offers from among the diverse population of large and small 

business. The SeaPort-E approach to acquiring services provides 

opportunities for many small companies, thereby bringing to the 

Navy diverse ideas and concepts. 

This benefits the Navy and encourages job growth of the Nation. 

Small businesses benefit by being able to compete among other 

small businesses or on an unrestricted basis for Navy work. Since 

the inception of SeaPort in 2004, 47 percent of the approximately 

1,700 task orders have been won by small business. 

Three billion dollars have been obligated to small business as 

prime contracts and another $2 billion have been subcontracted to 

small business. Every Navy requirement is pushed to all SeaPortE contract holders via the portal rather than having to search the 

database for a particular solicitation. 

They receive on-the-desk electronic notification linked right to 

that solicitation. In fact, some companies have said that they get 

too much information. We use a variety of cost and fixed price type 

task orders, but we do not use time and materiel type contracts. 

We use defense contract Audit Edge. They prorate information on 

all cost-type orders prior to award and Defense Contract Management Agency (DCMA) has assigned responsibility of contract administration. 

SeaPort-E was designed to provide a powerful strategic tool to 

allow the contracting officers the maximum flexibility to exercise 

their own business judgment to best meet the needs of their customer. 

Each ordering activity has the tools to manage the task orders 

using their own head of contracting activity, HCA authority—and 

developed the track acquisition cycle times, work load efficiencies, 

dollars awarded under SeaPort-E in both prime and sub-prime contract level. 

These metrics continue to be refined and developed through the 

life of the program. For instance, we developed the capability to 

collect subcontracting actuals at the task order level electronically 

every six months to ensure the larger businesses are meeting their 

small business subcontracting goals. 

We believe the SeaPort-E contracting vehicle is a success story 

for both the Navy and industry. We work with our partners both 

government and industry to continue to improve the program. At 

times we struggle with the ability to attract, train and retain ac-
11 

quisition personnel, both in contract and program offices that 

would enable the Navy to further realize the benefits. 

We have undertaken efforts using the money provided by Section 

852 of the NDAA to improve our workforce and use our performance space service acquisitions, contract and authorize representative duties and advance source selection techniques. 

Thank you again for allowing me to testify today, and I look forward to your questions. 

[The prepared statement of Mr. Punderson can be found in the 

Appendix on page 58.] 

Mr. ANDREWS. Well, thank you ladies and gentlemen. 

Mr. Punderson, your last comment about acquisition workforce 

will be the focus of the panel’s next inquiry next week and we will 

look into that issue. Thank you for the testimony, each of the three 

witnesses. 

I wanted to begin, Mr. Parsons, with some questions about 

LOGCAP III. And, I am pleased to hear about the lessons learned. 

I just want to go back into the GAO report from, I believe 2005, 

and one example that struck me—it is actually 2004. In LOGCAP 

III, the GAO reported the Army directed the contractor in that 

case, to provide water for units within 100 kilometers of certain 

designated points. 

But at least according to the GAO, the statement of work did not 

indicate how much water needed to be delivered to each unit or 

how many units there were. So if I read this correctly, the scope 

of work said, you know, within 100 kilometers of Tikrit or somewhere, deliver water, but it didn’t say how many units there were 

within 100 miles of Tikrit or how much water each unit needed. 

Is that correct, that the scope of work was that insufficient? 

Mr. PARSONS. Yes, sir, that is exactly one of the things that 

mean lessons learned that we had out of LOGCAP III, was the 

need to be more specific in the defining of the requirements. 

Mr. ANDREWS. But in this case as you—is this correct that that 

was—— 

Mr. PARSONS. I believe so. I mean if you take a look at the original LOGCAP III task order that was for the base life support was 

very general in nature. 

Mr. ANDREWS. Yes. One of the things I wanted to say, Mr. Conaway and I have talked about this, we want to make sure we hear 

from the contractor side of this and in future panels we will. I want 

to be very clear about that so we hear both sides, but it strikes me 

that sometimes contractors get beat up for things that we don’t do 

very well in the government. 

And this is not a rhetorical question, but how could this happen? 

How could we enter a contract that says we want to buy water, and 

that we, from our side, didn’t give direction to the contractor as to 

how much water and how many units it had to go to? 

Mr. PARSONS. Well, sir, the whole nature of the original 

LOGCAP contract envisioned a short duration type of an operation, 

and, you know, there wasn’t an expectation that you would be providing these services for a long period of time. People understood 

that things were going to change, and that is one of the toughest 

challenges we have as the task order changed management. 
12 

Mr. ANDREWS. But wouldn’t the contract even—I understand 

that. If you don’t know the requirements when you do a potential 

10-year contract, but wouldn’t there be a provision that would say, 

you know, within x number of days or hours of delivery, that we 

would notify the contractor the quantity that was needed. Is there 

a provision like that? 

Mr. PARSONS. There is today, and if you take a look at LOGCAP 

IV’s statement of work and the objectives and the specific metrics. 

It is much more specific. 

Mr. ANDREWS. How could there not be in the past? I mean this 

is reminiscent of our discussion in April where, I believe, it was 

about catering services, that it just strikes me as so elemental that 

when someone higher than your pay grade, I am sure, approved 

this contract, the fact that he or she missed this is just dumbfounding to me. 

That, again, to use a sort of a homeowners example, I don’t think 

any of us would say to the electrician, ‘‘Come over today and whatever you think needs to be fixed fix it and let me know how much 

the bill is.’’ I mean, it is just astonishing to me that how do we get 

to a point that we issue a contract with that little specificity? 

Mr. PARSONS. Well, again, sir, it was the nature of what that 

contract was originally designed for which was very undefined requirements for initial operations in providing some base life support to the soldiers who—— 

Mr. ANDREWS. Now, tell me what would happen today, in Afghanistan for example, if under LOGCAP IV I guess it would be 

at, right? Or is Afghanistan under three or four? 

Mr. PARSONS. Four. 

Mr. ANDREWS. Okay. 

Mr. PARSONS. And we just awarded task orders for that, sir. 

Mr. ANDREWS. If we were going to deliver water to units within 

100 miles of Khost Province, who would be responsible for specifying the specifics of how much water, for whom and when? How 

would that work? 

Mr. PARSONS. That would start with the units that have the actual requirements and they would inform the LOGCAP teams that 

is in country exactly how much water they needed delivered, the 

exact location, and then the administrative contracting officers that 

are located in Afghanistan would give direction to the LOGCAP 

contractors. But it all starts with the units being able to define the 

requirements. 

Mr. ANDREWS. Now, one of the other criticisms in the GAO report was that there weren’t enough contract officers, enough management personnel in place. Has that problem been fixed? Let us 

go back to LOGCAP IV. How many personnel, if it is not classified, 

how many personnel are in country right now in Afghanistan to 

manage this? 

Mr. PARSONS. Performing LOGCAP oversight? 

Mr. ANDREWS. Yes. 

Mr. PARSONS. And just in Afghanistan? 

Mr. ANDREWS. Yes. 

Mr. PARSONS. I would have to get back to you with the exact 

numbers, but I think between both countries we have about 120 

personnel today that are involved with LOGCAP management. 
13 

Mr. ANDREWS. Do you know the breakdown between Iraq and Afghanistan. 

Mr. PARSONS. No, I do not, but I can get that for you. 

[The information referred to can be found in the Appendix on 

page 67.] 

Mr. ANDREWS. Do, you know, I have no frame of reference for 

that. How many people in country did we have in 2004, 2005? 

Mr. PARSONS. That was part of the problem. We didn’t have any. 

Mr. ANDREWS. We didn’t have any. 

Mr. PARSONS. Had them early. They were early on in 2004 

and—— 

Mr. ANDREWS. Well sure, there are some reasons for that. 

Mr. PARSONS [continuing]. That is why we re-established—— 

Mr. ANDREWS. I realize that there are—obviously it is a war 

zone. There are some safety issues, other issues, but that is astonishing. 

Mr. PARSONS. Yes. 

Mr. ANDREWS. Well, when did we first have personnel in theater 

under LOGCAP III? 

Mr. PARSONS. Yes. Well, let me qualify. It means is the Defense 

Contract Management Agency had been there from the start performing contract administration, contract management. We did not 

have any LOGCAP program office personnel. 

Mr. ANDREWS. I understand. 

Mr. PARSONS. But that was made in 2004. 

Mr. ANDREWS. But when did we first have LOGCAP program 

managers in country under—— 

Mr. PARSONS. End of 2004, beginning of 2005. 

Mr. ANDREWS. Wow. So we essentially had a situation where on 

the ground from March of 2003 on with no contract officer until 

January of 2005? Why is that? 

Mr. PARSONS. Again, there was no foresight into how long this 

operation was going to be, and I think if you remember and recall 

there was a lot of people that were forecasting it to be a short-term 

operation. 

Mr. ANDREWS. We do remember that, yes. 

Mr. PARSONS. And you know, as a result, you know, folks 

thought that they could manage this sufficiently from back in the 

states, but again, that was one of the lessons learned to think as 

general managers. 

Mr. ANDREWS. I am not unsympathetic to the point that placing 

civilian personnel in a hostile environment is a very sensitive problem. It is not something you do lightly, but boy, it seems like— 

okay, I am going to come back for a second round and thank you 

for your answers and go to Mr. Conaway. 

Mr. CONAWAY. Thank you, Mr. Chairman. Mr. Parsons, you were 

doing a lot of head nodding at the end of the General’s testimony. 

Either you are a really bad poker player or you were agreeing with 

a lot of the systems of how the Air Force does it versus the way 

the Army does it. 

And helping us understand, you know, we would like to do the 

best of both systems. Neither one of them are perfect, but both of 

them are good and we would like to try to make sure we understand the best of those. 
14 

And you had mentioned post-award involvement, but you also 

said that your team doesn’t have any post-award authority for once 

a contract has been awarded and handed off to whatever. Can you 

kind of walk me through how that works? 

General MASIELLO. If I communicated that it was inappropriate. 

What we had not done for a couple of years because our staff was 

very small and we were working direct relationships with each program, that any contract that was going to exceed $100 million we 

got involved in defining the source selection strategy, helping make 

those decisions. 

And because we had such a lean staff we weren’t doing any of 

the post-award, but in the past couple of years we have started delegating some of our authority to some of the general officer and 

Senior Executive Service members out in the major commands, and 

getting them to help us provide better oversight with certain conditions. 

And that has then relieved our office to go out and get more involved in the post-award oversight role because that is part of our 

responsibility as well. And really, in my mind, that is one of the 

things we haven’t done well. We just haven’t had the resources or 

dedicated much time to paying attention to what goes on in services acquisition. 

Historically, I, my observation, having grown up in the contracting community, too, many times our functionals or our customers will have a need and they will say, ‘‘Oh, okay, contracting, 

I need people to do maintenance for me. Over to you.’’ And then 

the contract gets put in place and people don’t pay much attention 

to it. 

And historically if there was something wrong with that particular contract or in an inspection or in evidence, or in some type 

of inspection something went wrong or that contractor didn’t perform well, it was the contracting officer that got held accountable 

for that failure, when the reality is that contractor is performing 

a commander’s mission. 

That commander’s very mission success depends on the quality 

of that contractor and their performance, which means when a 

quality assurance evaluator is assigned by that mission commander, the theory is you would assign among your best to do that 

role. Historically we haven’t done that very well. 

So in this post award environment we have put a lot of attention 

on how the government team is organizing, who they are assigning 

to provide that oversight. Does that mission commander even know 

what the contractor is or even understand the value of those contractors to the success of their mission? 

And we are getting them increasingly involved, and if I could just 

give you an example. I am sure you have heard about Vance Air 

Force Base, one of our training bases in the Air Force. Almost the 

entire installation is contracted and when we do one of our annual 

execution reviews with that particular wing commander, he was involved in that post-award discussion. 

We had a lot of really good dialogue about what that contractor 

was doing and does he know what they are doing and how aware 

and how well is his team managing that contractor to achieve the 

objectives they need to do. 
15 

And I could hear the light bulbs coming on and in the time that 

he took over he went back and realigned performance plans for his 

civil servants who were responsible for overseeing the contractor. 

He started holding his military leaders accountable for what those 

contractors were doing. 

They actually prepared exercises that they tested what they 

would do if the contractor wasn’t able or chose not to perform for 

some reason, for example, a strike, and had run those exercises a 

couple of weeks prior to the strike actually occurring that shut 

down mission training for three weeks. 

And the good news is they had worked out all of those workaround strategies. They knew what they were going to need to do 

in order to keep mission going. That is part of staying involved, 

and when you have those dialogues you get involved. 

Now, what I want to make sure is we have just never thought 

that way before. Good or bad or indifferent, we just traditionally 

as a culture haven’t thought that way before. So to have this dialogue, to have this mentoring discussion to coach them on what it 

is they need to do and how to get involved, has been just really productive and enlightening for many of the functionals. So that is 

how we have gotten involved in the post-award environment. 

Mr. CONAWAY. Okay. I want to get one real quick one with Mr. 

Parsons. Would you explain what is going on with LOGCAP III in 

Iraq versus LOGCAP IV? What is the kind of transition? 

Mr. PARSONS. We are in the process of releasing the solicitation 

to transition the work in Iraq off of LOGCAP III into LOGCAP IV, 

and that solicitation should be out on the street in the next week 

or so, with the anticipation that we will do an award sometime in 

August, late August or early September. 

Mr. CONAWAY. And that would provide for the drawdown requirements as well? 

Mr. PARSONS. Correct. 

Mr. CONAWAY. All right, and then, okay. Once it is awarded in 

August then you will be off the LOGCAP III concept? 

Mr. PARSONS. We will be, again, I think it will be early September when we make the awards and then there will be a transition timeframe and then you have got to transition the work from 

the incumbent contractors to whoever winning contractors will be, 

and that takes a period of anywhere 90 to 120 days depending on 

what the service is. 

Mr. CONAWAY. Okay. I may have a second round as well. Thanks. 

Mr. ANDREWS. Thank you, Michael. 

Mr. Ellsworth is recognized. 

Mr. ELLSWORTH. Thank you, Mr. Chairman. I would like to, I 

guess, piggyback on both the former Members’ comments. Going 

back to the water for a second, I guess there is an—— 

Mr. ANDREWS. We are not former Members. 

Mr. CONAWAY. We are former Members? 

Mr. ELLSWORTH. Really. Sorry about that. 

Mr. CONAWAY. I woke up and thought I was still a Member of 

Congress. 

Mr. ELLSWORTH. Not at all. 

Mr. CONAWAY. Wow, things change quickly. 

Mr. ELLSWORTH. The Members that formerly spoke. 
16 

Mr. ANDREWS. There you go. 

Mr. CONAWAY. Formerly questioned. 

Mr. ELLSWORTH. You know, I have totally forgotten what I was 

going to say. 

Mr. ANDREWS. Sorry, Brad. 

Mr. ELLSWORTH. Let me go back to the water for just a second 

in that assumption that what the chairman said that, you know, 

when you make this contract you don’t think you are going to be 

there forever, this long, but there is an assumption that this contractor is a water expert I guess and they would therefore do the 

calculation that this soldier carrying this much equipment would 

need this many liters of water over the course of a day in this 

weather, and that is their job to figure that out. 

We are going to give them the contract, but there needs to be 

that communication, you know, between them. Somebody needs to 

be checking and saying—I am sitting here thinking things. It was, 

‘‘How many big screen TVs do we need or, you know, on certain 

meals or certain comforts, but weapons, ammunition, things like 

water, food and ammunition would be absolutely critical that we 

got it right. 

And there is not a lot of leeway on water of, you know, when 

these guys are in the field or in an outpost that can’t just call back 

and say, ‘‘I need five more skids,’’ and it gets there like that. 

So I guess that is why that example is so critical for the basics 

for life. On not-former-Member Conaway’s comment, talk about 

what both like LOGCAP and Air Force Contract Augmentation 

Program (AFCAP), General and Mr. Parsons about the drawdown, 

and if you can, the involvement there. What is happening? How involved and what is the involvement of both AFCAP and LOGCAP 

in the drawdown, if you can explain that to us, how your organizations are involved? 

General MASIELLO. From what I am hearing from the AFCAP 

team as LOGCAP draws down AFCAP is standing ready to receive 

perhaps some of the effort that LOGCAP once does. And in fact, 

it creates a competitive environment now between a LOGCAP-type 

environment or AFCAP-type of provider. 

Part of our condition on taking that in is having a point of contact responsible for defining that requirement in a disciplined way, 

and that is how the AFCAP tasks are assigned in the beginning. 

They come assigned with a quality assurance evaluator in the beginning. So that becomes a point of contact, not only in the final 

requirement but also in the post-award evaluation process. 

So AFCAP is posturing to support Iraq effort as is required. 

Clearly, we are not at all the dominant player in that theater, but 

are standing ready to support as required. 

Mr. PARSONS. Yes, in terms of the LOGCAP, our executive program director for the program has been over to Iraq quite frequently over the last six to eight months and working with them 

in the planning on the drawdown. 

What they are looking at is trying to establish where are the 

more enduring bases going to be located after the drawdown? 

Which camps are being transitioned over to the Iraqis and the timing of that, and so all that is being worked as we speak. 
17 

In fact, it is one of the things that has kind of delayed us getting 

the solicitation out is because the theater hasn’t been real definitive, well, I shouldn’t say real definitive. It is that things have been 

changing as far as, you know, where we are pulling troops out, 

where we are going to still have troops stationed for the more enduring operations. 

And so all that planning has been taking place. It is being communicated and then it is folded into the statement of work that we 

will be issuing with the request for proposal (RFP). In that the 

LOGCAP contract probably will be used to provide some of the retrograde as the forces draw out of Iraq, we anticipate that we will 

probably issue some additional task orders for transportation type 

of things to withdraw some of the equipment out. 

Mr. ELLSWORTH. And I have to assume that is all part of it is 

what we leave and what stays, what we transfer, what we just 

abandon. What costs more to bring back than it does to leave there 

because I can just, you know, you look in the crystal ball about the 

‘‘60 Minutes’’ program down the road that says the story about 

what was left of American equipment that we paid for that maybe 

we shouldn’t have or maybe, you know, we should have brought 

home or destroyed or whatever it might be. 

Mr. PARSONS. Cheaper to—— 

Mr. ELLSWORTH. I will yield back for now, too. Go ahead. 

Mr. PARSONS. If I could just add, Army Materiel Command in a 

separate LOGCAP itself has got a large planning process going on 

in taking a look at retrograde and trying to ensure that we don’t 

repeat a lot of the lessons that we had from the Gulf War and making sure that we do more of what they call responsible, you know, 

reset responsible retrograde and making sure that we are bringing 

the right things out. 

Mr. ANDREWS. If I may, I think Chairman Snyder has already 

done some work with his subcommittee on coming up with a method to do an evaluation of the cost effectiveness of bringing stuff 

home with all the transportation costs versus selling what you can 

sell versus simple abandonment. 

Mr. PARSONS. Right. 

Mr. ANDREWS. And I know that he has done some work on that 

as long as maybe 18 months ago, so they have done some office— 

we have done some good work in the committee on that already. 

It is a very big problem. 

Mr. PARSONS. Yes. 

Mr. ANDREWS. Mr. Coffman. 

Mr. COFFMAN. Thank you, Mr. Chairman. I am wondering, obviously, one of the big concerns here is the professionalism of our 

contracting personnel, and having been retired military myself I 

am always interested in taking snapshots of where we are. 

And I look back at being an infantry officer and a platoon commander in 1980 in the Marine Corps and the quality of the force 

at that time, going back to the first Gulf War, the quality of the 

force then, and then going back to Iraq in 2005 and the quality of 

the force then. It evolved dramatically upwards during those three 

snapshots in terms of the quality of particularly the young enlisted 

personnel. 
18 

In looking at the—our contracting folks, are most of them, I 

guess my first question would be are most of them, I mean, is that 

a career path in and of itself? Or do people do that or are they logistics people that, you know, go out to the fleet, you know, on one 

tour of duty and then come back in a subsequent tour and do contracting? 

Or are we evolving more into just specific contracting personnel 

and give me a snapshot maybe 10 years ago what it looked like and 

today and what it looks like, and tell me which direction we are 

moving in? Either one—anybody. 

General MASIELLO. Sir, I will go ahead and start from an Air 

Force perspective. It is a little out of my line job jar-wise but as 

a contracting professional I can speak from that particular side of 

my background. 

In the Air Force, our enlisted troops and our officers have a career path dedicated to contracting specifically. So from the very beginning, swearing in as a basic trainee, they will be a contracting 

professional. Now, on occasion, we will cross flow other careerists 

into the contracting career field and then we will put them through 

our traditional training. 

But in the Air Force it is contracting both, or contracting skill 

sets for both enlisted and officers. It is probably one of the things 

that has contributed to our ability to support the theater, where 

the Air Force has represented 70 to 80 percent of the deployed contracting support capability for the entire department. 

Mr. PARSONS. And I will just add, I mean, obviously this was one 

of the topics of the Gansler Commission review that took place 

back in the fall of 2007, and there was a considerable discussion 

in that report of the Air Force model for growing contracting professionals in the military and in the Army. 

And the recommendation is, because what happens in the Army 

is we do not cross folks over into contracting until they are what 

they call branch qualified, which could take up to eight years. So 

it is not unusual that the people that were getting into contracting 

on the Army side had done seven, eight years as an infantry officer, an Army officer, maybe even a, you know, quartermaster before we bring them over. 

Based on the Gansler Commission recommendation we are looking to move that back because the Gansler Commission believes 

that there is some value to having contracting people who have 

operational experience. 

And I can tell you being a product to the Air Force model I didn’t 

have any operational time when I was a contracting person, and 

if there is one area where I wish I probably had had some, and so, 

as General Masiello says, I think the Air Force is trying to cross 

some people over to give them some exposure to that. I think you 

need to have some operational flavor to do this. 

But clearly we have to start the contracting individuals earlier 

in the career field to get the type of expertise that we need, and 

in fact, up until two years ago, we didn’t even have an non-commissioned officer (NCO) designation for contracting like the Air Force. 

And the Air Force, you know, their contingency crew, the backbone is really on NCOs and so the Army is just now developing, 
19 

and we have about 125, 130 NCOs that we have just brought in 

to start doing contracting training. 

Mr. PUNDERSON. I can’t speak for the whole Navy. I can only 

speak for NAVSEA. Only military contracting officers have our officer rank. I can get you an exact number, but I think there are 12 

at headquarters. And I suspect there are another 10 to 15 scattered 

around the field as part of a workforce of approximately 800 people. 

Everyone else is civilian. But we are an acquisition unit. We are 

not in operational management. 

Mr. COFFMAN. Right. 

Mr. PUNDERSON. We do the supply corps officers which are the 

military officers that do contracting, go over in theater on individual augmentation basis, on a 9-month or 12-month tour, but 

there is no—from NAVSEA, very limited military involvement in 

contracting. 

Mr. COFFMAN. Well, certainly I think from the standpoint of the 

Army seems to be evolving. The Air Force seems to be there. Where 

we are developing a specialty or in fact you are already there—— 

Mr. PUNDERSON. Yes. 

Mr. COFFMAN [continuing]. Of an expertise in contracting. And 

that is interesting about having or not having the operational experience and how that plays into it. I know the Marine Corps loves 

operational, everybody to have the common set of experiences. 

Now, General, you mentioned point of contact issues in terms of 

responsibility. Is that one of the problems that we have, that there 

are so many people with their fingerprints on this that no one person seems to be responsible and that is maybe how we get contracts that are out of line? 

I mean, do we have problems with service contracts crossing 

boundaries where, you know, tours of duty or command changes 

where, you know, it is kind of like who is responsible? 

General MASIELLO. That is part of it. I think it is also a cultural 

thing that often when a contractor steps into the role to do the job 

there can be a mindset of just kind of shutting down the brain to 

know that is a contractor’s responsibility, but that is a problem because it is the government’s responsibility to make sure the contractor does what it is they need to do. 

And in fact it is the government’s responsibility to define the requirement, and what is often challenging as we have relied on contractors and I find as we go in our press to war environment or 

even as we plan for follow-on acquisitions, it is certainly the dollar 

level that I am dealing with sometimes, is we have relied on contractors to do that work for so long in some cases we are not even 

sure what they are still doing for us. 

So we have to really spend a lot of time re-baselining what our 

contractors are doing for us and that is, in my opinion, best handled by the people whose mission the contractor is being performed. 

They are the people who understand what the contractor should 

be doing, how and why, and as the contract is really the tool for 

documenting that requirement, somebody has to help us best define 

that requirement, and it is usually the person who owns the requirement. 

And to be fair, often they don’t know how to do that, but what 

we have done is we have been working with the University of Ten-
20 

nessee and Defense Acquisition University (DAU) to help develop 

some training programs to prepare those folks that we need to help 

us define these requirements well to do that role. 

And it is one of those things where you are really frustrated 

when you are asked to do something and you don’t know how to 

do it, how frustrating that is, so you strike back. So instead of just 

asking somebody to do them and not give them the tools, we are 

really working to try to give them the tools to help best succeed in 

getting this right. 

Mr. ANDREWS. Yes. If you could answer quickly, the gentleman’s 

time expired, but if there are anyone else to answer Mr. Coffman’s 

question? Okay, we will move on. 

I wanted to, General Masiello, ask you about the Defense Intelligence Agency (DIA) experience with Intelligence Information, 

Command and Control Equipment and Enhancement (ICE2) contract that you mentioned in your testimony, and it appears that 

this successful collaboration resulted in a 25 percent reduction in 

fixed labor rates producing a $145 million increase in buying power 

in the final 2 years of the contract. Could you elaborate for us how 

that worked and how that calculation was derived? 

General MASIELLO. We worked with the Defense Contract Audit 

Agency and the contractor to get an understanding of what cost 

elements were involved as we extended the contract two additional 

years. When you extend your contract value or where you can extend your contract, you need to have cost insight in the sole source 

environment. 

Previously the rates were set in a competitive environment—— 

Mr. ANDREWS. Right. 

General MASIELLO. And for the follow-on we wanted some insight. We worked with the auditors. We worked with the contractor 

and came to the agreement of a 25 percent reduction. 

Mr. ANDREWS. And what was the size of this contract? What is 

the $145 million measured against? 

General MASIELLO. It is about 25 percent. It was about $600 million, $600 million to $700 million. 

Mr. ANDREWS. So—— 

General MASIELLO. It was very healthy. 

Mr. ANDREWS [continuing]. In other words, the status quo would 

have us spending about $600 million, but we got the same value 

for $455 million or something like that? 

General MASIELLO. Exactly sir. We kind of looked at it the other 

way. We had a $600 million ceiling so we are really buying in that 

$145 million worth of work. 

Mr. ANDREWS. And it, in layperson’s terms, to what would you 

attribute that success? Why were we able to achieve that level of 

success? 

General MASIELLO. Working with a contractor and they are realizing that they had a mission to help us perform and they worked 

with us to get the data ready. 

Mr. ANDREWS. I am sorry. What exactly was the contractor 

doing? 

General MASIELLO. This was information technology (IT) solutions for the intelligence communications. 
21 

Mr. ANDREWS. So the DIA needed some IT solutions. We had a 

contractor that was providing them. 

General MASIELLO. And had been for a number of years. 

Mr. ANDREWS. And you were called in to manage that process 

when it went to the sole source world. 

General MASIELLO. The Air Force had that contract for a number 

of years and it, in the global war on terrorism boom, we had maxed 

out the ceiling available on that contract and we needed to buy a 

couple more years—— 

Mr. ANDREWS. Right. 

General MASIELLO [continuing]. In anticipation of DIA taking it 

on. 

Mr. ANDREWS. Mr. Punderson, I wanted to ask about the success 

of the Seaport-E program and it sounds like you have done a great 

job at enhancing competition and diversity with small businesses 

and, I mean, intuitively I think that that does drive better value 

and lower cost. 

But are there metrics by which we could measure that and then 

should we fill in the blanks that because you have had this success 

in creating more competition we saved x dollars, or is there an 

equivalent to what General Masiello just said we could say about 

Seaport-E? 

Mr. PUNDERSON. I don’t have hard data. We have anecdotal from 

program managers. We had come off—our biggest savings was competing things that had not necessarily been competed before in our 

first days. 

Some of the time and materiel contracts with General Services 

Administration (GSA), the program manager told us that he got 

the same team at a 45 percent reduction from the same people at 

the same company. 

Mr. ANDREWS. And what did that team do? 

Mr. PUNDERSON. This was the team providing program management support for them—— 

Mr. ANDREWS. Okay. 

Mr. PUNDERSON [continuing]. Helping them to manage their program. 

Mr. ANDREWS. So at least in that anecdote the testimony was a 

45 percent savings through the competition? 

Mr. PUNDERSON. Right. Now, that was coming off a very inefficient vehicle. 

Mr. ANDREWS. Right. 

Mr. PUNDERSON. And I would say that savings phase—— 

Mr. ANDREWS. Right. So it was a horrible baseline that we are 

working from. 

Mr. PUNDERSON. Yes. 

Mr. ANDREWS. Yes. 

Mr. PUNDERSON. It is a wonderful success story other than you 

shouldn’t have to do it in the first place. 

Mr. ANDREWS. I understand. 

Mr. PUNDERSON. And now we are coming around again, and we 

are saying, okay, that was kind of like low-hanging fruit. 

Mr. ANDREWS. Right. 

Mr. PUNDERSON. So now we are working on getting better requirements definitions so in our next phase of competitions is—— 
22 

Mr. ANDREWS. Yes. We want to be careful and understand that 

diminishing savings may be a function of better requirements than 

actual savings. We get that that we don’t want to punish people for 

doing a good job on requirements. 

Is there a plan in place to derive the data I just asked about, 

that we can move beyond the anecdotal? 

Mr. PUNDERSON. We had a very hard time setting a baseline and 

what we were coming from because as I told you, we had 350 contract people just at NAVSEA headquarters. 

Mr. ANDREWS. Yes. 

Mr. PUNDERSON. And to say you had the same requirement five 

years later was very hard, especially in that program management 

support area. So we have not found an effective way of telling you 

absolutely it cost $100 here. It is $97 here. 

Mr. ANDREWS. I know witnesses hate to do this, but without prejudice, as we say, meaning that neither you nor NAVSEA will be 

held to this, if you had to make an educated guess as to what that 

$100 was reduced to, what would that be? 

Mr. PUNDERSON. We actually—— 

Mr. ANDREWS. Again, we will not hold you to this in—— 

Mr. PUNDERSON. We had a study done, at the time we were 

starting, and they anticipated that it would average 7 to 10 percent. 

Mr. ANDREWS. Well, that is very good. 

Mr. Conaway. 

Mr. CONAWAY. Just one final thing. Mr. Parsons, you have got 

two years under your belt now, with LOGCAP IV but no GAO report yet. Clearly criticisms from III and II, do you expect that GAO 

will not find criticisms with III, when they do their review of 

LOGCAP IV? 

Mr. PARSONS. That they won’t have criticism especially with 

LOGCAP IV? 

Mr. CONAWAY. Well, that they won’t find the same criticisms as 

the ones they found in III. 

Mr. PARSONS. Actually, I think there were some follow-on GAO 

reports, even after the early ones in LOGCAP III, where they recognized a lot of the improvements we made by, you know, putting 

more program management structure in place, putting people forward. 

Yes, you know, we welcome any kind of further reviews. I mean, 

we have asked the Army audit agency to do follow-on reviews on 

how well the LOGCAP IV is being managed because there is always room for improvement. 

But I can personally tell you, having been associated with the 

program for five years, we are not managing it today like we did 

five years ago when I came in. 

And part of the reason I was nodding my head with General 

Masiello is I did have some involvement with the development of 

her office and I brought it to the Army and said, ‘‘Well, we manage 

these service contracts, especially something like LOGCAP, where 

we are in the billions of dollars. You need some kind of program 

management structure in here to do this properly.’’ 

And I was one of the ones that originally pushed to get a Senior 

Executive Service member to lead the program. And you see, on the 
23 

hardware programs, you have got general officers and SES running 

those hardware programs, and here we have a $5 billion a year 

service contract that warrants to have a general officer or SES running that as well. 

Mr. CONAWAY. Okay. Thank you, Mr. Parsons. 

Mr. ANDREWS. Mr. Ellsworth, any follow-up? 

Mr. ELLSWORTH. I know not to reference comments from other 

Members. 

Mr. ANDREWS. Other present Members? 

Mr. ELLSWORTH. From my higher ranking Members that I admire so much. 

Mr. CONAWAY. Keep it up. 

Mr. ANDREWS. You are doing very well. 

Mr. ELLSWORTH. Mr. Punderson, you have talked in your testimony, in the written comments, about small business and some of 

the improvements and the things we have done to increase that. 

I have a lot of friends I hear from that would love to break into, 

you know, kind of provide very good service on this thing, and 

would love to get into some of the business. 

Can you talk about some of the efforts you have made and how 

they might break into that ever-expanding web of government contracting? I hear it every weekend when I go home, ‘‘How do I get 

into that system?’’ 

Or they will go on the Web site, look at the system, and then say, 

‘‘No, that is not for me, way too complicated,’’ which appears to 

them to be a monopoly and wouldn’t be competition of other small 

businesses. How have you had those successes? 

Mr. PUNDERSON. What we do is, when we put the contracts in 

place, first SeaPort-E contracts in 2004, we had 141 contracts. 

Every year we have done what we call rolling admissions. The contract allows us to add more contractors. 

So every year except this year, so far, we have put a solicitation 

out to allow people the opportunity to propose against the solicitation put out of our office, it is all in Virginia, it is on FedBizOpps, 

the information about it is on seaport.navy.mil and we would announce there in advance. 

We put questions and answers that have ever been asked about 

the program. Last year we did two, because the Small Business Administration asked us to do a special one just for 8(a) contractors. 

We added that and we did that and added, I believe 199 8(a). 

So as long as—and Dahlgren never hear this, we plan on later 

this year putting another solicitation out—— 

Mr. ELLSWORTH. We will keep it quiet for you. 

Mr. PUNDERSON. Thanks. So if people look at seaport.navy.mil all 

the information on how you get in and when that occurs is all published. 

Mr. ELLSWORTH. And just in my final comment, Mr. Chairman, 

I was looking at your resumes, all three of you before this, and, you 

know, we were talking a few minutes ago about trying to shirk responsibility and, you know, people that don’t want to take the 

blame. 

And I look at this and all three of you are people that have invited responsibility your whole lives and your whole careers, and 

the kind of people that get stars on their shoulders and have these 
24 

kind of careers are the ones that say, ‘‘I will take that on,’’ knowing 

that someday I might get invited to a hearing like this and get, you 

know, the what beat out of you. 

Or a GAO report comes down, your response, and I appreciate 

that because you have probably said, you and many like you are 

willing to take it on, knowing what is going to be criticism, let us 

improve more forward from here, so thank you all very much. I 

yield back, Mr. Chairman. 

Mr. ANDREWS. Thank you. 

Mr. Coffman, any follow-up? 

Mr. COFFMAN. No, Mr. Chairman. 

Mr. ANDREWS. Well, thank you. I want to thank my colleagues 

and the witnesses for doing an excellent job, as we expect. 

I want to echo something Mr. Ellsworth just said. There was a 

news report yesterday that a prominent investment bank that we 

used to own a piece of, until they paid it back, had record profits, 

and the average salary, if you divide their profits by the number 

of people they have, is over $700,000 a year. 

And I do want to reflect the fact that we appreciate the sacrifice 

the three of you are making to manage huge amounts of money, 

and more importantly, manage programs that are life and death in 

many cases, for the people who wear the uniform of this country, 

and we appreciate the sacrifice that you make and how hard you 

have worked throughout your career. 

The other thing that occurs to me, and this is not a criticism of you, it is more of an observation of us, in this $200 billion a year 

enterprise, where we are spending a huge amount of money, in a 

huge number of contract vehicles, to buy everything from, you 

know, food supplies to software and everything in between, we 

don’t do a very good job of gathering and analyzing data. 

And again, you are all busy actually doing the contracting, I am 

not criticizing you, but we really don’t have our arms around 

trends and data the way that we should, and I think that is one 

of the things that the Congress is going to have to focus on to make 

sure that we have a better picture. 

It strikes me that General Masiello’s testimony is a success story 

because you got a grip on data. In that DIA contract that you made 

reference to. It sounds to me like the first thing you did was get 

a sense of what had gone on in the past, particularly the labor 

rates, drilled down on that and achieved a very, very good result. 

I am sure there are other examples where the Army and the 

Navy have done the same thing, but I think we want to institutionalize that success, and that is the challenge that we have legislatively. 

Mr. Conaway, do you have any closing comments? 

Mr. CONAWAY. No, I just appreciate you being here this morning, 

and I agree with your comments about your dedication and service 

to this country over a long period of time, when perhaps more lucrative careers would have been available to you. 

So thank you for your service and we may have some other questions, on a go-forward basis. I think, collectively, we can say that 

we are really more about looking forward, making sure that we 

have not made the mistakes we have made in the past. We have 

got plenty of new mistakes to make. They are out there. But we 
25 

are all in this together and the taxpayers deserve our really 

best—— 

Mr. ANDREWS. I completely agree with that. This panel is not 

about grandstanding on problems that we can identify. It is about 

trying to analyze and fix them, as I think you are all about as well. 

So thank you very much for your time and we will be calling you 

again. Panel is adjourned. Thank you. 

[Whereupon, at 9:09 a.m., the panel was adjourned.] 

A P P E N D I X 

JULY 16, 2009 

PREPARED STATEMENTS SUBMITTED FOR THE RECORD 

JULY 16, 2009 

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WITNESS RESPONSES TO QUESTIONS ASKED DURING 

THE HEARING 

JULY 16, 2009 

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RESPONSE TO QUESTION SUBMITTED BY MR. ANDREWS 

Mr. PARSONS. The current numbers of LOGCAP Program management personnel 

in the theater are: 

Iraq 

55 DCMA Military, 28 Military LOGCAP (LSU) 

54 DCMA Civilians, 27 LOGCAP Program Office Support Contractors 

Afghanistan 

28 DCMA Military, 30 Military LOGCAP (LSU) 

64 DCMA Civilians, 18 LOGCAP Program Office Support Contractors 

These are in addition to personnel from the three companies that have what we 

call ‘‘execution’’ contracts—the contracts that provide support to the military units 

deployed in the area such as dining halls, facility support, etc. [See page 13.] 

QUESTIONS SUBMITTED BY MEMBERS POST HEARING 

JULY 16, 2009 

(71) 

QUESTIONS SUBMITTED BY MR. ANDREWS 

Mr. ANDREWS. From the Air Force’s point of view what have been the benefits and 

disadvantages of having a multi-award AFCAP contract as opposed to a single 

award contract. What studies or analysis has been completed to document the advantages and disadvantages? 

General MASIELLO. There have not been any formal studies documenting the advantages and disadvantages of multiple award versus single award contracts for 

AFCAP services. However, the primary benefit of the AFCAP III multiple-award 

contract is the ability to obtain competitive rates for labor, materials, and equipment at worldwide locations with ever changing market conditions. In addition, 

since past performance on AFCAP task orders is an evaluation factor for award of 

new task orders, the contractors are incentivized to successfully perform in order 

to effectively compete for future awards. The main disadvantage associated with the 

multiple award contract type is the quantity of work must be sufficient to sustain 

the participation of multiple vendors; however, this has not been a challenge under 

AFCAP III where almost all task orders are competitively awarded. An additional 

burden to multiple award contracts is the increased time to assess multiple proposals in a task order source selection. This is mitigated on the AFCAP III program 

by having a manageable number of contracts that promote competition while still 

permitting the source selection to be accomplished in a period of time responsive to 

the user’s needs. 

Mr. ANDREWS. DCMA currently provides a significant amount of support to the 

AFCAP contracts in theater. The Committee understands that in the near future, 

DCMA will no longer provide contract administration services to either contract. 

Could you tell the committee how the Air Force plans to provide oversight of the 

contracts in deployed locations considering the shortfalls in the acknowledged shortfalls in the acquisition workforce? 

General MASIELLO. The Air Force is part of an OSD led joint working group examining the optimal execution and resourcing of Contingency Contracting Administration Services (CCAS). However, this will not impact DCMA’s support of our CCAS 

needs in the AOR for the foreseeable future. Additionally, for countries other than 

Iraq or Afghanistan, the Air Force currently provides its own CCAS for AFCAP. In 

Iraq and Afghanistan, Joint Contracting Command Iraq/Afghanistan (JCC–I/A) has 

cognizance and utilizes DCMA to provide CCAS on the AFCAP III program. If at 

some point, a decision is made to alter the CCAS support DCMA provides in theater; the Air Force will work with stakeholders within the Department to ensure 

effective CCAS support to the warfighter. 

Mr. ANDREWS. The current AFCAP contract is for 1 year plus 9 option years? 

What are the advantages of having contracts of this length? Are there any disadvantages? 

General MASIELLO. There are several advantages of the AFCAP contract of 1 year 

plus 9 options years. Anecdotally, contractors have stated they are more likely to 

propose on a contract with a longer period of performance thereby potentially increasing our competitive base on this multiple award program. From a government 

resource stand point, longer periods of performance allow us to focus limited acquisition resources on the post-award administration and then surge to conduct source 

selections. An award every three to five years, would keep us in a near perpetual 

source selection surge on this program. To mitigate the potential risk of stale pricing associated with longer term contracts, each AFCAP III requirement is competed 

at the task order level and there are no set pricing conditions over the life of the 

contract that drive to specific labor or material pricing rates. Therefore, the Air 

Force receives competitively derived pricing on task orders regardless of option year. 

A known disadvantage of a ten year basic contract is the risk associated with contractor mergers and acquisitions and changes to company business models that 

could potentially reduce the number of active contractors on this program. AFCAP 

III mitigated this risk by having a large enough contractor base so that we maintain 

healthy and active task order competition at nearly the halfway point on this 10 

year contract. 

Mr. ANDREWS. What are the lessons learned from the use of this type of contract? 
72 

General MASIELLO. As previously mentioned, the AFCAP III program has learned 

several lessons from the first iteration of AFCAP. The AFCAP III program has 

learned the Air Force receives much more benefit when using definitized requirements, competition, and multiple contract types to craft the best acquisition strategy 

for the requirement. 

Mr. ANDREWS. LOGCAP guidance reflects the single contractor concept. What 

plans does the Army have to revise its LOGCAP guidance to reflect the new concept 

of operations? 

Mr. PARSONS. The Army is currently revising doctrine to reflect lessons learned 

in Iraq and current LOGCAP constructs. Under the Logistics Civil Augmentation 

Program (LOGCAP) Strategy 2010 General Officer Steering Council, the Army G– 

4 (Logistics) is leading an effort to examine present LOGCAP implementation realities and challenges, revisit all past program assumptions, determine enduring and 

appropriate tenets of the LOGCAP program, and develop a strategy for future utilization and programmatics. The results will be incorporated into an updated Army 

Regulation 700–137 Logistics Civil Augmentation Program. After this group has a 

completed product, it will be staffed throughout the Army them published. The staffing process is expected to begin in early 2010. These efforts will result in doctrine 

and policy that align with the LOGCAP IV multiple contractor concept. 

Mr. ANDREWS. DCMA currently provides a significant amount of support to the 

AFCAP contracts in theater. The Committee understands that in the near future, 

DCMA will no longer provide contract administration services to either contract. 

Could you tell the committee how the Air Force plans to provide oversight of the 

contracts in deployed locations considering the shortfalls in the acknowledged shortfalls in the acquisition workforce? 

Mr. PARSONS. The Army Contracting Command has submitted a concept plan for 

approval that contains 31 personnel to support that mission—one military, ten contracting personnel and 20 quality assurance specialists for the LOGCAP program 

office, and 497 deployable contracting and quality assurance specialists for the ACC. 

In addition, the ACC has submitted a Force Design Update (FDU) request that includes 158 active duty Sergeants and 74 Army National Guard and 24 Reserve Sergeants that could augment those positions. We are working with the Army to identify how to resource those positions and to determine when personnel will be provided. 

Mr. ANDREWS. In the past GAO has reported that those who used logistic type 

contracts contingencies for example, the commanders on the ground, often did not 

understand how the contract worked, or what their responsibilities were. What 

steps have the services taken to improve customer understanding of the contracts? 

Mr. PARSONS. The Operational Contract Support doctrine and related training are 

in the process of being changed to reflect changes in the LOGCAP program and the 

greater reliance on contractors in the deployed wartime environment. The field manual entitled Army Tactics, Techniques, and Procedures (ATTP)/FM 4–10 Commander’s Guide to Operational Contract Support: will be renamed The Army Guide 

to Operational Contract Support. It will be refocused on operational level planning 

and tactical level requiring activity procedures. A draft for comment is expected to 

be circulated in late 2009. It will incorporate the tenets of Army Regulation 715– 

9 Operational Contract Support Planning and Management, which reflects current 

LOGCAP constructs. 

In addition to these doctrine changes, the Army has developed an Operational 

Contracting Support Course. The target population for the class is selected logistics 

and other non-acquisition officers/senior NCOs from FORSCOM and other operating 

force units. The second class of that course was held 13–24 July 2009. 17 students 

attended and graduated. The third session will begin in mid September. 

Mr. ANDREWS. Under the LOGCAP IV contract, each contractor proposes a fee as 

part of the proposal submitted for each task order. Under the LOGCAP III contract 

the fee was established at the time the contract was awarded. First, why was this 

change implemented and second, have the fees agreed upon been higher or lower 

then the fee agreed to under the LOGCAP III contract? 

Mr. PARSONS. The change was implemented as part of the overall strategy to 

award to multiple contractors rather than just one single award. By allowing the 

contractor to propose fee as part of the task order award process, the Army conforms 

to the Federal Acquisition Regulation’s requirement to align profit rate with the relative risk the contractor will experience for a given effort. The profit analysis factors 

in FAR 15.404–4(d) sets forth the elements to be considered in evaluation of profit, 

including at paragraph (ii)(A) the risk associated with the complexity and duration 

of the contract task. Given the diversity of the tasks expected to be awarded under 

the LOGCAP IV contracts, it made sense to allow the fee/profit rate to vary with 

the instant task. This has the additional benefit of allowing rates to be reduced in 
73 

the future should the execution environment become less risky. Had the Army kept 

the rate constant, the rates would have been set within the context of an on-going 

conflict with high performance risk. This would have resulted in higher fees for the 

life of the contracts. 

Actual fees paid bear this out. The fee for LOGCAP III was set just after 9/11 

before the amount of work to be performed in Afghanistan and then Iraq was 

known. The previous contracts reflected much shorter tasks in less risky environments. This is likely the reason that KBR proposed a 3% fee. The other offerors proposed a 6% fee. Fees to date under LOGCAP IV are higher—in the 4.5 to 10% range 

combining the base and potential award fees. 

Paying potentially higher award fees does not necessarily mean higher overall 

costs to Government. LOGCAP IV Task Order Competitions should drive lower estimated cost baselines upon which fees are based. Competition forces should drive 

lower actual cost. Government only pays actual cost plus fees based upon the estimated cost baseline. 

We note that the FAR cautions contracting officers to pay fair and reasonable 

profits and fees to contractors to encourage them to remain in the industrial base. 

FAR 15.404–4(a)(2) states ‘‘It is in the Government’s interest to offer contractors opportunities for financial rewards sufficient to stimulate efficient contract performance, attract the best capabilities of qualified large and small business concerns to 

Government contracts, and maintain a viable industrial base.’’ In addition, FAR 

15.404–4(a)(3) states that profit should motivate efficient performance and extremely low profit rates do not motivate such performance. ‘‘Both the Government 

and contractors should be concerned with profit as a motivator of efficient and effective contract performance. Negotiations aimed merely at reducing prices by reducing 

profit, without proper recognition of the function of profit are not in the Government’s interest. Negotiations of extremely low profits, use of historical averages, or 

automatic application of pre-determined percentages to total estimated costs do not 

provide proper motivation for optimum contractor performance. 

Mr. ANDREWS. What, if any problems has the Army encountered as it transitioned 

from using LOGCAP III to LOGCAP IV in Kuwait and Afghanistan? What actions 

in the department taking to avoid similar problems as it transitions in to LOGCAP 

IV in Iraq? 

Mr. PARSONS. The Acquisition Strategy from the beginning was to begin transition 

in Kuwait, capture the lessons learned and then move to Afghanistan, capturing the 

lessons learned from this transition and then move to Iraq. As far as problems encountered during the transition—none affected mission or became showstoppers. 

Obviously, the military environment changed as the President directed that we 

expand in Afghanistan. We, in the acquisition community, adjusted accordingly and 

while we did capture the lessons from Kuwait and successfully completed the transition we are also capturing the lessons from the expansion and will capture the lessons as we transition the legacy task orders in Afghanistan. 

There were 16 specific lessons learned from Kuwait were: 

1. Communication 

2. Protocols 

3. Property Inventories 

4. Material Inventories 

5. Property and Materials Location 

6. Transfer of ITAR 

7. Certificates for Trade Employees 

8. Hiring of Incumbent Employees 

9. Badging 

10. Vehicle Transfer & Registration 

11. DODAAC 

12. IT COMMS 

13. CAC Process 

14. Flight Physicals 

15. Proprietary Determination 

16. Site Transfer Process 

There were also lessons learned by DCMA for property transfer and for their 

QARs. 

We are just beginning the transition for Afghanistan and have yet to experience 

the difficulties we expect in transportation and movement of men, material, and 

equipment since Afghanistan lacks the infrastructure of Kuwait and Iraq. 

Mr. ANDREWS. What is the role of LOGCAP in the draw down of forces in Iraq? 

How is the LOGCAP office involved in the planning for the draw down? Does the 
74 

LOGCAP office has enough assets in Iraq to manage the draw down as well as the 

anticipated transition from LOGCAP III to LOGCAP IV? 

Mr. PARSONS. LOGCAP is faced with closing 10 Forward Operating Bases (FOBs) 

between now and August 2010. Since this number could change based on conditions 

on the ground LOGCAP has dedicated personnel assigned to the MNC/MNF–I planning cell. Under the current contract, known as LOGCAP III, the contractor is 

tasked to close the FOB upon direction. LOGCAP has been asked to provide personnel to man the Base Closure Assessment Team (BCAT) which is established to 

provide advice to those Commanders on FOBs where LOGCAP is not responsible for 

closing the base. 

Past this tasking LOGCAP has not been tasked to provide any additional support. 

Mr. ANDREWS. The current LOGCAP contract is for 1 year plus 9 option years? 

What are the advantages of having contracts of this length? Are there any disadvantages? 

Mr. PARSONS. The benefit of a 10 year contract length for the execution contracts 

is to establish three qualified contractors in a long term relationship with the Government, where they operate in a competitive environment for task orders. It provides stability for contractors in establishing vendor relationships and continuity for 

Government operations in not having to conduct a major source selection after five 

years when we have three quality contractors who compete for work. As long as the 

execution contractors are performing well and there is competition for task orders, 

there is no reason to cut short a ten year performance period. Competing the effort 

more frequently consumes significant resources related to a major source selection 

as well as the potential mission disruption while undergoing a transition from one 

contractor to another, while realizing no appreciable benefit, given that the Government continues to realize the benefits of competition through the task order process. 

As the Government also retains the ability to shorten the period of performance 

by not exercising options or using the termination for convenience clauses in the 

contract, there is no associated disadvantage in this approach. Note that the 

LOGCAP III contract is ending before its anticipated 10 year period of performance 

is complete. 

Mr. ANDREWS. What are the lessons learned from the use of this type of contract? 

Mr. PARSONS. The Army has learned that profit and fee rates can motivate efficient performance if used correctly. These lessons were applied in developing the 

LOGCAP IV acquisition strategy 

The fee rates were discussed at length as the acquisition strategy was developed 

for the LOGCAP IV contract. CPAF Fees: For CPAF task orders on the LOGCAP 

IV execution contracts, there will be no minimum fee percents for the base or award 

fee portions. The maximum combined base plus award fee is 10%, with a maximum 

base fee of 3% a contractor can propose. A cap was set on total CPAF fee because 

there will be instances where competition is not possible and there are no locked 

in fee percents. The cap prevents possible excessive fee in those non-competitive situations. All other things being equal, a lower base fee percent is more advantageous 

to the Government since the contractor’s performance has to earn a higher percent 

of the award fee. 

In deciding on this approach, the Army considered several sources of input. At the 

July 26, 2005 Industry Day, the Army initially proposed possibly setting a minimum 

and maximum level for both base fee and award fee percents. Industry was receptive to this approach, as they perceived the very low fees the incumbent proposed 

on the LOGCAP III solicitation had an impact on the award decision. They also did 

not believe it beneficial to a company’s long term financial health to be locked into 

very low fees on a long term contract. Subsequently the Army reconsidered the impact of competition on task orders and decided that fees proposed on the sample scenario should apply to real world task orders. With individual task orders being competed, the execution contractors will be more competitive if they are not locked into 

established fee percents over the life of the contract. This will permit them to vary 

their proposed fees based on the immediate requirement and decide how aggressive 

they choose to be in the fee area on certain individual task orders. 

Experience on the LOGCAP III contract showed that very low fees, locked in for 

a long term contract where there is only one contractor, are not as effective in getting good cost proposals. This led the Army to initially consider setting minimum 

base and award fee percents. However, it was ultimately determined that having 

multiple contractors, who will submit a proposal on each competitive task order, will 

provide enough incentive and minimum fee percents were not needed. 

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