Military Operations: Implementation of Existing Guidance and Other Actions Needed to Improve DOD's Oversight and Management of Contractors in Future Operations
Published: 2008-01-24T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Department of Defense (DOD) relies extensively on contractors to support deployed forces for services that range from food and housing services to intelligence analysis. Since 1997, GAO has reported on DOD's shortcomings in managing and overseeing its use of contractor support. Part of the difficulty attributed to these shortcomings is that no one person or entity that made the decision to send 129,000 contractors to Iraq. Rather, numerous DOD activities were involved, thus adding to the complexity of the problems which GAO identified in its past work on this topic. This testimony focuses on (1) the problems that DOD has faced in managing and overseeing its contractor support to deployed forces and (2) future challenges that DOD will need to address to improve its oversight and management of contractors at deployed locations. In addition, as you requested, we have developed several actions Congress may wish to consider requiring DOD to take. This testimony is based on previously issued GAO reports and testimonies on DOD's management and oversight of contractor support to deployed forces that focused primarily on U.S. efforts in Southwest Asia. This work was conducted in accordance with generally accepted government auditing standards.
section_title: What GAO Found
paragraphs: DOD leadership needs to ensure implementation of and compliance with existing guidance to improve the department's oversight and management of contractors supporting deployed forces. While DOD issued a comprehensive guidance on contractor support to deployed forces in 2005, we found little evidence that DOD components were implementing this and other guidance. As a result, several long-standing problems have hindered DOD's management and oversight of contractors at deployed locations, even in cases where DOD and its components have developed guidance related to these problems. These problems include failure to follow planning guidance, an inadequate number of contract oversight and management personnel, failure to systematically collect and distribute lessons learned, and lack of comprehensive training for contract oversight personnel and military commanders. Our previous work in this area has identified several instances where poor oversight and management of contractors led to negative monetary and operational impacts. Based on our past work, several challenges will need to be addressed by DOD to improve the oversight and management of contractors supporting deployed forces in future operations and ensure warfighters are receiving the support they rely on in an effective and efficient manner. Those challenges include: (1) incorporating contractors as part of the total force, (2) determining the proper balance of contractors and military personnel in future contingencies and operations, (3) clarifying how DOD will work with other government agencies in future contingencies and operations, and (4) addressing the use and role of contractors into its plans to expand and transform the Army and the Marine Corps.

section_title: Letter
paragraphs: I am pleased to be here today to discuss a number of issues regarding the  oversight and management of contingency contracting in hostile zones. As  you know, the Department of Defense (DOD) relies extensively on  contractors for services that include communication services, interpreters  who accompany military patrols, base operations support (e.g., food and  housing), weapons systems maintenance, and intelligence analysis to  provide support to our military operations in Southwest Asia. Our previous  work has highlighted long-standing problems regarding the oversight and  management of contractors supporting deployed forces and we continue  to conduct work looking at various aspects of these problems. Many of the  problems we see in Iraq and Afghanistan stem from these long-standing  problems and need to be viewed in that context. Moreover, although DOD  estimated in its October 2007 report to Congress that 129,000 contractors  support deployed forces in Iraq, no one person or organization made a  decision to send 129,000 contractors to Iraq. Rather, the decision to send  contractors to support forces in Iraq was made by numerous DOD  activities both within and outside of Iraq. The scope and scale of contract  support to deployed forces therefore contributes to the complexity of the  problems we have identified in our past work on this topic.
My testimony today will focus on (1) the problems that DOD has faced in  managing and overseeing its contractor support to deployed forces and (2)  future challenges that DOD will need to address to improve its oversight  and management of contractors at deployed locations. In addition, as you  requested, we have developed several actions the Congress may wish to  consider requiring DOD to take.
In preparing this testimony, we relied on previously issued GAO reports  and testimonies on DOD’s management and oversight of contractor  support to deployed forces that focused primarily on our efforts in  Southwest Asia. This work was conducted in accordance with generally  accepted government auditing standards. A list of GAO products used to  prepare this testimony is located in appendix 1.
subsections: section_title: Background
paragraphs: The U.S. military has long used contractors to provide supplies and  services to deployed U.S. forces, and more recently contractors have been  involved in every major military operation since the 1991 Gulf War.  However, the scale of contractor support DOD relies on today in Iraq and  elsewhere throughout Southwest Asia has increased considerably from  what DOD relied on during previous military operations, such as  Operation Desert Shield/Desert Storm and in the Balkans. Moreover,  DOD’s reliance on contractors continues to grow. In December 2006, the  Army alone estimated that almost 60,000 contractor employees supported  ongoing military operations in Southwest Asia. In October 2007, DOD  estimated that the number of contractors in Iraq to be about 129,000. By  way of contrast, an estimated 9,200 contractor personnel supported  military operations in the 1991 Gulf War. Factors that have contributed to  this increase include reductions in the size of the military, an increase in  the number of operations and missions undertaken, and DOD’s use of  increasingly sophisticated weapons systems.
DOD uses contractors to meet many of its logistical and operational  support needs during combat operations, peacekeeping missions, and  humanitarian assistance missions. Today, contractors located throughout  Southwest Asia provide U.S. forces with such services as linguist support,  equipment maintenance, base operations support, and security support. In  Iraq and Afghanistan, contractors provide deployed U.S. forces with  communication services; interpreters who accompany military patrols;  base operations support (e.g., food and housing); weapons systems  maintenance; intelligence analysis; and a variety of other support.  Contractors also provide logistics support such as parts and equipment  distribution, ammunition accountability and control, port support  activities, and support to weapons systems and tactical vehicles. For  example, in Kuwait and Qatar the Army uses contractors to refurbish,  repair, and return to the warfighters a variety of military vehicles, such as  the Bradley Fighting Vehicle, armored personnel carriers, and the High- Mobility, Multi-Purpose Wheeled Vehicle (HMMWV).
Since our initial work on the use of contractors to support deployed forces  in 1997, DOD has taken a number of actions to implement  recommendations that we have made to improve its management of  contractors. For example, in 2003 we recommended that the department  develop comprehensive guidance to help the services manage contractors’  supporting deployed forces. In response to this recommendation, the  department issued the first comprehensive guidance dealing with  contractors who support deployed forces in October 2005. Additionally, in  October 2006, DOD established the office of the Assistant Deputy Under  Secretary of Defense for Program Support to serve as the office with  primary responsibility for contractor support issues. This office has led the  effort to develop and implement a database which, when fully  implemented, will allow by-name accountability of contractors who deploy  with the force. These database implements recommendations we made in  2003 and 2006 to enhance the department’s visibility over contractors in  locations such as Iraq and Afghanistan.
section_title: DOD has Experienced Problems with Its Oversight and Management of Contractors at Deployed Locations, But Has Taken Some Steps to Address These Problems
paragraphs: DOD leadership needs to ensure implementation of and compliance with  existing guidance to improve the department’s oversight and management  of contractors supporting deployed forces. Several long-standing  challenges have hindered DOD’s management and oversight of contractors  at deployed locations, even though in many cases DOD and its  components have developed guidance related to these challenges. These  challenges include failure to follow long-standing planning guidance,  ensure an adequate number of trained contract oversight and management  personnel, systematically collect and distribute lessons learned, and  comprehensively train contract oversight personnel and military  commanders. We have found several instances where poor oversight and  management of contractors has led to negative monetary and operational  impacts.
subsections: section_title: DOD Leadership Needs to Ensure Implementation of and Compliance with Existing Guidance Regarding Oversight and Management of Contractors
paragraphs: Based on our previous work, we believe for DOD to improve its oversight  and management of contractors supporting deployed forces in future  operations and ensure warfighters are receiving the support they rely on in  an effective and efficient manner, DOD leadership needs to ensure  implementation of and compliance with existing guidance to improve the  department’s oversight and management of contractors supporting  deployed forces. DOD has taken a number of steps over the last several  years to improve and consolidate its long-standing guidance pertaining to  the use of contractors to support deployed force. Moreover, largely in  response to the recommendation in our 2006 report, DOD established the  office of the Assistant Deputy Under Secretary of Defense (Program  Support) within the office of the Deputy Under Secretary of Defense for  Logistics and Materiel Readiness to serve as the focal point to lead DOD’s  efforts to improve contract management and oversight. However, as we  reported in 2006, although the issuance of DOD’s new guidance was a  noteworthy improvement, we found little evidence that DOD components  were implementing this guidance or much of the additional guidance  addressing the management and oversight of contractors supporting  deployed forces. For example, additional DOD and service guidance  requires, among other things, the collection of lessons learned, the  appointment of certified contracting officer’s representatives, and that all  personnel receive timely and effective training to ensure they have the  knowledge and other tools necessary to accomplish their missions. Given  DOD’s continued difficulties meeting these requirements, it is clear that  guidance alone will not fix these long-standing problems. Therefore, we  believe that the issue is now centered on DOD providing the leadership to  ensure that the existing guidance is being implemented and complied with.
section_title: DOD Has Not Followed Long-standing Planning Guidance Regarding the Use of Contractors to Support Deployed Forces
paragraphs: As we have noted in previous reports and testimonies, DOD has not  followed long-standing planning guidance, particularly by not adequately  factoring the use and role of contractors into its planning. For example,  we noted in our 2003 report that the operations plan for the war in Iraq  contained only limited information on contractor support. However, Joint  Publication 4.0, which provides doctrine and guidance for combatant  commanders and their components regarding the planning and execution  of logistic support of joint operations, stresses the importance of fully  integrating into logistics plans and orders the logistics functions  performed by contractors along with those performed by military  personnel and government civilians. Additionally, in our 2004 report, we  noted that the Army did not follow its planning guidance when deciding to  use the Army’s Logistics Capabilities Augmentation Program (LOGCAP) in  Iraq. According to Army guidance, integrated planning is a governing  principle of contractor support, and for contractor support to be effective  and responsive, its use needs to be considered and integrated into the  planning process. Proper planning identifies the full extent of contractor  involvement, how and where contractor support is provided, and any  responsibilities the Army may have in supporting the contractor.  Additional Army guidance stresses the need for the clear identification of  requirements and the development of a comprehensive statement of work  early in the contingency planning process. Because this Army guidance  was not followed, the plan to support the troops in Iraq was not  comprehensive and was revised seven times in less than 1 year. These  revisions generated a significant amount of rework for the contractor and  the contracting officers. Additionally, time spent reviewing revisions to the  task orders is time that is not available for other oversight activities. While  operational considerations may have driven some of these changes, we  believe others were more likely to have resulted from ineffective planning.  The lack of planning also impacts the post-award administration of  contracts. For example, in our 2004 report, we noted that one reason the  Army was unable to definitize the LOGCAP task orders was the frequent  revisions to the task orders. Without timely definitization of task orders,  the government is less able to control costs.
Our 2003 report also concluded that essential contractor services had not  been identified and backup planning was not being done. DOD policy  requires DOD and its components to determine which contractor-provided  services will be essential during crisis situations and to (1) develop and  implement plans and procedures to provide a reasonable assurance of the  continuation of essential services during crisis situations and (2) prepare a  contingency plan for obtaining the essential service from an alternate  source should the contractor be unable to provide it. According to DOD  Instruction 3020.37, commanders have three options if they cannot obtain  reasonable assurance of continuation of essential contractor service: they  can obtain military, DOD civilian, or host nation personnel to perform the  services, they can prepare a contingency plan for obtaining essential  services, or they can accept the risk attendant with a disruption of services  during crisis situations. However, our review found that essential  contractor services had not been identified and backup planning was not  being done. Without firm plans, there is no assurance that the personnel  needed to provide the essential services would be available when needed.
Moreover, because DOD and its components have not reviewed contractor  support to identify essential services, the department lacks the visibility  needed to provide senior leaders and military commanders with  information on the totality of contractor support to deployed forces. As we  noted in 2003 and 2006,  having this information is important in order for  military commanders to incorporate contractor support into their planning  efforts. For example, senior military commanders in Iraq told us that when  they began to develop a base consolidation plan for Iraq, they had no  source to draw upon to determine how many contractors were on each  installation. Limited visibility can also hinder the ability of commanders to  make informed decisions regarding base operations support (e.g., food  and housing) and force protection for all personnel on an installation.  Similarly, we found that limited visibility over contractors and the services  they provide at a deployed location can hinder the ability of military  commanders to fully understand the impact that decisions such as  restrictive installation access and badging requirements can have on the  ability of contractors to provide services.
As noted above, DOD has taken some steps to improve its visibility over  contractor support. In addition, according to a October 2007 DOD report  to Congress on managing contractor support to deployed forces, the  department is developing a cadre of contracting planners whose primary  focus will be to review contractor support portions of combatant  commanders’ operations plans and contingency plans, including the  requirements for contractor services.
section_title: DOD Lacks an Adequate Number of Trained Contract Oversight and Management Personnel
paragraphs: As we noted in several of our previous reports, having the right people  with the right skills to oversee contractor performance is crucial to  ensuring that DOD receives the best value for the billions of dollars spent  each year on contractor-provided services supporting forces deployed to  Iraq and elsewhere. Since 1992, we designated DOD contract management  as a high-risk area, and it remains so today, in part, due to concerns over  the adequacy of the department’s acquisition workforce, including  contract oversight personnel. While this is a DOD-wide problem, having  too few contract oversight personnel presents unique difficulties at  deployed locations given the more demanding contracting environment as  compared to the United States. Although we could find no DOD guidelines  on the appropriate number of personnel needed to oversee and manage  DOD contracts at a deployed location, several reviews by GAO and DOD  organizations have consistently found significant deficiencies in DOD’s  oversight of contractors due to an inadequate number of trained personnel  to carry out these duties.
In 2004, we reported that DOD did not always have enough contract  oversight personnel in place to manage and oversee its logistics support  contracts such as LOGCAP and the Air Force Contract Augmentation  Program (AFCAP). As a result, the Defense Contract Management Agency  was unable to account for $2 million worth of tools that had been  purchased using the AFCAP contract. The following year, we reported in  our High-Risk Series that inadequate staffing contributed to contract  management challenges in Iraq. During our 2006 review, several contract  oversight personnel we met with told us DOD does not have adequate  personnel at deployed locations. For example, a contracting officer’s  representative for a linguistic support contract told us he had only one  part-time assistant, limiting his ability to manage and oversee the  contractor personnel for whom he was responsible. The official noted that  he had a battalion’s worth of people with a battalion’s worth of problems  but lacked the equivalent of a battalion’s staff to deal with those problems.  Similarly, an official with the LOGCAP Program Office told us that the  office did not prepare to hire additional budget analysts and legal  personnel in anticipation of an increased use of LOGCAP services due to  Operation Iraqi Freedom. According to the official, had adequate staffing  been in place early, the Army could have realized substantial savings  through more effective reviews of the increasing volume of LOGCAP  requirements. More recently, we reported that the Army did not have  adequate staff to conduct oversight of an equipment maintenance contract  in Kuwait. During our review of the contract, we found that vacant  authorized oversight personnel positions included a quality assurance  specialist, a property administrator, and two quality assurance inspectors.  Army officials also told us that in addition to the two quality assurance  inspectors needed to fill the vacant positions, more quality assurance  inspectors were needed to fully meet the oversight mission. According to  Army officials, vacant and reduced inspector and analyst positions meant  that surveillance was not being performed sufficiently in some areas and  the Army was less able to perform data analyses, identify trends in  contractor performance, and improve quality processes.
In addition to our work, a number of other reviews of DOD’s contractor  oversight personnel have identified similar problems. A 2004 Joint Staff  review of the Defense Contract Management Agency’s responsiveness and  readiness to support deployed forces found that the agency had not  programmed adequate resources to support current and future  contingency contract requirements. The review also found that the  Defense Contract Management Agency manpower shortages were  aggravated by internal policies that limited the ability of personnel to  execute those missions. More recently, the 2007 report of the Commission  on Army Acquisition and Program Management in Expeditionary  Operations stated that the Army lacks the leadership and military and  civilian personnel to provide sufficient contracting support to either  expeditionary or peacetime missions. According to the commission, Army  contracting personnel experienced a 600 percent increase in their  workload and are performing more complex tasks, while the number of  Army civilians and military in the contracting workforce has remained  stagnant or declined. As a result, the commission found that the vital task  of post-award contract management is rarely being done.
As we noted in our 2006 report, without adequate contract oversight  personnel in place to monitor its many contracts in deployed locations  such as Iraq, DOD may not be able to obtain reasonable assurance that  contractors are meeting their contract requirements efficiently and  effectively. However, some actions have been taken since our report to  address the issue of inadequate numbers of trained contract oversight and  management personnel. For example, in February 2007, the Deputy  Assistant Secretary of the Army (Policy and Procurement) issued guidance  that for service contracts greater that $2,500, the contracting officer shall  appoint certified contracting officer’s representatives in writing, identify  properly trained contracting officer’s representatives for active service  contracts, and ensure that a government quality assurance surveillance  plan is prepared and implemented for service contracts. In addition,  Congress has taken steps to improve oversight by increasing the budgets  for the Defense Contract Audit Agency, Defense Contract Management  Agency, and the Defense Department’s Inspector General in the fiscal year  2008 Defense Department Appropriations.
section_title: DOD Is Not Systematically Collecting and Distributing Lessons Learned
paragraphs: Although DOD and its components have used contractors to support  deployed forces in several prior military operations, DOD does not  systematically ensure that institutional knowledge regarding the use of  contractors to support deployed forces, including lessons learned and best  practices, is shared with military personnel at deployed locations. We  previously reported that DOD could benefit from systemically collecting  and sharing its institutional knowledge to help ensure that it is factored  into planning, work processes, and other activities. We have also made  several recommendations that, among other things, called for DOD to  incorporate lessons learned from its experience in the Balkans to improve  the efficiency and effectiveness of the Army’s LOGCAP contract,  implement a departmentwide lessons-learned program to capture the  experiences of military units that have used logistics support contracts,  and establish a focal point within the Office of the Under Secretary of  Defense to lead and coordinate the development of a departmentwide  lessons-learned program to collect and distribute the department’s  institutional knowledge regarding all forms of contractor support to  deployed forces.
Although DOD has policy requiring the collection and distribution of  lessons learned to the maximum extent possible, we found in our previous  work that no procedures were in place to ensure that lessons learned are  collected and shared. For example, DOD has established the Joint Lessons  Learned Program, designed to enhance joint capabilities through  discovery, knowledge development, implementation, and sharing of  lessons learned from joint operations, training events, exercises, and other  activities. The program applies to the Joint Staff, combatant commands,  services, and combat support agencies that are to coordinate activities and  collaboratively exchange lesson observations, findings, and  recommendation to the maximum extent possible. According to DOD  policy, combatant commands are responsible for executing and supporting  joint lessons learned functions including lesson discovery, knowledge  development, and implementation activities. U.S. Joint Forces Command  is responsible for developing and implementing the capability to collect  and analyze observations from current operations and ensuring key  findings are appropriately disseminated.
The Army regulation which establishes policies, responsibilities, and  procedures for the implementation of the LOGCAP program makes  customers that receive services under the LOGCAP contract responsible  for collecting lessons learned. Nonetheless, we have repeatedly found that  DOD is not systematically collecting and sharing lessons learned on the  use of contractors to support to deployed forces. Despite years of  experience using contractors to support forces deployed to the Balkans,  Southwest Asia, Iraq, and Afghanistan, DOD has made few efforts to  leverage this institutional knowledge. As a result, many of the problems  we identified in earlier operations have recurred in current operations. In  2004, we reported that despite over 10 years of experience in using  logistics support contracts, the Army continued to experience the same  types of problems it experienced during earlier deployments that used  LOGCAP for support. For example, we found that U.S. Army, Europe,  which has had the most experience in using logistics support contracts,  has not consolidated its lessons learned and made them available for  others. Similarly, we learned that a guidebook developed by U.S. Army,  Europe on the use of a logistical support contract was not made available  to military commanders in Iraq until mid-2006.
During the course of our 2006 work, we found no organization within DOD  or its components responsible for developing procedures to capture  lessons learned on the use of contractor support at deployed locations.  Likewise, we found that neither the Joint Force’s Command Joint Center  for Operational Analysis nor the Army’s Center for Army Lessons Learned  was actively collecting lessons learned on the use of contractor support in  Iraq. We noted that when lessons learned are not collected and shared,  DOD and its components run the risk of repeating past mistakes and being  unable to build on the efficiencies and effectiveness others have  developed during past operations that involved contractor support. We  also found a failure to share best practices and lessons learned between  units as one redeploys and the other deploys to replace it. As a result, new  units essentially start at ground zero, having to resolve a number of  difficulties until they understand contractor roles and responsibilities.
section_title: DOD Does Not Comprehensively Train Contract Oversight Personnel and Military Commanders
paragraphs: DOD does not routinely incorporate information about contractor support  for deployed forces in its pre-deployment training of military personnel,  despite the long-standing recognition of the need to provide such  information. We have discussed the need for better pre-deployment  training of military commanders and contract oversight personnel since  the mid-1990s and have made several recommendations aimed at  improving such training as shown in figure 1.
Moreover, according to DOD policy, personnel should receive timely and  effective training to ensure they have the knowledge and other tools  necessary to accomplish their missions. Nevertheless, we continue to find  little evidence that improvements have been made in terms of how DOD  and its components train military commanders and contract oversight  personnel on the use of contractors to support deployed forces prior to  their deployment. For example, in an October 2007 report to Congress on  managing contractor support to deployed forces, DOD discussed broad,  contractor management-related training programs that it intends to  implement in the future. Without properly trained personnel, DOD will  continue to face risks of fraud, waste, and abuse.
Limited or no pre-deployment training on the use of contractor support  can cause a variety of problems for military commanders in a deployed  location. As we reported in 2006, with limited or no pre-deployment  training on the extent of contractor support to deployed forces, military  commanders may not be able to adequately plan for the use of those  contractors. In its 2007 report, the Commission on Army Acquisition and  Program Management in Expeditionary Operations found that combatant  commands do not recognize the significance of contracts and contractors  in expeditionary operations, and concluded that the Army needs to  educate and train commanders on the important operational role of  contracting. Several military commanders we met with in 2006 said their  pre-deployment training did not provide them with sufficient information  regarding the extent of contractor support that they would be relying on in  Iraq. These commanders were therefore surprised by the substantial  number of personnel they had to allocate to perform missions such as on- base escorts for third-country and host-country nationals, convoy security,  and other force protection support to contractors. In addition, limited or  no pre-deployment training for military commanders on the use of  contractor support to deployed forces can result in confusion regarding  their roles and responsibilities in managing and overseeing contractors.  For example, we found some instances where a lack of training raised  concerns over the potential for military commanders to direct contractors  to perform work outside the scope of the contract, something  commanders lack the authority to do. As Army guidance makes clear,  when military commanders try to direct contractors to perform activities  outside the scope of the contract, this can cause the government to incur  additional charges because modifications would need to be made to the  contract and, in some cases, the direction may potentially result in a  violation of competition requirements. In addition, our 2005 report on the  use of private security contractors in Iraq noted that commanders told us  they received no training or guidance on how to work with private security  providers in Iraq. To highlight the lack of training and guidance,  representatives from one unit told us that they did not know there were  private security providers in their battle space until the providers began  calling for assistance. They also said that any information about who  would be in the battle space and the support the military should be  providing would be useful.
We also found that contract oversight personnel such as contracting  officer’s representatives received little or no pre-deployment training  regarding their roles and responsibilities in monitoring contractor  performance. Many of the contracting officer’s representatives we spoke  with in 2003 and 2006 said that training before they assumed these  positions would have better prepared them to effectively oversee  contractor performance. Although DOD has created an online training  course for contracting officer’s representatives, individuals we spoke with  noted that it was difficult to set aside the time necessary to complete the  training once they arrived in Iraq. Furthermore, in most cases, deploying  individuals were not informed that they would be performing contracting  officer representative duties until after they had deployed. We found  several instances where the failure to identify and train contracting  officer’s representatives prior to their deployment hindered the ability of  those individuals to effectively manage and oversee contractors. For  example, the contracting officer’s representative for an intelligence  support contract in Iraq had not been informed of his responsibilities prior  to deploying and had no previous experience working with contractors.  The official told us he found little value in the online training course and  subsequently did not believe this training adequately prepared him to  execute his contract oversight responsibilities, such as reviewing invoices  submitted by the contractor. Similarly, officials from a corps support  group in Iraq told us that until they were able to get a properly trained  contracting officer’s representative in place, they experienced numerous  problems regarding the quality of food service provided by LOGCAP. The  2007 report of the Commission on Army Acquisition and Program  Management in Expeditionary Operations also discussed the need to train  contracting officer’s representatives and warned that the lack of training  could lead to fraud, waste, and abuse.
Some steps have been taken to help address the issue of pre-deployment  training of military commanders and contract oversight personnel. In  DOD’s response to our 2006 report, the Director of Defense Procurement  and Acquisition Policy stated that the Army is making changes to its  logistics training programs to be better positioned to meet current and  future challenges. This included incorporating contracting officer’s  representatives training into its basic and advanced training for its  ordnance, transportation, and quartermaster corps. In addition, the  Defense Acquisition University has updated its contingency contracting  course to include a lesson on contractors accompanying the force. More  recently, the National Defense Authorization bill for fiscal year 2008  included a provision addressing the need for contingency contractor  training for personnel outside the acquisition workforce. This provision  requires that military personnel receive training sufficient to ensure that  they understand the scope and scale of contractor support they will  experience in contingency operations and are prepared for their roles and  responsibilities regarding contractor oversight and program management  among others.
section_title: DOD’s Problems in Managing and Overseeing Contractors Have Had Negative Impacts at Deployed Locations
paragraphs: DOD’s problems managing and overseeing contractors at deployed  locations make it difficult for the department to be assured that it is  getting the services it needs on time and at a fair and reasonable price.  Over the past few years, we reported some of the results of these long- standing problems. While many of the situations we discuss below  highlight monetary consequences, poor contract management and  oversight can affect military operations as well. Furthermore, although  determining the extent of the financial impact is not always feasible or  practicable, the inability to quantify the financial impact should not detract  from efforts to achieve greater rigor and accountability in DOD  contracting practices. The following are examples of negative impacts that  have occurred at deployed locations.
On January 23, 2008, we issued a report on the Army’s equipment  maintenance contract in Kuwait and concluded that the Army did not  always follow key principles included in the Army Quality Program. This  instruction specifies the use of performance information to perform root- cause analysis and foster continuous improvement. In addition, the  battalion’s July 2006 draft maintenance management plan requires that  contractor performance data should be analyzed to help identify the cause  of new and/or recurring quality problems and evaluate the contractor’s  performance. However, we found that the Army did not begin to track  contractor pass/fail rates until July 2007. According to Army quality  assurance officials, this metric was not tracked and monitored because  they did not have sufficient quality assurance staff to perform such an  analysis. By not tracking and monitoring the percent of equipment  submitted for Army acceptance that failed quality assurance inspection,  the Army did not know the extent to which the contractor was meeting the  specified maintenance standard requirements nor could it identify  problem areas in the contractor’s processes and initiate corrective action.  Furthermore, our analysis of Army data found that for five types of  vehicles inspected by quality assurance personnel between July 2006 and  May 2007, 18 percent to 31 percent of the equipment presented to the  Army as ready for acceptance failed government inspection. In addition,  some equipment presented to the Army as ready for acceptance failed  government inspection multiple times, sometimes for the same  deficiencies. When the Army inspected equipment that did not meet  standards, it was returned to the contractor for continued repair. Our  analysis of Army data found that since May 2005 an additional 188,000  hours were worked to repair equipment after the first failed government  inspection, which translates into an additional cost of approximately $4.2  million.
In July 2004, we reported that the Air Force had used the Air Force  Contract Augmentation Program (AFCAP) contract to supply commodities  for its heavy construction squadrons because it did not deploy with  enough contracting and finance personnel to buy materials quickly or in  large quantities. Additionally, the U.S. Agency for International  Development has used the contract to provide disaster relief and  humanitarian assistance supplies. In some cases, the contractor simply  bought the supplies and delivered them to the customer under cost-plus  award fee task orders. We noted that the contractor had received more  than $2 million in award fees since February 2002 for these commodity  supply task orders. While permitted, the use of cost-plus award fee task  orders to obtain supplies may not be cost-effective, as the government  reimburses the contractor’s costs and pays award fees for orders with  little risk. Air Force officials recognized that this business arrangement  may not be cost-effective. Under the current Air Force Contract  Augmentation Program (AFCAP) contract, commodities may be obtained  using only firm fixed price orders or cost-plus fixed fee orders.
The lack of sufficiently trained personnel can also lead to the inefficient  use of military personnel. In our December 2006 report, officials with a  Stryker brigade told us a lack of contractor management training hindered  their ability to resolve staffing issues with a contractor conducting  background screenings of third-country and host-country nationals. In this  case, shortages of contractor-provided screeners forced the brigade to use  its own intelligence personnel to conduct screenings. As a result, those  personnel were not available for their primary intelligence-gathering  responsibilities.
In June 2004, we reported that a disagreement between the LOGCAP  contractor and the Defense Contract Audit Agency (DCAA) on how to bill  for services to feed soldiers in Iraq involved at least $88 million in  questioned costs. In this case, the statement of work required the  contractor to build, equip, and operate dining facilities at various base  camps and provide four meals a day for the base camp populations. The  statement of work did not specify, however, whether the government  should be billed on the camp populations specified in the statement of  work or on the actual head count. This is an important distinction because  the specified camp population was significantly higher than the actual  head count, and the subcontractors providing the services generally billed  the contractor for the specified base camp population. A contractor  analysis of selected invoices over a 4-month period found that it had billed  the government for food service for more than 15.9 million soldiers when  only 12.5 million—more than 3.4 million fewer—had passed through the  dining facilities. DCAA believed that the contractor should have billed the  government on the actual head count services, whereas the contractor  believed that it should have billed the government based on the camp  populations specified in the statement of work. A clearer statement of  work, coupled with better DOD oversight of the contract, could have  prevented the disagreement and mitigated the government’s risk of paying  for more services than needed.
section_title: Future Challenges DOD Will Need to Address to Improve Its Oversight and Management of Contractors at Deployed Locations
paragraphs: Looking at our past work, I would like to make a number of broad  observations about challenges we believe will need to be addressed by  DOD to improve the oversight and management of contractors supporting  deployed forces in future operations and ensure warfighters are receiving  the support they rely on in an effective and efficient manner. There are  four issues in particular that merit attention by DOD: (1) incorporating  contractors as part of the total force, (2) determining the proper balance  of contractors and military personnel in future contingencies and  operations, (3) clarifying how DOD will work with other government  agencies in future contingencies and operations, and (4) addressing the  use and role of contractors into its plans to expand and transform the  Army and the Marine Corps.
subsections: section_title: Incorporating Contractors as Part of the Total Force
paragraphs: DOD relies on contractors as part of the total force, which the department  defines as its active and reserve military components, its civil servants,  and its contractors. As DOD’s 2006 Quadrennial Defense Review noted,  “The department and military services must carefully distribute skills  among the four elements of the total force (Active Component, Reserve  Component, civilians, and contractors) to optimize their contributions  across the range of military operations, from peace to war.” Furthermore,  in a November 2007 briefing on challenges and opportunities associated  with DOD’s transformation efforts, the Comptroller General called on  DOD to employ a total force management approach to planning and  execution (e.g., military, civilian, and contractors). Similarly, the 2007  report of the Commission on Army Acquisition and Program Management  in Expeditionary Operations called on the Army to transform its culture  with regard to contracting and establish contracting as a core competency.  Many of the long-standing problems we have identified regarding the  oversight and management of contractor support to deployed forces stem  from DOD’s reluctance to plan for contractors as an integral part of the  total force. This is evidenced by the fact that DOD does not incorporate  the use and role of contractors in its professional military education. For  example, an official from the Army’s Training and Doctrine Command said  it was important that all DOD components incorporate into their  institutional training information on the use of contractors in deployed  location so that all military personnel who deploy have a basic awareness  of contractor support issues prior to deploying. We therefore  recommended in our 2006 report that DOD develop training standards for  the services on the integration of basic familiarity with contractor support  into their professional military education. This would be an important first  step towards incorporating the use and role of contractors across the  department.
section_title: Determining the Proper Balance of Contractors and Military Personnel in Future Contingencies and Operations
paragraphs: DOD needs to determine the appropriate balance between contractors and  military personnel in deployed locations in order to ensure its ability to  meet its future mission requirements while at the same time assuring it has  the capacity to oversee and manage contractors supporting those future  missions. As the Comptroller General stated in April 2007, given DOD’s  heavy and increasing reliance on contractors in Iraq and elsewhere, and  the risks this reliance entails, it may be appropriate to ask if DOD has  become too reliant on contractors to provide essential services. This is  becoming a more important issue, as DOD becomes increasingly involved  in missions such as stability operations. Looking towards the future, the  department needs to consider how it will use contractors to support those  missions and how it will ensure the effective management and oversight of  those contractors. What is needed is a comprehensive, forward-looking  review of contractor support to deployed forces that provides the proper  balance between contractor support and the core capabilities of military  forces over the next several years. The National Defense Authorization bill  for fiscal year 2008 requires the Secretary of Defense to conduct, every 4  years, a comprehensive assessment of the roles and missions of the armed  forces and the core competencies and capabilities of DOD to perform and  support such roles and missions. This could provide the foundation for a  comprehensive examination of the support DOD will require contractors  to provide in future operations and core capabilities the department  believes it should not be relying on contractors to perform. Only when  DOD has established its future vision for the use and role of contractors  supporting deployed forces can it effectively address its long-term  capability to oversee and manage those contractors.
section_title: Clarifying How DOD will Work with Other Government Agencies in Future Contingencies and Operations
paragraphs: As DOD works to improve its oversight and management of contractors  supporting deployed forces, it is increasingly working with other  government agencies at those deployed locations. This has raised a  number of issues that will likely continue to affect future operations  unless the U.S. government acts to resolve them. For example, the  Department of the Defense and the Department of State need to determine  who should be responsible for providing security to the U.S. government  employees and contractors working in contingency operations. If the U.S.  government determines that it will use private security companies during  contingency operations, it is imperative that DOD and the other agencies  agree on regulations and procedures to govern the use of private security  companies and clarify their rules of engagement. Another question that  has come up in Iraq and may occur in future operations is which agency  should be responsible for reconstruction efforts. Moreover, there are  issues that arise from the different rules and regulations governing military  personnel, DOD civilians, other government agency employees, and  contractors who may all be living and working on the same installation.  For example, concerns have been raised about the applicability of the  Military Extraterritorial Jurisdiction Act to crimes committed by  contractors who support agencies other than DOD at deployed locations.  In addition, contractors working for DOD in Iraq and Afghanistan fall  under military policies that prohibit the use of alcohol, gambling, and  other behaviors. However, contractors working for other agencies are  generally not required to follow these policies, which can lead to tensions  and erode military efforts to maintain discipline and morale. Given that  DOD can expect to work more closely with other agencies in the future,  the department will need to develop memoranda of understanding with  those agencies and update its guidance to improve its working relationship  with its partners across the U.S. government.
section_title: Addressing the Use and Role of Contractors into Plans to Expand and Transform the Army and the Marine Corps
paragraphs: DOD also needs to address the role and use of contractor support to  deployed forces as the department develops its plan to expand and  transform its military forces. The department is in the process of planning  for a substantial increase in the size of the Army and the Marine Corps. As  it develops these plans, it is important that the department address the  impact this growth in military forces will have on the contractor services  needed to support those forces. Moreover, DOD should recognize that not  all of the additional personnel must be dedicated to combat arms; a  portion of that increase should be dedicated to expanding and enhancing  the department’s professional acquisition corps. In addition, as the  Department continues to transform its forces, DOD should ensure that it is  addressing contract oversight and management requirements, such as  personnel requirements. For example, the 2007 report of the Commission  on Army Acquisition and Program Management in Expeditionary  Operations recommended that the Army establish an Expeditionary  Contracting Command that would be responsible for providing skilled,  trained, contracting personnel for the support of expeditionary forces,  assigned to deployable or deployed commands.
section_title: Concluding Observations
paragraphs: In closing, I believe the long-standing challenges DOD faces transcend the  current operations in Iraq and Afghanistan and demand a comprehensive  effort to resolve. As requested, we considered specific legislative remedies  for the challenges facing DOD. While we believe that DOD bears the  primary responsibility for taking actions to address the challenges  discussed above, these are three actions Congress may wish to consider  requiring DOD to take in order to move the debate forward:    Determine the appropriate balance of contractors and military  personnel as it shapes the force for the future. A Quadrennial  Defense Review-type study of contracting may be in order, one which  comprehensively examines the support DOD will require contractors to  provide in future operations and the core capabilities the department  believes it should not be relying on contractors to perform. In addition, as  the department continues to grow and transform its military forces, it  should ensure that the role of contractor support to deployed forces is  incorporated into its planning efforts.
Include the Use and Role of Contractor Support to Deployed  Forces in Force Structure and Capabilities Reporting. DOD regularly  reports on the readiness status, capabilities assessments, and other review  of the status and capabilities of its forces. Given the reality that DOD is  dependant on contractors for much of its support in deployed locations,  the department should include information on the specific missions  contractors will be asked to perform, the operational impacts associated  with the use of contractors, and the personnel necessary to effectively  oversee and manage those contractors. In addition, these reports should  address the risks associated with the potential loss of contractor support.
Ensure that operations plans include specific information on the  use and roles of contractor support to deployed forces. DOD  guidance requires that contractor support be fully integrated into the  logistics annex of operations and contingency plans. However, our  previous work indicates that this is not being done at a sufficient level.  Because of the increased use of contractors to support deployed forces  and the variety of missions DOD may be asked to perform, Congress may  want to take steps to gain assurances that operations plans for those  missions sufficiently consider the use and role of contractors.
Mr. Chairman and member of the subcommittee, this concludes my  prepared remarks. I would be happy to answer any question you may have.
section_title: Contacts and Acknowledgments
paragraphs: For questions about this statement, please contact Bill Solis at (202) 512-  8365. Other individuals making key contributions to this statement include  Carole Coffey, Assistant Director, Sarah Baker, Grace Coleman, and James  Reynolds.
section_title: Appendix I: Related GAO Products
paragraphs: Defense Logistics: The Army Needs to Implement an Effective  Management and Oversight Plan for the Equipment Maintenance  Contract in Kuwait. GAO-08-316R. Washington, D.C.: January 23, 2008.
Defense Acquisitions: Improved Management and Oversight Needed to  Better Control DOD’s Acquisition of Services. GAO-07-832T. Washington,  D.C.: May 10, 2007.
Military Operations: High-Level DOD Action Needed to Address Long- standing Problems with Management and Oversight of Contractors.  GAO-07-145. Washington, D.C.: December 18, 2006.
Rebuilding Iraq: Continued Progress Required Overcoming Contract  Management Challenges. GAO-06-1130T. Washington, D.C.: September 28,  2006.
Military Operations: Background Screenings of Contractor Employees  Supporting Deployed Forces May Lack Critical Information, but U.S.  Forces Take Steps to Mitigate the Risks Contractors May Pose. GAO-06- 999R. Washington, D.C.: September 22, 2006.
Rebuilding Iraq: Actions Still Needed to Improve the Use of Private  Security Providers. GAO-06-0865T. Washington, D.C.: June 13, 2006.
Rebuilding Iraq: Actions Needed to Improve Use of Private Security  Providers. GAO-05-737. Washington, D.C.: July 28, 2005.
Interagency Contracting: Problems with DOD’s and Interior’s Orders to  Support Military Operations. GAO-05-201. Washington, D.C.: April 29,  2005.
Defense Logistics: High-Level DOD Coordination Is Needed to Further  Improve the Management of the Army’s LOGCAP Contract. GAO-05-328.  Washington, D.C.: March 21, 2005.
Contract Management: Opportunities to Improve Surveillance on  Department of Defense Service Contracts. GAO-05-274. Washington, D.C.:  March 17, 2005.
Military Operations: DOD’s Extensive Use of Logistics Support  Contracts Requires Strengthened Oversight. GAO-04-854. Washington,  D.C.: July 19, 2004.
Military Operations: Contractors Provide Vital Services to Deployed  Forces but Are not Adequately Addressed in DOD Plans. GAO-03-695.  Washington, D.C.: June 24, 2003.
Contingency Operations: Army Should Do More to Control Contract  Costs in the Balkans. GAO/NSIAD-00-225. Washington, D.C.: September  29, 2000.
Contingency Operations: Opportunities to Improve the Logistics Civil  Augmentation Program. GAO/NSIAD-97-63. Washington, D.C.: February  11, 1997.
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