Contingency Contracting: Further Improvements Needed in Agency Tracking of Contractor Personnel and Contracts in Iraq and Afghanistan
Published: 2009-11-02T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This statement discusses ongoing efforts by the Department of Defense (DOD), the Department of State (State), and the U.S. Agency for International Development (USAID) to track information on contractor personnel and contracts in Iraq and Afghanistan. Reliable, meaningful data on contractors and the services they provide are necessary to inform agency decisions on when and how to effectively use contractors, provide support services to contractors, and ensure that contractors are properly managed and overseen. The importance of such data is heightened by the unprecedented reliance on contractors in Iraq and Afghanistan and the evolving U.S. presence in the two countries. The statement focuses on (1) how information on contractor personnel and contracts can assist agencies in managing and overseeing their use of contractors and (2) the status of DOD, State, and USAID's efforts to track statutorily-required information on contractor personnel and contracts in Iraq and Afghanistan, as well as our recent recommendations to address the shortcomings we identified in their efforts. This statement is drawn from our October 2009 report on contracting in Iraq and Afghanistan, which was mandated by section 863 of the National Defense Authorization Act for Fiscal Year 2008 (NDAA for FY2008), and a related April 2009 testimony. Our prior work was prepared in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audits to obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions based on our audit objectives. We believe that the evidence obtained provides a reasonable basis for our findings and conclusions based on our audit objectives.
section_title: What GAO Found
paragraphs: The need for information on contracts and contractor personnel to inform decisions and oversee contractors is critical given DOD, State, and USAID's extensive reliance on contractors to support and carry out their missions in Iraq and Afghanistan. The agencies' lack of complete and accurate information on contractors supporting contingency operations may inhibit planning, increase costs, and introduce unnecessary risk, as illustrated in the following examples: (1) Limited visibility over contractors obscures how extensively agencies rely on contractors to support operations and help carry out missions; (2) Without incorporating information on contractors into planning efforts, agencies risk making uninformed programmatic decisions; (3) A lack of accurate financial information on contracts impedes agencies' ability to create realistic budgets; (4) Lack of insight into the contract services being performed increases the risk of paying for duplicative services; and (5) Costs can increase due to a lack of visibility over where contractors are deployed and what government support they are entitled to. DOD, State, and USAID have made progress in implementing the Synchronized Predeployment and Operational Tracker (SPOT). However, as we reported last month, DOD, State, and USAID's on-going implementation of SPOT currently falls short of providing agencies with information that would help facilitate oversight and inform decision making, as well as fulfill statutory requirements.

section_title: Letter
paragraphs: Thank you for inviting me here today to discuss ongoing efforts by the  Department of Defense (DOD), the Department of State (State), and the  U.S. Agency for International Development (USAID) to track information  on contractor personnel and contracts in Iraq and Afghanistan. Reliable,  meaningful data on contractors and the services they provide are  necessary to inform agency decisions on when and how to effectively use  contractors, provide support services to contractors, and ensure that  contractors are properly managed and overseen. The importance of such  data is heightened by the unprecedented reliance on contractors in Iraq  and Afghanistan and the evolving U.S. presence in the two countries.
My statement focuses on (1) how information on contractor personnel and  contracts can assist agencies in managing and overseeing their use of  contractors and (2) the status of DOD, State, and USAID’s efforts to track  statutorily-required information on contractor personnel and contracts in  Iraq and Afghanistan, as well as our recent recommendations to address  the shortcomings we identified in their efforts. This statement is drawn  from our October 2009 report on contracting in Iraq and Afghanistan,  which was mandated by section 863 of the National Defense Authorization  Act for Fiscal Year 2008 (NDAA for FY2008), and a related April 2009  testimony. Our prior work was prepared in accordance with generally  accepted government auditing standards. Those standards require that we  plan and perform the audits to obtain sufficient, appropriate evidence to  provide a reasonable basis for our findings and conclusions based on our  audit objectives. We believe that the evidence obtained provides a  reasonable basis for our findings and conclusions based on our audit  objectives.
subsections: section_title: Background
paragraphs: Section 861 of the NDAA for FY2008 directed the Secretary of Defense, the  Secretary of State, and the USAID Administrator to sign a memorandum of  understanding (MOU) related to contracting in Iraq and Afghanistan. The  law specified a number of issues to be covered in the MOU, including the  identification of common databases to serve as repositories of information  on contract and contractor personnel. The NDAA for FY2008 required the  databases to track at a minimum:  a brief description of the contract,  its total value, and    whether it was awarded competitively, and  for contractor personnel working under contracts in Iraq or Afghanistan,  total number employed,  total number performing security functions, and  total number who have been killed or wounded.
In July 2008, DOD, State, and USAID signed an MOU in which they agreed  the Synchronized Predeployment and Operational Tracker (SPOT) would  be the system of record for the statutorily-required contract and  contractor personnel information. The MOU specified SPOT would include  information on DOD, State, and USAID contracts with more than 14 days  of performance in Iraq or Afghanistan or valued at more than the  simplified acquisition threshold, which the MOU stated was $100,000, as  well as information on the personnel working under those contracts.
While DOD is responsible for all maintenance and upgrades to the SPOT  database, each agency agreed in the MOU to ensure that data elements  related to contractor personnel, such as the number of personnel  employed on each contract in Iraq or Afghanistan, are accurately entered  into SPOT by its contractors. SPOT is designed to track contractor  personnel by name and record information such as the contracts they are  working under, deployment dates, and next of kin. Contract data elements,  such as value and extent of competition, are to be imported into SPOT  from the Federal Procurement Data System – Next Generation (FPDS- NG), the federal government’s system for tracking information on  contracting actions.
section_title: Contractor and Contractor Personnel Information Can Help Agencies Address Management and Oversight Challenges
paragraphs: The need for information on contracts and contractor personnel to inform  decisions and oversee contractors is critical given DOD, State, and  USAID’s extensive reliance on contractors to support and carry out their  missions in Iraq and Afghanistan. We have reported extensively on the  management and oversight challenges of using contractors to support  contingency operations and the need for decision makers to have  accurate, complete, and timely information as a starting point to address  those challenges. Although much of our prior work has focused on DOD,  the lessons learned can be applied to other agencies relying on contractors  to help carry out their missions. The agencies’ lack of complete and  accurate information on contractors supporting contingency operations  may inhibit planning, increase costs, and introduce unnecessary risk, as  illustrated in the following examples:    Limited visibility over contractors obscures how extensively agencies  rely on contractors to support operations and help carry out missions.  In our 2006 review of DOD contractors supporting deployed forces, we  reported that a battalion commander in Iraq was unable to determine  the number of contractor-provided interpreters available to support his  unit. Such a lack of visibility can create challenges for planning and  carrying out missions. Further, knowledge of who is on their  installation, including contractor personnel, helps commanders make  informed decisions regarding force protection and account for all  individuals in the event of hostile action.
Without incorporating information on contractors into planning  efforts, agencies risk making uninformed programmatic decisions. As  we noted in our 2004 and 2005 reviews of Afghanistan reconstruction  efforts, when developing its interim development assistance strategy,  USAID did not incorporate information on the contractor resources  required to implement the strategy. We determined this impaired  USAID’s ability to make informed decisions on resource allocations for  the strategy.
A lack of accurate financial information on contracts impedes  agencies’ ability to create realistic budgets. As we reported in July  2005, despite the significant role of private security providers in  enabling Iraqi reconstruction efforts, neither State, DOD, nor USAID  had complete data on the costs associated with using private security  providers. Agency officials acknowledged such data could help them  identify security cost trends and their impact on the reconstruction  projects, as increased security costs resulted in the reduction or  cancellation of some projects.
Lack of insight into the contract services being performed increases  the risk of paying for duplicative services. In the Balkans, where  billions of dollars were spent for contractor support, we found in 2002  that DOD did not have an overview of all contracts awarded in support  operations. Until an overview of all contractor activity was obtained,  DOD did not know what the contractors had been contracted to do  and whether there was duplication of effort among the contracts that  had been awarded.
Costs can increase due to a lack of visibility over where contractors  are deployed and what government support they are entitled to. In our  December 2006 review of DOD’s use of contractors in Iraq, an Army  official estimated that about $43 million was lost each year to free  meals provided to contractor employees at deployed locations who  also received a per diem food allowance.
Many recommendations from our prior work on contractors supporting  contingency operations focused on increasing agencies’ ability to track  contracts and contractor personnel so that decision makers—whether out  in the field or at headquarters—can have a clearer understanding of the  extent to which they rely on contractors, improve planning, and better  account for costs. While actions have been taken to address our  recommendations, DOD, State, and USAID officials have told us that their  ability to access information on contracts and contractor personnel to  inform decisions still needs improvement. Specifically, information on  contracts and the personnel working on them in Iraq and Afghanistan may  reside solely with the contractors, be stored in a variety of data systems,  or exist only in paper form in scattered geographical regions. These  officials indicated that the use of SPOT has the potential to bring some of  this dispersed information together so that it can be used to better manage  and oversee contractors.
section_title: Despite Some Progress, SPOT Not Yet Fully Implemented to Track Contractor Personnel and Contracts
paragraphs: DOD, State, and USAID have made progress in implementing SPOT.  However, as we reported last month, DOD, State, and USAID’s on-going  implementation of SPOT currently falls short of providing agencies with  information that would help facilitate oversight and inform decision  making, as well as fulfill statutory requirements. Specifically, we found  that the agencies have varying criteria for deciding which contractor  personnel are entered into the system and, as a result, not all required  contractor personnel have been entered. While the agencies have used  other approaches to obtain personnel information, such as periodic  contractor surveys, these approaches have provided incomplete data that  should not be relied on to identify trends or draw conclusions. In addition,  SPOT, which was intended to serve as a central repository of information  on contracts performed in Iraq or Afghanistan, currently lacks the  capability to track required contract information as agreed to in the MOU.
subsections: section_title: Tracking Information on Contractor Personnel in Iraq and Afghanistan
paragraphs: DOD, State, and USAID have been phasing in the MOU requirement to use  SPOT to track information on contracts and the personnel working on  them in Iraq and Afghanistan. In January 2007, DOD designated SPOT as  its primary system for collecting data on contractor personnel deployed  with U.S. forces and directed contractor firms to enter personnel data for  contracts performed in Iraq and Afghanistan. State started systematically  entering information for both Iraq and Afghanistan into SPOT in  November 2008. In January 2009, USAID began requiring contractors in  Iraq to enter personnel data into SPOT. However, USAID has not yet  imposed a similar requirement on its contractors in Afghanistan and has  no time frame for doing so.
In implementing SPOT, DOD, State, and USAID’s criteria for determining  which contractor personnel are entered into SPOT varied and were not  consistent with those contained in the MOU, as the following examples  illustrate:    Regarding contractor personnel in Iraq, DOD, State, and USAID  officials stated the primary factor for deciding to enter contractor  personnel into SPOT was whether a contractor needed a SPOT- generated letter of authorization (LOA). However, not all contractor  personnel, particularly local nationals, in Iraq need LOAs and agency  officials informed us that such personnel were not being entered into  SPOT.
For Afghanistan, DOD offices varied in their treatment of which  contractor personnel should be entered into SPOT. Officials with one  contracting office stated the need for an LOA determined whether  someone was entered into SPOT. As a result, since local nationals  generally do not need LOAs, they are not in SPOT. In contrast, DOD  officials with another contracting office stated they follow DOD’s 2007  guidance on the use of SPOT. According to that guidance, contractor  personnel working on contracts in Iraq and Afghanistan with more  than 30 days of performance and valued over $25,000 are to be entered  into SPOT—as opposed to the MOU threshold of 14 days of  performance or a value over $100,000.
These varying criteria and practices stem, in part, from differing views on  the agencies’ need to collect and use data on certain contracts and the  personnel working on them. For example, some DOD officials we spoke  with questioned the need to track contractor personnel by name as  opposed to their total numbers given the cost of collecting detailed data  compared to the benefit of having this information. However, DOD  officials informed us that the agencies did not conduct any analyses of  what the appropriate threshold should be for entering information into  SPOT given the potential costs and benefits of obtaining such information  prior to establishing the MOU requirements. As a result of the varying  criteria, the agencies do not have an accurate or consistent picture of the  total number of contractor personnel in Iraq and Afghanistan.
Although officials from all three agencies expressed confidence that SPOT  data were relatively complete for contractor personnel who need LOAs,  they acknowledged SPOT does not fully reflect the number of local  nationals working on their contracts. Agency officials further explained  ensuring SPOT contains information on local nationals is challenging  because their numbers tend to fluctuate due to the use of day laborers and  local firms do not always track the individuals working for them.
Absent robust contractor personnel data in SPOT, DOD, State, and USAID  have relied on surveys of their contractors to obtain information on the  number of contractor personnel. However, we determined the resulting  data from these surveys are similarly incomplete and unreliable and,  therefore, should not be used to identify trends or draw conclusions about  the number of contractor personnel in each county. Additionally, officials  from all three agencies stated that they lack the resources to verify the  information reported by the contractors, particularly for work performed  at remote sites where security conditions make it difficult for U.S.  government officials to regularly visit.
According to DOD officials, the most comprehensive information on  the number of DOD contractor personnel in Iraq and Afghanistan  comes from the U.S. Central Command’s (CENTCOM) quarterly  census. As shown in table 1, DOD’s census indicated there were  200,807 contractors working in Iraq and Afghanistan as of the second  quarter of fiscal year 2009, which is 83,506 more than what was  reported in SPOT. However, DOD officials acknowledged the census  numbers represent only a rough approximation of the actual number  of contractor personnel in each country. For example, an Army-wide  review of fiscal year 2008 third quarter data determined approximately  26,000 contractors were not previously counted. Information on these  contractors was included in a subsequent census. As a result,  comparing third and fourth quarter data would incorrectly suggest that  the number of contractors increased, while the increase is attributable  to more accurate counting. Conversely, there have also been instances  of contractor personnel being double counted in the census.
Although State reported most of its contractor personnel are currently  entered into SPOT, the agency relied on periodic inquiries of its  contractors to obtain a more complete view of contractor personnel in  the two countries. State reported 8,971 contractor personnel were  working on contracts in Iraq and Afghanistan during the first half of  fiscal year 2009. Even relying on a combination of data from SPOT and  periodic inquiries, it appeared State underreported its contractor  personnel numbers. For example, although State provided obligation  data on a $5.6 million contract for support services in Afghanistan,  State did not report any personnel working on this contract.
USAID relied entirely on contractor surveys to determine the number  of contractor personnel working in Iraq and Afghanistan. The agency  reported 16,697 personnel worked on its contracts in Iraq and  Afghanistan during the first half of fiscal year 2009. However, we  identified a number of contracts for which contractor personnel  information was not provided, including contracts to refurbish a  hydroelectric power plant and to develop small and medium  enterprises in Afghanistan worth at least $6 million and $91 million,  respectively.
section_title: Tracking Information on Contracts with Performance in Iraq and Afghanistan
paragraphs: Although some information on contracts is being entered into SPOT, the  system currently lacks the capability to accurately import and track the  contract data elements as agreed to in the MOU. While the MOU specifies  contract values, competition information, and descriptions of the services  being provided would be pulled into SPOT from FPDS-NG, this capability  is not expected to be available until 2010. Once the direct link is  established, pulling FPDS-NG data into SPOT may present challenges  because of how data are entered. While contract numbers are the unique  identifiers that will be used to match records in SPOT to those in FPDS- NG, SPOT users are not required to enter the numbers in a standardized  manner. In our review of SPOT data, we identified that at least 12 percent  of the contracts had invalid contract numbers and, therefore, could not be  matched to records in FPDS-NG. Additionally, using contract numbers  alone may be insufficient since specific task orders are identified through  a combination of the contract and task order numbers. However, SPOT  users are not required to enter task order numbers. For example, for one  SPOT entry that only had the contract number without an order number,  we found that DOD had placed 12 different orders—ranging from a few  thousand dollars to over $129 million—against that contract. Based on the  information in SPOT, DOD would not be able to determine which order’s  value and competition information should be imported from FPDS-NG.
As SPOT is not yet fully operational as a repository of information on  contracts with performance in Iraq and Afghanistan, DOD, State, and  USAID relied on a combination of FPDS-NG, agency-specific databases,  and manually compiled lists of contract actions to provide us with the  contract information necessary to fulfill our mandate. None of the  agencies provided us with a cumulative listing of all their contract actions  for Iraq and Afghanistan. Instead, they provided a total of 48 separate data  sets that we then analyzed to identify almost 85,000 contracts with  performance in Iraq and Afghanistan that totaled nearly $39 billion in  obligations in fiscal year 2008 and the first half of fiscal year 2009. Our  analyses involved compiling the data from the multiple sources, removing  duplicate entries, and standardizing the data that were reported.
section_title: Prior Recommendation for Executive Action and Concluding Observations
paragraphs: To address the shortcomings we identified in the agencies’ implementation  of SPOT, we recommended in our October 2009 report that the  Secretaries of Defense and State and the USAID Administrator jointly  develop and execute a plan with associated timeframes for their continued  implementation of the NDAA for FY2008 requirements, specifically  ensuring that the agencies’ criteria for entering contracts and  contractor personnel into SPOT are consistent with the NDAA for  FY2008 and with the agencies’ respective information needs for  overseeing contracts and contractor personnel; revising SPOT’s reporting capabilities to ensure that they fulfill  statutory requirements and agency information needs; and establishing uniform requirements on how contract numbers are to be  entered into SPOT so that contract information can accurately be  pulled from FPDS-NG as agreed to in the MOU.
In commenting on our recommendation, DOD and State disagreed with the  need for a plan to address the issues we identified. They cited ongoing  coordination efforts and anticipated upgrades to SPOT as sufficient. While  USAID did not address our recommendation, it similarly noted plans to  continue meeting with DOD and State regarding SPOT. We believe  continued coordination among the three agencies is important. They  should work together to implement a system that is flexible across the  agencies but still provides detailed information to better manage and  oversee contractors. However, they also need to take the actions  contained in our recommendation if the system is to fulfill its potential. By  jointly developing and executing a plan with time frames, the three  agencies can identify the concrete steps they need to take and assess their  progress in ensuring the data in SPOT are sufficiently reliable to fulfill  statutory requirements and their respective agency needs. Absent such a  plan and actions to address SPOT’s current shortcomings, the agencies  will be reliant on alternative sources of data—which are also unreliable  and incomplete. As a result, they will continue to be without reliable  information on contracts and contractor personnel that can be used to  help address some longstanding contract management challenges.
Messrs. Chairmen, this concludes my prepared statement. I would be  happy to respond to any questions you or the other commissioners may  have.
section_title: GAO Contacts and Acknowledgement
paragraphs: For further information about this statement, please contact John P.  Hutton (202) 512-4841 or huttonj@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this statement. Individuals who made key contributions to this  statement include Johana R. Ayers, Assistant Director; Noah Bleicher; Raj  Chitikila; Christopher Kunitz; Heather Miller; and Morgan Delaney  Ramaker.
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