Operational Contract Support: Actions Needed to Address Contract Oversight and Vetting of Non-U.S. Vendors in Afghanistan
Published: 2011-06-30T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Departments of Defense (DOD) and State (State) and the United States Agency for International Development (USAID) have collectively obligated billions of dollars for contracts and assistance to support U.S. efforts in Afghanistan. The work of GAO and others has documented shortcomings in DOD's contract management and oversight, and its training of the non-acquisition workforce. Addressing these challenges can help DOD meet warfighter needs in a timely and costconscious manner; mitigate the risks of fraud, waste, and abuse; and minimize the operational risks associated with contractors. This testimony addresses the extent to which (1) DOD's Contracting Officer's Representatives (COR) are prepared for their roles and responsibilities and provide adequate contract oversight in Afghanistan; (2) DOD, State, and USAID vet non-U.S. firms for links to terrorist and insurgent groups in Afghanistan; and (3) DOD has implemented GAO's past recommendations. The testimony is based on GAO's recently published reports and testimonies on operational contract support, including a June 2011 report on vetting of non-U.S. vendors in Afghanistan, as well as providing preliminary observations as a result of ongoing audit work in Afghanistan. GAO's work included analyses of a wide range of agency documents, and interviews with defense officials including CORs, contracting officers, and contract management officials in the United States and Afghanistan.
section_title: What GAO Found
paragraphs: DOD has taken actions to better prepare CORs to conduct contract oversight and management in Afghanistan; however, CORs are not fully prepared for their roles and responsibilities to provide adequate oversight there. To improve the capability of CORs to provide contract management and oversight in contingencies, DOD has developed a new, contingency-focused COR training course, issued new guidance, and developed a COR certification program. Nonetheless, gaps in the training exist. For example, according to DOD personnel in Afghanistan, the required training does not provide CORs with enough specificity about contracting in Afghanistan, such as information about the Afghan First Program, which encourages an increased use of local goods and services, or working with private security contractors. Also, whether a COR has relevant technical expertise is not always considered prior to assigning an individual to oversee a contract, even though CORs have a significant role in determining if products or services provided by the contractor fulfill the contract's technical requirements. However, according to officials, some CORs appointed to oversee construction contracts have lacked necessary engineering or construction experience, in some cases resulting in newly constructed buildings that were to be used by U.S. or Afghan troops having to be repaired or rebuilt. According to CORs and commanders in Afghanistan, poor performance on construction contracts has resulted in money being wasted, substandard facilities, and an increased risk to bases. For example, contracting officials from one regional contracting center told GAO that construction of guard towers at a forward operating base was so poor that they were unsafe to occupy. DOD and USAID have both established processes to vet non-U.S. vendors in Afghanistan, but GAO has identified limitations; additionally, State has not yet developed a vendor vetting process. The purpose of DOD's vetting process begun in August 2010--which includes the examination of available background and intelligence information--is to reduce the possibility that insurgents or criminal groups could use U.S. contracting funds to finance their operations. Additionally, in January 2011 USAID also began to implement a process to vet prospective non-U.S. contract and assistance recipients (i.e., implementing partners) in Afghanistan. GAO made recommendations, such as to formalize their vetting processes, which, both agencies concurred with. For example, USAID signed a mission order in May 2011 codifying the details of its vetting process. As of May 2011, State had not developed a vendor vetting process for non-U.S. vendors in Afghanistan, though officials stated they are considering several options.
section_title: What GAO Recommends
paragraphs: GAO has made numerous recommendations in areas such as developing guidance, tracking contractor personnel, providing oversight personnel, and training, and DOD has made strides in addressing some of them. However, it has not fully implemented other previous recommendations, such as ensuring training for commanders and senior leaders and improvements to the contracting personnel tracking system in Afghanistan.

section_title: Letter
paragraphs: Thank you for inviting me to be here today to discuss a few of the  challenges that the Department of Defense (DOD) faces in providing  contract oversight in Afghanistan and that the DOD, the U.S. Agency for  International Development (USAID), and the Department of State (State),  face vetting non-U.S. vendors. Guidance issued in September 2010 by  the Commander of the International Security Assistance Force (ISAF) and  United States Forces-Afghanistan stated that, with proper oversight,  contracting can spur economic development and support the Afghan  government’s and ISAF’s campaign objectives. In fiscal year 2010, DOD  reported obligating approximately $11.4 billion on contracts with a  principal place of performance in Afghanistan, while USAID obligated  about $331.5 million and State obligated $775 million. Our work, as well  as that of the inspectors general and the Commission on Wartime  Contracting in Iraq and Afghanistan, has documented the need for  improvements in DOD’s contract management and oversight, and training  of the non-acquisition workforce. Additionally, U.S. government agencies  and congressional committees have paid increasing attention to the risks  of DOD, USAID, and State contracting and reconstruction funds being  diverted to criminal or insurgent groups. Legislation to address this issue  has recently been proposed in Congress, and there have been  congressional hearings and reports detailing examples of corruption and  financing of insurgents in Afghanistan.
Addressing DOD’s oversight challenges is essential if DOD is to meet the  warfighters’ needs in a timely and cost-conscious manner; mitigate the  risks of fraud, waste, and abuse; and minimize the operational risks  associated with contractors not only in today’s operations but also in  future contingencies. Similarly, DOD, USAID, and State must address the  challenges they face in ensuring that U.S. funds do not help finance the  insurgency.
My statement today will focus on the extent to which (1) DOD’s  Contracting Officer’s Representatives (COR) are prepared for their roles  and responsibilities and provide adequate contract oversight in  Afghanistan; (2) DOD, USAID, and State vet non-U.S. vendors for links to  terrorist and insurgent groups in Afghanistan; and (3) DOD has  implemented our past recommendations to improve contract  management and oversight. My statement is based on preliminary  observations from ongoing work looking at the extent to which DOD and  the services have taken actions to improve the capabilities of CORs to  provide contract management and oversight in Afghanistan. During the  course of our work we reviewed relevant DOD and service publications,  guidance, and training material; attended DOD and Army operational  contract support training; and interviewed officials both in the United  States and in Afghanistan responsible for contracting and contract  management and oversight including contracting officers, CORs, officials  from the Defense Contract Management Agency, representatives from  the U.S. Central Command (CENTCOM) Contracting Command, and  other personnel responsible for contract management and oversight in  Afghanistan. In addition, this testimony is based on a June 2011  published report on vendor vetting, and testimonies that examined the  extent to which contract management and oversight has improved. Our  work was conducted in accordance with generally accepted government  auditing standards. Additional information on scope and methodology is  provided in previously issued products.
subsections: section_title: Background
paragraphs: Oversight of contracts—which can refer to contract administration  functions, quality assurance surveillance, corrective action, property  administration, and past performance evaluation—ultimately rests with  the contracting officer, who has the responsibility for ensuring that  contractors meet the requirements as set forth in the contract. Frequently,  however, contracting officers are not located in the contingency area or at  the installations where the services are being provided. As a result,  contracting officers appoint contract monitors who are responsible for  monitoring contractor performance. For some contracts, such as  LOGCAP or theaterwide service contracts like the Afghan trucking  contract or some Afghan security guard contracts, contracting officers  may delegate contract oversight to the Defense Contract Management  Agency (DCMA) to monitor contractor performance. In Afghanistan,  DCMA teams include administrative contracting officers, and quality  assurance representatives, who ensure that the contractors perform work  to the standards written in the contracts and oversee the CORs assigned  to DCMA-administered contracts. The DCMA team also includes  property administrators and subject matter experts who advise the  agency on technical issues such as food service, electrical engineering,  and fire safety. DCMA does not administer construction contracts  because according to the head of DCMA in Afghanistan it lacks the  technical expertise to manage these types of contracts. Generally,  construction contracts in Afghanistan are administered by organizations  like the Army Corps of Engineers, or they may be administered by the  contracting officer assisted by a COR.
If DCMA is not delegated responsibility for administrative oversight of a  contract, the contracting officer who awarded the contract is responsible  for the administration and oversight of the contract. These contracting  officers, such as those from the CENTCOM Contracting Command,  appoint CORs or contracting officer’s technical representatives to monitor  contractor performance. CORs appointed by the CENTCOM contracting  command and others are typically drawn from units receiving contractor- provided services. These individuals are not normally contracting  specialists and serve as contract monitors as an additional duty. They  cannot direct the contractor by making commitments or changes that  affect price, quality, quantity, delivery, or other terms and conditions of the  contract. Instead, they act as the eyes and ears of the contracting officer  and serve as the liaison between the contractor, the contracting officer,  and the unit receiving support or services. In Afghanistan, CORs who  have been appointed as contracting officer’s representatives for contracts  administered by DCMA report their oversight results to DCMA personnel.  For contracts not administered by DCMA, CORs provide oversight  information to the contracting officer, who may be located in Afghanistan  or outside the theater of operations. In addition to their oversight  responsibilities, CORs have been tasked with other duties such as  developing statements of work, developing requirements approval  paperwork and preparing funding documents.
section_title: DOD’s CORs Are Not Fully Prepared for Their Roles and Responsibilities in Afghanistan
subsections: section_title: DOD’s Training Does Not Fully Prepare Most CORs for Their Roles and Responsibilities of Contract Management and Oversight
paragraphs: DOD has added new training for CORs serving in contingencies, but  some gaps in training remain and not all of the required training is being  conducted or completed. In Afghanistan, much of the day-to-day  surveillance of contracted projects is done by CORs. The Federal  Acquisition Regulation (FAR) requires that quality assurance, such as  surveillance, be performed at such times and places as necessary to  determine that the goods or services conform to contract requirements.  DOD guidance requires CORs be trained and assigned prior to award of  a contract. DOD training is intended to familiarize the COR with the duties  and responsibilities of contract oversight and management. Contracting  organizations such as CENTCOM Contracting Command require that  personnel nominated to be CORs complete specific online training  courses, as well as locally developed training and contract-specific  training, before they can serve as CORs. DOD has taken some actions to  improve the capability of CORs to provide management and oversight of  contracts in contingency operations such as Afghanistan. These actions  include developing a new COR training course, with a focus on  contingency operations, and developing a COR certification program.
Additionally, DOD has begun to emphasize the need for qualified CORs  in military doctrine and other guidance with the publication of Joint  Publication 4-10, Operational Contract Support and the Defense  Contingency Contracting Representatives Officers Handbook and  memoranda issued by the Deputy Secretary of Defense.
However, our analysis of DOD’s COR training and interviews with CORs  and contracting personnel from organizations like the regional contracting  centers and the Defense Contract Management Agency indicated that  some gaps and limitations continue to exist. According to personnel in  Afghanistan, none of the required COR training provides enough specifics  about contract management and oversight in Afghanistan. For example,  the required training does not provide CORs with information regarding  important issue areas like the Afghan First Program, which encourages  an increased use of local personnel and vendors for goods and services  as part of the U.S. counterinsurgency strategy, and working with private  security contractors. Some CORs told us that they were unfamiliar with  the challenges of working with Afghan contractors, and had believed that  contracting with Afghan vendors would be similar to contracting with U.S  vendors. However, some of the CORs and other contracting officials we  interviewed said they found that providing oversight to Afghan contractors  is more challenging than working with other vendors because Afghan  vendors often did not meet the time lines established by the contract, did  not provide the quality products and the services the units had  anticipated, and did not necessarily have a working knowledge of English.  For example, one COR told us during our visit in February 2011, that the  unit was still waiting for barriers that they had contracted for in May 2010.  While some of the barriers had been delivered, the unit had not received  all of the barriers they required even though the contract delivery date  had passed. Other CORs and contracting officials and contract  management officials described similar situations where services were  not provided as anticipated or not provided at all. As a result, items such  as portable toilets, barriers, gates, water, and other items or services  were not available at some locations when needed, raising concerns  about security, readiness, and morale. Officials we spoke with noted  similar problems with construction contracts awarded to Afghan  contractors. For example, according to another COR, an Afghan  contractor was awarded a $70,000 contract to build a latrine, shower, and  shave unit. However, when the contractor was unable to satisfactorily  complete the project, another contract was awarded for approximately  $130,000 to bring the unit to usable condition. Similarly contracting  officials provided documentation of other construction problems including,  a latrine or shower facility built without drains, and a facility constructed in  the wrong location, and facilities that were poorly constructed.
Because of the nature and sensitivity of security contracts, CORs for  private security contractor contracts have unique responsibilities. For  example, CORs are responsible for compiling a monthly weapon’s  discharge report and for ensuring contractor adherence to contractual  obligations on topics such as civilian arming requirements, personnel  reporting systems, property accountability and badging. According to a  senior military officer with U.S. Forces Afghanistan’s private security  contractor taskforce, because of gaps in training, CORs do not always  understand the full scope of their responsibilities and so do not always  ensure that a contractor is meeting all contract requirements. He noted  that CORs do not always understand that they have the responsibility to  ensure that the terms of the contract are met and therefore do not bring  contractors’ performance issues to the contracting officer’s attention for  resolution. As a result, DOD may pay contractors for poor performance  and installations may not receive the level of security contracted.
Further, we found that the training programs do not provide enough  information on preparing statements of work or preparing documentation  for acquisition review boards—two responsibilities that CORs are  routinely tasked with. The Defense Contingency COR Handbook  describes statements of work as specifying the basic top-level objectives  of the acquisition as well as the detailed requirements of the government.  The statement of work may provide the contractor with ‘how to”  instructions to accomplish the required effort, and forms part of the basis  for successful performance by the contractor. Well-written statements of  work are needed to ensure that units get the services and goods needed  in the required time frame. CORs we spoke to highlight the problems they  encountered when preparing statements of work. For example, several  CORs told us of instances when statements of work needed to be  rewritten because the original statements of work did not include all  required contractor actions, or because they included incorrect  requirements. Military officials responsible for reviewing and approving  requests for contract support told us that poorly written statements of  work are a principal reason why units do not receive the contract support  they require. In 2000 and 2004, we reported that poorly written  statements of work can result in increased costs and in contractors  providing services that do not meet the requirements of the customer.  According to DOD, the acquisition review board—known in Afghanistan  as the Joint Acquisition Review Board—reviews and recommends  approval or disapproval of proposed acquisitions to ensure efficiency and  cost effectiveness and so it is important that CORs understand and are  able to complete the required documentation in order to obtain needed  goods and services.
Furthermore, in addition to required on-line training, CENTCOM  Contracting Command guidance requires that contracting officers discuss  with CORs their specific contract requirements and responsibilities after  they have been nominated and before they have begun their duties.  However, contracting officers we interviewed at regional contracting  centers in Afghanistan said they are frequently unable to provide the  required contract-specific training for CORs because they are busy  awarding contracts. Without this follow-on training on the specific  contract, the COR may not have a clear understanding of how to perform  contract oversight or the full scope of their responsibilities. In contrast,  DCMA is able to provide specific contract training and mentoring to its  CORs because DCMA has quality assurance personnel who have been  tasked with providing COR training and assistance.
section_title: CORs Lack Needed Technical Expertise to Oversee Some Contracts
paragraphs: Although CORs are selected from a group of candidates who have  completed the basic COR training, their technical expertise, or lack  thereof is not always taken into consideration when they are appointed to  oversee contracts. The Defense Contingency COR handbook indicates  that CORs are responsible for determining whether products delivered or  services rendered by the contractor conform to the requirements for the  service or commodity covered under the contract. The COR handbook  notes that personnel nominated as CORs should have expertise related  to the requirements covered by the contract, and suggests that  commanders should consider the technical qualifications and experience  of an individual when nominating a COR. In addition, the CENTCOM  Contracting Command requires that commanders identify the nominee’s  qualifying experience.
However, these requirements are not always taken into consideration  when CORs are selected to oversee certain contracts. According to  CORs and other personnel we interviewed in Afghanistan, CORs  frequently lack the required technical skills to monitor contractor  performance. For example, military personnel have been appointed to  oversee construction contracts without the necessary engineering or  construction experience, in part because their units lack personnel with  those technical skills. While DCMA has subject matter experts in key  areas such as fire safety available for CORs needing technical  assistance, CORs for contracts written by the CENTCOM Contracting  Command have no subject matter experts to turn to for assistance,  particularly in the construction trades. As a result, according to officials  there have been newly constructed buildings used by both U.S. and  Afghan troops that had to be repaired or rebuilt before being used  because the CORs providing the oversight were not able to adequately  ensure proper construction. According to personnel we interviewed, this  resulted in a waste of money as well as lower morale due to substandard  facilities; and in an increased risk to bases and installations because  required infrastructure such as guard towers, fire stations, and gates were  lacking. Contracting officials from one regional contracting center told us  that guard towers at a forward operating base were so poorly constructed  that they were unsafe to occupy; they were subsequently torn down and  reconstructed. According to a contracting officer, it is not uncommon for  CORs to accept a portion of the contractor’s work only to find, at the  project’s completion, that the construction was substandard. Similarly,  officials told us that before the LOGCAP program will accept responsibility  for maintenance of a facility not constructed by the LOGCAP contractor,  the LOGCAP contractors are often required to repair or replace wiring or  plumbing in buildings constructed by Afghan contractors to meet U.S.  building codes.
section_title: The Number of CORs Is Not Sufficient to Adequately Oversee the Thousands of Contracts Being Used in Afghanistan
paragraphs: DOD continues to lacks a sufficient number of oversight personnel to  oversee the numerous contracts and task orders used in Afghanistan.  While there is no specific guidance on the number of contracts for which a  COR can be responsible, the CENTCOM Contracting Command’s  standard operating procedures for COR nomination requires that  memoranda for COR nominations, signed by the unit commander, contain  a statement verifying that the COR will have sufficient time to complete  assigned tasks. Similarly, the Defense Contingency Contracting Officer  Representative Handbook states that the requiring unit must allow  adequate resources (time, products, equipment, and opportunity) for the  COR to perform his or her COR functions. However, we found that CORs  do not always have the time needed to complete their oversight  responsibilities. While available data do not enable us to determine the  precise number of contracts that require CORs, in fiscal year 2010  CENTCOM Contracting Command awarded over 10,000 contracts.  According to contracting officials and CORS we interviewed in  Afghanistan, some CORs are responsible for providing oversight to  multiple contracts in addition to their primary military duty. For example,  one COR we interviewed was responsible for more than a dozen  construction projects. According to the COR, it was impossible to be at  each construction site during key phases of the project, such as the wiring  installation or plumbing, because these phases were occurring almost  simultaneously at different locations. Consequently, according to officials,  construction was completed without sufficient government oversight, and  problems were not always identified until the buildings were completed.  This often resulted in significant rework, at a cost to the U.S. taxpayer. In  addition, in some cases units did not assign enough CORs to provide  oversight. For example, we were told at one unit that they did not have a  sufficient number of CORs to provide proper oversight of dining facilities.  Although the unit was able to provide one COR for each dining facility, the  dining facilities operate 24 hours a day, and ideally, enough CORs would  have been assigned to provide contract oversight 24 hours a day. Army  guidance requires that supervisory staff for dining facilities (military food  advisors, food program manager, CORs, and contractors operations)  check food for sanitation and safety at dining facilities at every meal  period. Without verification that food is prepared in a safe manner, the  health of military personnel, DOD civilians, contractors, and others could  be put at risk, with the potential to impact ongoing operations.
section_title: DOD Has Not Institutionalized Operational Contract Support
paragraphs: An underlying cause for the oversight issues discussed above is DOD’s  inability to institutionalize operational contract support. Army officials  stated that commanders, particularly those in combat units, still do not  perceive contract management and oversight as warfighter tasks. As a  result, units may not always use the tools available to help prepare for  contract management operations in Afghanistan. For example, according  to Army officials, personnel nominated as CORs are not always provided  the opportunity to practice their COR roles during pre-deployment training  events, despite Army guidance that requires the CORs to be exercised  during these training events. Army CORs we interviewed in Afghanistan  expressed their desire for more specific and in-depth training at their  units’ predeployment training events. In addition, we and others have  made recommendations to provide operational contract support  predeployment training for commanders and senior leaders and DOD  agreed with our recommendations. However, little or no operational  contract support training for these personnel is available prior to  deployment. As a result, commanders do not always understand their  units’ roles and responsibilities to provide contract management and  oversight. For example, some commanders and other personnel we  interviewed questioned the idea that units should be responsible for  contract oversight, and believe that contract oversight should be provided  by other organizations.
section_title: DOD, USAID, and State Efforts to Vet Non-U.S. Vendors in Afghanistan Need Improvement
subsections: section_title: Interagency Efforts Are Underway to Address Corruption in Afghanistan
paragraphs: In response to continued congressional attention and concerns from  DOD, USAID, and other agencies about actual and perceived corruption  and its impact on U.S. and International Security Assistance Force  activities in Afghanistan, several DOD and interagency (including USAID)  efforts have been established to identify malign actors, encourage  transparency, and prevent corruption. While our recent work has not  directly addressed anti-corruption activities in Afghanistan, we can report  that these efforts include the establishment of several interagency task  forces. One of them is Task Force 2010, an interagency anticorruption  task force that aims to provide commanders and civilian acquisition  officials with an understanding of the flow of contract funds in Afghanistan  in order to limit illicit and fraudulent access to those funds by criminal and  insurgent groups. Another is the Afghan Threat Finance Cell, an  interagency organization that aims to identify and disrupt the funding of  criminal and insurgent organizations.
section_title: While DOD Has Recently Begun to Vet Non-U.S. Vendors in Afghanistan, Its Approach Has Limitations
paragraphs: In August 2010, DOD began to vet non-U.S. vendors in Afghanistan by  establishing a vetting cell called the Vendor Vetting Reachback Cell  (hereinafter referred to as the vetting cell). The purpose of this vetting  process—which includes the examination of available background and  intelligence information—is to reduce the possibility that insurgents or  criminal groups could use U.S. contracting funds to finance their  operations. The vetting cell is staffed by 18 contractor employees  operating from CENTCOM headquarters and is supervised by DOD  officials. The contract used to establish the vetting cell for Afghanistan  was awarded in June 2010, and in August 2010 the cell began vetting  non-U.S. vendors. Names of non-U.S. contractors who are seeking a  contract award with DOD in Afghanistan are forwarded to the cell, and an  initial assessment is made about the prospective vendor. Once an initial  assessment is made by the cell about a non-U.S. vendor, a final  determination is made by a DOD entity in Afghanistan as to whether to  accept or reject the prospective vendor for the particular contract.
However, some limitations exist in the vendor vetting process. According  to the CENTCOM Contracting Command Acquisition Instruction, all  awards of and options for contracts equal to or greater than $100,000 to  all non-U.S. vendors in Afghanistan are subject to vetting by the vetting  cell. Additionally, all information technology contracts in Afghanistan,  regardless of dollar value, are subject to vetting. However, while the  acquisition instruction does highly recommend that all vendors be  submitted for vetting-which would include those with contracts under  $100,000-it does not require that vendors with contracts below $100,000  be vetted. This presents a significant gap in the vetting requirements for  non-U.S. vendors as nearly three-quarters of the new contracts awarded  and options exercised for FY 2010 to non-U.S. vendors were valued at  under $100,000. Additionally, currently, CENTCOM Contracting  Command does not routinely vet subcontractor vendors, even though  according to DOD officials, subcontractors do much of the work in  Afghanistan. Also CENTCOM Contracting Command officials said that  when the contract was established, it was with the intention of  determining a non-U.S. vendor’s eligibility to be awarded a contract in  Afghanistan prior to award. However, according to CENTCOM  Contracting Command officials, when they began submitting names to the  vendor vetting cell in 2010, the focus was on vendors who had already  received contracts in order to address immediate corruption and illicit  funding concerns. CENTCOM Contracting Command has not yet to  determined how many of the remaining non-U.S. vendors that have  already been awarded contracts valued above $100,000 will be vetted in  the future, and at the same time, the number of vendors awarded  contracts prior to vetting continues to grow as contracts continue to be  awarded in Afghanistan by CENTCOM Contracting Command during  fiscal year 2011. This may mean that the number of non-U.S. vendors  who have not been vetted will continue to grow and further delayed by the  fact that CENTCOM Contracting Command has also not established a  timeline for when it will begin vetting vendors prior to award, nor have  they developed an estimated number of prospective vendors that it  anticipates vetting in the remainder of the fiscal year. Furthermore, the  command does not use a formalized risk based approach to prioritize  vetting needs. Officials from CENTCOM Contracting Command told us  that they considered factors such as the risk, complexity, and nature of  the contract to prioritize the first tranche of non-U.S. vendors sent to the  cell for vetting, but they have no documentation identifying these  considerations as a process.
To address these vendor vetting limitations in Afghanistan, in our June  2011 report we made several recommendations to DOD. These  recommendations included that CENTCOM Contracting Command  consider formalizing a risk-based approach to enable the department to  identify and vet the highest-risk vendors—including those vendors with  contracts below the $100,000 threshold—as well as subcontractors, and  to work with the vendor vetting cell to clearly identify the resources and  personnel needed to meet the demand for vendor vetting in Afghanistan,  using a risk-based approach. DOD concurred with our recommendations  and in their response provided additional clarification about the limitations  that currently exist on its resources, including limitations on expanding its  joint manning document and the current mandate to reduce staff at  CENTCOM.
section_title: USAID Has Recently Begun to Implement A Vendor Vetting Process
paragraphs: In January 2011, in order to counter potential risks of U.S. funds being  diverted to support criminal or insurgent activity, USAID created a  process for vetting prospective non-U.S. contract and assistance  recipients (i.e., implementing partners) in Afghanistan. This process is  similar to the one it has used in the West Bank and Gaza since 2006.  This process was formalized in USAID’s May 2011 mission order, which  established a vetting threshold of $150,000 and identified other risk  factors, such as project location and type of contract or service being  performed by the non-U.S. vendor or recipient. The mission order also  established an Afghanistan Counter-Terrorism Team, which can review  and adjust the risk factors as needed. USAID officials said that the  agency’s vendor vetting process was still in the early stages, and that it is  expected to be an iterative implementation process of which aspects  could change—such as the vetting threshold and the expansion of vetting  to other non-U.S. partners. In our June 2011 report we recommended that  USAID consider formalizing a risk-based approach that would enable it to  identify and vet the highest-risk vendors and partners, including those  with contracts below the $150,000 threshold. We also recommended that  in order to promote interagency collaboration so as to better ensure that  vendors potentially posing a risk to U.S. forces are vetted, DOD and  USAID should consider developing formalized procedures, such as an  interagency agreement or memorandum of agreement, to ensure the  continuity of communication of vetting results and to support intelligence  information, so that other contracting activities may be informed by those  results. USAID concurred with our recommendations and noted that the  agency has already begun to implement corrective measures to ensure  conformity with the GAO recommendations and adherence to various  statutes, regulations, and executive orders pertaining to terrorism.
section_title: State Has Not Created a Vendor Vetting Process for Afghanistan
paragraphs: As of May 2011, the State Department (State) was not vetting vendors in  Afghanistan. As we reported in June 2011, State officials told us that  currently many of their contracts are awarded to U.S. prime contractors,  and that they award relatively few contracts to non-U.S. vendors.  Nonetheless, our analysis of contract data shows that State does work  with many non-U.S. vendors in Afghanistan, and embassy officials in  Kabul told us they do not do any vetting or background checks on the  vendors other than for the security risks posed by individual personnel  with physical access to the embassy property or personnel. State has  endorsed the Afghan First policy, which will likely result in increased  contracting with Afghan vendors in the future, which will in turn increase  the need to have procedures in place to prevent funds from being  diverted to terrorist or insurgent groups. Given this potential increase in  local contracting, and without a way to consider—after specific vendors  are known to be candidates—the risk posed by funding non-U.S. vendors  to perform particular activities in Afghanistan, the department may  increasingly expose itself to contracting with malign actors.
To help ensure that State resources are not diverted to insurgent or  criminal groups, we recommended that State assess the need and  develop possible options for vetting non-U.S. vendors—for example,  these could include leveraging existing vendor vetting processes, such as  USAID’s, or developing a unique process. State partially agreed with our  recommendation, and in written comments noted that while it recognized  the risk of U.S. funds under State’s management being diverted to  terrorists or their supporters, there were significant legal concerns related  to contracting law, competition requirements, and the conflict between  open competition and the use of classified databases to vet contractors  and grantees that have required analysis and discussion. We recognize  these concerns and encourage State to continue to address these various  issues should they develop and implement a vetting process.
section_title: DOD, USAID, and State have Not Developed a Formal Method of Sharing Vendor-Vetting Information in Afghanistan
paragraphs: Although DOD, USAID, and State likely utilize many of the same vendors  in Afghanistan, we found and reported in June 2011 that the agencies  have not developed a formalized process to share vendor vetting  information. Currently, DOD and USAID officials in Afghanistan have  established informal communication, such as biweekly meetings, ongoing  correspondence, and mutual participation in working groups. Further,  DOD and USAID officials said that their vetting efforts are integrally  related and are complementary to the work of the various interagency  task forces, such as Task Force 2010 and the Afghan Threat Finance  Cell, and that their mutual participation in these task forces contributes to  interagency information sharing in general and vetting results in  particular. However, a formal arrangement for sharing information such as  would be included in a standard operating procedure or memorandum of  agreement between DOD and USAID has not been developed for vetting  efforts. In addition, though the U.S. Embassy also participates in various  interagency task forces, such as Task Force 2010, there is no ongoing  information sharing of vendor vetting results, either ad hoc or formally.  According to CENTCOM Contracting Command officials, the command is  in the process of developing a standard operating procedure for sharing  the vendor vetting results specifically with USAID, but this document has  not yet been completed. To promote interagency collaboration so as to  better ensure that non-U.S. vendors potentially posing a risk to U.S.  forces are vetted, we recommended that DOD, USAID, and State  consider developing formalized procedures, such as an interagency  agreement or memorandum of agreement, to ensure the continuity of  communication of vetting results and to support intelligence information,  so that other contracting activities may be informed by those results. DOD  and USAID both concurred with our recommendation, but State did not  comment on it.
section_title: DOD Has Not Fully Addressed GAO Recommendations
paragraphs: Since the beginning of our work on operational contract support in 1997,  we have made numerous recommendations to DOD to help improve the  oversight and management of contractors used to support contingency  operations. Specifically, we have made recommendations in the areas of  developing guidance, planning for contractors in future operations,  tracking contractor personnel, providing sufficient numbers of oversight  personnel, and training non acquisition personnel including CORs and  other key leaders such as unit commanders and senior staff. DOD has  implemented some—but not all—of these recommendations.
DOD has taken some actions to address or partially address some of our  previous recommendations regarding operational contract support, such  as establishing a focal point to lead the department’s effort to improve  contingency contractor management and oversight at deployed locations,  issuing new guidance, incorporating operational contract support into  professional military education, and beginning to assess its reliance on  contractors. For instance, based on our work, in October 2006, the  Deputy Under Secretary of Defense for Logistics and Materiel Readiness  established the Office of the Assistant Deputy Under Secretary of  Defense (Program Support) to act as a focal point for leading DOD’s  efforts to improve contingency contractor management and oversight at  deployed locations. Among the office’s accomplishments is the  establishment of a community of practice for operational contract support  comprising of subject matter experts from the Office of the Secretary of  Defense, the Joint Staff, and the services. In March 2010, the office  issued an Operational Contract Support Concept of Operations, and it  has provided the geographic combatant commanders with operational  contract support planners to assist them in meeting contract planning  requirements.
To provide additional assistance to deployed forces, the department and  the Army introduced several handbooks and other guidance to improve  contracting and contract management in deployed locations. For example  in October 2008, the department issued Joint Publication 4-10,  Operational Contract Support, which establishes doctrine and provides  standardized guidance for, and information on, planning, conducting, and  assessing operational contract support integration, contractor  management functions, and contracting command and control  organizational options in support of joint operations.
Additionally, in 2003 we recommended that DOD develop training for  commanders and other senior leaders who are deploying to  contingencies and we recommended that CORs be trained prior to  assuming their duties. DOD has partially implemented this  recommendation; training is available for commanders and other senior  leaders however these courses are not required prior to deployment. In  2006, we recommended that Operational Contract Support training be  included in professional military education to ensure that military  commanders and other senior leaders who may deploy to locations with  contractor support have the knowledge and skills needed to effectively  manage contractors. Both DOD and the Army have taken some actions  to implement this recommendation. For example, the Army includes  operational contract support topics in its intermediate leaders course and  includes limited operational contract support familiarization in some but  not all of its pre-command courses. DOD has established a program of  instruction for use in senior leader professional military education but the  instruction has yet to be incorporated in this level of professional military  education.
We have made several recommendations to improve contractor visibility  in contingencies. While DOD, along with USAID and State, has  implemented a system—the Synchronized Predeployment and  Operational Tracker (SPOT)—to track information on its contractor  personnel in Afghanistan and other countries, we have issued a series of  reports that highlight shortcomings in the system’s implementation. The  shortcomings are due, in part, to varying interpretations of which  contractor personnel should be entered into the system. As a result, the  information SPOT does not present an accurate picture of the total  number of contractor personnel in Afghanistan. In October 2009, we  recommended that DOD, State, and USAID develop a plan, to among  other matters, ensure consistent criteria for entering information into  SPOT and improve its reporting capabilities to track statutorily required  contracting data and meet agency data needs. The agencies did not  agree with our recommendation and when we reviewed the system a year  later, we found that many of the issues our recommendation was  intended to address had not been resolved. We are currently evaluating  the status of SPOT’s implementations and the agencies’ efforts to  improve SPOT.
section_title: Concluding Observations
paragraphs: DOD and the services have taken some important steps to institutionalize  OCS—for example, by issuing joint doctrine, including some training in  professional military education, and establishing a vetting cell to vet non- U.S. vendors in Afghanistan, to minimize the risk of criminal groups using  contracts to fund their operations but DOD’s efforts have not gone far  enough. Our previous work has emphasized the need to institutionalize  operational contract support within DOD and improved vetting processes  for contractor personnel and vendors, as well as highlighting long- standing problems regarding oversight and management of contractors  supporting deployed forces. Contract management, including contract  oversight, remains on our high risk list in part because of DOD’s  challenges in managing contracts used to support deployed forces.  Since 2004, we have identified the need for a sufficient number of trained  oversight personnel, including CORs, as challenge to effective contract  management and oversight. While the department has improved contract  management and oversight by adding training requirements for CORs,  the current system of using CORs to provide contract management and  oversight still has significant weaknesses. As a result, contract oversight  and management issues are resulting in a waste of money and raises  concerns about security, readiness, and morale. The Secretary of  Defense recently called for a change in culture related to operational  contract support and directed the joint staff to identify the resources and  changes in doctrine and policy necessary to facilitate and improve the  execution of operational contract support. This reexamination of culture,  policies, and resources along with implementing solutions to the contract  oversight problems identified by us and others should help DOD address  its longstanding issues oversight issues.
Madam Chairman, Ranking Member Portman, and members of the  Subcommittee this concludes my statement. I would be happy to answer  any questions you may have at this time.
section_title: Contact and Acknowledgments
paragraphs: For further information on this testimony, please contact William Solis at  (202) 512-8365 or solisw@gao.gov.
In addition, 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 are Carole Coffey,  Assistant Director; Vincent Balloon, Natalya Barden, Tracy Burney,  Carolynn Cavanaugh, Alfonso Garcia, Melissa Hermes, Christopher  Miller, James Reynolds, Natasha Wilder and Sally Williamson. Michael  Shaughnessy provided legal support, and Cheryl Weissman, Vernona  Brevard, and Peter Anderson provided assistance in report preparation.
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