Contingency Operations

The Army is concerned about controlling the cost of the Balkans Support Contract and has taken several steps to do so. This report assesses whether: (1) the Army is taking effective actions to contain costs, and (2) improvements are needed in how the Army and other Department of Defense (DOD) agencies involved in Balkan operations manage activities under the primary Balkan contract. GAO believes that the Army should have done more to control costs. One step it should have taken was to give more consideration to costs in making decisions on the extent of services to be provided by the contractor. In July 2000, the Army directed that a quarterly review be done to assess whether all the services it receives under the contract are still needed. However, it has not called for the review to include an examination of the level of these services and the efficiency with which they are being provided. The Army expects to cut costs by reducing the number of contractor personnel providing services, scaling back service levels, and reducing on-hand inventories. There was a widespread desire on the part of personnel administering the contract for more training on the government's authority and on how to apply the contract in real world situations. Incomplete understanding of the government's authority and responsibilities under this type of contract, coupled with limited training and a lack of continuity among contract administration personnel, has led personnel to simply accept existing practices rather than question them. GAO concludes that DOD may be incurring higher costs than necessary.

GAO noted that: (1) both the Army and its contractor, Brown and Root Services, have taken various actions to control the cost of services provided under the Balkans Support Contract; (2) these actions include a contract provision requiring the contractor to regularly identify cost savings, recycling materials from elsewhere in the Balkans and Europe, and using soldiers to perform tasks such as building construction whenever possible; (3) nevertheless, the Army should have done more to control costs; (4) one step it should have taken was to give more consideration to costs in making decisions on the extent of services to be provided by the contractor; (5) another step the Army should have taken was to place greater emphasis on the level and efficiency with which recurring services were being provided; (6) in July 2000, the Army directed that a quarterly review be conducted to assess whether all the services it receives under the contract are still needed; (7) however, it has not called for the review to include an examination of the level of these services and the efficiency with which they are being provided; (8) the Army has also directed that standards be developed for each service provided at its camps, but as of July 2000 had not set a date for the standards' completion; (9) each standard is to describe the service to be performed, the necessary facilities and personnel, when and how the services are to be performed, and the level at which they are to be performed; (10) the Army plans to achieve efficiencies in the level of services and the way in which they are provided by mandating that officials in Kosovo and Macedonia identify $40 million in cost savings for fiscal year 2001; (11) the Army expects costs to be reduced by this amount by reducing the number of contractor personnel providing services, scaling back service levels, and reducing on-hand inventories; (12) the Army should improve its management of the Balkans Support Contract; (13) officials at facilities in the Balkans have not been as specific as they should have been about what they expect from the contractor; (14) they frequently have simply accepted the level of services the contractor provided without questioning whether they could be provided more efficiently or less frequently and at lower cost; (15 ) GAO found a widespread view among Army and other DOD agencies' officials in the Balkans that they had little control over the contractor's actions once it was authorized to perform tasks; and (16) contract administrators are deployed for a limited time which hinders effective contract oversight.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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