Contingency Contracting
Further Improvements Needed in Agency Tracking of Contractor Personnel and Contracts in Iraq and Afghanistan Gao ID: GAO-10-187 November 2, 2009This 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.
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.
GAO-10-187, Contingency Contracting: Further Improvements Needed in Agency Tracking of Contractor Personnel and Contracts in Iraq and Afghanistan
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Statement Before the Commission on Wartime Contracting in Iraq and
Afghanistan:
United States Government Accountability Office:
GAO:
For Release on Delivery:
Expected at 9:30 a.m. EST:
Monday, November 2, 2009:
Contingency Contracting:
Further Improvements Needed in Agency Tracking of Contractor Personnel
and Contracts in Iraq and Afghanistan:
Statement of John P. Hutton, Director:
Acquisition and Sourcing Management:
GAO-10-187:
[End of section]
Chairman Thibault, Chairman Shays, and Commissioners:
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,[Footnote 1] which was mandated by
section 863 of the National Defense Authorization Act for Fiscal Year
2008 (NDAA for FY2008),[Footnote 2] and a related April 2009 testimony.
[Footnote 3] 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.
Background:
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.[Footnote 4] 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:
* for each contract,
- 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.
Contractor and Contractor Personnel Information Can Help Agencies
Address Management and Oversight Challenges:
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.[Footnote 5] 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.[Footnote 6] 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.[Footnote 7] 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.[Footnote 8] 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.[Footnote 9]
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.
Despite Some Progress, SPOT Not Yet Fully Implemented to Track
Contractor Personnel and Contracts:
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.
Tracking Information on Contractor Personnel in Iraq and Afghanistan:
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).[Footnote 10] 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.[Footnote 11] 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.
Table 1: DOD-Reported Data on the Number of Contractor Personnel in
Iraq and Afghanistan, Second Half of Fiscal Year 2008 and First Half of
Fiscal Year 2009:
Iraq:
Fiscal year 2008, third quarter: 162,428;
Fiscal year 2008, fourth quarter: 163,446;
Fiscal year 2009, first quarter: 148,050;
Fiscal year 2009, second quarter: 132,610.
Afghanistan:
Fiscal year 2008, third quarter: 41,232;
Fiscal year 2008, fourth quarter: 68,252;
Fiscal year 2009, first quarter: 71,755;
Fiscal year 2009, second quarter: 68,197.
Total:
Fiscal year 2008, third quarter: 203,660;
Fiscal year 2008, fourth quarter: 231,698;
Fiscal year 2009, first quarter: 219,805;
Fiscal year 2009, second quarter: 200,807.
Source: GAO analysis of CENTCOM census data.
[End of table]
* 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.
Tracking Information on Contracts with Performance in Iraq and
Afghanistan:
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.[Footnote 12]
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.
Prior Recommendation for Executive Action and Concluding Observations:
To address the shortcomings we identified in the agencies'
implementation of SPOT, we recommended in our October 200[Footnote 13]9
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.
GAO Contacts and Acknowledgement:
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.
[End of section]
Footnotes:
[1] GAO, Contingency Contracting: DOD, State, and USAID Continue to
Face Challenges in Tracking Contractor Personnel and Contracts in Iraq
and Afghanistan, [hyperlink, http://www.gao.gov/products/GAO-10-1]
(Washington, D.C.: Oct. 1, 2009).
[2] Pub. L. No. 110-181, § 863.
[3] GAO, Contingency Contracting: DOD, State, and USAID Are Taking
Actions to Track Contracts and Contractor Personnel in Iraq and
Afghanistan, [hyperlink, http://www.gao.gov/products/GAO-09-538T]
(Washington, D.C.: Apr. 1, 2009).
[4] Pub. L. No. 110-181, § 861, as amended by Pub. L. No. 110-417, §
854 (2008).
[5] GAO, Military Operations: High-Level DOD Action Needed to Address
Long-standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces, [hyperlink,
http://www.gao.gov/products/GAO-07-145] (Washington, D.C.: Dec. 18,
2006).
[6] GAO, Afghanistan Reconstruction: Deteriorating Security and Limited
Resources Have Impeded Progress; Improvements in U.S. Strategy Needed,
[hyperlink, http://www.gao.gov/products/GAO-04-403] (Washington, D.C.:
June 2, 2004) and Afghanistan Reconstruction: Despite Some Progress,
Deteriorating Security and Other Obstacles Continue to Threaten
Achievement of U.S. Goals, [hyperlink,
http://www.gao.gov/products/GAO-05-742] (Washington, D.C.: July 28,
2005).
[7] GAO, Rebuilding Iraq: Actions Needed to Improve Use of Private
Security Providers, [hyperlink, http://www.gao.gov/products/GAO-05-737]
(Washington, D.C.: July 28, 2005).
[8] GAO, Defense Budget: Need to Strengthen Guidance and Oversight of
Contingency Operations Costs, [hyperlink,
http://www.gao.gov/products/GAO-02-450] (Washington, D.C.: May 21,
2002).
[9] [hyperlink, http://www.gao.gov/products/GAO-07-145].
[10] An LOA is a document issued by a government contracting officer or
designee that authorizes contractor personnel to travel to, from, and
within a designated area and to identify any additional authorizations,
privileges, or government support the contractor is entitled to under
the contract. Contractor personnel need SPOT-generated LOAs to, among
other things, enter Iraq, receive military identification cards, travel
on U.S. military aircraft, or, for security contractors, receive
approval to carry weapons.
[11] CENTCOM is one of DOD's unified combatant commands. It is
responsible for overseeing U.S. security interests in 20 countries--
including Iraq and Afghanistan--that stretch from the Arabian Gulf
region into Central Asia. CENTCOM initiated its quarterly census of
contractor personnel in June 2007 as an interim measure until SPOT is
fully implemented. The census relies on contractor firms to self-report
their personnel data to DOD components, which then aggregate the data
and report them to CENTCOM at the end of each quarter.
[12] Contract numbers consist of 13 alphanumeric characters. We
considered a contract number invalid if the contract number entered
into SPOT had a different number of characters.
[13] [hyperlink, http://www.gao.gov/products/GAO-10-1].
[End of section]
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