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Senator McCaskill, ex-auditor, to shine brighter light on Iraq defense contracts |
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By Roxana Tiron
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Posted: 07/12/07 07:01 PM [ET] |
Freshman Sen. Claire McCaskill (D-Mo.), a former prosecutor and Missouri state auditor, is planning to offer several amendments to the defense authorization bill in an effort to curb contracting mismanagement and abuse in Iraq.
The new member of the Senate Armed Services Committee is coming into her own, drawing on her auditor experience to shine light on fraud in defense contracts. Around 180,000 contractors are in Iraq, performing everything from providing security and transportation to feeding the soldiers.
McCaskill is planning to introduce her amendments later in the week. The junior senator has worked closely with Armed Services Chairman Carl Levin (D-Mich.) to make sure “that they are principled measures,” according to a Senate aide.
Concerned about the growth of service contracts, particularly in Iraq, McCaskill is planning to introduce two amendments that would exercise tighter control over such contracts. One of them would require an independent review for service contracts higher than $100 million.
For example, under the Logistics Civilian Augmentation Program (LOGCAP), a multibillion-dollar contract with Kellogg Brown and Root spiraled out of control and there was no backstop, said a congressional source.
Stung by criticism of cost overruns and no-bid contracts, the Pentagon has now injected competition into its troop support arrangements. Three companies — KBR, DynCorp and Fluor Intercontinental — will compete for projects in the Middle East worth up to $150 billion.
Under McCaskill’s provision, the review would look at how the contracts were staffed, whether sufficient audits were conducted, and whether a cost-plus contract should be changed into a fixed-cost contract. The Pentagon may not renew any of the contracts while this review is under way.
McCaskill has been very critical of cost-plus contracts, in which a company receives compensation equal to its expenses plus an additional bonus when the agreed-upon work is finished. Even with cost overruns, the contractor will receive full compensation and the expected profit. Cost-plus contracts therefore offer little incentive to minimize costs.
After repeated criticism of cost-plus contracts, the Pentagon is moving toward using more fixed-price contracts. But McCaskill said that cost-plus contracts still make up a significant percentage.
After visiting the Middle East in mid-June, McCaskill said that the military has made mistakes in the way it awarded and managed contracts supporting the war in Iraq.
“There was an abdication of stewardship as it relates to the way that the money was spent,” she said in a conference call June 18.
McCaskill’s other amendment addresses another oversight concern: the use of contracts that the Pentagon signs off on before all the terms of the contract are known or have been completed. By law, the contracts have to be fully completed within a year, but there are few incentives to do that fast, said the Senate aide.
The amendment is seeking to rein in that practice. It would require higher-ranking Pentagon officials to approve contracts with uncompleted terms, and it would cut in half the award fee and profits to the contractor until the contract terms are fully completed.
In addition, McCaskill is working with Sen. Tom Carper (D-Del.) on an amendment that would seek to establish contracting training for uniformed military personnel who are not acquisition officials. Military officers interact with contractors on the battlefield regularly, but they do not have any knowledge of contracting.
Compounding the problem, the number of Pentagon procurement officers charged with overseeing defense service contracts has shrunk by almost half since the early 1990s. But the amount spent on those contracts has increased by 78 percent over the same period.
It is yet unclear when any of these amendments will be taken up as part of the floor debate of the 2008 defense authorization bill. Senate Majority Leader Harry Reid (D-Nev.) failed to invoke cloture on the first amendment offered to the bill yesterday, and the GOP minority is threatening to set up procedural roadblocks on Iraq troop withdrawal amendments.
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