Hearing on COUNTING CONTRACTORS
Counting Contractors: Where are they and what are they doing?
1 of 66
THE COMMISSION ON WARTIME CONTRACTING IN IRAQ & AFGHANISTAN HOLDS A HEARING ON ACCOUNTABILITY ISSUES IN IRAQ AND AFGHANISTAN, PANEL 1
NOVEMBER 2, 2009
SPEAKERS: MICHAEL J. THIBAULT, CO-CHAIR
CHRISTOPHER SHAYS, CO-CHAIR
CLARK KENT ERVIN
GRANT S. GREEN
ROBERT J. HENKE
DOV S. ZAKHEIM
WITNESSES: GARY MOTSEK, ASSISTANT DEPUTY UNDER SECRETARY OF DEFENSE FOR PROGRAM SUPPORT
JOHN HUTTON, DIRECTOR, ACQUISITION AND SOURCING MANAGEMENT, THE GOVERNMENT ACCOUNTABILITY OFFICE,
REDDING HOBBY, DEPUTY DIRECTOR, LOGISTICS, CONTRACTING, AND ENGINEERING WITH U.S. ARMY CENTCOM
[*] THIBAULT: Good morning. I’m Mike Thibault, co-chair of the Commission on Wartime Contracting in Iraq and Afghanistan. Welcome to all.
Today’s hearing, “Counting Contractors: Where Are They and What Are They Doing?” carries the theme of accountability into three important areas of the commission’s work. I offer this opening on behalf of Co-chair Christopher Shays and myself. The other commissioners at the dais are Clark Kent Ervin, Grant Green, Robert Henke, Charles Tiefer, and Dov Zakheim. There is currently one vacancy on the eight-member commission awaiting a congressional appointment.
We will hear from three panels of witnesses today, one for each of the three issues to be explored. The issues are problems in gaining an accurate count of contractor employees in the Southwest Asia area of military operations, secondly; the role and management of contractors during the Iraq drawdown and, third, progress toward better coordination and cooperation between the
Page 2 of 66
Department of Defense agencies that provide contractor oversight and audit contingency contracting.
First, counting the contractors onto to our first accountability issue. As the commission has repeatedly observed, U.S. military and political operations in Southwest Asia depend heavily on the support of contractors, and contractors are making a valuable contribution to the war effort.
However, it is both peculiar and troubling that eight years after the overthrow of the Taliban regime in Afghanistan and more than six years since the overthrow of the Baathist regime in Iraq, we still don’t know how many contractor employees are working in the region. That is amazing. How can contractors be properly managed if we aren’t sure how many there are, where they are, and what are they doing?
We discussed this concern in our June 2009 interim report to Congress. We observed that there is no single source for a clear, complete, and accurate picture of contractor numbers, locations, contracts, and cost. There are two main sources of information on these matters. First, the Department of Defense has created the SPOT database to track contractor personnel, the contracts they are working on, and other data. SPOT stands for — here we go — Synchronized Predeployment and Operational Tracker. That’s why we call it SPOT.
The other main source for this information is the U.S. Army Central Command’s quarterly census, which receives manual data inputs from dozens of reporting entities, 33 to be exact. Both systems have limitations. For example, SPOT doesn’t capture all foreign national employees. That’s a big concern, because much of the work in theater is actually performed by foreign nationals. The CENTCOM census doesn’t include data for contractors working for the Department of State or the Agency for International Development as opposed to defense and on and on.
The most troubling gap we observed, however, was the one between the results of the two systems. You have two systems. You’d think that if they were counting the same work force, contractor work force, they’d come up with reasonably the same numbers. As noted in our June report, the SPOT database counted about 160,000 active contractor employees as of April 2009 in the CENTCOM area that includes Iraq, Afghanistan, Kuwait, and several less active venues.
CENTCOM’s manual census had counted more than 242,000 contractors just a month earlier. As a trained auditor who can at least do the easy math, I can tell you that’s a difference of more than 80,000 people. More recent data reveal a significant gap continues, presently at 73,800 people. We have charts that are
Page 3 of 66
not easily read on the dais because they kind of turned them around, but we’ll get them turned around so you can read them that has that data.
This abiding uncertainty over a pretty basic metric raises two serious questions for this commission. One concern is that not knowing exactly how many contractors there are, where they are, what they’re doing and for whom makes the job of federal contract managers and auditors very difficult. That difficulty in turn permits and invites waste, fraud, and abuse of taxpayer money and undermines the achievement of U.S. mission objectives. Simply put, how can you provide oversight on contractors that don’t exist on paper and may not exist on the ground? And how can we assure taxpayers that they aren’t paying for ghost employees?
The second concern involves security and safety. We have said and written that the vast majority of contractors in theater are doing vital work for this country, winning the appreciation of our troops for their performance and operating in dangerous areas that have cost hundreds of them lives — of their lives. But it takes only one foreign national contractor employee smuggling explosives into a dining facility, headquarters, hospital, or barracks to create a mass casualty disaster. We know that the SPOT database has not reached yet its promised 100 percent inclusiveness. We know that the more cumbersome CENTCOM census, well intended to make up the difference, is also not all inclusive. We must ask whether the resulting uncertainty about contractor numbers constitutes cause for concern about the security of our troops and other Americans in theater. We will explore each of these concerns with our first panel today.
The Iraq drawdown — the second accountability issue for today’s hearing concerns the drawdown of American forces in Iraq. We need to be clear about the role of contractors in supporting the Iraq drawdown and be sure that the numbers of contractor personnel are appropriately geared to the reduction of U.S. military strength and base closures and are being timely adjusted for any needed reduction.
As units move out of bases, the absolute and comparative numbers of contractors may rise to prepare bases for handover or closure. But the general trend should be for declining numbers also. Either way, the government needs to monitor and adjust as appropriate the contractor staffing needed to support the U.S. mission.
The current agreement between the U.S. and Iraqi government calls for all U.S. military personnel to be out of Iraq by December 31, 2011. In addition, President Barack Obama has directed that the U.S. military presence in Iraq be reduced to 50,000 by August 2010.
Page 4 of 66
The daunting management challenge of closing or handing over hundreds of bases and moving, donating, or selling millions of pieces of property caused the commission to flag the Iraq drawdown as an issue of immediate concern in our interim report to Congress. We wrote, “The drawdown of U.S. forces in Iraq risks incurring enormous waste which could range from completion of work that may not need to be done to poorly controlled handling and disposition of U.S. government property.”
The Government Accountability Office, GAO, has also studied and reported on the planning for and managing of the Iraq drawdown and has expressed similar concerns about planning, coordination, and arrangements for ensuring accountability for contractors’ work and the disposition of property. This commission truly appreciates and respects the exceptional oversight work being performed by the GAO and by military and civilian agency auditors. We rely heavily on their work for planning our own operations.
Our witnesses on this issue will discuss the role of contractors in the drawdown, progress in planning and management of operation, the adequacy of contract oversight arrangements and processes, the impact of the transition from the LOGCAP III to the LOGCAP IV logistics contract structures and related issues, and lastly, DCMA, Defense Contract Management Agency, and DCAA, Defense Contract Audit Agency, coordination.
The third accountability issue on today’s agenda takes the form of a progress report from two critical agencies, absolutely critical and important agencies with the Department of Defense. During the commission’s August 11th hearing on contractor business systems, we heard testimony and colloquy on significant differences in definitions, methods, and organizational attitudes between the Defense Contract Management Agency and the Defense Contract Audit Agency.
This represented a deep concern for this commission, because contractors’ business systems for creating cost estimates, logging purchases and labor hours, and issuing billings are vital inputs to the work of federal contract managers and auditors. We asked and the agencies agreed that DCMA and DCAA meet and work to clarify issues, resolve differences, and better coordinate their approaches to their different but equally vital missions.
The commission asked the agencies to report in 60 days on their progress. That is what this part of this hearing is about: to listen. We expect to hear good news about their meetings and their progress and about DOD’s leadership commitment to achieving greater accountability for the contractors that the agencies oversee and audit.
The commission hearing in August on contractor business systems revealed significant differences between DCMA’s and DCAA’s evaluations and
Page 5 of 66
assessments of contractor systems for cost estimating, purchasing, subcontracting, and other functions. The evidence showed that DCMA frequently took untimely or no action on DCAA findings or issued contract — contrary assessments and opinions and often failed to ensure that contractors took the corrective actions needed to improve the deficiencies.
We thank all of today’s witnesses for participating in what promises to be a very informative session. Witnesses have been asked to summarize their testimony in five to seven minutes in order to ensure adequate time for questions and answers. The full text of written statements will be entered into the hearing record and posted on the commission’s web site. We also ask that witnesses submit within 15 days responses to any questions for the record that occur today and any additional information they may undertake to offer during this hearing.
I will now introduce the first panel — well, I will introduce each new panel at the start of each session, and we turn to our first panel, who will speak to the concerns about the SPOT database — I’m not going to try to repeat that, but maybe they’ve got it struck to memory for what SPOT stands for — for contractor employee and administrative information.
Our witnesses are Mr. Gary Motsek, assistant deputy undersecretary of defense for program support; Mr. Redding Hobby, deputy director, logistics, contracting and engineering with the U.S. Army Central Command or CENTCOM; and Mr. John Hutton — thank you, sir — director, acquisition and sourcing management with the Government Accountability Office.
I would like to thank each of you ahead of time and, hopefully, we’ll thank you after you’re done. And I’d like to ask each of you if you’d please rise and we’ll swear you in.
Do you solemnly swear — please raise your right hand. Do you solemnly swear or affirm that the testimony you will give before this commission is the truth, the whole truth, and nothing but the truth?