US commission finds widespread waste and corruption in wartime contracts

The US government’s over-reliance on wartime contractors in Iraq and Afghanistan has resulted in as much as $60 billion in waste and fraud – and it’s likely to worsen without reform.

That's the main message coming out of a new report from the bipartisan Commission on Wartime Contracting. The report suggests that contracting is more prone to waste than in-house spending because of the greater difficulty in overseeing the spending and the profit motive of the private contracting firms. (See the pdf of the report here).

Moreover, a different set of commitments tend to bring a contractor versus a soldier or State Department official into a conflict zone. In general, it's a little less for country, a little more for wallet.

“I am having a good war,” one American contractor told me in Kabul on a visit last year, admitting that the pay has been great, especially in a down US economy.

I have met some contractors who grew attached to Afghanistan, even setting up their own charitable organizations to help. But it is also true that there is a roving band of contractors who are on a circuit of conflict zones, jumping from contract to contract with few institutional or other long-term commitments. Sustainability, sense of mission, and quality can suffer.

The use of contractors has also degraded the capabilities of government agencies like USAID. Contractors take on more risk while officials charged with overseeing them are kept cloistered behind security protocols. See this Monitor report on a waste-filled $60 million project in Afghanistan.

The amount of contractor waste will expand as projects are handed over to host governments who do not have the capacity and resources to maintain them, the commission notes. The reliance on contractors is also likely to expand, it says, because contractors will be needed to fill gaps left by withdrawing soldiers and because of the federal budget fight.

The roots of the reliance on contractors stem from the slimming down of the Defense Department and the US Agency for International Development in the 1990s. Now a new bout of government-cutting fervor is hitting Washington.

“The ongoing debate about the federal budget and the deficit is likely to translate into reductions in the size of the military and federal-civilian workforce, but not a corresponding reduction in national-security missions. This ‘do the same with less’ outcome – or an even riskier ‘do more with less’ – may drive an even heavier over-reliance on contractors that has been seen in the past decade,” the report reads.

It goes on to observe that “faced with a mandate to reduce staffing, the bureaucratic instinct is usually to put acquisition staff on the chopping block first. Unfortunately, these are the same professionals the agencies would need to plan, manage, and oversee the additional contracts that would be signed to compensate for a reduced federal workforce and keep up with unrelenting mission pressure. Likely result: a dangerous spiral of growing over-reliance on contractors and shrinking management capability.”

The report notes that the government could increase the size of the federal workforce or “reconsider the number, nature, and scope of the overseas contingency operations.”

Under the Obama administration, USAID has been given the money to expand its staff, though the agency still struggles at getting these officials out in the field. The next round of budget cuts in Congress, however, has USAID and the Department of Defense in the crosshairs.

The budget knives are out, but so are the knives for fighting. Since the protest movements preceding the Iraq war, ordinary Americans have offered no substantial resistance to expanding military missions – despite the efforts of groups like Rethink Afghanistan.

In the face of these political realities, the commission lays out a series of recommendations for formalizing the currently ad hoc handling of contractors so as to curb future waste.

Among the recommendations:

• Require officials to determine the sustainability of projects and come up with risk-mitigation strategies.
• Elevate the positions of those overseeing contractors within the Defense and State Departments and USAID.
• Phase out contractors for certain functions that involve high risk of corruption, enemy infiltration, and other risks.