The Usual Suspects of Contract Abuse
Government Executive reports that the Army is investigating whether Combat Support Associates, an Orange, Calif.-based contractor, overcharged the government on its contract supporting U.S. troops in Kuwait.
CSA performs equipment maintenance and security work at Army bases in Kuwait under the Services Support Contract - Kuwait (CSSC-K), a contract the Army awarded in 1999, shortly after the company was formed. The contract, which had a projected 10-year value of $547 million when it was awarded, has so far cost the government more than $2 billion.
It is not surprising that CSA is under suspicion. Read the story and you immediately see some of the “usual suspects” of contract abuse: 1) a multi-year, cost-plus contract; 2) a war zone; 3) an understaffed contract oversight office; and 4) a Cayman Islands subsidiary set up shortly after winning the contract to avoid paying taxes on its overseas employees and to escape the jurisdiction of U.S. courts.
There is an important aspect to this story not mentioned in the Government Executive article. We hesitate to call it a usual suspect, but Blackwater Worldwide has certainly seen its share of contracting controversy. Last year, when a shooting in Baghdad put Blackwater in the spotlight, new questions arose in regard to Andrew J. Moonen, a Blackwater guard accused of shooting a an Iraqi vice president's bodyguard on Christmas Eve 2006. Moonen was fired and quickly sent home after the incident, but within weeks he was hired by CSA and sent off to Kuwait. Moonen ended up working for the company for six months.
The incident was a cause of embarrassment for the State Department, which helped Moonen get out of Iraq and apparently did nothing to prevent him from getting work on other Iraq War-related contracts. CSA claimed it was unaware of Moonen's history when it hired him.
-- Neil Gordon
To GovtUncovered.
T&M contracts, which usually have much higher fees (profit) built into the rates than cost-type contracts, are really problematical. Like CPFF, there is no deliverable except labor at a certain rate. Look at the FBI's VCF contract. Nearly $104 million in SAIC charges, T&M for the most part, were flushed down the drain with no usable result.
Posted on: Oct 13, 2008 at 02:31 PM
Why does this surprise anyone?
Contractors, since the beginning of our republic, have always profited through the public expense. There has always been crooks.
As far as CPFF (Cost-plus fixed fee) contracts, they are put in place to help mitigate risk to the contractor. This is not unreasonable since it is difficult to gauge what the level-of-effort will be in some cases. I see no reason why the government couldn't put out a time and materials (T&M) contract RFP. This would allow them switch to a cost effective vehicle. Easier said than done.
The government CO and COTR should be held accountable. They are the one's managing the contract.
www.GovernmentUncovered.com
Posted on: Oct 13, 2008 at 10:56 AM