The Project On Government Oversight (POGO) Blog

DoD Contractors Cost Nearly 3 Times More than DoD Civilians

See the inforgraphic below for all the data

Last month, the Project On Government Oversight sent a letter to government officials poking holes in the Department of Defense’s (DoD) claims that it utilizes a cost-effective workforce, and that congressional prohibitions have prevented it from implementing greater cost efficiencies. DoD’s own documents prove otherwise and support POGO’s 2011 finding that, on average, the federal government is wasting money by hiring service contractors.

POGO’s review of DoD service contracting budget and spending data found that contractor employees cost 2.94 times more than an average DoD civilian employee performing the same job. In fact, although the number of employees in both workforces is relatively balanced, spending on the workforces is not: DoD service contracts cost $253.8 billion and DoD’s civilian workforce cost $72 billion (base) or $108 (base plus overhead) in FY 2010.

Comparison of contractors to military personnel results in similar ratios, although this comparison is complicated by such cost considerations as pay, housing, subsistence, change-of-station expenses, education assistance, veteran’s benefits, tax advantages, and non-monetary benefits to military members

EPA Sends a Message With BP Suspension

The federal contracting community is abuzz today with the Environmental Protection Agency’s (EPA) announcement that energy company BP P.L.C. and several of its affiliates have been suspended from federal contracting.

The EPA justified its action citing BP’s “lack of business integrity” as demonstrated by the 2010 Deepwater Horizon disaster. That one incident killed 11 people and caused a massive oil spill in the Gulf of Mexico, for which BP recently pleaded guilty to 14 criminal counts and agreed to pay more than $4.5 billion in penalties. BP still faces civil lawsuits filed by the federal and state governments.

The suspension prevents BP from getting new contracts. It does not affect BP’s existing federal contracts, a point BP makes abundantly clear in its public statement today. The suspension will be lifted when BP can show the EPA that it is responsible and meets federal business standards. In the meantime, the Department of Interior has also disqualified BP from winning new leases to drill for oil or gas on federal land.

KBR November Litigation Round-Up

By NEIL GORDON

November has been a very bad month for defense contractor KBR.

KBR is the federal government’s primary logistics support contractor in Iraq, receiving tens of billions of dollars in business from the Department of Defense over the last decade, much of that under the U.S. Army’s monopolistic Logistics Civil Augmentation Program (LOGCAP) III contract.

In early November, an Oregon federal jury returned an $85.2 million verdict against KBR for exposing military personnel to toxic chemicals at an Iraqi water treatment facility in 2003. The jury found that KBR had “acted with reckless and outrageous indifference to a highly unreasonable risk of harm and conscious indifference to the health, safety, and welfare” of the plaintiffs. A case raising similar claims is pending in KBR’s hometown of Houston, Texas, and will soon go to trial.

Star Creeps: Petraeus & the Price of the Top-Heavy Pentagon

Gen. David Petraeus

In addition to extramarital affairs and “flirtatious e-mails,” the General Petraeus sex scandal highlighted another of the Pentagon’s dirty little secrets – generals live like billionaires, and taxpayers are footing the bill.

As the Washington Post reported on Saturday, these perks “befitting a billionaire,” include, “palatial homes, drivers, security guards and aides to carry their bags, press their uniforms and track their schedules in 10-minute increments. Their food is prepared by gourmet chefs. If they want music with their dinner parties, their staff can summon a string quartet or a choir.”

Lavish perks bestowed to generals increase with higher ranks, as Raymond Dubois, former DoD director of Administration and Management from 2002 to 2005, told Air Force Times. “A four-star has an airplane. A three-star often doesn’t…Can a three-star get an airplane when he needs it? Not always. Does a four-star get an airplane when he needs it? Always. Many times he’ll already have a G5 sitting on the runway, gassed up. There are the kinds of costs that are fairly significant when you add them all up,” according to Dubois.

Taxpayers are paying for this largesse, and they keep paying long after the generals retire—even if they are receiving other salaries and benefits.

General Petraeus, for example, will reportedly receive a $220,000 annual pension for the rest of his life. Petraeus is reaping the benefits of a 2007 provision that dramatically increased the pensions of top generals and admirals, but not the lower ranking soldiers they command. The Pentagon’s press office told POGO, for the average three-star general or admiral that retires from the military, “the annual difference in retired pay between the old and new criteria is about $39,900,” per year.

Stop U.S. Involvement in Human Trafficking

By ANDRE FRANCISCO

Twenty million—that’s about how many men, women and children are victims of human trafficking around the world. But what you probably didn’t know is that your U.S. tax dollars are supporting human trafficking on U.S. military bases in Iraq and Afghanistan, where thousands of foreign nationals working for U.S. government contractors and subcontractors are victims of human traffickers.

We need you to urge your Members of Congress to include strong anti-trafficking enforcements in the final version of the National Defense Authorization Act that is sent to the President’s desk for signature so exisiting laws have enough teeth to make them effective. 

Help us end U.S.-supported human trafficking so not another cent of your tax dollars go to funding modern-day slavery.

Andre Francisco is an online producer with the Project On Government Oversight.

Follow @andrefrancisco

Our Nuclear Insecurity Complex

Back in July, an 82-year-old nun and two fellow peace activists breached the security at the Y-12 nuclear weapons facility in Tennessee. The red-faced federal officials who subsequently promised thorough oversight proclaimed they had "no tolerance" for that kind of negligence.

Since then, it's only gotten worse for the Department of Energy and its National Nuclear Security Administration — the semiautonomous agency in charge of securing nuclear materials at our national laboratories and weapons production facilities.

An inspector general's report found that a Y-12 security contractor got caught cheating just before a security performance evaluation administered after the break-in. Then last month, Nuclear Weapons and Materials Monitor and the Albuquerque Journal reported that a new and expensive security system at the Los Alamos National Laboratory in New Mexico is so botched it may require Congress to rescue it with up to $41 million in emergency funding.

The federal government did go ahead and fire that Y-12 security contractor, Wackenhut Oak Ridge. But that doesn't address its role in loosening oversight of the contractors who run our nuclear facilities. The hands-off approach to contractors championed by Energy Secretary Stephen Chu is one of the reasons why we're facing a security crisis in our nuclear weapons complex.

Fluor Whistleblower Draws "First Blood"

Volpentest HAMMER Training Facility at the Hanford Nuclear Site.

By NEIL GORDON

Last week, the Department of Justice announced it had intervened in a False Claims Act lawsuit alleging that federal contractor Fluor Corporation improperly used federal funds for lobbying activities. The lawsuit was originally filed in February 2011 by whistleblower Loydene Rambo.

The Byrd Amendment prohibits contractors from using federal funds to influence or attempt to influence the executive branch or Congress in connection with the awarding, extension, continuation, renewal, amendment, or modification of a federal contract. Contractors are required to certify (FAR Subpart 52.203-11) that they will comply with this lobbying restriction.

The government alleges that Fluor, while managing the Department of Energy’s (DOE) Hanford nuclear site in southeastern Washington State, spent DOE funds to lobby Congress and executive branch officials to secure additional appropriations and contracts for the Volpentest HAMMER (Hazardous Materials Management and Emergency Response) Training Facility at the site.

Energy Dept. IG Finds Conflicts of Interest in Nuke Clean-Up

Aerial view of the Portsmouth Gaseous Diffusion Plant

By MIA STEINLE

Government investigators have uncovered conflicts of interest among the contractors working on a multi-billion dollar effort to decontaminate and decommission two of the nation’s nuclear weapons sites.

Contractors at plants in Piketon, Ohio, and in Oak Ridge, Tenn., were overseeing work by subcontracting companies in which they hold a financial interest, according to a report from the Department of Energy (DOE) Inspector General.

According to federal and DOE regulations, this arrangement means the contractors are “unable to render impartial assistance or advice to the government,” and their “objectivity in performing the contract work is or might be otherwise impaired,” the report said.

The investigation found that contractor Restoration Services Inc. (RSI) was overseeing the work of subcontractor VETCO at both nuclear sites, even though RSI holds a financial interest in VETCO.

Government Sues Triple Canopy for Iraq Contract Fraud

 

A fraud lawsuit alleges none of the security guards provided by Triple Canopy to guard a U.S. airbase in Iraq met the Army's minimum target shooting requirements.

By NEIL GORDON

The Department of Justice announced the filing of a lawsuit against private security firm Triple Canopy for allegedly defrauding the government on an Iraq security contract.

In June 2009, the Joint Contracting Command in Iraq/Afghanistan (JCC-I/A) awarded Triple Canopy a one-year, $9.5 million contract to provide security at Al Asad Airbase, the second largest U.S. airbase in Iraq. According to the government’s complaint, Triple Canopy billed the government for hundreds of Ugandan security guards who did not meet firearms proficiency requirements.

“[Triple Canopy] went further than simply billing the Government for unqualified personnel,” the complaint alleges. “It falsified the documents in its files to show that the unqualified guards each qualified as a ‘Marksman’ on a U.S. Army qualification course.” According to the complaint, the government paid Triple Canopy a total of $10.4 million on the contract between September 2009 and July 2010 in reliance on falsified billing documents.

SIGAR Slams Army Corps for Letting DynCorp Walk Off the Job

By NEIL GORDON

On Thursday, the government’s Afghanistan reconstruction watchdog released a report showing that the U.S. military has failed to address serious construction deficiencies at an Afghan Army garrison that have persisted for more than two years. The report also criticized the military’s handling of the construction contractor, DynCorp International, which was released of its obligation to repair the deficiencies.

The U.S. Army Corps of Engineers (USACE) paid DynCorp almost $71 million to oversee construction of the garrison, Camp Pamir, in Kunduz Province on Afghanistan’s northern border. In April 2010, the Special Inspector General for Afghanistan Reconstruction (SIGAR) reported that the facilities at Camp Pamir were at risk of structural failure because of poor site grading and serious soil stability issues. During a follow-up inspection this year, SIGAR found that USACE had failed to address the soil stability problem, and identified additional structural failures (one of which is pictured above), improper grading, and new sink holes.

Perhaps the most troubling finding is that, despite DynCorp’s unsatisfactory performance, USACE released the contractor in December 2011 under a settlement that absolved DynCorp of responsibility for fixing the structural defects. Not only was DynCorp paid in full and released from all existing or future warranty obligations, USACE also retroactively extended the contract duration date by 948 days (to make it appear that DynCorp had met contractual deadlines) and changed DynCorp’s unsatisfactory performance ratings to satisfactory.

SIGAR Seeks Debarment of Contractors Who Aid the Enemy

Photo: Special Inspector General for Afghanistan Reconstruction John F. Sopko testifies before the House Oversight and Government Reform National Security Subcommittee on September 13, 2012.

On Tuesday, the Special Inspector General for Afghanistan Reconstruction (SIGAR) posted a letter to top U.S. diplomatic, military, and U.S. Agency for International Development (USAID) officials calling for immediate action to stop the disbursement of federal funds to several companies and individuals believed to be actively supporting the insurgency in Afghanistan.

Government investigations have uncovered instances of U.S. taxpayer money being funneled to the enemy in Afghanistan, a serious problem largely caused by weak oversight. To remedy this, Congress inserted Section 841 into the Fiscal Year 2012 National Defense Authorization Act, which requires the Commander of the United States Central Command (CENTCOM) to review recipients of U.S. contracts, grants, and cooperative agreements with an estimated value exceeding $100,000 to determine if they are actively supporting an insurgency or otherwise opposing U.S. or coalition forces in a contingency operation. If this determination is made with regard to a particular person or corporate entity, CENTCOM puts Department of Defense (DoD) Heads of Contracting Activities (HCAs) on notice to restrict, terminate, or void their contracts, grants, and cooperative agreements.

According to the SIGAR letter, in July, CENTCOM Commander General James N. Mattis identified the following 5 individuals and entities as “actively supporting an insurgency” in Afghanistan:

• Arvin Kam Group LLC
• Arvin Kam Construction Company
• Vakil Saadat
• Haji Mohammad Almas Khan
• Haji Khalil Fruzi

DoD Service Contract Budget & Spending Data Don't Match Up

Today, the Project On Government Oversight sent a letter to congressional and executive branch officials, highlighting the Department of Defense’s (DoD) inability to provide sufficient oversight of the hundreds of billions of dollars spent each year to procure services from contractors. Without reliable and accurate data, how can Congress hold DoD accountable for complying with requirements for submitting accurate budget requests? Additionally, in the absence of government transparency, how are taxpayers to know whether their dollars are being spent in a cost-effective fashion?

POGO analyzed DoD’s responses to congressional inquiries; testimony given at Senator Claire McCaskill’s March hearing, “Contractors: How Much Are They Costing the Government?”; and DoD policy and budgetary records. POGO found inconsistencies in DoD’s claims about making cost-efficient policy and human capital decisions. POGO’s review of DoD service contracting budget and spending documents found that it expends between 2.35 and 3.53 times more of its funding on service contracts than on its civilian workforce, and that the cost of an average contractor full-time equivalent (CFTE) is between 2.94 and 8.60 times more than an average DoD civilian full-time equivalent (GFTE). In short, the numbers are grossly out of proportion, and there need to be improvements in comparative cost modeling and service contracting data in order to control costs and protect taxpayers.