« Obama's Revolving Door Promise Put to the Test (Again) | Main | Morning Smoke: F-22 Has Big Maintenance Problems, Costs Over $44,000/hr »

Jul 09, 2009


CPT Reginald Guillet / CGSC-ILE 12-003 / SG:D

The lack of oversight on contracts awarded by the U.S. Army LOGCAP to KBR is attributed to the lack of knowledgeable personnel overseeing that process. According to Senator Frank R. Lautenberg on a Senate Democratic Policy Committee Hearing, Halliburton’s multi-billion dollar contracts with the federal government for work in Iraq may go down in history as the most scandal-plagued in U.S. history.

Despite several negative audit reports and contractor performance evaluations, KBR was awarded the sole-source Restore Iraqi Oil (RIO) contract in secret in March 2003 after all other companies were excluded from bidding. Under this contract, the Army issued ten task orders worth approximately $2.5 billion. Again in January 2004, KBR was awarded the southern RIO 2 contract which is worth up to $1.2 billion.

The War on Terror has shown serious issues with the U.S. Army LOGCAP contract administration, to include contract management and contract oversight. It has also shown that not enough appropriately-trained professionals are available to award and manage contracts. A study headed by former Deputy Secretary of Defense Jacques Gansler to analyze “structural weaknesses and organizational deficiencies in the Army’s acquisition and contracting system used to support expeditionary operations” recommended that the Army makes systemic and fundamental changes in the way it conducts business by:
- increasing the stature, quantity, and career development of military and civilian contracting personnel (especially for expeditionary operations);
- restructuring the organization and restoring responsibility to facilitate contracting and contract management in expeditionary and CONUS operations;
- providing training and tools for overall contracting activities in expeditionary operations;
- and obtaining legislative, regulatory, and policy assistance to enable contracting effectiveness in expeditionary operations.

The government in its reform with LOGCAP IV instituted the Gansler Commission’s recommendations to improve its contracting procedures, policies, training and officials’ awareness. Nonetheless, more studies are needed in the post award phase of the U.S. Army LOGCAP contract management process. The Army’s contract administration activities are not effective in monitoring compliance with contract terms and conditions, practicing effective communication and control, managing contract changes, invoicing and payment and resolving claims and disputes. The analysts comparing the actual performance goals of the U.S. Army LOGCAP contracts are not yet competent, realistic, honest, and are still allowing poor performance to deteriorate further.

The government is continuously victims of unpleasant surprises regarding requirements or costs when dealing with KBR. With regards to the LOGCAP contract, the U.S. Army officials and KBR, without proper accountability of the taxpayers’ money, will continue to be the favored punching bag for critics for the Defense Contract Audit Agency (DCAA), the Defense Contract Management Agency (DCMA), the Army Audit Agency (AAA), and the DOD Inspector General. DCAA has continually examined KBR’s estimating, cost accounting, labor hours reporting and procurement systems and found them deficient. Consequently, the U.S. Army LOGCAP needs to implement and enforce a Quality Assurance Surveillance Plan (QASP) to define what must be done to ensure that the contractor has performed in accordance with the Performance Statement of Work (PSW) performance standards. They need to ensure their contracting officers are properly trained to control cost and schedule performance as well as report progress against contracts. Additionally, the contracting officers need to be able to receive and understand the contract performance reports, approve changes to the system, and generally ensure that the system requirements are being met. The U.S. Army LOGCAP needs to ensure that each project is assigned a project manager to have overall responsibility for executing the project, and a contract manager to oversee the contractual aspects of the project. Lastly, they should continue to develop and adopt an automated contract management tool, Decision Support Systems (DSS), and Expert Systems (ES) to improve business communication, enforce contract control, accelerate the contract management lifecycle, facilitate and improve the quality of decision making.

The Army’s love affair with KBR can only be judged in Congress and the court system. With the reluctance of the Army to admit mistakes, the American People through the audits and congressional commotion can identify the perception that KBR and the Army are allies against a common enemy, Congress!

The comments to this entry are closed.