Dogs of War: The importance of oversight

By DAVID ISENBERG  |  Feb. 1, 2008 at 5:13 PM
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WASHINGTON, Feb. 1 (UPI) -- If private military and security contractors are motivated by patriotism, as well as by the mighty dollar, they should welcome oversight of the way the government spends taxpayers' money. Besides, if you take the king's shilling, you must take the king's auditor, too.

Contractors frequently say, when asked why they voluntarily choose to work in conflict zones, that they are motivated by feelings of patriotism, just like their counterparts in the regular military. And no doubt, many of them are. After all, many of them spent years in the military. It is hard to do that and not come away with ideas of service and defense of the country ingrained in you.

Still, we need to be honest here. Contractors do this work for the same reason Willie Sutton robbed banks, because that is where the money is. Anyone who tells you otherwise is a liar. And anyone who believes it is a fool.

In the end it is, as Cuba Gooding so memorably pointed out to Tom Cruise, all about showing the money.

Not that there is anything wrong with that. In a capitalist society it is foolish to expect people to voluntarily risk serious wounds or death, when they are not in the regular military, on the basis of love of country.

The problem is that it is a government doling out the money; specifically the U.S. government. And when the spigots to the U.S. treasury can be turned on by various contractors then you better be sure to move quickly out of the way lest you are trampled by the resulting stampede.

Let's face facts: Anytime a government starts awarding hundreds of billions of dollars in contracts you better make sure you have one thing in place before you start signing contracts.

And that one thing is financial oversight. In a word, auditors -- lots of them, and experienced ones at that, are not just necessary, but critical.

Otherwise you are issuing an invitation to financial disaster, as in KBR and Halliburton overcharges, or Custer Battles fraud. The latter was the first civil fraud case against a U.S. contractor accused of war profiteering in Iraq; specifically bilking the U.S. government out of $50 million.

According to estimates from the International Peace Operations Association, one of the industry's trade groups the total industry value of the global "Peace and Stability Operations Industry" (a nice euphemism if ever there was one) is $20 billion for all companies providing services in the field.

That is lower than some other figures but nevertheless a lot of money by anyone's standards

In theory there are plenty of ways to ensure proper contract oversight and financial management.

Internal oversight of contractors can be accomplished through the activities of contracting officers and the operation of laws, regulations and guidelines.

In Iraq, for example, external oversight in theory is provided by the Government Accountability Office, the Special Inspector General for Iraq Reconstruction, Department of Defense Office of the Inspector General, Defense Contract Management Agency, and the Defense Contract Audit Agency.

Meantime, contractors and their supporters like to claim that they are more "nimble" and "cost-effective" than the government.

But with nearly five years of contracting experience in Iraq to ponder we can see that the reality is different on both counts.

Many contractors suffered from the same hasty and poor planning that regular military forces did.

And while it may be true that the private sector can scale up and adapt faster than the regular military it is also true that the Pentagon's oversight mechanisms could not be scaled up as quickly.

The shortened time-frame meant hasty tendering of contracts, which denied both the contracting private military or security firm and the awarding organization the necessary time to make careful decisions.

In addition, with the explosion of companies within the industry in Iraq, and the reduced time-frames for tenders, those awarding contracts had insufficient information about the companies competing for contracts. This was exacerbated by that fact that those awarding the contracts often had little experience of the industry or of their own organizations' security needs.

It has long been a dirty little secret within the private military industry that there are far too few contracting officers, and of those they do have, there are not enough with significant experience, and those who do are or are about to retire.

In case anyone had any doubts about the state of contractor management they were answered by an Army commission report released last November. The independent Commission on Army Acquisition and Program Management in Expeditionary Operations found significant failures in the Army's contracting and contract management.

The commission suggested improvements to the Army's contracting personnel, the reorganization of contracting in expeditionary operations and at home, training for contracting activities, and getting external assistance to ensure contracting efficiency. The commission recommended that the Pentagon add up to 2,000 military and civilian contract officers, strengthen the Defense Contract Management Agency, overhaul its personnel system and reform its procurement procedures.

While the military gets it the White House still seems clueless. Among the 2887 sections of the National Defense Authorization Act that President Bush just signed were four provisions he said, "purport to impose requirements that could inhibit the president's ability to carry out his constitutional obligations to take care that the laws be faithfully executed, to protect national security."

Two of these were aimed at private security firms accused of wartime abuses. One would establish an independent, bipartisan Commission on Wartime Contracting. This was actually endorsed by no less an official than the Pentagon's inspector general, who told Congress in a November meeting, "We're leaning forward in the saddle, we're committed to this."

The other provision Bush waived would extend whistle-blower protections to employees of defense contractors. This, by the way, was how the Custer Battles fraud was first revealed.

Without sufficient auditors, private military and security contracting will, like every other industry, continue to attract fraudsters and con men from every corner.


(U.S. Navy veteran David Isenberg is a military analyst. His "Dogs of War" column, analyzing developments in the private security and military sector, appears every Friday.)

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