Your Taxpayer Dollar$ at Work: Final Iraq Audit Report Edition

The “final” report on Iraq reconstruction was released recently, and I have seen little media attention to the astonishing level of waste, incompetence, and outright theft that the report highlights.

How much money is unaccounted for? According to the report, nobody knows. After years of trying to account for the billions we poured into the rabbit hole of Iraq, the government can only say that billions were wasted, but not how much.

Some on the highlights from the report:

…"billions of American taxpayer dollars at risk of waste and misappropriation"...

..."The precise amount lost to fraud and waste can never be known," the report said….

The auditors found huge problems accounting for the larger sums and complex projects, but it was also the smaller sums that also added up to hundreds of millions of waste and fraud:

…"Given the vicissitudes of the reconstruction effort — which was dogged from the start by persistent violence, shifting goals, constantly changing contracting practices and undermined by a lack of unity of effort — a complete accounting of all reconstruction expenditures is impossible to achieve," the report concluded…

Although the Office of the Inspector General (OIG) has spent more than $200 million tracking the reconstruction effort, and producing numerous reports, some accountability has been realized. The OIG investigations resulted in 87 indictments, 71 convictions and $176 million in fines and other penalties.

Among those held accountable are civilians, military personnel, and contractors accused of kickbacks, bribery, bid rigging, fraud, embezzlement and outright theft of government property and funds.

Nonetheless, these actions are just a drop in the bucket trying to account for the outright criminal behavior and complete lack of governance and oversight of taxpayer funds.

One of the major overlying issues was the lack of trained, competent contracting personnel to oversee the mission. In some cases, invoices were reviewed months after they had been paid due to the lack of contracting officers.

The OIG highlighted a case in which the State Department had only one contracting officer in Iraq to validate more than $2.5 billion in spending. No contracting office representative, no help. Further, lack of any invoice review whatsoever was the modus operandi. It is easier to not ask questions, and sign the checks, as opposed to the improper micro-management of contracts on the other spectrum.

Further, the IG goes on to say:

…"As a result, invoices were not properly reviewed, and the $2.5 billion in U.S. funds were vulnerable to fraud and waste,"

"We found this lack of control to be especially disturbing since earlier reviews of the DynCorp contract had found similar weaknesses."

The report did highlight that some funds were recovered ($60 million), but how much was wasted? Again, nobody knows.

It is easy to sit behind a keyboard and Monday-morning quarterback these failures, given the level of violence and danger, shifting sands of priorities and goals, and difficulties in securing the country. However, these failures did not occur overnight.

Endemic waste, fraud, and corruption were rampant, and the lack of trained acquisition personnel was known, or should have been known. Where are the government leaders who allowed this to happen?

The OIG report is silent. Silence seems to be acceptance.

Service Contract Inventories: Missed Opportunities For Transparency

Last month, the Government Accountability Office (GAO) released a new report in April 2012 detailing a continuing issue at the Department of Defense (DoD) that is not foreign across government; the lack of transparency when it come to service contracts.

The GAO report looks at two issues inherent in the struggles at DoD; lack of clear oversight on service contracts and the continuing issue of contractors performing inherently governmental functions.

One issue identified was the reliance on the Federal Procurement Data System-Next Generation (FPDS-NG) for the inventory for most defense components other than the Army.

DOD acknowledged a number of factors that limited the utility, accuracy, and completeness of the inventory data. For example, FPDS-NG does not identify more than one type of service purchased for each contract action, provide the number of contractor full-time equivalent personnel, or identify the requiring activity. As before, the Army used its Contractor Manpower Reporting Application to compile its fiscal year 2010 inventory. This system collects data reported by contractors on services performed at the contract line item level, including information on labor hours and the function and mission performed. DOD officials noted that the Army’s current process complies with legislative requirements.

What the GAO recommends is for DoD to create processes and adopt similar systems such as the Army, since the other services use their own methodologies, processes, or simply do not follow the requirements.

This problem is endemic across government, and I do not understand why GAO is recommending separate processes for DoD. This is a “big data” problem, as the requirements for transparency are not possible given the current data collection processes and systems anywhere.

The overall issue is one of workforce, and the need to analyze spending on the biggest expenditure, which is on service contracts. Without comprehensive, accurate data, how are decisions to be made on insourcing, continuity of service contracts for mission performance, and ensuring contractors are not performing inherently governmental functions.

The guidance from the Office of Federal Procurement Policy is more than adequate, and agencies are in full swing providing the information. However, the jury is still out on the utility of the information, let alone the accuracy. Further, the information on FTE counts is still mostly a work in progress, which seems to be a vital gap in this data collection exercise.

Most beneficial across government is not to create new systems, but to simply retool FPDS-NG to ensure that the data being collected is complete to meet the overall reporting requirements with a simple data field. Current contract management systems should automate this process, such that the complete data sets are collected from the contract file, which should include contract management data.

Combined with this relatively simple and inexpensive fix (let me take a deep breath as I write that), the Office of Management and Budget should provide more clear guidance on how to use the inventories in decision making regarding manpower, and the appropriate use of contractors.

This is a solid opportunity to consolidate a vital data issue that is common across government, but the GAO recommends that DoD and federal agencies should continue the fragmented approach to collecting this data.

This is one area where the “uniqueness” argument across organizational boundaries does not hold water. Transparency and the ability to make workforce decisions with complete and accurate data is a federal government issue, not just one for the Defense Department.

Contract Management not Sexy, but Necessary

A recent Defense Department inspector general report found that contracting officers and their representatives (COR) at the U.S. Army Medical Research Acquisition Activity need to step up their game when it comes to improving contract performance and acquisition outcomes.

The report shins a light on a reality hitting many procurement offices, where the intense workload, combined with a lack of enough skilled and trained 1102s, is creating an environment where quality is being sacrificed at the expense of performance.

Just taking a look at the topic headers is an eye-opening example of a procurement organization that is in need of serious improvements:

• Sole-Source Awards Not Adequately Justified
• Price Reasonableness Not Adequately Determined
• Quality Assurance Surveillance Plans Not Prepared
• Inadequate Quality Assurance Surveillance Plans
• Contracting Officer’s Representative Acceptance of Deliverables Not Documented
• Language in Contracting Officer’s Representative Letters Too General
• Invoice Review Needs Improvement

The recommendations are also somewhat disturbing, in that they basically outline what needs to happen to realize improvements and work to improve this organization. Mainly, the recommendations state that contracting officers and CORs need to do their jobs, since some of the responses the IGs received where common in this environment: lack of time, resources, and a focus on production.

Simple tools, such as checklists, can be created to ensure that ALL the requirements of a contract action are achieved. This may seem simplistic, but following the checklists, and having them executed through automated contract systems and solutions, will ensure that the proper steps have been conducted. Basically, contract actions can not bee executed until these issues have been eliminated by ensuring the proper steps an actions by procurement personnel have been followed and verified. This is ultimately creating an environment of accountability, and hopefully improved quality.

I don't have time is not a legitimate excuse, not under any circumstance. However, leadership needs to understand the needs of the organization, provide the proper level of oversight, resources, and training to the procurement staff, and ensure that things are being done properly. 

Best practices are plentiful, and they need to be acted on.

Performance Outcomes: Judgment Day is Coming

So Fiscal Year (FY) 2011 is now in the books, and the new government FY 2012 begins. I don't think anyone can argue that this end of FY was one of the most challenging end of FYs in recent memory, with budgetary issues and Continuing Resolutions adding to a sense of doom in industry, if not outright confusion and desperation in most government procurement shops. Many of the acquisition divisions at federal agencies did not have a clear sense of what the budgets and fiscal environment for the rest of the year would be, thanks to a dysfunctional political system and a Congress willing to sellout stable government operations in the name of political sensationalism and outright partisanship at the expense of the nation.

From what I have seen over the last few months and winding up this FY, coupled with the bleak fiscal horizon in the next few years, government operations are in serious trouble. Frankly, if you think government operations are bad now, you ain't seen nothing yet. The Government Accountability Office, Office of Management and Budget, and other watchdog groups and organizations can expect their workload to increase to the point of trying to move a mountain with a shovel.

One only need taking a look at what is happening with alarming regularity, and will no doubt continue as the government continues to find ways to save money and reduce the amount of contractor support and contracted dollars; low price is the only price.

Granted low price, despite illusions of "best value" has always been around, things seem to be spiraling out of control. I have seen with alarming frequency contracts be awarded to low-priced bids, at prices that are ridiculously low compared to both other bidders and government estimates. Sometimes 20% or more below. So much for price not being the most important factor. Price reasonableness and realism? Looking at the bottom-line figure is not enough. Sometimes performance costs money, and should actually save money in the long-run. That is a concept seemingly lost on procurement officials right now.

Although "buying in" is a prohibited practice according to the Federal Acquisition Regulation, it has now become a sanctioned activity. Expect to see many more fixed priced contracts, despite the requirement, in addition to modification after modification. Performance will be an afterthought, as multipliers in industry (the final amount that a contractor bills the government for a dollar of labor, often referred to as “loaded” cost) get lower and lower. Anything less than 2.4 is considered inexpensive; with 2.4 – 2.7 the norm and anything greater than 2.7 considered expensive. I have heard of firms lowering their multipliers to 1.9 to be competitive. Competitive? How can you be profitable?

Size is the answer, as only very large firms can absorb that type of contract strategy. Make it up in volume, and the modification circus that poorly written and "cheap" contracts is also another outcome. This strategy simply decreases competition, especially for small businesses, and will result in even further poor contract performance. Just what we need. Forget about even developing proper requirements, as that is now a cost driver.

So how to you staff these contracts if you are "lucky" enough to win a contract? Answer: on the cheap. Hire know-nothing consultants straight out of college or inexperienced staff to support the requirement, pay them rock-bottom salaries with little if any benefits, and put them through the sausage grinder for a couple of years. Repeat the process. How will government get any decent performance? The current environment and abilities of the acquisition workforce are not conducive for governance and oversight as it is. Now you're going to expect them to provide even more?

Industry: How are you planning to succeed in this environment? What adjustments are you making? What experiences have you had in this "new" low-cost paradigm?

Government: What are you doing to ensure performance with such a low-price? What price reasonableness and realism checks are being done? What technical acceptability checks are being done?

Your Taxpayer Dollar$ at Work: Volume II

Last year I started a series to highlight outrageous cases of waste, fraud, and abuse by the federal government. In the current environment of complete political theatre and legislative dysfunction leading to budget crises, debt ceilings, and continuous resolutions, I can probably write a book with so much material. However, I wanted to focus on a truly outrageous case of fraud and waste that is shocking, even when we succumb to the worst stereotypical fears of our government.

According to a recent inspector general report at the Department of Veterans Affairs (VA), $540 million dollars annually worth of business is being awarded to companies that fail to meet eligibility requirements for veteran owned small businesses or service-disabled veteran owned small businesses. The report stated these results were extrapolated from audit results, which assumes $540 million, and could add up to $2.5 billion over the next 5 years. The report further estimates that factoring out ineligible businesses, the VA only awarded 12 percent of its procurement dollars to actual veteran owned small businesses (VOSBs) and 10 percent to service disabled veteran owned businesses (SDVOSBs), as opposed to the 23 and 20 percent it said it did during fiscal 2010. Half a billion in estimated fraud? Give me a break.

The main culprit, not surprisingly, is the lack of accountability, according to testimony before the House Veterans Affairs' subcommittee on oversight and investigations by Belinda Finn, assistant inspector general for audits and evaluations at the VA OIG.

…Ineligible businesses received awards because VA's office of small and disadvantaged business utilization was not thoroughly reviewing business documentation and performing site visits to verify the veteran-owned status, said Finn. The OIG also found that contracting officers did not always check VA's enterprise veterans database, business size classification codes, or properly assess subcontracting and partnering agreements…

Once again the lack of resources and strain on the acquisition workforce was blamed, although this is a false argument. There is absolutely no excuse for not verifying eligibility of a firm for these types of set-aside programs, not to mention the subcontracting and partnering agreements. Where is the protection of the public’s trust?

Also of note is that only 30% of service disabled veteran contracts are with the VA, so this is a widespread issue. Obviously unethical firms and individuals are taking advantage of the lack of oversight, but there is no reason why VOSBs and SDVOSBs should be self-certifications. These programs should have formal certification processes similar to 8(a).

Although the VA has verification programs in place through its Center for Veteran Enterprise, it is woefully inadequate and cumbersome. You need your DD-214, adjudication letter from the VA (for SDVOSB), and corporate documentation showing 51% ownership and control. That is it. The current document requests are intrusive, and privacy is a risk. Explain to me how requiring 14 voided checks proves I am eligible?

Taxpayers are at risk in this program, and I hope the government, especially at the VA, understand the depths of this massive fraud being per perpetrated on taxpayers and veterans.

Let Sellers Talk to Buyers Early in Procurement

This piece was originally published for Bloomberg Government on 03/11/2011.

The Obama White House announced plans in December to transform the way federal information technology projects are managed and executed. Its 25-point implementation instructions to federal agencies include many good ideas, from the adoption of light technologies and shared services to aligning the budget and acquisition process with the technology cycle.

The 24th and 25th points go to something deeper -- and actually transformative -- in the way government IT projects operate: increased engagement with private industry. They suggest new opportunities to develop relationships among industry experts and key procurement personnel that are currently closed or difficult to create.

This is the gaping hole in the government procurement process. For understandable but increasingly obsolescent reasons, government acquisition officials create artificial barriers and prevent themselves from working as closely as they could with industry experts in the earliest stages of the acquisition process.

While the Federal Acquisition Regulation encourages such exchanges, the perception of improper influence and unethical behavior, coupled with the risk-adverse nature of government in general, often prevents meaningful communications from occurring.

The results are poor requirements development and the unintended consequences of waste, fraud and abuse that are rampant in many programs across the government.

Identify Needs

The requirements phase identifies the needs and scope of a project and thus becomes its blueprint. By having more meaningful discussion with stakeholders, specifically industry stakeholders, proper requirements and can be developed, increasing the opportunities for governance and oversight.

When both government and contractors can focus on execution of common goals and objectives, based on designed metrics developed early in the program, they lessen the chances of costly change orders and foster better outcomes.

Regretfully, in the current system, stakeholders in industry are an afterthought, and industry experts have little bearing on helping program managers and acquisition officers develop sound requirements to ensure goals are realistic and achievable.

Best practices on how industry develops requirements are what the government desperately needs. By focusing on the earlier phases of an acquisition, which is to focus as far left as possible in the needs-identification phase of an agency’s acquisition lifecycle, user requirements are matched with customer needs and available resources, and products can be designed within cost, schedule and performance goals.

Social Media Tools

So how can legitimate ethics concerns be accommodated while still making room for the obvious benefits of government-industry communications?

Here's where social media technology now provides new tools to facilitate communication and maintain proper arms-length relationships.

Recently, the government launched several online wiki tools to explore collaboration between government and industry in an open-dialogue platform. Thousands of visitors participated from all 50 states. They included Fortune 500 company experts interacting in an environment where they suggested best practices and cutting-edge solutions to identified needs.

The results were an encouraging start of the future of these exchanges. The feedback was "both more comprehensive and more actionable than what could have been obtained through traditional methods," wrote Vivek Kundra, the government's chief information officer and author of the 25-point plan.

In fact, crowd sourcing and stakeholder analysis are commonly used by commercial entities in these knowledge-based environments. Many companies use a structured product-development process to ensure that a high level of knowledge exists about a product at key junctures during its development, similar to milestones or phased entry-points used by the Defense Department.

It's this knowledge-based process that helps enable decision makers to be reasonably confident about product quality, reliability and timeliness.

Through these interactive platforms, key decision makers, such as program managers, can develop the information they need, particularly in the period before issuing a request for proposal, or RFP, when they need more effective ways to perform market research.

The current acquisition process for market research uses a request for information, or RFI. Just like the stages following an RFP, and RFI requires a significant investment in business development dollars for a prospective bidder to build the relationships necessary to be on the government buyer’s radar.

As both industry and government realize the value of early interaction, both business development expenditures and procurement lead times can be drastically reduced. The new interactive platform will allow government to get more focused and value-added input from industry, improve awareness of cutting-edge technologies and allow for increased opportunities for innovation, competition and flexibility in contract development.

The platform, being built by the General Services Administration, is scheduled for beta-testing and initial operating capability by Memorial Day. I hope that industry contractors continue to keep track of this development, if only to increase their own performance along with that of government’s.

Past Performance Accountability Should Not be Punishment

The Commission on Wartime Contracting in Iraq and Afghanistan met recently to raise concerns that large defense contractors are getting a pass on fraud and poor performance. However, some on the Commission seem to think that solutions should not be bilateral, or even going so far as to seemingly having a "Save me from myself" mentality.

The focus of the testimony was the effectiveness of the government’s current methods for assessing oversight and surveillance of the current $200 billion that has been spent on contracts and grants since 2002 to support military, reconstruction, and other U.S. operations in Iraq and Afghanistan. According to the Commission, the United States has wasted tens of billions of dollars of contract dollars in Iraq and Afghanistan, but of course the blame game is always the first line of defense for failing to get at the root cause of not only the failures of oversight in Iraq and Afghanistan, but in how the government evaluates performance overall.

Laying the blame squarely on industry, Commissioner Charles Tiefer called five large companies that do business with the Defense, among them KBR, the "Flagrant Five" for continuing to receive work despite claims of fraud, misconduct and poor performance.

.…"I'm beginning to get the picture that bad performance could be good business," Tiefer said at a commission hearing Monday…

Also joining in on bashing industry was The Project on Government Oversight's general counsel Scott Amey.

…Companies involved in misconduct are a "necessary evil" required to get work done. "This might be the contracting version of ‘too big to fail,'" he said…

Amey also went on to state that the Air Force issued multiple waivers in order to continue business with firms accused of wrongdoing, in addition to the Interagency Suspension and Debarment Committee not issuing the annual reports required to document federal agencies' suspension and debarment activities.

These activities bring up an interesting issue about why the government is not doing its job in providing the proper level of oversight, surveillance, and past performance reporting. Lack of time? Not wanting to correct a problem and "slow down" the process? Really?

Most of the testimony focused around the report issued a week before about the vital need for contingency contracting reform, with a particular focus on debarments and suspensions as seemingly a punitive weapon and silver bullet against contractors. Although the report discusses the failures of government, clearly malfeasance also seemed to be the root cause of waste.

...."For many years the government has abdicated its contracting responsibilities -- too often using contractors as the default mechanism, driven by considerations other than whether they provide the best solution, and without consideration for the resources needed to manage them," the commission concluded. "That is how contractors have come to account for fully half the United States presence in contingency operations."...

Not all the voices on the panels were one-sided. Dan Gordon, Administrator for the Office of Federal Procurement Policy, discussed in his testimony the facts about debarments and suspension.

...The regular evaluation of contractor performance and the use of those evaluations in decisions for future awards motivate contractors to perform well, and help ensure that we avoid doing repeat business with firms that don’t perform well. Suspending or debarring entities can help to protect taxpayers from the abuse of contractors who have been convicted of fraud or other criminal or civil offenses indicating a lack of business honesty or integrity, or who otherwise behave unethically, or engage in poor performance of government-funded work. The system works, however, only if we are willing and able to suspend or debar entities when we shouldn’t be doing business with them, and if all agencies check to be sure they are not awarding a contract to an entity that has been suspended or debarred...

Past performance data collection is the actual root cause of many of these issues. Past performance completion rates are not only low, but the reports are not being entered into the Past Performance Information Retrieval System (PPIRS) database. So accountability needs to be the first step in this reform analysis, by ensuring the information about wrong doing is available to government. However, the understanding of what and how suspensions and debarments are supposed to be used is currently a major issue that seemingly is lost on the Commission.

... Among 32 recommendations made in a report released last week, commissioners want agencies to:

• Give a written rationale for not pursuing a proposed suspension or debarment.

• Increase use of suspensions and debarments.

• Revise regulations to lower procedural barriers to contingency suspensions and debarments...

These activities are not supposed to be punitive, but that is exactly what the commission seems to be implying. The report itself lists almost double the number of activities targeted to punishment, vice creating solutions to prevent the fraud, waste, and abuse from happening in the first place.

I am not implying that some companies have not acted in the best interest of the taxpayer. Fraud, waste, and abuse has definitely occurred, and regretfully has been a part of war profiteering that goes back to the founding of the nation. However, advocating the use of debarments and suspensions as a punitive weapon will not solve the problem. I hope the Commission realizes that treating the symptoms and not the disease is simply a recipe for failure, and will be further adding to the waste it has been formed to help prevent.

Communications Are Vital to Improving Acquisitions

Two opposing views have emerged this week regarding communications with industry. According to Sen McCaskill (D-MO), chairwoman of the Senate Homeland Security and Governmental Affairs Committee's Contracting Oversight Subcommittee, the current relationship has apparently clouded the judgment of contracting officials to the point where objectivity has been compromised in contract award decisions.

During a recent hearing on how federal agencies use contract audits to detect and prevent waste, fraud, and abuse in government contracts, McCaskill conceded the relationship is too close, and expressed a bias toward auditors.

“Contracting officers have an ongoing relationship with the contractors that sometimes impact their ability to see everything clearly as it relates to some of the behavior of the contractors,” said McCaskill.

As much as I respect and admire Sen. McCaskill's efforts to ferret out waste, fraud, and abuse in federal contracting, I could not disagree more with her premise. Firstly, Contracting Officers and industry should have a strategic partnership, as both parties are trying to execute the same goals and objectives. Of course government and industry have different means to achieve these goals, but it is through understanding each other and open communication that both parties will be successful. Communication between industry and government continues to be challenging, and advancing the agenda of building barriers and confrontation that Sen. McCaskill seems to be advocating will further exacerbate this issue.

Further, it is Contracting Officers that are given the authority to negotiate and enter into contracts on behalf of the government, not auditors. Financial analysts and Contracting Officers need to work together, in conjunction with industry, to get the best deal for the taxpayer and ensure all parties are setup for success. Adversarial relationships are neither objective nor productive, they just create friction and missed opportunities for successful outcomes.

Opposing this view has been Dan Gordon, administrator of the Office of Federal Procurement Policy (OFPP). Gordon launched a "myth-busting" campaign to help government officials understand that the fear of talking to industry is overblown, and that talking to industry is vital to increasing competition and to ensuring best value for the taxpayer.

“We need to be independent, but more communication can increase our independence,” he said. “In fact, more communication can overcome the tie between the contracting staff and a particular vendor.”

By opening discussions, agency officials can learn what other companies can offer them, Gordon said. However, agency officials feel like they don’t know enough about other companies due to limited interaction with industry. Too often, agencies have one contractor they have dealt with, and they will continue to work with that company, even preferring it over others.

“More communication, especially with competing vendors, may be the best oxygen to remedy that situation,” Gordon said.

Market research is prescribed in Federal Acquisition Regulation (FAR) Part 10. Yet, the environment is such that the Administrator of OFPP is on a myth-busting campaign that following the FAR is a good thing and needed?

There is no question that improved communications are essential to ensure requirements are sound, that contract types are appropriate, and that metrics are effective. I have written about this topic, and I hope Gordon’s myth-busting campaign will help melt the ice of the current environment. However, much more is needed. Mainly, acquisition officials need to have guidance and oversight to ensure that the acquisition workforce is not beaten over the head while trying to communicate with industry. Officials must give the acquisition workforce the confidence and ability to perform these crucial pre-acquisition tasks without fear of retribution. It is this risk-averse environment that is one of the main issues with communication barriers, so focusing on this impediment should help see improvements in the quality and quantity of communications with industry.

The National Contract Management Association recently issued an open letter on this subject entitled An Open Letter Addressing the Need for Cooperation between Government and Industry. It is call to action to understand that government and industry both share a common goal, and that is serving the public.

Once this common goal is understood, then progress can be made in developing new channels to communicate, and see improvements in how the government buys and realize the cost-savings that are desperately needed in federal acquisition. I hope that Sen. McCaskill realizes that she is actually making a difficult situation harder, and that she and others needed to collaborate with Mr. Gordon and industry to achieve this common goal.

Acquisition Reforms Will Focus on Oversight

As the lame duck session of the 111^th Congress comes to a close, some in the acquisition community are left to wonder what lays ahead for the acquisition reform initiatives of the Obama Administration. According to many experts, the shift in political power may not make much difference for the IT and procurement communities.

I am not sure that is the case, according to plans that Rep. Darrell Issa (R-Calif.) has stated as incoming chairman of the House Oversight and Government Reform Committee. Issa has said that the Telework Enhancement Act (H.R. 1722) lacks many of the safeguards necessary to prevent fraud, waste, and abuse. Specifically, Issa claimed employees can take advantage of the lack of direct manager oversight, does not require agencies to prove how much money they’re saving, and does not create jobs.

Although Rep. Issa continues to draft his agenda for the new Congress, I am not going to hold my breath that this process will not be politicized, when Rep. Issa makes statements such as “I want seven hearings a week, times 40 weeks.” Rep. Issa also stated he looks forward to working with the Office of Management and Budget (OMB) and industry on ways to address wasteful spending from failed government IT programs. I think OMB is really making some important strides on this front, so we’ll either see either a real oversight agenda moving forward or more political witch-hunts as in the past.

On the Senate side, Sen. Claire McCaskill (D-Mo.) remains chairwoman of the Homeland Security and Governmental Affairs Committee’s Contracting Oversight Subcommittee. Sen. McCaskill will continue her focus on interagency contracts and reforms to the 8(a) set aside programs for Alaska Native Corporations. I hope these initiatives continue, as Sen. McCaskill has much unfinished work to do regarding abuses in these programs, so I hope that Rep. Issa seizes the opportunity to really craft bipartisan and meaningful relationships with other members on ferreting out waste, fraud, and abuse.

Another important issue is the effect of the midterm elections on open government, transparency, accountability, and the overall Gov 2.0 movement. I believe that significant movement will come on this issue, as politicians move from political use of Web 2.0 for campaigns, to executing Gov 2.0 initiatives to execute transparency initiatives and hold government accountable. Again, I hope that this renewed focus on using Gov 2.0 tools to advance Open Government and allow for more citizen engagement. However, it is hard to fathom considering this hyper partisan political environment where Congress scores so low in providing these services themselves.

I would like to see the latter happen. But I have reason to lack hope. Tim Evans, a program analyst who works on Web analytics and customer service measurement at the Social Security Administration, posted a story by Larry Freed of The Digital Citizen about a recent survey in which ForeSee Results found “a clear and proven relationship between transparency, satisfaction and trust,” and “higher transparency leads to higher citizen satisfaction with government, which in turn leads to higher trust.”

Unfortunately, “when it comes to transparency, citizen satisfaction, trust, accountability, perceived goodwill, competence and integrity, American citizens give Congress the worst scores across the board,” Freed wrote.

Not the most encouraging situation, but let’s give Rep. Issa the benefit of the doubt that he will wield his gavel responsibility to protect the taxpayers and not a political party and its agenda. Change we can believe in? We have heard that before.

Portraying Government Procurement: Is It The Media Or The Culture?

Recent testimony by Steve Schooner, co-director of The George Washington University's Government Procurement Law Program, and others before the House Armed Services Committee's Defense Acquisition Reform Panel, helped paint the picture and made valid points about how the media portrays the federal acquisition environment and the current state it is in.

"The pervasive anti-contractor rhetoric emanating from the media, not-for-profit organizations, the legislature, the executive branch (including, among others, the Justice Department, Defense Contract Audit Agency and the inspectors general) colors public perceptions of contractors and the acquisition profession," said Mr. Schooner. "There is more truth to black humor in Jacques Gansler's popular new moniker for the current environment -- the 'global war on contractors.' "

However, I believe this is only half the story. I believe the media is simply reporting on what is becoming a culture of “Insource at All Costs,” with little regard to quality of the acquisition workforce, and thus creating the term that Mr. Gansler referenced.

The current environment and culture of the acquisition workforce that new hires enter into is not a pretty picture. For years the workforce has been neglected, with little attention to building skills or future capabilities. Furthermore, the environment has been one of risk aversion, exacerbated with little need for innovation or developing the tools necessary to be true business advisors and partners for programs. The result is that the acquisition workforce has stagnated on many fronts, and new hires seem to be lost in developing their own skills.

The average professional in the current workforce is very experienced, but it is becoming more and more difficult for them to train and mentor new hires, which tend to be younger and less experienced. I do not believe this is a result of generational friction, which may the case in some instances, but more of a function of the lack of resources. Many simply do not have the time, or leadership does not see it as a priority. This very fact was further discussed by Steve Kelman in a recent blog post on this topic.

The federal procurement process is a maze of bureaucracy and mind-numbing regulations that takes years of experience and know-how on navigating these difficult waters. But as Mr. Kelman pointed out, new hires seem to be given very little focused training to the point that the new hires he was talking to had received no guidance on learning anything about the products or services they were buying. The overall feedback he received was alarming, as was the lack of innovation and underutilization of these talented people who want to serve. Chairman Rep. Rob Andrews, D-N.J, said it best:

…"If you make the proper investment in experience and skill, if you motivate and reward experienced and skilled people and empower them to do the things that need to be done, they can make improvements that can turn the whole system around."

Ultimately these issues need to be solved by changing the culture and environment, and driven by the supervisors, senior contracting officials, and acquisition leaders at the agencies to create the 21st century acquisition workforce. Further, empowering the next generation is ultimately necessary to succeed, and not be treated as a necessary-evil but a strategic imperative by leadership.

However, the guidance from the Office and Management and Budget seems to be more distressing, as I see further evidence of the counter product attitude that seems to be emanating from the various institutions Mr. Schooner identified in his testimony. Leadership is vitality needed to help solve these daunting issues, as industry and government need to be working more collaboratively, expanding ways they communicate, and fining solutions together. However, it seems that the pervasive attitude is for the pendulum to drastically swing in the government’s direction, vice finding the right balance to perform the vital missions of government to ensure the best outcomes for cost, schedule, and performance.

Progress in Afghanistan Contract Oversight; Measured Optimism

I recently wrote a piece for contract management improvements in reconstruction and nation-building initiatives. Updates were provided by Senator Claire McCaskill, (D-Mo), who is completing an overseas trip, including Afghanistan, and stated she was encouraged by what she saw in Afghanistan.

During the trip, auditors told McCaskill oversight agencies are working more collaboratively, ensuring contracts are properly scoped and are not duplicative.

According to Sen. McCaskill, she was encouraged by “indications” that training is being conducted for auditors, contract managers and others with procurement oversight. What those indications entail is not specified. As Sen. McCaskill is a former auditor, I fear those “indications” she was privy too may seem reasonable to her, but may not be adequate for the type of responsibilities and workload these contract personnel will be undertaking.

McCaskill also focused the contracting oversight portion of her trip on the Commander's Emergency Response Program (CERP) funds – which are a type of micro-lending program for small scale projects. She went on to say that most projects under CERP were in the $20,000 range, but now about half the programs cost $500,000 or more. This is a troubling development, as it seems that larger contracts are being awarded under CERP, presumably as a work around to bypass procurement processes in the name of speed. The Senator stated that she will further investigate CERP funds and how they are being used when she returns to Washington, and I hope she lives up to that commitment. CERP is also referred to as “Walking Around Money,” and I believe waste, fraud, and abuse seem to be inevitable with this program as I do not know anybody that walks around with $500,000 in their wallets.

Unfortunately, little progress has been made with monitoring of U.S. Agency for International Development contracts for reconstruction, humanitarian and other development work in Afghanistan, according to the Senator:

…"There's an awful lot of oversight being done there by e-mail because the work is done outside the wire," McCaskill said. "The work is being done in places government officials cannot easily get to, to oversee them."…

Oversight done via email? I’m all for using technology to increase procurement efficiency, but that seems to be taking things a bit too far.

Oversight of Contracting Needs To Be Overhauled In Rebuilding Efforts

As the devastation unfolds in the aftermath of the earthquake in Haiti, it is clear that rebuilding the country will be one of the greatest nation-building exercises ever undertaken. To that end, federal agencies have started turning to contractors to support the missions of recovery and relief, and ultimately, reconstruction.

What is troubling is the lack of oversight and accountability whenever disaster strikes, both domestically and abroad. The United States is certainly no stranger to devastation, most notably with Hurricanes Katrina and Rita, and the floods that devastated the Midwest last year. However, processes and systems seem to still lack the capability to track the contract funding and ensure that performance is being managed and monitored. The Department of Defense has predictably been spending the most in Haiti, on items such as barges, ships, and relief supplies. However, there never seems to be little efforts to account for the spending. It is always a focus after the fact, but even then contract data is either incorrect or non-existent. It is this lack of accountability that seems to be unfolding in Haiti, and the Department of State and the U.S. Agency for International Development (USAID), who will no doubt be heavily involved in any reconstruction mission, have had their contract management failures in the spotlight with the their reconstruction efforts in Iraq and Afghanistan.

The Special Inspector General for Iraq Reconstruction recently issued a scathing report taking State to task on it contracting and oversight practices.

…The Department of State (DoS) Bureau of International Narcotics and Law Enforcement Affairs (INL) contract with DynCorp International includes task orders to support the Department of Defense’s (DoD) Iraqi police training program...

…INL continues to exhibit weak oversight of the DynCorp task orders for support of the Iraqi police training program. INL lacks sufficient resources and controls to adequately manage the task orders with DynCorp. As a result, over $2.5 billion in U.S. funds are vulnerable to waste and fraud…

Apparently in 2005, the Inspector General told State that INL's staffing was inadequate to keep pace with its workload, and oversight of the contracts for Iraq needed to be strengthened. Again the calls went out in 2007, with the same response that INL “planned” to increase staffing and improve contract management. Those “plans” seem to still be in the works, as by November 2009, there were three contract monitors in Iraq for the police training work; a $2.5 billion contract. State had responded with plans to boost that figure to 11. Although I am not a fan of talking about numbers, but rather favor skills and capability, it seems that fraud, waste, and abuse will continue to be difficult to manage with such few personnel.

The situation in Afghanistan is no different. Recent congressional hearings focused on Defense and the State departments' ability to handle a rise of contractors in Afghanistan.

…According to the Congressional Research Service, if the ratio of contractors to U.S. military personnel remains roughly the same, the deployment of 30,000 more troops to Afghanistan would require 26,000 to 56,000 additional contractors. The number of contractors in Afghanistan already is growing; from June to September, there was a 40 percent increase in Defense contractors alone...

…Auditors found "much of [the] waste [in Iraq] stemmed from inadequate contracting management, including contractors overseeing contractors, poor coordination of interagency efforts, continual personnel turnover and the challenges of contracting in a war zone," Senator Claire McCaskill (D-Mo) said…

USAID responded with their mitigation plan for Afghanistan by hiring more contracting officer technical representatives (COTR) and regional inspectors general, improve COTR training for quality-control and assurance, and boost the number and quality of site visits, according to Charles North, senior deputy director of the USAID Afghanistan-Pakistan Task Force. The report also stated that the agency also is modifying contracts to include more stringent reporting measures and providing additional guidance for COTRs in ensuring compliance. This would certainly be a step in the right direction, but it is the accountability to execute that ultimately will lead to results and improvements in ensuring the mission is being achieved and that taxpayer funds are not being wasted.

These efforts by USAID needs to be established by all contracting offices as a matter of course and contracting strategies before execution and not after the fact, as it is seems to be unfolding in Haiti. Only by establishing procedures and processes upfront can the reconstruction mission be done effectively and efficiently. Further, lessons learned need to be incorporated and accountability needs to be brought into the process in hopes of putting Inspector General reports and recommendations to good use as tools for improvement and not triggers for congressional hearings and investigations.

Insourcing Debate Is About Strategy, Not Numbers

As the federal government continues to find ways to move contracted work back in-house, it must overcome some major obstacles. One area that has been significantly neglected is effective human capital planning. As a result, the government’s lack of in-house resources has increased its reliance on contractors to help it perform vital functions. This issue became acute with the federal acquisition workforce, but only recently garnered substantial attention. Although human capital plans are being implemented as part of the Office of Management and Budget’s (OMB) guidance on contract savings initiatives, the real challenge remains understanding the roles and responsibilities of current contract activities and how a blended workforce will be managed in order to continue performing the acquisition mission.

Strategic human capital plans can only be effective and executed properly by identifying an organization’s skills and capabilities, and recognizing how that current skill set performs the mission. Contractor visibility and transparency remain areas of concern for the government because of poor information management, lack of oversight and accountability, and most importantly, poor leadership. A renewed focus by the government on contract management is critical to alleviating these continuing problems. In short, the government must have a better grasp of who the agency contractors are and what activities they are performing.

On the other side, industry must also engage by providing information crucial to human capital planning so they too can be more effective. Contractors have more accurate and current data on their workers because of their necessity to maximize profitability and utilization. Obtaining this data from industry will help the government make informed decisions and strike a much needed balance. Only through this partnership and trust can workforce plans be created that are of any value.

Furthermore, vast information to help make these decisions already exists, but because of the lack of contract oversight and administration, in addition to poor overall program management skills by government, this data is either incorrect or incomplete. This creates a vicious cycle because inadequate staffing contributes to contract management issues, which in turn fuels reliance on contractors. Additionally, lack of staffing and bad practices have led to poor quality assurance principles, making it difficult to determine whether contractors are meeting their contract requirements. The end result is that skills, capabilities, and outcomes are obfuscated because of shortcomings in following guidelines for contract execution.

These quandaries must be solved to help shape the balanced workforce and human capital management plans, as contractors will continue to perform vital functions such as the acquisition mission. The government simply does not have the manpower to perform all necessary tasks, and thus contractors help fill a critical gap. However, it is this gap that needs to be the central focus of any debate on insourcing and managing a blended workforce.

A comprehensive review must also be conducted of current contracted services, what services and skills are being purchased, the size and complexity of the contracts, and the efficiency and costs associated with these contracts. This will be an exercise in information management, and the power of collaboration tools, or Gov 2.0, can undoubtedly play an important and essential role.

Solving these problems requires strong leadership, and a demand for accountability and transparency, from both the government and the private sector. Only by working together can both succeed, and provide the tools necessary to create the foundation for effective government management.

Execution is the Key to Improving the Federal Acquisition Process

As 2009 is now in the books, the year ended with plans submitted to the Office of Management and Budget (OMB) by the 24 federal agencies that account for 98% of contract actions. As reported by NextGov, these agencies have identified $19 billion in acquisition-related savings, also announced by OMB in their report on the plans.

These plans will not be made public until spring 2010, when an online dashboard focusing on the savings is launched, in addition to “a combination of strategies,” according to Jeff Zients, federal chief performance officer and OMB's deputy director for management. These plans will apparently focus on program terminations and reductions, spending caps, and more competition with procurement actions.

I for one look forward to the plans, because the lack of information and the “identified savings” seem to be cherry-picked actions with no real long-term impact, focus on real process improvements and business case analyses, contract restructuring, or ways to improve human capital strategic planning. One good area of the plans are a renewed commitment to strategic sourcing and leveraging the buying power of the government. However, details are non-existent, in addition to a strategy that relies on increased use of agency-wide and government-wide contract vehicles, which also need a further look as abundant waste is indicative in the use of these contract vehicles as standardization is needed. However, the inherent culture of “uniqueness” across government will deter this needed analysis on these contract vehicles, and create further waste with any strategic-sourcing initiatives since buying power will not be leveraged to the maximum extent possible.

Encouraging examples were given in the report, such as the Department of Homeland Security (DHS) standardizing desktop operating systems across the department, allowing DHS to award a single contract for all necessary IT products and projecting cost savings of $87.5 million. Also included are examples of savings through in-house engineering expertise for a manufacturing or design flaw, and a new online reverse auction service implemented by Energy. Although these are steps in the right direction, I hope the plans move forward in a more strategic way, or these initiatives will be the equivalent of placing band-aids on wounds that require a tourniquet.

The report continues by discussing how agencies are also seeking to find the right balance of contractors and federal employees. The reporting agencies have apparently developed pilot programs to determine the appropriate number of contractors and federal workers and will report on progress under these programs by May 2010.  According to OMB, these pilots will be assessed to find ways to  “insource” or add resources for contract management. A better use of resources would to create strategic human capital plans now that include a balanced workforce based on skills and capability needs. I would like to think that adding resources for contract management would be a known fact, so it makes better sense to forgo pilots and execute. The time for further pilots and studies has passed, we need action now. Although each reporting agency is required to submit a human capital plan for acquisition by March 31, 2010, I hope the balanced workforce is part of the plan. We shall see.

Finally, the third area of the report is to address one of the vital administration priorities; a reduction of high-risk and noncompetitively awarded contracts. In discussing these contracts, Zients said:

…"carry the greatest potential risk of overspending taxpayer resources." He said the "explosion" of these contracts -- the use of which increased by 129 percent between 2002 and 2008 -- is a concern. Agencies are working to meet the president's goal of reducing money spent through such contracts by 10 percent, and will report twice a year on their progress…

This is an area of concern, as the administration and OMB want to restrict the tools available to the workforce, and add insult to injury by focusing on symptoms and not the disease. The acquisition workforce is understaffed and undertrained, and do not have skills, capabilities, or tools to perform. One of the resulting factors is an explosion in sole source procurement actions, as contracting personnel forgo competition in an effort to increase contract velocity in a desperate and increasingly futile attempt to keep up with the workload. Creating an environment where only fixed-priced contracts should be used, regardless of the requirement or appropriateness of another contract type, has already been attempted and will only lead to more waste, fraud, and abuse. The reality is that more needs to be done with less, and increased communications and collaboration through Gov 2.0 tools is a promising endeavor that should bear fruit (See Better Buy Project). These tools will not solve everything certainly, but will go a long way to improving the acquisition process, and help standardize and improve methods to increase competition, lower costs, and change outcomes for the better.   

This year-end report from OMB continued a disturbing trend on their part in 2009 through a lack of specificity, guidance, and leadership instead of creating an environment of risk-taking, accountability, and a renewed focus on oversight. I hope that 2010 is a year for execution, but apparently we’ll have to wait until March 2010 before we get a roadmap on how we can move the process forward.

With New Fiscal Year Comes New OMB Guidance

As Fiscal Year (FY) 2010 is now underway, The Office of Management and Budget (OMB) will be ramping up its guidance on improving acquisition outcomes, which includes a broad section of areas to include competition, contract types, workforce, outsourcing, and acquisition practices. I will be covering theses issues in more depth as they are rolled out, but wanted to set the table for the upcoming guidance by reviewing past recommendations and improvement actions. The first of two steps of pointed guidance for contracting cost savings came from the OMB memo late summer, outlining existing contracts and acquisition practices. I will therefore review these two subjects, as the guidance from OMB in their memo left many in industry flat for the lack of details, and many in Government with the lack of direction that they desperately need and were hoping to obtain from leadership. My take is that the memo created a scenario of asking for short-term objectives with long-term guidance, creating somewhat of a mixed message structure and raising more questions than were answered.

In the July memo, OMB has asked agencies for a 7% contract spending reduction in FY 2010 and 2011, with the overall goal of $40 billion a year in net savings through better acquisition management and contract practices. Immediately, in my mind anyway, the questions raised and not addressed are how did the Administration come up with the figures? What analysis was done? Where is the transparency? Also, what investments in resources are needed to realize these savings? The logical solution is to make agencies accountable for reshaping their acquisition processes and refining their strategic plans to meet these objectives. However, many organizations find themselves in the unenviable position of either not having a plan, having poorly written plans, or more importantly, not having the resources and commitments from leadership to perform this important function. Most acquisition offices that I know and have spoken with would love nothing more to perform these important strategic activities, but the reality is that they are severely stretched thin, in both personnel and resources, with procurement velocity the only activity that can and must occur. Acquisition has to first become a strategic imperative at an organization; to be folded into the performance goals that are also being rolled out by OMB. First thing is first, and I think this dichotomy will cause more problems than it solves.

Since procurement as a strategic activity is a difficult if not foreign concept in the current acquisition process, many of the recommendations made by OMB will fall on deaf ears unless strong, active leadership executes on these initiatives. Let’s take a look at the recommendations as they were made by OMB one-by-one:

(1) Ending contracts that do not meet program needs or projects that are no longer needed

Does this also mean that Congress will stop funding pet-projects in their home districts; the ignominious and omnipresent earmarks or “pork barrel” projects? Doubtful, since Congress is under enormous pressure from an army of government contractor lobbyists and re-election always on the horizon. Further, my hope is that agencies do not take the “termination” guidance as a mandate, since the victims of those activities will more than likely be easy targets with little inclination and resources to fight back; small businesses. A thorough analysis of contract activities, return on investment, termination costs, and other similar variables will need to be analyzed through a prism of contract, budgeting, and program management; critical skills that are in short supply across Government.

(2) Building the skills of the acquisition workforce and recruiting new talent so as to negotiate more favorably priced contracts and manage contract costs more effectively

This is a long-term goal, and the most important one as the common denominator breakdown in the acquisition process; the lack of sufficiently, trained personnel. Government wide initiatives are already under way to shore up numbers, but I have yet to see coherent, strategic plans to build capability and skills, a much more important objective than numbers alone. I do know the Office of Federal Procurement Policy (OFPP) is working with agencies to develop these plans, but also believe the lack of an Administrator is hurting the efforts, with significant weaknesses in communicating these strategies and helping shape the policies and guidance that will help to alleviate workforce personnel issues. I hope that the nomination of Daniel Gordon, who has served as acting general counsel at the Government Accountability Office since 2006, gets expedited, as he is desperately needed. Nonetheless, I do not believe workforce issues will be a short-term activity to help realize the cost savings objectives, as the hiring process is too slow, and the training too substantial and lengthy for new acquisition personnel to have immediate impacts on the process. Changing that paradigm is another topic altogether, and does merit further discussion.

(3) Developing more strategic acquisition approaches to leverage buying power and achieve best value for the taxpayer

No question leveraging buying power is an important activity that needs to be properly planned and executed to see real savings. I believe this initiative is one the most value-added activities that needs to be a primary focus across Government to meet cost savings goals outlined by the OMB in the next 24 months. The issue here is a coherent strategic communication strategy, across multiple agencies and across multiple organizations so that the left hand knows what the right hand is buying, but also knows how they are buying, and why. The simple answer here is that working groups across Government need to continue working through these issues, conduct a thorough spend analyses, and eliminate redundancy to save on contract costs by increasing efficiency, cutting wasteful and redundant contract vehicles, and only purchasing from trusted vendors that offer the desired discounts and have a track record of meeting cost, schedule, and performance goals. Elimination of waste at buying centers saves on contract and administration costs, and could be done relativity quickly without the need of legislation. This is simply a good business practice, and is being conducted by commercial firms as a primary strategic imperative to save money and lower costs.

(4) Increasing the use of technology to improve contract management

I do not think there is an argument or question here about how technological innovations has drastically improved productivity and helped lower costs. However, the issue here is what technologies need investment as they pertain to reducing contract management costs. I believe the answer lies in the potential of Web 2.0 (or Gov 2.0). The power of Web 2.0 strategies is the improved exchange of information, which is critical and at the heart of improving transparency, quality, and accountability, all themes shared by the Obama Administration. Further the use of Web 2.0 technology can help improve communication and knowledge transfer between stakeholders, having a dual effect of increasing quality, and lowering costs. These tools can be very helpful during pre-contract award, where Government and industry can communicate on needs, build solid requirements, properly plan and budget, and create realistic cost, schedule, and performance objectives with corresponding metrics for successful administration and oversight. The impacts on long-term performance and lowering contract costs could be impressive and significant, but also timely.

(5) Reengineering ineffective business processes and practices to reduce cost to spend

Another important concept is improving the processes of acquisition, which I also see as long-term goal requiring short-term planning to see real change and reduce costs. One the best methodologies to accomplish this goal is Lean Six Sigma, where improvements are done in a structured, project format. This methodology follows a prescribed mandate and structure, which would be the reduction in contracting costs, and ensures that important issues are analyzed using a sound and consistent methodology. The beauty of Lean Six Sigma is that this methodology can avoid the pitfalls common to efforts that address symptoms of a bad process, rather than causes, of problems and enforce the use of data in decision making.

What is further important about this methodology is the consistency of how the processes are analyzed; which helps effectiveness of the process improvement project teams and allows for the sharing of project results across the organization. Using this methodology, along with Web 2.0 tools for knowledge sharing and information flow, also helps apply a disciplined approach to configuration management and feedback mechanisms to ensure that project team recommendations are implemented and tracked. Again this initiative is dead in the water without active commitment from leadership, which requires hands-on participation and creating a culture that actively supports process improvement. Further, leaders need to be change agents, and help and drive the message that change is good and can help complete the mission in a more effective, less costly manner.

The amount of work that needs to be done to create a world-class procurement process in Government is a long-term objective, but has been also put into a short-term bucket with cost savings targets that will be taken as a mandate by agencies. As we move into FY 2010, I look forward to continuing to see leadership in action, and change for the better.

When the Lack of Oversight on Government Contracts Has Dire Consequences

One of the most blatant examples of contractors running amok with little to no oversight has come to light recently as a result of an investigation and subsequent report by the Project on Government Oversight (POGO). This report was created based on information from current and former employees of ArmorGroup North America Inc., hired to protect the U.S. embassy in Afghanistan. The report and subsequent information provided by POGO is something that one would fine by cross pollinating a Stephen King novel with Lord of the Flies, where security contractors were forced to participate in a variety of lewd activities, hazing, and other lascivious acts or risk losing their jobs. Although the behavior by ArmorGroup personnel is inexcusable and leaves ones bereft for words, the real issue is how this happened, and how it could have been prevented.

According to the POGO report, concerns about the ArmorGroup contract have been addressed by the State Department, which administers the contract, for over two years. These concerns repeatedly addressed a pattern of security violations, a pervasive breakdown in the chain of command, and discipline and morale issues.

…In July 2007, State issued a "cure notice," advising the firm of 14 specific deficiencies that were endangering the performance of the contract, including failure to provide an adequate number of guards, relief personnel and armored vehicles. Officials sent another cure notice in April 2008. But two months later, State decided to extend the contract for an additional year...

…This environment has resulted in chronic turnover by U.S./ex-pat guards. According to the State Department, "nearly 90% of the incumbent US/Expats left within the first six months of contract performance…

...Problems with the contract, particularly concerning staffing, persisted and in September 2008 the department threatened to terminate it. But in July, State renewed the contract through 2010, with an option to extend it through 2012. The contract is worth $187 million annually…

The report further examines the utter breakdown in State oversight, with toothless warning and notifications that allowed Wackenhut Services, Inc., the parent company of ArmorGroup, to continue its abysmal performance with no real consequences. Over the last two years, this contract has seen possible misrepresentation by Wackenhut executives to Congress through sworn testimony refuted by POGO, security and communications breakdowns, and creating an environment that fuels resentment and volatility that has far reaching effects on our mission and foreign perception in a culturally sensitive part of the world.

Other questions brought to bear by the report is the inherently governmental function of providing security in a combat zone by contractors, which carries the risks of cost-cutting and profit motive, personnel issues, and rules of engagement and accountability by contractors. These types of questions still remain unanswered, although they should have been answered by State years ago through investigation and proper contract management of security contracts in Iraq (e.g. Blackwater).

Although it is expected that State will finally terminate the ArmorGroup contract, the issue remains on how these oversight gaps will be filled in the future. Although State continues to take the issue very seriously in light of the POGO report and will continue to improve its oversight of State security contract overseas, the bigger question is the inherently governmental nature of providing security in a combat zone. As POGO recommends, the language in the 2009 National Defense Authorization Act should be clarified and strengthened to prohibit reliance on private security contractors for inherently governmental functions, and to include protection of the diplomatic mission in a combat zone as being inherently governmental. I do not believe this function is something that should be outsourced, as the most professional and dedicated security force in the world should go back to performing this function; the U.S. Marines.

This also brings into question appropriate disciplinary action against Wackenhut and ArmorGroup, as the nature and severity of their actions warrant disbarment and possible criminal proceedings against those employees who violated the law in the “performance” of their duties against other employees and local nationals. Only when the Government takes performance and oversight seriously, and holds contractors responsible and accountable for their actions, will this type of activity no longer take place. I do believe that the vast majority of contractors act in accordance with ethics rules and uphold high standards of integrity, but am troubled by the small percent that do not and corrupt the government contracting process with little or no accountability. Past performance has to be made a much stronger evaluation factor for future work, and should be the central focus of award guidelines in light of a renewed push for tracking past performance data. Nonetheless, strong contract administration and oversight are ultimately the key to ensure performance on contracts. If it were not for whistleblowers risking is some cases their safety, would we have known about the abuses at Abu Ghraib prison in Iraq or ArmorGroup in Afghanistan?