Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

Auditing Mission Essential Personnel

CorpWatch Pratap Chatterjee

In September 2007 the U.S. Intelligence and Security Command (INSCOM) awarded Mission Essential Personnel (MEP) a five-year-contract worth up to $414 million to provide 1,691 translators in Afghanistan. MEP was a start-up company created by three men, including Chad Monnin, a U.S. Army Special Forces reservist who was injured in a parachute accident. (Procurement rules give preference to companies owned by injured veterans, even if they have no prior experience.)

When the Obama administration decided to expand the war in Afghanistan last year, MEP quickly hit the ceiling of what it could bill. On May 10, INSCOM gave MEP a $679 million extension without bothering to put it up for competitive bid. MEP will also get a share of the Intelligence Support Services Omnibus III contract, a five-year contract, with a ceiling of $492 million, announced on August 10, 2010.

The only two other contractors that have held multi-billion dollar contracts to supply translators to soldiers and diplomats in the Global War on Terror — L-3/Titan and Global Linguist Services — have both been investigated for alleged overcharging, suggesting that this type of work falls in the high risk category of government spending.

Yet DCAA failed to conduct a full business systems audit for MEP. Concerned about DCAA’s failure, Christopher Shays, one of the co-chairs of the Commission on Wartime Contracting told MEP CEO Chris Taylor: “You don’t have to compete for it, and you, whatever your costs are, you get something plus, and you haven’t had any audits.” Shays assured MEP that he was not suggesting that the company had done anything wrong, re-iterating that the commission considered MEP a “a great American success story.”

“We currently have DCAA auditors on our property in Columbus, Ohio, working through any number of audit issues. But we welcome it,” Taylor told the commission. “We are current on our 2008 and 2009 incurred-cost submissions,” he added, referring to the invoices that the company sends INSCOM for payment.

DCAA Director Patrick Fitzgerald told the hearing that the problem was that the contract grew quicker than expected. “Are we behind the curve? Yes. We should have been in there quicker,” he told commissioners. “Our experience has shown that when contractors grow that fast, the procedures, processes, and systems have trouble keeping up with that growth, increases the risk to the U.S. government.”

When asked to respond the charges leveled at DCAA at the hearing, a Pentagon spokesperson emailed the following statement to CorpWatch: “We agreed with the commission that additional resources were required at MEP and have worked to ensure that additional DCAA assets are directed to MEP.” The spokesperson estimated that it will complete “much of the critical audit work needed to assess MEP’s business systems within the next six months.”

See Also

Inside the No Bid Contract for Iraqi Interpreters

Meet the men who help US and NATO troops communicate their aims in Afghanistan — and in doing so risk their lives.

Lost in Limbo: Injured Afghan Translators Struggle to Survive

August 30, 2010 Posted by | Afghanistan, Civilian Contractors, Contractor Casualties, Defense Base Act, Iraq, Mission Essential Personnel, Private Military Contractors | , , | 2 Comments

Billion Dollar Audit Missed by Pentagon Watchdog

Corp Watch Pratap Chatterjee

Military auditors failed to complete an audit of the business systems of an Ohio-based contractor even though it had billed for $1 billion worth of work over the last four years, largely done in Afghanistan. Immediately after this fact came to light at a public hearing of the bi-partisan Commission on Wartime Contracting, the Defense Contract Audit Agency (DCAA) scrambled to dispatch an extra ten staff to catch up on the job.

Mission Essential Personnel (MEP), which Corpwatch profiled here, supplies 6,000 translators to the U.S. military, mostly in Afghanistan. The company’s costs have not been singled out as questionable or unsupported, but the failure of the government agency to oversee taxpayer money is an indicator of widespread problems and staff shortages at this key military agency.

“How does the government know we’re getting our money’s worth?” asked Christopher Shays, co-chair of the commission and a former member of Congress from Connecticut, at the July 26 hearing.

“This was a major miss on DCAA’s part,” Michael Thibault, the other co-chair and a former deputy director of DCAA, told CorpWatch.

DCAA has oversight over half a trillion dollars of taxpayer money every year. It is supposed to constitute the “first line of defense” against corruption when the Pentagon contracts anything from bunker-buster-bombs from Lockheed Martin, to rockets from Boeing, or when it subcontracts military support operations as it did when it paid Halliburton subsidiary, KBR, to hire Sri Lankans to clean toilets in Iraq.

Despite past success – including exposing Halliburton’s inability to account for billions of dollars early in the occupation of Iraq – DCAA management has drawn fire in the last two years for giving military contractors a clean bill of health and ignoring serious problems in corporate financial systems spotted by lower ranked staff.

Whistleblowers have charged that instead of actively pursuing waste, fraud, and abuse, the top ranks of DCAA were obsessed with signing off on as many audits as possible in the shortest period of time. DCAA management has also been accused of harassing and intimidating staff who have spoken out. The DCAA estimates that the savings it has made for the taxpayer plummeted from $51 for each dollar spent on staff and overhead in 1984 to just $5 today.

Muzzling A Pentagon Watchdog

The first shot across DCAA’s bow was fired by the Government Accountability Office (GAO), the investigative arm of the U.S. Congress. In a July 2008 report that provoked alarm among politicians, the GAO gave DCAA a failing grade for not complying with government standards on 14 major audits.

“This auditing agency has been exposed as being fundamentally corrupt in the way they issue audits,” Democratic Senator Claire McCaskill, a former Missouri state auditor, told her fellow senators in Congress at the time.

The agency’s lapses also sparked internal criticism and multiple internal upheavals as angry staffers battled management – notably in a public forum via the website of Government Executive magazine.

Then in September 2009 both the GOA and the Pentagon’s inspector general issued critical reports, and the Pentagon, after conducting confidential interviews with 68 DCAA staff, confirmed some allegations of staff harassment.

DCAA History

Founded in 1965 to provide the U.S. Air Force, Army, Navy, and Ordnance Department with uniform oversight of contractors was first headquartered in the now closed Alexandria, Virginia Cameron Station, a cold windowless building fitted with rows of steel gray desks.

Even in the days before computers and modern accounting techniques, its auditors were able to catch corrupt contractors and save millions. To do their jobs, the staff sometimes had to battle their own and Pentagon management who were reluctant to criticize the big contractors.

DCAA expanded quickly. By 1966, it had 3,662 staffers around the country with oversight over $21.5 billion. As the Vietnam War ramped up, the DCAA’s “Flying Squad” would fly Huey helicopters to forward bases in the jungle to check up on work done by contractors.

By the end of the 1980s DCAA had more than 6,000 staff and today, with headquarters in Fort Belvoir, Virginia, it has some 300 offices and sub-offices around the world. The agency’s staff still get on helicopters — now Blackhawks and Chinooks — in Afghanistan, Iraq, and Kuwait to visit forward bases and inspect contractor’s books. Although DCAA primarily serves the U.S. military, it also conducts audits for other agencies including the Department of Energy and the National Aeronautics and Space Administration (NASA).

In the last 45 years, DCAA’s oversight of contract dollars has expanded more than four-fold (adjusted for inflation) to $501 billion in proposed or claimed contractor costs that required 30,352 audits in 2008.

Not surprisingly the agency staff has struggled to keep up with demand, and as far back as the 1980s, it had a six to seven year backlog to complete audits. This lag had a major impact on payments to military contractors, which were typically paid just 85 percent of costs on delivery of services, with the remaining 15 percent paid out several years later — only if the auditors were satisfied.    Please read the full article here

August 30, 2010 Posted by | Afghanistan, Civilian Contractors, Contractor Oversight, Mission Essential Personnel | , , , , , | Leave a comment

DFA: 2,000 Filipino workers in Iraq may continue, but deployment still banned

By US News Agency / Asian

Some 2,000 Filipino workers currently in U.S. military bases and facilities in Iraq could stay in that war-torn country until their contracts expire and if their safety and eventual repatriation are guaranteed by their employers.

But the Philippines’ current total ban against the deployment of Filipino workers to Iraq remains.

This “high-level decision” on how supposedly banned Filipino workers in Iraq are to be handled was reached by a governmental Inter-agency Task Force in Manila, following observations by Special Envoy to the Middle East Roy Cimatu.

The decision had been forwarded to the concerned U.S. authorities, through the Philippine embassies in Washington and Baghdad, the Department of Foreign Affairs (DFA) said on Thursday.

Cimatu was in and out of Iraq in the past weeks, against the backdrop of the first-phase withdrawal of U.S. troops from Iraq by August 29 next week.

Following this policy of the administration of President Barack Obama, American job contractors have been directed to take stock of their workplaces, including their employment of Filipinos and Nepalese nationals who are banned by their respective countries from being in Iraq.

Philippine passports are stamped “Not Valid for Travel to Iraq” because of the high security risk there as the U.S. engages in anti-terrorism operations.

A July 20 memorandum of the U.S. Central Contracting Command (CENTCOM) in Iraq had given work contractors until August 9 for the ‘prompt repatriation’ of their Filipino workers out of Iraq, citing the latter’s presence as contrary to the laws of the U.S., Iraq and the Philippines.

Heeding Cimatu’s assessment, the Task Force decided that instead of repatriating the workers, albeit against their will, they were allowed to stay with guarantees from employers who were just too willing to retain them.

DFA said the decision could ‘be considered compliant’ with the memorandum signed by Col. Richard Nolan, senior contracting officer in Iraq of CENTCOM.

“Upon the approval of the high-level inter-agency committee mandated to assess the security situation of and ensure the safety and welfare of Filipino workers in Iraq, Filipino workers in U.S. military facilities may continue working there until their contracts expire,” DFA said.

“It’s a win-win situation for Filipinos who preferred to continue despite the risks and to their employer-contractors who saw a dire need for them,” according to a DFA source.

“The decision has the effect of ‘legitimating’ their stay, if only for a short while, despite the deployment ban,” another DFA source noted.

Given that scenario, Cimatu’s mission had been quite difficult, the source said. Add to this the workers’ hesitance to leave Iraq because of the good pay and limited job opportunities in the Philippines, they are willing to face the risk, the source added.

Cimatu could not be contacted, but it is reasonable to deduce that he figured out the 2,000 after meetings in Iraq with contractors, among others.

Sources said that about 10,000 Filipinos were discovered to have been left behind in Iraq by their previous employers, known as ‘jumpers’, at various contractor-controlled camps throughout Iraq.

But with only about 2,000 workers ‘legitimated’ by the Task Force, it is not clear from DFA what happened to the rest.

DFA continued: “According to the task force, Filipino workers currently employed by the U.S. government or their subcontractors inside U.S. military bases and facilities will be allowed to continue working in Iraq on the condition that their safety is assured and there will be guaranteed repatriation to the Philippines at the end of their engagement.”

Aside from DFA, other agencies in the Task Force are the Department of Labor and Employment, the Overseas Workers Welfare Administration and the Philippine Overseas Employment Administration, and the Office of the Executive Secretary. Original Story here

August 30, 2010 Posted by | Civilian Contractors, Iraq, Legal Jurisdictions, Safety and Security Issues | , , , | Leave a comment