The Invisible Foreign Subcontractor
David Isenberg at Huffington Post August 16, 2012
Last year I wrote a report for the Project on Government Oversight about and subsequently testified to Congress, regarding a Kuwaiti-based KBR subcontractor which had exploited hundreds of third-country nationals (TCN) coming from various South Asian countries.
Some of the subsequent press coverage criticized KBR, but that missed the point. Sure, in several respect KBR could have done much better, but at least it held special inspections documenting atrocious living conditions and threatened to cut off awards to the subcontractor.
But the real story is how little information the U.S. government has over the operations of foreign subcontractors. As I noted in my congressional testimony:
Subcontracting is among the most challenging parts of the U.S. government’s widespread outsourcing of war-related tasks. It works like this: A government agency – most likely the Defense Department, State Department, or U.S. Agency for International Development – will award work to a “prime” contractor. That prime contractor, usually a large American company like Kellogg, Brown and Root (KBR) or DynCorp International, will often subcontract some or even a majority of its work to other companies, including foreign-owned firms. Those subcontractors sometimes then turn around and subcontract part of the work, and so on.…
But in footing the bill for all this work by a network of companies, the U.S. government often doesn’t know who it is ultimately paying. And that can lead to fraud, shoddy work, or even taxpayer funds ending up in the hands of enemy fighters.
For more detail the article “Limitations Of the Contingency Contracting Framework: Finding Effective Ways To Police Foreign Subcontractors In Iraq And Afghanistan” by Carissa N. Tyler in the Winter 2012 issue of the Public Contract Law Journal provides some valuable detail on the scope of this problem. For example, “Subcontractors are responsible for approximately seventy percent of the work of prime contractors; however, the Government has extremely limited visibility into these subcontractors’ operations. U.S. taxpayer dollars are at risk because U.S. agencies cannot directly police foreign subcontractors. ”
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