Overseas Civilian Contractors

News and issues relating to Civilian Contractors working Overseas

The Invisible Foreign Subcontractor

David Isenberg at Huffington Post  August 16, 2012

See also Davids blog Institute of Strategic Satire

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. ”

Please read the entire article here

August 16, 2012 Posted by | Civilian Contractors, Contractor Corruption, Contractor Oversight | , , , , , , , | Leave a comment

GAO Finds Pentagon Still Can’t Keep Track of Its Contractors

By NEIL GORDON at POGO  April 10, 2012

The Government Accountability Office (GAO) has released the second of three annual reviews of Department of Defense (DoD) service contract inventories. As you know, POGO has repeatedly called for the government to improve the quality of these annual inventories, which are crucial for determining the true size and cost-effectiveness of the federal service contractor workforce and whether contractors are performing inherently governmental functions.

According to the GAO, DoD spent $204 billion on service contracts in fiscal year 2010. DoD relies on contractors to perform a wide variety of services, including professional and management support, information technology, and weapon system and intelligence functions.

The GAO reported that DoD has made a number of changes to improve the utility of the FY 2010 inventory, such as centrally preparing contract data to provide greater consistency among DoD components and increasing the level of detail on the services provided. However, the GAO found a number of problems that continue to limit the utility, accuracy, and completeness of inventories. DoD, to its credit, is making progress, but it does not expect to fully meet statutory requirements until FY 2016.

In the meantime, the shortcomings in DoD’s systems for compiling and reviewing inventories leave contractors free to run amok. According to the GAO, Army and Air Force inventory reviews identified 1,935 and 91 instances, respectively, in which contractors were performing inherently governmental functions. These are functions which, by law, must be performed by federal government employees.

For example, the GAO found 26 instances of Army contractors performing the inherently governmental function of Systems Coordinator, a position that involves representing program managers at meetings, acting as a liaison with Congress, and writing background papers for military staff. In another example, the entire police force at U.S. Army Kwajalein Atoll in the Marshall Islands (pictured above) was made up of 47 contractors patrolling, issuing citations, making arrests, and investigating misdemeanors. (Check the Federal Acquisition Regulation (FAR) subpart listing examples of inherently governmental functions, and the first one you’ll see is “the direct conduct of criminal investigations.”)

Please see the original and read more here

April 11, 2012 Posted by | Civilian Contractors, Contingency Contracting, Contractor Oversight, Department of Defense, Government Contractor | , , , , , , , , | Leave a comment

Pentagon, FBI investigating Defense contractor for Iranian ties

Gov Exec  April 4, 2012

A new watchdog report finds that the FBI and the Pentagon are quietly investigating whether military contractor Kuwait and Gulf Link Transport Co. has illegal ties to Iran, despite assurances from the Defense Department that there is no indication the company’s business dealings ever violated U.S. law.

The report by the Project on Government Oversight finds that the contractor, known as KGL, continues to hold $1 billion worth of contracts with the U.S. military as the FBI and the Pentagon’s Defense Criminal Investigative Service probe allegations that it deals with Iranian shipping interests, ports, and front companies despite sanctions meant to derail Tehran’s nuclear ambitions. “No contractor to the U.S. military has ever been debarred for doing business with Iran, so KGL could emerge as a test case,” POGO’s Adam Zagorin writes.

The investigation is at least a year old, according to documents and interviews, and appears to remain active. POGO writes that federal agents at Dulles airport pulled aside a senior KGL executive trying to enter the country and questioned him for hours about the firm’s ties to Iran.

Ashton Carter, currently the Pentagon’s No. 2 official, wrote a letter to Sen. Mark Kirk, R-Ill., on July 15 saying that the U.S. found “no indication” KGL ever “violated U.S. law.” Kirk had provided internal company documents to the Pentagon that apparently indicated KGL had illegal ties to Iran and asked for an explanation. Sens. Claire McCaskill, D-Miss., Robert Menendez, D-N.J., Marco Rubio, R-Fla., and Tom Coburn, R-Okla. — as well as Rep. Brad Sherman, D-Calif., and former Rep. Ron Klein, D-Fla. — have all asked “pointed” questions and received similar assurances from Carter, according to POGO.

Please see the original and read more here

April 4, 2012 Posted by | Civilian Contractors, Contractor Oversight, Government Contractor, Iran, Pentagon | , , , , , , , , | Leave a comment

Pentagon Contractors are “Second to None” in Salary, AIA Study Shows

POGO Project on Government Oversight  March 8, 2012

Yesterday, the Aerospace Industries Association (AIA) launched another volley in its “Second to None” campaign to protect the more than $350 billion taxpayer-funded revenue stream flowing to contractors every year from the Pentagon.

AIA released a Deloitte study it commissioned titled “The Aerospace and Defense Industry in the U.S.: A financial and economic impact study,” which, similar to a previous “study” from AIA, is light on unbiased facts and heavy on fear-mongering.

From page one it is clear that the results of this study should not be used to predict, well, anything. But, don’t take my word for it, take Deloitte’s—“These results are not intended to be predictions of events or future outcomes,” says a disclaimer on the cover of the study. So, while it’s usually necessary to remind AIA that the Pentagon gives defense contractors more money than all of our men and women in uniform, and thus don’t deserve subsidies or corporate welfare while our troops get their benefits cut, or that military spending is one of the least effective means the government has to create jobs, we can instead focus on a remarkable statistic provided by Deloitte.

According to the study, the average salary for the aerospace and defense industry was $80,175. By way of comparison, that is more than $36,000 higher than the U.S. national average cited by Deloitte and more than $10,000 higher than the average wage amongst the U.S. military’s civilian workforce, whom these defense contractors often replace. According to the Office of Personnel and Management, the average salary at the Department of Defense (DoD) is $69,218, and the average salary in every branch of the military is lower than the average salary of these defense contractors.

The average salary of defense contractors is also far greater than the pay of the vast majority of uniformed military personnel. For instance, a Sergeant First Class in the Army (E-8 pay grade) with 20 years of service and a family of 4 receives just over $50,000 annually in basic pay. Even when other military benefits, like housing and tax perks, are accounted for the Sergeant First Class’s compensation is still below that of the average defense contractor. The same is true for many officers. For instance, a First Lieutenant (O-2 pay grade) with 20 years of service takes home just over $53,000 annually.

Fortunately, the DoD is become increasingly more reluctant to pay its contractors more than its soldiers. Just this week, General Martin Dempsey, Chairman of the Joint Chiefs of Staff, noted that contracted operational support for the military has grown from a ratio of six troops per contractor during the Revolutionary War to fewer than one troop per contractor in Afghanistan. And Dempsey said, “It can’t keep going that way.”

Dempsey’s concern for the military’s overreliance on contractors should be echoed by Secretary of Defense Leon Panetta and other Pentagon leaders to remind AIA that troops, not contractors, are second to none

Please see the original and read more here

March 8, 2012 Posted by | Civilian Contractors, Contractor Oversight, Department of Defense, Government Contractor, Pentagon | , , , , , , , | 1 Comment

More DoD Investigations of Allegations of U.S. Contractor-Fueled Human Trafficking

By NICK SCHWELLENBACH at POGO  January 26, 2012

It appears that Fiscal Year 2011 saw more Defense Department criminal investigations of alleged human trafficking by its contractor supply chain than in any one of the last five years, according to a Pentagon inspector general report publicly released today (it is dated January 17).

All three investigations involved or allegedly involved U.S. government contractors or subcontractors in Southwest Asia: Iraq, Kuwait and Afghanistan.

“While not criminal prosecutions, there have been some civil and administrative actions recently. Earlier this year, the Justice Department joined a whistleblower qui tam lawsuit that alleged that ArmorGroup North America had not reported trafficking-in-persons violations by its personnel as required by its contract. ArmorGroup North America, which had a contract to defend the U.S. Embassy in Kabul, settled the lawsuit for $7.5 million. ArmorGroup North America’s parent company said in a statement that the settlement was made “to avoid costly and disruptive litigation—and that there has been no finding or admission of liability.”

Please read the entire post here

January 26, 2012 Posted by | Afghanistan, Africa, ArmorGroup, Civilian Contractors, Contractor Oversight, Department of Defense, Human Trafficking, Legal Jurisdictions, State Department | , , , , , , , , , , , | Leave a comment

98 Percent of Former Military Officers Drop Out of Pentagon Program after Financial Disclosure

Project on Government Oversight  POGO November 9, 2011

Since Defense Secretary Robert Gates ordered the Pentagon to require “senior mentors” to file public financial disclosure documents, 98 percent of the retired senior officers have left the program, according to a Department of Defense Inspector General (DoD IG) report released on October 31.

The controversial “senior mentors” program refers to the Pentagon’s practice of hiring retired military officers, one to four stars in rank, as part-time government advisors. According to USA Today, in exchange for offering advice to former colleagues, these mentors made as much as $330 an hour—more than triple what they made as active officers.

On top of that, USA Today revealed that of 158 identified senior mentors, 80 percent had financial ties to defense contractors—and 29 were full-time executives of defense companies. As POGO’s former national security investigator Mandy Smithberger pointed out, this practice showed that “the revolving door between the Pentagon and the defense industry is alive and well…and raises many ethical questions that merit additional investigation by Congress and the Inspector General.”

After the Senate Armed Services Committee exerted pressure, the Pentagon ordered an overhaul of the program in April 2010. The resulting memorandum [which was revised again in November, 2010] included subjecting mentors to federal conflict of interest laws, such as preventing mentors from divulging non-public information to defense contractors, or taking action that has “a direct and predictable” effect on their private interests. It also required all members of the program to disclose their employers, earnings and stocks.

The resulting Inspector General audit aimed to determine whether DoD implemented and complied with the memorandum. It determined that of the 194 reported senior mentors in fiscal year 2010, 11 converted to the title of “highly qualified expert” (HQE) and the rest are no longer working in the senior mentor program.

Please read the entire article here

November 9, 2011 Posted by | Civilian Contractors, Contractor Oversight, Department of Defense, Government Contractor, Pentagon | , , , , , | 1 Comment

State Dept. IG Finds Waste and Mismanagement on Afghanistan Contract

By NEIL GORDON at POGO  Oct 12, 2011

The Commission on Wartime Contracting (CWC) may be history, but the need for a contingency operations watchdog of the CWC’s caliber will never go away. In fact, just as the CWC was closing up shop last week, the State Department Inspector General released a report finding problems on a $12 million contract in Afghanistan.

The State Department’s Bureau of International Narcotics and Law Enforcement Affairs (INL) awarded a contract to DynCorp International to provide operations and maintenance support services at Camp Falcon in Kabul, Afghanistan. Under the contract, DynCorp provides almost everything needed to sustain the camp, including food, laundry and medical services, pest control, electric power generation, sewage and sanitation, and security. While the Inspector General determined that, in general, DynCorp “adequately” operates and maintains the camp, the report found weaknesses in DynCorp’s performance of food, fuel operations, and static security guard services.

First, the report found that INL overpaid DynCorp as much as $940,000 for meals. Although DynCorp’s cost proposal to INL established a daily rate per person for meals, the subcontractor charged DynCorp per meal rather than per person. DynCorp, in turn, invoiced INL at the higher per meal rate. The overcharges were caused in part by INL’s two in-country contracting officers, who were “spread too thinly” to be able to adequately review and approve all purchases.

Second, the report found that DynCorp could not verify that Camp Falcon receives the correct amount of diesel fuel for its electric generators or determine how much fuel is used at the camp. DynCorp does not maintain records for the amount of fuel pumped in and consumed. Not only does this increase the risk to the government of overpayment and waste, not knowing the amount of fuel on hand could put camp operations at risk if generators unexpectedly run out of fuel. The report notes that DynCorp does not plan to change the current fuel delivery process.

Finally, while DynCorp’s static guard force has been generally effective in ensuring the safety of the camp’s approximately 1,000 residents, the report found that guards did not have the required English language proficiency and worked an excessive number of hours without a break. All of the guards are third-country nationals, yet DynCorp failed to verify their English proficiency. Although guards are supposed to work 6 days per week, the report found guards working 14 days in a row for as many as 24 consecutive pay periods. The report notes that static guard personnel continue to work this grueling schedule. It is for these reasons that POGO has long been concerned about the use of contractor security guards in war zones.

DynCorp, one of the three primary LOGCAP IV contractors in Afghanistan, is currently the 32nd largest contractor in POGO’s Federal Contractor Misconduct Database. It has 8 instances of misconduct (3 of which involve allegations of overcharging the government) and $19.5 million in penalties. In January, it was reported that DynCorp violated security procedures at Kandahar Airfield in Afghanistan by escorting undocumented foreign laborers onto the base. Around that time, POGO had obtained a DynCorp security incident report documenting that several third-country nationals had gained access to Kandahar Airfield through questionable circumstances. In April, DynCorp paid $7.7 million to settle a whistleblower lawsuit alleging it defrauded the government on a contract to provide civilian police training in Iraq

October 12, 2011 Posted by | Afghanistan, Civilian Contractors, DynCorp, Follow the Money, Government Contractor, Private Security Contractor, State Department | , , , , , , | Leave a comment

Kabul Attack Underlines Importance of Embassy Security

Despite all that has been done ArmorGroup remains on this contract and is advertising for more staff

By JAKE WIENS  POGO  September 14, 2011

Armed with rockets and machine guns, a group of militants yesterday launched a sophisticated attack on the U.S. Embassy in Kabul from a partially constructed building about half a mile away, reports the New York Times.

The attack comes just months after two separate attacks rocked Afghanistan’s capital. The first was a June attack on the famed Inter-Continental Hotel, which reportedly claimed the lives of at least 10 people. Following that attack, at least nine people were killed and dozens more were injured when Taliban militants, dressed as Afghan women, detonated car bombs at the British Council on Afghanistan’s Independence Day in late August.

Although no embassy personnel were harmed during today’s attack on the Embassy, the brazen midday assault, coupled with the previous attacks, is a reminder that security of the Embassy remains paramount.

Back in 2009, POGO wrote to Secretary of State Hillary Clinton to raise concerns about the State Department’s management of Armor Group North America (AGNA), the contractor responsible for guarding the Embassy in Kabul.

The letter garnered international attention largely because of the “Lord of the Flies” environment depicted in photographs and videos released by POGO. But lost in much of the coverage was the threat to the Embassy’s security posed by State’s ineffectual oversight of AGNA.

Among the security vulnerabilities documented by POGO in 2009:

• Chronic guard turnover which, according to POGO sources, may have been as “high as 100 percent annually”;

• Nearly two-thirds of the guard force could not “adequately speak English,” which raised concerns that the guards could not communicate effectively if under attack; and

• Guard shortages resulted in “14-hour-day work cycles extending for as many as eight weeks in a row”

A subsequent report by the State Department’s Office of Inspector General (OIG) verified and expanded upon many of POGO’s findings. The report, published in September 2010, found that “AGNA has been unable to maintain the number of guards or the quality level required by the contract.” The OIG also found that “To manage staffing shortfalls, AGNA hired and put on duty Nepalese guards without verifiable experience, training, or background investi¬gations, which violates its contract” and that AGNA “firearms instructors qualified guards who did not actually meet the minimum qualification score on the firing range.”

This July, AGNA paid $7.5 million to the U.S. government to settle a qui tam lawsuit by a former employee who alleged AGNA’s performance in 2007 and 2008 put the security of the U.S. Embassy at risk.

AGNA’s parent company said the settlement was made solely “to avoid costly and disruptive litigation—and that there has been no finding or admission of liability.” The parent company, WSI, also stated, “At all times, the Embassy was secure.”

In an attempt to replace AGNA, the State Department last September selected EOD Technology (EODT) to take over security of the Embassy. But shortly following that announcement, a report by the Senate Armed Service Committee (SASC) documented both EODT and AGNA’s use of warlords with possible ties to the Taliban to staff their respective guard forces. A couple months later, EODT’s offices were raided by federal agents in connection with a separate investigation into “potential export violations.”

Following news of that raid, POGO Executive Director Danielle Brian argued that security of the Embassy should be an inherently governmental function, carried out by government employees rather than contractors. “If there’s a better argument for making this mission an inherently governmental function, this situation is it,” she said. “We’ve got one discredited company to be replaced by another discredited company,” she added.

Following a delay, EODT was scheduled to take over from AGNA this May, a State Department spokesperson told Mother Jones magazine. But in response to a POGO query, an AGNA spokesperson confirmed that AGNA is still responsible for Embassy security and also that the Embassy was “part of the insurgent citywide attack in Kabul today.”

There is no indication, at this point, that inadequate security contributed to yesterday’s attack. But as the Commission on Wartime Contracting (CWC) recommended in its final report, the government should evaluate the risk of using private security contractors at each static-security site. And if it’s determined that the risk is too high, the security contractors should be phased out. Yesterday’s attack presents an unwelcome reminder that it may be time to reevaluate the security situation at the Embassy in Kabul

Please read the entire article at POGO here

September 14, 2011 Posted by | Afghanistan, ArmorGroup, Civilian Casualties, Contractor Oversight, Contracts Awarded, Government Contractor, Private Security Contractor, Safety and Security Issues, State Department, Wackenhut | , , , , , , | 1 Comment

Pentagon Contractor Employee Investigated for Human Trafficking, Fired… But No Prosecutions or Contract Terminations

By NICK SCHWELLENBACH at POGO

Yesterday, the State Department released its latest annual report on combating human trafficking. The report said that although one Department of Defense contractor employee was investigated and dismissed in the last year, there have been no prosecutions and no contract terminations:

Allegations against federal contractors engaged in commercial sex and labor exploitation continued to surface in the media. During the reporting period, allegations were investigated and one employee was dismissed by a DoD contractor. The Inspectors General at the Departments of State and Defense and USAID continued their audits of federal contracts to monitor vulnerability to human trafficking and issued public reports of their findings and reparations. USAID also created an entity dedicated to proactively tracking contractor compliance with the authority to suspend contracts and debar contracting firms, a positive step toward increasing enforcement in this area. No prosecutions occurred and no contracts were terminated.

Earlier this month, POGO published an investigation into a case of alleged labor trafficking by a DoD subcontractor in Iraq. In that instance, there were no prosecutions or contract terminations. Last year, I and Washington Post reporter Carol Leonnig wrote that there have been zero prosecutions or contract terminations ever since a tough-sounding “zero tolerance” policy that emphasized prosecutions went into place nearly a decade ago. Experts inside and outside the government told us there is little appetite and investigative resources to go after these crimes. “Zero prosecutions,” we quoted attorney Martina Vandenberg, a former Human Rights Watch investigator, “suggests zero effort to enforce the law.”

Nick Schwellenbach is POGO’s Director of Investigations.  Please see the original here

June 29, 2011 Posted by | Civilian Contractors, Department of Defense, State Department, USAID | , , , , , , | Leave a comment

Documents Reveal Details of Alleged Labor Trafficking by KBR Subcontractor

The Najlaa Episode Revisited

By DAVID ISENBERG and NICK SCHWELLENBACH at POGO

In December 2008, South Asian workers, two thousand miles or more from their homes, staged a protest on the outskirts of Baghdad. The reason: Up to 1,000 of them had been confined in a windowless warehouse and other dismal living quarters without money or work for as long as three months.

In a typical comment made by the laborers to news organizations at the time, Davidson Peters, a 42-year-old Sri Lankan man, told a McClatchy Newspapers reporter that “They promised us the moon and stars…While we are here, wives have left their husbands and children have been shut out of their schools” because money for their families back home had dried up.

The men came to Iraq lured by the promise of employment by Najlaa International Catering Services, a subcontractor performing work for Houston-based KBR, Inc. under the Army’s Logistics Civil Augmentation Program (LOGCAP) III contract.

Now, a cache of internal corporate and government documents obtained by POGO offer insight into this episode of alleged war zone human trafficking by companies working for the U.S.—and suggest that hardly anyone has been held accountable for what may be violations of U.S. law.

The subcontractor, Najlaa, appears to have suffered no repercussions for its role in luring hundreds of South Asian workers to Iraq with promises of lucrative jobs only to turn around and warehouse at least 1,000 of them in dismal living conditions without work—and pay—for several months. In fact, Najlaa continues to win government contracts.

Despite strongly worded “zero tolerance” policies against human trafficking, the U.S. has directly awarded contracts to Najlaa after the December 2008 protests, including one contract that lasts through 2012.

The Najlaa Incident: An Accountability Case Study

The freshly unearthed documents show that for several months, KBR employees expressed exasperation at Najlaa’s apparent abuse of the laborers and said the subcontractor was embarrassing KBR in front of its main client in Iraq: the U.S. military. But despite its own employees’ strongly worded communications to Najlaa, to this day, KBR continues to award subcontracts to the company.

The documents also suggest that Najlaa rehired former KBR employees who were terminated for what appear to be trafficking-in-persons violations. It is not clear what, if any, repercussions these employees faced besides their termination.

Additionally, the documents raise questions about government officials’ response in the wake of the 2008 protests by Najlaa employees. Although, at the time, the press reported that the U.S. government was investigating alleged trafficking by Najlaa, it has not led to any prosecution or termination of the subcontract. A Sri Lankan company that supplied laborers to Najlaa told POGO it complained about Najlaa’s abusive practices to both KBR and the U.S. government, but said that U.S. law enforcement agencies never followed up.

Please read this entire report here

June 14, 2011 Posted by | Civilian Contractors, KBR, Legal Jurisdictions | , , , , , , | Leave a comment

Close but no SIGAR

Commentary: Arnaud de Borchgrave

WASHINGTON, Jan. 14 (UPI) — After no less than 10 quarterly reports to Congress, 40 percent of $56 billion — $22.4 billion in U.S. taxpayer funds — allocated to civilian projects in Afghanistan cannot be accounted for by the Special Inspector General for Afghan Reconstruction.

The original amount for civilian aid is now being increased to $71 billion.

Corruption and outright theft are rampant in the projects SIGAR supposedly inspects but SIGAR’s top cop, retired U.S. Marine Maj. Gen. Arnold Fields, kept coming up empty handed as he labored to protect his 150-person organization (32 of them stationed in Afghanistan, most of whom don’t speak any local language).

SIGAR employs 50 auditors, many of them “double-dippers,” who collect both government pensions and six-figure salaries, but none of them ever conducted required forensic or contract audits. More than 100 cases of corruption — both U.S. contractors and Afghan subcontractors — were ignored. U.S. Government Accounting Office auditors look at programs but are not shown the uncompleted completion.

U.S. Sens. Tom Coburn, R-Okla., and Claire McCaskill, D-Mo., led a team of Senate investigators that spent two years looking into what became the SIGAR scandal.

Please read the entire commentary at UPI

January 14, 2011 Posted by | Afghanistan, Civilian Contractors, Contractor Corruption, Contractor Oversight, SIGAR | , , , , , | Leave a comment

New Bill Cracks Down on Foreign Bribery

Project on Government Oversight   Sept 17, 2010

This week, the House overwhelmingly passed the Overseas Contractor Reform Act (H.R. 5366). The bill, sponsored by Vermont Congressman Peter Welch, would propose debarment for companies and individuals who violate the Foreign Corrupt Practices Act (FCPA), which prohibits the payment of bribes to foreign officials.

If this legislation becomes law, it would make the FCPA, which is already highly despised by some in the business community, even more terrifying to federal contractors, as POGO learned yesterday at a legal conference on the FCPA sponsored by the International Peace Operations Association, a private security company trade association.

According to Welch’s legislation, the proposal for debarment would be issued within 30 days after a “final judgment” of a violation, which means when all appeals have been exhausted or the deadline to file an appeal has passed. In theory, this means that a contractor found guilty of violating the FCPA could continue receiving new contracts for many years while its case slowly makes its way through the lengthy appeals process. Furthermore, even when a final judgment is issued, the OCRA allows the head of a federal agency to waive the proposed debarment.

And how would officials in charge of debarment know when a final judgment has been issued so that they can act within that relatively brief 30-day time frame? Somehow, all suspension and debarment officers throughout the government would have to be quickly notified when final judgments in FCPA cases involving federal contractors and grantees have been issued.

Welch says his motivation for the bill came from reading this New York Times story from last November alleging that Xe Services, formerly known as Blackwater, had paid $1 million in bribes to Iraqi officials after the tragic incident in Baghdad’s Nisoor Square in September 2007, when Blackwater guards opened fire on Iraqi civilians. (Of course, since Xe has not yet been found guilty of a FCPA violation, let alone exhausted all of its appeals, the OCRA would allow Xe to continue bidding on and receiving new contracts.)

There have been several other big FCPA cases in recent years: the Oil-For-Food prosecutions of Chevron and Textron, the Nigeria bribery incident involving KBR and Halliburton, and BAE Systems’ and Daimler AG’s multi-million dollar settlements of foreign bribery allegations. Presumably, since all of the aforementioned cases have been resolved and none of those companies have filed appeals (as far as we know), the OCRA would have required the government to propose debarment for each of those companies—unless the government issued a waiver. In fact, the Daimler case, which was resolved through a deferred prosecution agreement under which the Department of Justice promised to “cooperate with” Daimler in suspension and debarment proceedings (see paragraph 21 on page 14 of the agreement), might have resulted in the granting of a waiver, which must be reported to Congress by the head of the agency within 30 days from the date of the waiver, along with an accompanying justification.

Lawyers who participated in yesterday’s International Peace Operations Associations conference pointed out various definitional problems in the OCRA. For example, one former federal prosecutor observed that the OCRA does not define what constitutes a “finding” of a violation. Would a deferred prosecution or non-prosecution agreement constitute a “finding”?

It’s not clear why we even need the OCRA. The Federal Acquisition Regulation (FAR) already makes bribery a debarrable offense. Other catch-all provisions in that section (a “criminal offense in connection with obtaining; attempting to obtain; or performing a public contract or subcontract,” a “commission of any other offense indicating a lack of business integrity or business honesty” and “any other cause of so serious or compelling a nature that it affects the present responsibility of the contractor or subcontractor”) could also apply. With its “final judgment” provision, the OCRA could hinder the government’s power to suspend or debar contractors under the FAR.

When it comes to holding contractors accountable, the problem isn’t that the government lacks the tools. The problem is the government is not effectively using the tools it already has. As Sen. Russell Feingold, D-Wis., recently noted, suspensions and debarments have been steadily decreasing over the last five years, even though incidents of contractor misconduct—he specifically mentioned violations of the FCPA as one example—are increasing.

September 20, 2010 Posted by | Civilian Contractors, Contractor Oversight | , , , , , | Leave a comment

Testimony of Danielle Brian before the Commission on Wartime Contracting in Iraq and Afghanistan Regarding Private Security Contractors

Testimony of Danielle Brian, Executive Director
Project On Government Oversight (POGO)

before the
Commission on Wartime Contracting in Iraq and Afghanistan
“Are Private Security Contractors Performing Inherently Governmental Functions?”

June 27, 2010 Posted by | Private Security Contractor, Wartime Contracting | , , , , | Leave a comment

Hearings Reveal Lapses in Private Security in War Zones

By Pratap Chatterjee*

WASHINGTON, Jun 21, 2010 (IPS) – Jerry Torres, CEO of Torres Advanced Enterprise Solutions, has a motto: “For Torres, failure is not an option.” A former member of the Green Berets, one of the elite U.S. Army Special Forces, he was awarded “Executive of the Year” at the seventh annual “Greater Washington Government Contractor Awards” in November 2009.

On Monday, Torres, whose company provides translators and armed security guards in Iraq, was invited to testify before the Commission on Wartime Contracting (CWC), a body created in early 2008 to investigate waste, fraud and abuse in military contracting services in Afghanistan and Iraq.

Torres was asked to testify about his failure to obtain the required clearances for “several hundred” Sierra Leonian armed security guards that he had dispatched to protect Forward Operating Base Shield, a U.S. military base in Baghdad, in January 2010.

Torres didn’t show up.

An empty chair at the witness table was placed ready for him together with a placard with his name on it next to those for representatives of three other companies working in Iraq – the London-based Aegis, and DynCorp and Triple Canopy, both Virginia-based companies.

“This commission was going to ask him, under oath, why his firm agreed in January to assume private security responsibilities at FOB Shield with several hundred guards that had not been properly vetted and approved,” said Michael Thibault, one of the co-chairs of the commission and a former deputy director of the Defence Contract Audit Agency.

“This commission was also going to ask Mr. Torres why he personally flew to Iraq, to FOB Shield, and strongly suggested that Torres AES be allowed to post the unapproved guards, guards that would protect American troops, and then to ‘catch-up the approval process’.”

Instead, a lawyer informed the commission staff that Torres was “nervous about appearing”.

The failure of a contractor to appear for an oversight hearing into lapses was just one example that the use of some 18,800 armed “private security contractors” in Iraq and another 23,700 in Afghanistan to protect convoys, diplomatic and other personnel, and military bases and other facilities in Afghanistan and Iraq was not working.

Blackwater’s new Afghan contract

Perhaps the most famous private military contractor in Afghanistan and Iraq – North Carolina-based Blackwater – was not invited to sit at the witness table either, despite the fact that the company had been the subject of several investigations into misconduct.

For example, in September 2007, security guards from North Carolina-based Blackwater guards shot and killed 17 Iraqi civilians in Baghdad’s Nisour Square.

Blackwater staff have also been accused of killing other private security contractors – in December 2006, Andrew J. Moonen, was accused of killing a security guard of the Iraqi vice president, Adel Abdul Mahdi. And as recently as May 2009, four Blackwater contractors were accused of killing an Afghan on the Jalalabad road in Kabul.

Members of the commission noted with astonishment that the State Department had awarded Blackwater a 120-million-dollar contract to guard U.S. consulates in Heart and Mazar-i- Sharif in Afghanistan this past Friday.

Asked to explain why Blackwater was awarded the contract, Charlene R. Lamb, deputy assistant secretary for international programmes at the State Department, stated that the competitors for the contract – DynCorp and Triple Canopy – weren’t as qualified.

Yet Don Ryder of DynCorp and Ignacio Balderas of Triple Canopy testified that they were both qualified and able to do the contract. The two men said that they would consider lodging a formal protest at the State Department Tuesday after a de-briefing with the government.

The choice of Blackwater, which has been banned by the government of Iraq, left the commissioners with little doubt that the contract award system was flawed. “What does it take for poor contractual performance to result in contract termination or non-award of future contracts?” wondered Thibault.

Inherently Governmental

At a previous hearing of the commission last week, John Nagl, president of the Washington, DC-based Centre for a New American Security, submitted a report on the subject that explained why the government was turning to these companies: “Simple math illuminates a major reason for the rise of contractors: The U.S. military simply is not large enough to handle all of the missions assigned to it.”

Yet it appears that the government does not even have the oversight capability to police the companies that it has hired to fill the gap.

Some witnesses and experts said that by definition this work should not be handed out to private contractors in war zone.

“Private security contractors are authorised to use deadly force to protect American lives in a war zone and to me if anything is inherently governmental, it’s that,” said Commissioner Clark Kent Ervin, a former inspector general at both the State Department and the Homeland Security Department. “We don’t have a definitional problem, we have an acknowledgement of reality problem.”

Non-governmental expert Danielle Brian, executive director of the Project on Government Oversight (POGO), said: “It has become clear to POGO that the answer is yes, PSCs are performing inherently governmental functions. A number of jobs that are not necessarily inherently governmental in general become so when they are conducted in a combat zone. Any operations that are critical to the success of the U.S. government’s mission in a combat zone must be controlled by government personnel.”

*This article was produced in partnership with CorpWatch – http://www.corpwatch.org.

June 21, 2010 Posted by | Afghanistan, Blackwater, Civilian Contractors, Contingency Contracting, Contractor Corruption, Contractor Oversight, DynCorp, Iraq, NATO, Private Security Contractor, State Department, Triple Canopy | , , , , , , , , , , | Leave a comment

End KBR’s Monopoly in Iraq

Project on Government Oversight

March 29, 2010

We may have spoken too soon when we praised the Army for taking past contractor performance into consideration for the LOGCAP program. POGO was recently informed that the Army is considering awarding KBR additional work in Iraq under the LOGCAP III contract. That action would continue KBR’s monopoly on LOGCAP work in Iraq, rather using the competitive procurement procedures created under LOGCAP IV.

In a letter sent today to Army Secretary John McHugh, POGO urged the Army to end KBR’s monopoly in Iraq and reconsider the continued use of the LOGCAP III program. To better evaluate goods and services, and to get the best value for taxpayers, the government must encourage genuine competition.

The spotlight on KBR’s work in Iraq was also reviewed today as company representatives testified before the Commission on Wartime Contracting at a hearing on the “Rightsizing and managing contractors during the Iraq drawdown.” The military is going to have to handle many issues, including troop withdrawals and determining adequate levels of contractor support needed for ongoing activities. Additionally, the government must resolve logistical problems with the goods that have brought into the country to support military and reconstruction effort – sometimes with a lack of planning and management.

March 29, 2010 Posted by | Civilian Contractors, KBR, Wartime Contracting | , , , , , , | Leave a comment