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

America’s Shame: The U.S. Government’s Human Trafficking Dilemma

Project on Government Oversight  May 7, 2012

For Vinnie Tuivaga, the offer was the answer to a prayer: A job in a luxury hotel in Dubai–the so-called Las Vegas of the Persian Gulf–making five times what she was earning as a hair stylist in her native Fiji.

She jumped at the chance, even if it meant paying an upfront commission to the recruiter.

You probably know how this story is going to end. There was no high-paying job, luxury location or easy work.

Tuivaga and other Fijians ended up in Iraq where they lived in shipping containers and existed in what amounted to indentured servitude.

Journalist Sarah Stillman told Tuivaga’s story and that of tens of thousands of other foreign workers in acute detail almost a year ago in her New Yorker piece, “The Invisible Army.”

In some cases, Stillman found more severe abuses and more squalid living conditions than what Tuivaga and her fellow Fijians experienced.

But like Tuivaga, thousands of foreign nationals in the U.S. government’s invisible army ended up in Iraq and Afghanistan war zones because they fell victim to human traffickers.

Let that sink in.

This human trafficking pipeline wasn’t benefitting some shadowy war lord or oppressive regime. No, these are workers who were feeding, cleaning up after, and providing logistical support for U.S. troops—the standard-bearers of the free and democratic world.

In its final report to Congress last year, the Commission on Wartime Contracting said it had uncovered evidence of human trafficking in Iraq and Afghanistan by labor brokers and subcontractors. Commissioner Dov Zakheim later told a Senate panel that the Commission had only scratched the surface of the problem. He called it the “tip of the iceberg.”

In essence, despite a 2002 presidential directive that set a “zero tolerance” on human trafficking, modern-day slavers have been operating with impunity under the aegis of the U.S. government.

Nick Schwellenbach, who until last month was the director of investigations at the Project On Government Oversight (POGO), and author David Isenberg also wrote about the conditions some of these foreign workers endured in Iraq.

Nick and David uncovered documents that showed how one U.S. contractor—in this case KBR—was well aware that one of its subcontractors, Najlaa International Catering Services, was involved in trafficking abuses.

Please see the original and read more here

May 7, 2012 Posted by | Afghanistan, Civilian Contractors, Contingency Contracting, Contractor Corruption, Contractor Oversight, Follow the Money, Halliburton, Human Trafficking, Iraq, KBR, Politics | , , , , , , , , , | 1 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

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

Tales from Chamber Contractor Oversight

Project on Government Oversight

October 28, 2011 Posted by | Civilian Contractors, Contractor Corruption, Contractor Oversight, Follow the Money, Government Contractor | , , , , , , | 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

Pentagon panel has contractor contacts

By Ray Locker and Ken Dilanian, USA TODAY
WASHINGTON — More than half of the panel members appointed to review the Pentagon’s latest four-year strategy blueprint have financial ties to defense contractors with a stake in the planning process, a USA TODAY analysis shows.

Congress created the 20-member panel in 2006 to analyze the Defense Department’s four-year plan, known as the Quadrennial Defense Review. Lawmakers called for the committee to provide an independent “alternate view” of the Pentagon’s plan, which shapes future military policy and spending on weapons and other needs.

A dozen of the unpaid panelists were appointed by Defense Secretary Robert Gates and eight by the top Republican and Democrat members of the House and Senate Armed Services committees. Eleven work for defense contractors as employees, consultants or board directors, records show.

“The Pentagon often talks about its cooperation with industry, but this makes you wonder who’s wearing the pants in this relationship,” said Mandy Smithberger, national security investigator for the Project on Government Oversight.

CONSULTANTS: Shift seen in role of military ‘mentors’

Gates “takes very seriously” the ethical issues confronting panelists with ties to defense firms, said Paul Hughes of the U.S. Institute of Peace, the QDR committee’s executive director. Last fall, the secretary ordered that his appointees be covered by federal ethics rules and had to disclose their assets and sources of income, Hughes said.

Initially, according to panelist John Lehman, congressional appointees were not to be subject to the executive branch ethics and disclosure rules.

This week, after inquiries by USA TODAY, officials from the Pentagon and Congress decided that all panel members will be governed by the same rules, Hughes said. The panelists have agreed to recuse themselves from considering any recommendation that could affect a company with which they are affiliated.

Committee members will have to file financial disclosure statements to the Pentagon, but those disclosures won’t be publicly available, said Cynthia Smith, a Defense Department spokeswoman.

One case that will require a recusal involves panelist Lehman, a former Navy secretary in the Reagan administration who was appointed to the committee by Sen. John McCain of Arizona, the ranking Republican on the armed services panel. Lehman runs an investment company specializing in defense holdings. His firm owns Atlantic Marine Holding Co., which repairs Navy ships in Mayport, Fla. The latest version of the review, released last week, recommends moving a nuclear aircraft carrier to Mayport from Norfolk, Va., which could mean more business for Atlantic Marine.

Lehman said he would recuse himself from reviewing the Mayport carrier issue and anything else that touched on his business interests. At the same time, he said, he and others with defense ties are capable of offering unbiased advice. Most defense experts have some financial affiliation with the defense industry, Lehman said, pointing out that the Defense Department does business with more than 33,000 companies and also funds university research.

“Could you find anybody who knows anything about defense who doesn’t have some potential conflict of interest?” he asked.

Some experts say the answer is yes. “There are retired military officers or Defense officials who don’t have defense industry ties. If you wanted to find these people, you could,” said Jordan Tama, an American University professor and expert on government commissions.

The panel’s co-chairmen — former Defense secretary William Perry and former National Security adviser Stephen Hadley— each work for the defense industry. Perry is chairman of the board of LGS Innovations, a division of Alcatel Lucent, which won nearly $70 million in defense contracts last year, and Hadley is on the board of Raytheon, which won more than $15.8 billion, according to government contracting data. Neither responded to requests for comment.Four other members — former diplomat Richard Armitage, retired admiral David Jeremiah, retired general Jack Keane and retired major general Robert Scales — run consulting companies that list some of the nation’s largest defense firms as their clients. Jeremiah and retired general George Joulwan are also members of the board of directors of General Dynamics, a defense contractor that makes tanks, ships and other weapons while also providing intelligence services.

“It’s pretty straightforward,” Jeremiah said. “You disclose any affiliation that you have, they are reviewed by legal counsel, and if there’s one where there is a problem, it is resolved in one of several ways. You can be recused from the discussion of that particular item.”

That’s not sufficient, said Janine Wedel, a George Mason University professor and author of a book on government contracting. “It’s the ultimate irony when an entity ostensibly set up to provide impartial oversight is in fact rigged to be much less impartial than what it is supposed to be overseeing,” she said.

March 1, 2010 Posted by | Private Military Contractors | , , , , | Leave a comment