Report | March 31, 2015

Contingency Contracting: A Framework For Reform - 2015 Update DODIG-2015-101

What We Did

Our objective was to provide DoD field commanders and contract managers with information on contracting problems related to contingency operations that the DoD Office of Inspector General (OIG) identified and reported from April 1, 2012, through December 31, 2014. In this report, we discuss ongoing contingency contracting problems, as well as re-emphasize those problems identified in DoD IG Report No. DODIG-2012-134, “Contingency Contracting: A Framework for Reform–2012 Update,” September 18, 2012, and D-2010-059, “Contingency Contracting: A Framework for Reform,” May 14, 2010. After DODIG-2012-134, DoD OIG personnel issued 40 reports and participated in 21 fraud investigations pertaining to Overseas Contingency Operations. These reports and investigations identified a variety of problems relating to DoD officials not properly awarding, administering, or managing contingency contracts in accordance with Federal and DoD policies.

What We Found

We reviewed 40 reports and identified 9 systemic contracting problem areas relating to contingency operations. The five most prevalent problem areas reported were:

1. Oversight and Surveillance;

2. Requirements;

3. Property Accountability;

4. Financial Management; and

5. Contract Pricing.

Additionally, we reviewed 21 fraud investigations uncovering criminal offenses that occurred during contract award and administration p hases. The 21 fraud investigations a ffected 6 contracting areas: source selection, oversight and surveillance, financial management, contractor personnel, property accountability, and contract documentation.

What Has Been Done

The 40 DoD IG reports contained 304 recommendations addressing 9 systemic contracting problem areas. As of March 3, 2015, 233 audit report recommendations have been closed while the remaining 71 recommendations are still open. For the five most prevalent problem areas, DoD OIG recommended DoD:

• develop quality assurance surveillance plans;

• properly define all requirements;

• establish records and maintain accountability for Government property;

• manage and execute Government funds in accordance with Federal and DoD guidance; and

• conduct cost and price analysis to determine whether prices paid on contracts are fair and reasonable.

In addition, the 21 fraud investigations resulted in prison sentences, fines, restitution, and criminal and civil settlement agreements.

What Needs to Be Done

DoD will support the Afghan National Security Forces as they assume full responsibility for security in Afghanistan. The DoD has drawn down troop strength in Afghanistan from an average of 38,000 military personnel in December 2014 to approximately 9,800 in February 2015. In March 2015, President Obama stated that troop strength in Afghanistan would remain at approximately 9,800 through the end of 2015. President Obama added that the 2016 drawdown plan would be developed later in 2015. Additionally, DoD contractor personnel in Afghanistan have been decreasing since FY 2013. In first quarter of FY 2013, DoD had 110,404 contractor personnel in Afghanistan for Operation Enduring Freedom, and by first quarter of FY 2015, DoD contractor personnel decreased to 39,609. As support requirements in Afghanistan continue to be reduced, there will be a further decline in the number of contractors in Afghanistan.

Although spending for Overseas Contingency Operations has been decreasing, contingencies continue to occur across the scope of DoD operations. Congress amended the FY 2015 DoD budget to include $5.6 billion for contingency operations to defeat the Islamic State of Iraq and the Levant, including military operations as part of Operation Inherent Resolve. Therefore, it is essential for DoD field commanders and contracting personnel to ensure that the United States receives what it pays for in a timely manner, at a reasonable price, and that it meets quality requirements, especially in contingency operations where the environment is less controlled.

The effectiveness of contractor support of U.S. contingency operations could be compromised if DoD officials fail to apply lessons learned from previous problems identified in Iraq and Afghanistan. DoD officials should review the identified problems and develop a framework to achieve better contracting performance for future contingency operations.  

This report is a result of Project No. D2015-D000AU-0099.000.