AP: Military Contractor Oversight Too Lax

Defense Auditors Uncover at Least $6B in Questionable Expenses Claimed by Government Contractors

(AP)  During a routine check of a watch tower at a U.S. military base in Kuwait, an Army sergeant found the guard leaning back in a chair, his sunglasses on, apparently sound asleep. When the soldier woke the guard, an employee of a defense contractor named Combat Support Associates, he denied he'd dozed off while on duty.

"It's so weird that I can close my eyes for one second and then you appear out of nowhere," the guard said, according to the sergeant's March 2008 inspection report.

The episode illustrates the problems between the U.S. armed forces and the industrial army supporting military operations in Iraq and Afghanistan. Demand for contractor services is heavy, while oversight of their work isn't. That means problems often aren't discovered until long after the payments have been made.

A major trouble spot is the business systems and procedures that companies use to bill the government. The numbers are eye-popping. Defense auditors have found at least $6 billion in questionable charges generated by sloppy accounting or, worse, contractors trying to bilk the military.

Yet, the Pentagon has done a poor job of recovering the money and forcing companies to improve, according to the independent Commission on Wartime Contracting . The panel cites dysfunction among auditors and contract managers, a shortage of personnel and a failure to be more confrontational with contractors who don't measure up.

Based in Orange, Calif., Combat Support Associates is a largely unknown enterprise that, since 1999, has held an Army contract worth $2.7 billion to support U.S. troops at bases in Kuwait as they move in and out of Iraq. The company's responsibilities include vehicle maintenance, warehousing, computer repairs and post security.

Between 2003 and 2007, when the U.S. invaded Iraq and then became ensnared in a lengthy counterinsurgency, there was little government scrutiny of the company's business systems, according to interviews and government records obtained by The Associated Press through the Freedom of Information Act.

In late 2007, the military belatedly began paying attention. Numerous contract violations were found, several of them serious, leading to a flood of what contracting officials call corrective action requests. Last fall, the Army Criminal Investigation Command opened an inquiry to determine if Combat Support Associates overbilled the government. The case is ongoing.

The records obtained through FOIA show money flowing to Combat Support Associates despite an alarming catalog of problems later uncovered by Army contracting officials.

In one case, the company signed a $48 million deal with a Kuwaiti company to provide food, lodging and transportation for employees, but it did no detailed study to justify such a large expense. A memorandum supporting the buy included a price analysis three sentences long, which an Army review team called a "major systemic weakness."

The documents detail other deficiencies. The company failed to properly secure classified communications gear and weapons stored in warehouses. And it was written up for having no system in place to check the identification of contract employees - who are often not American citizens - at U.S. maintenance facilities in Kuwait.

In the past two years alone, Combat Support Associates received dozens of warnings from the government to improve performance, the records show. Several of those have been Level Three warnings, which are issued only in cases of serious noncompliance with the terms of a contract.

None of this appears to have dented the company's bottom line, however. Over the past decade, its performance has been rated as excellent, very good or good, according to the Army Sustainment Command in Rock Island, Ill. With those marks, Combat Support Associates has earned close to $90 million.

Part of the problem is a type of government contract that critics say diminishes the incentive for companies to keep down costs. The government agrees to reimburse the contractor for expenses, such as costs for equipment, leasing space and hiring subcontractors, plus a prearranged amount for profit.

For the military, however, these so-called cost-plus contracts are useful in wartime, when it can't precisely define all the work that needs to be done.

Gary Lewi, a spokesman for Combat Support Associates, said all of the corrective action warnings have been or are in the process of being resolved to the "satisfaction of the client."

As for the sleeping guard? He resigned, said Lewi, who provided no further details.

How the company's contract will fare is up in the air. It expires in March, and Army officials say they're contemplating changes in how they handle the base support work.

Jeffrey Parsons, executive director of the Army Contracting Command at Fort Belvoir, Va., said he expects the arrangement to be broken up into smaller, more manageable pieces that will generate competition and improve performance.

[noloyalisti]

This is NEWS? How many billions have these right wing scum stolen. They were set up by the Bush Crime Family to do money laundering. That is what the whole Iraq debacle is all about.

[Ms_enza]

We should gear up on "contractors" in Afghanistan... hire Xe (Blackwater) and all their competitors, give them lots of money and logistical support and then quietly leave.

[Turbidite]

And the Repubs think that private industry can run things better than the government! If that had been an underpaid Army guard found asleep, he would have been court marshalled and demoted at least. In a war zone the violation would demanded a more severe punishment for jeopardizing fellow soldiers' lives. This guy simply resigns and takes his loot home with a smile on his face. Disgusting!

[rocketjl]

How high does this make Congress reach on the stupid level. Congress and the WH say they are going to help pay for health care reform by attacking fraud, waste, and abuse. Looking at this, I get the feeling that they have no idea what is going on or what to do. All this has been going on for years and no one in government is turning it off. It is clear we will see the same if the government becomes the single payer in health care. Rats, just give the people the billions and things will get better (not your business buddies).

[timdgrim]

What Oversight? The Mercenaries outnumber the military and the Industrial War Complex rakes in the corporate profits. If we had run World War 2 like we do this one, we would all be speaking German and Japanese. This is total BS.

[hungry1968-16]

All of these functions - guard duty, kitchen work, laundry, supply, and other logistics, were ALWAYS provided by trained and highly professional military people.

The conservatives decided that it would be better to hire private businesses to do the work at three times the cost, with half the results.

It's time to reverse these conservative policies, and get America back on it's own two feet.

[retiredgustav]

It is the anti-socialist bunch at work. Privitize all govt. opperations we will save your tax dollars..........and then I will give you a great deal on a bridge.

[doc_holliday76]

by hungry1968-16:
"All of these functions - guard duty, kitchen work, laundry, supply, and other logistics, were ALWAYS provided by trained and highly professional military people.

The conservatives decided that it would be better to hire private businesses to do the work at three times the cost, with half the results."
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Yep....in Iraq, we still have 140,000 troops being coddled by 200,000 private contractors making huge salaries and not paying any taxes!

This is exactly how the republican't privatization of everything works -- a smaller, all volunteer military, being surrounded by private contractors making 5-10 times the money for the same jobs we used to train our military to do for themselves! This is INSANE, but the reasoning behind the conservitard endless WARmongering for PROFIT!

[fss2009]

This just demonstrates that the system is broken. That which remains is run by arrogant, under-trained warmongers with no ethics... as bad, if not worse than the so-called enemy. These bums are not protecting us... they are robbing us while waving the flag.

[doc_holliday76]

by fss2009:
"This just demonstrates that the system is broken."
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Absolute proof that unfettered capitalism without any accountability has been running rampant throughout the entire broken system!

[Snowhare]

How on earth can you put someone contracted on something as important as watchtower duty? I can understand contracters doing kitchen, even facilities if they do them properly and without electroshock showers... But this is acutal military work! Guards, watches, armed services must not be done by contractors. It is as simple as that!

[doc_holliday76]

by Snowhare:
"Guards, watches, armed services must not be done by contractors. It is as simple as that!"
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Come now, this is exactly how the republican'ts have privatized everything just like our prison system, and these close-connected cronies will be cutting a fat hog forever until the system is changed!

[pubsrtoast]

Time to put that new law crafted on ACORNs behalf to work on the rest of the system.

[briannorwood]

Agreed! These guys make ACORN look like a bunch of saints in comparison. Where is the outrage by the GOP?

[doc_holliday76]

"Yet, the Pentagon has done a poor job of recovering the money and forcing companies to improve, according to the independent Commission on Wartime Contracting . The panel cites dysfunction among auditors and contract managers, a shortage of personnel and a failure to be more confrontational with contractors who don't measure up."

"Based in Orange, Calif., Combat Support Associates is a largely unknown enterprise that, since 1999, has held an Army contract worth $2.7 billion to support U.S. troops..."
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by briannorwood:
"These guys make ACORN look like a bunch of saints in comparison. Where is the outrage by the GOP?"
----------------------------------




Come now....these close-connected cronies in the military/industrial complex are GOP contributors, using their "cost-plus" no-bid contracts to become wealthy beyond belief at the taxpayers' expense!

This is how the busheviks and the republican'ts have been doing it for the past 8 years, with absolutely no accountability, no competition and no need to prove any performance standards!