Contractors Watching Contractors

Jeremy Scahill, a Puffin Foundation Writing Fellow at The Nation Institute, is the author of the bestselling Blackwater: The Rise of the World's Most Powerful Mercenary Army, published by Nation Books.

As part of its work for SIGAR, according to contracts obtained by The Nation, the firm helps prepare the agency's quarterly reports to Congress, assists in preparing Congressional testimony for agency officials and helps develop SIGAR's responses to "questions for the record" from lawmakers.

SIGAR hired Deloitte "as an interim measure while we, as a new organization, built the internal capability we needed to provide the quality reports that the Congress requires," SIGAR spokesperson Susan Phalen told The Nation. "The SIGAR Quarterly Reports require an extraordinary amount of detail and attention." Phalen downplayed Deloitte's role in preparing Congressional reports, saying they "have assisted the SIGAR staff on certain sections of the Quarterly Reports."

Deloitte also plays a similar role for several other federal agencies, including preparing reports for the Special Inspector General for the Troubled Asset Relief Program. TARP was created by the Emergency Economic Stabilization Act of 2008 and allows the US Treasury Department to purchase or insure up to $700 billion of "troubled assets." Deloitte also works in a similar capacity for the US Agency for International Development and the Special Inspector General for Iraq Reconstruction.

Danielle Brian, the executive director of the non-partisan Project on Government Oversight sees a direct relationship between Deloitte's increasingly prominent oversight role within the US government and the hiring of former Congressman Davis. "We saw an immediate growth in Deloitte's contracts for oversight functions, especially for special inspectors general, when Davis left the Congress to go work for Deloitte," said Brian. "It's totally predictable. This is the kind of thing that he was encouraging while he was in the Congress. I think this is a real degradation of government." She said Davis's work with Deloitte is the "definition of the revolving door."

SIGAR has come under fire recently from a bipartisan group of senators who have called on President Obama to "commence a comprehensive review" of the agency. "In light of the planned increase in the U.S. presence in Afghanistan, we have serious concerns that SIGAR currently may be unable to perform its mission at a time when the need for aggressive, independent oversight is greater than ever," wrote Democrat Claire McCaskill and Republicans Susan Collins and Tom Coburn on December 8 to President Obama. The lawmakers specifically said that SIGAR has had "significant, ongoing difficulty in recruiting adequate, qualified staff."

The senators also criticized the agency for not fulfilling its role of focusing on "reconstruction contracting," instead conducting reviews of female participation in the Afghan elections, which the senators said is not SIGAR's job. The senators also decried what they called "the lack of audit and investigative reports," pointing out that only "one of the eight audits performed was a contract audit."

According to a "Performance Work Statement" for Deloitte's contract, obtained by The Nation, Deloitte "shall provide all personnel, equipment, tools, materials, supervision, and other items and non-personal services necessary to perform data collection, data analysis, report design, report formation and project management support to ensure timely publication of the quarterly report to be distributed to Congress...to track the status and maintain accountability of specific funds allocated/designated for the reconstruction of AFGHANISTAN, and to determine how the funds have been spent."

The firm, according to the work statement, is also responsible for "Tracking the oversight activities (Audits and Investigations) of other Government agencies having oversight authority of the relief and reconstruction effort in Afghanistan." The contract specifies that Deloitte personnel must have been granted a "SECRET security clearance or an Interim Secret clearance from the Defense Industrial Security Clearance Office."

"Now we have contractors overseeing the oversight of contractors," said a government oversight official. "It's like a bad '80s movie." Tourang Nazari, a spokesperson for Deloitte, when asked for comment on the firm's work for SIGAR told The Nation, "We do not comment on work we do for clients."

Despite descriptions in the Deloitte contract, SIGAR's Phalen denied that Deloitte plays a central role in SIGAR's communications to Congress, saying "SIGAR staff is fully responsible for the writing and final editing of all SIGAR reports," adding that Deloitte "contractors have assisted SIGAR staff, on a interim basis [and it] is limited to graphics production and the drafting of specific sections of the Quarterly Reports." She said all audits and investigative reports are done by official SIGAR investigators. POGO's Brian, however, contradicted that. "They're actually writing the copy," she said. "To me the most pure example of what a government person should be doing is communicating between an inspector general and the Congress. The idea you hire an outside contractor to do that is, to me, obscene."

SIGAR was created by President George W. Bush, who appointed its current head, Marine Major General Arnold Fields, in June 2008. SIGAR has thirty auditors in Afghanistan and the United States. Its budget of $23 million seems stunningly low given the extent of government contracting in Afghanistan. According to federal records, the US paid some $6.7 billion to contractors for work in Afghanistan in 2008. That figure does not include contracts in Pakistan over which SIGAR has no official mandate. More than $5 billion has been allocated for Afghanistan reconstruction in the Supplemental Appropriation of 2009. Meanwhile, according to the most recent Department of Defense census, there are more than 104,000 private contractors on the US government payroll in Afghanistan, a number that is expected to grow as US troop numbers swell.

By Jeremy Scahill:
Reprinted with permission from The Nation