DOD tripped up by low staffing, poor planning

The Defense Department has struggled to keep track of contracts awarded during the wartime operations of the past eight years because of the sheer size and urgency of the operations and the shortage of workers to oversee those contracts. The result is wasted money and poor oversight of companies in the war zone, according to a new audit.

Although DOD officials do not have details on the number of its Iraq contracts that are eligible for closeout, Government Accountability Office auditors have concluded that DOD must review and potentially close at least 58,000 contracts that were awarded between fiscal 2003 and 2010, according to the report released today.

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Since 2002, DOD has obligated at least $166.6 billion on contracts that support reconstruction and stabilization efforts in Iraq and Afghanistan. GAO auditors said DOD will end relatively few contracts by their closeout date. About 90 percent of them are already overdue, based on the information DOD has about a limited number of contracts.

GAO blames DOD’s lack of planning for workforce shortfalls — including the number of employees at the Defense Contract Audit Agency — and contractor accounting problems, which are costing DOD money due to delayed audits of the contractors’ incurred costs.

Furthermore, DOD officials can't identify the improper payments it's been making because of the limited information it has about its own contingency contracts. Stopping improper payments is an issue the Obama administration has tried to tackle across the government. DOD officials also identified at least $135 million in unspent funds that could potentially not be available to meet other DOD needs, GAO reported.

In 2008, DOD officials tried to catch up on the backlog, but the help arrived too late.

So now, DOD has decided to transition the responsibility for closing out contracts awarded by the U.S. Central Command’s Contracting Command and its predecessors to the Army Contracting Command. But the takeover will cause more delays due to staffing issues, GAO reports.

The auditors recommended that top DOD and Army officials make sure the ACC has enough people to handle the work. Officials told GAO that the Army has made progress in closing out contracts even as it works to increase staff numbers.

Looking further out, GAO recommended that DOD revise its contingency contracting doctrine to reflect the need for advanced planning for closing out contracts. Officials have changed provisions in DOD’s acquisition rules and are developing new language to impress the need on contracting officers for better planning in contingency contracting.

DOD also needs to have senior contracting officials monitor and assess the progress of contract closeouts throughout the contingency operation to rearrange resources if a backlog emerges.

The realities of contract waste and contractor fraud in contingency operations raised concerns on Capitol Hill and elsewhere this month. The Commission on Wartime Contracting in Iraq and Afghanistan’s final report to Congress, released in August, paints an ugly picture of what’s happening in the background of the battlefield.

The commission said the government has lost at least $31 billion to waste and fraud, and the true figure could be closer to $60 billion. As a result, members of Congress have introduced legislation to correct some issues. One bill includes a resource center for training in contingency contracting.

DOD officials said they had begun instituting many of the commission’s recommendations even before the final report was released.