The Associated Press March 29, 2010, 2:17PM ET

Commissioners criticize contracting oversight

The U.S. government probably is paying for millions of dollars worth of unneeded work by contractors in Iraq because the military is providing inadequate guidance to companies about drawing down their work forces as U.S. troops leave, commissioners on the independent Commission on Wartime Contracting said Monday.

Each contracted employee can cost thousands of dollars a month, and some 100,000 contracted employees work in Iraq.

Much of the emphasis at a commission hearing was on Houston-based KBR Inc., the largest contractor in the country, which recently won a new contract potentially worth more than $2 billion for support work in Iraq.

Pentagon auditors said late last year that the company could save $193 million from January to August of this year by reducing its work force, but auditors estimate in a new report that KBR has plans to implement a drawdown during the period that would save only $27 million.

Commissioner Robert Henke asked military contracting officials testifying before the commission why they made no formal response to last year's audit findings, particularly since a possibility exists that new rules could save so much money.

"The savings are going, going, gone," Henke said.

Lt. Gen. James Pillsbury, deputy commanding general of the U.S. Army Materiel Command, said that the drawdown in contractors is on pace. He noted that in January 2009, Gen. Ray Odierno, the top U.S. military official in Iraq, issued a letter directing all contractors to draw down their employee level by 5 percent a quarter.

Noting the complexity of the task in a constantly changing war environment, Pillsbury said, "the situations on the ground are somewhat fluid, as you know."

Also at the hearing, commissioners expressed misgivings about a March 3 report from the Defense Department's inspector general that found that from Sept. 1, 2008, to Aug. 31, 2009, only from about 4 to 10 percent of contracted maintenance services at a base in Balad, Iraq, were used, costing about $4.6 million in unnecessary expenses.

Guy Laboa, a KBR contracting official, said that on multiple occasions the company notified the military about the lack of services being used in Balad.

A second KBR official, Douglas Horn, vice president of operations at KBR, said the company often waits for direction from the military on how to proceed, which complicates the company's ability to plan.

The number of U.S. troops in Iraq is scheduled to fall to 50,000 by August; all are to leave by the end of 2011. The Department of Defense estimates that the number of contracted employees in Iraq will exceed 70,000 in August, which is about half the contractor count of January 2009.


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