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McCaskill, Portman prod officials to bolster audits of wartime contracting

This article first appeared in the St. Louis Beacon, April 17, 2012 - WASHINGTON – Signing million-dollar deals with contractors convicted of fraud. Building gold-plated power plants or “highways to nowhere” that Afghanistan can’t afford to operate. Awarding massive contracts without competitive bidding.

A Senate hearing Tuesday focused on such failures in wartime contracting in Iraq and Afghanistan and examined whether legislation based on a bill introduced last month by Sens. Claire McCaskill, D-Mo., and Jim Webb, D-Va., would foster better management of such contingency contracting.

“It’s an incredibly important hearing,” said the panel’s ranking Republican, Sen. Rob Portman, R-Ohio, because it is vital “to examine the lessons we have learned about wartime contracting from our experience over the last decade” in Iraq and Afghanistan.

Portman, a former chief of the Office of Management and Budget and potential running mate for likely GOP nominee Mitt Romney, said the Commission on Wartime Contracting in Iraq and Afghanistan’s “troubling bottom-line conclusion” -- that waste and fraud on service contracts during those military operations amounted to at least $31 billion and perhaps as much as $60 billion – showed that “reforms are necessary to avoid making more costly mistakes.”

Some key recommendations made last year in that commission’s report – which blamed the waste on ill-conceived projects, lax planning and oversight by the government – would be implemented by the McCaskill-Webb bill, called the Comprehensive Contingency Contracting Reform Act of 2012. It aims to improve contracting practices and further accountability by bolstering oversight, improving management, widening planning rules and reforming contracting practices during military contingency operations overseas.

The legislation also would require the government to explain how it will pay for such operations and require more transparency and competition in the contracting process. “We want to get this right,” said McCaskill, who chairs the Senate Homeland Security subcommittee on contracting oversight, which held the hearing.

To that end, the subcommittee asked top management officials and acting inspector generals of the three main agencies involved in the Iraq and Afghanistan contracting -- the Defense Department, State Department and U.S. Agency for International Development -- to assess the legislation, suggest improvements and explain how they had improved their oversight of contingency contracts in recent years.

Webb, a former secretary of the Navy and assistant secretary of defense, told the panel that it was vital to put “management structures in place to catch up with the realities of what happened in the post-9/11 environment of military commitments overseas.”

One major issue pursued by McCaskill – and addressed in the bill -- is that the federal agencies have failed to use suspension and debarment powers to prevent contractors from taking advantage of the government. Last year, the Pentagon reported that over a decade, it had awarded $255 million to contractors convicted of criminal fraud and $574 billion to contractors involved in civil fraud cases that resulted in a finding against the contractor.

The senator cited a report that found that the State Department had pursued only six suspension or debarment cases while issuing more than $33 billion in contracts from 2006-10. By contrast, the Air Force pursued 367 suspensions or debarment actions in 2010 alone.

“I don’t know what they are drinking at the Air Force,” McCaskill said, “but I like it that they are aggressive about suspension and debarment.”

Contending that the State Department and Pentagon had failed to take advantage of procedures to bar contractors with demonstrably bad records, McCaskill added: “It seems to me that a criminal indictment of a contractor should be an event that requires folks in that agency to take a hard look, do some scrubbing, and figure out what the problem is” with that contractor.

McCaskill also criticized the administration of President Barack Obama for failing to move quickly enough to nominate permanent inspector generals for massive agencies like the Pentagon, State and USAID. All three of the IGs who testified at Tuesday’s hearing were there in an “acting” capacity.

“I find it appalling that these people have not been appointed,” McCaskill said. “There is a long list of qualified people to hold those jobs….How these positions can go vacant for this period of time is beyond me.”

Both McCaskill and Webb are members of the Senate Armed Services Committee, and they plan to seek a vote on a revised version of their bill – reflecting some changes suggested Tuesday by federal officials – later this year.

Lawrence J. Korb, a former assistant secretary of Defense and senior fellow on the Council on Foreign Relations, submitted testimony asserting that the “explosion in the use of contractors in contingency operations has undermined U.S. strategic and financial interests, outsourced essentially governmental functions, and distanced American policymakers from the moral hazards of their decisions.”

Noting that more than a quarter million private workers had been deployed on various contracts in Iraq and Afghanistan alone, Korb – now a senior fellow at the Center for American Progress Action Fund – wrote that the McCaskill-Webb bill “addresses most of the structural, systemic, and technical problems identified” in the commission's report.

“If we do not act expeditiously, we will continue to needlessly squander blood and treasure and undermine our image in current and future conflicts,” wrote Korb. “War and peace are matters of national interest and national endeavor, and it is not appropriate to impose a management structure or ethos more appropriate in the corporate world.”