U.S.: Congress Reviews Military Contracts, Kabul Embassy Scandal

• by Pratap Chatterjee (washington)
• Thursday, June 11, 2009
• Inter Press Service

A logistics manager who bought hundreds of thousands of dollars worth of counterfeit boots, winter jackets and gloves from his wife's company.

A 30-million-dollar dining facility that is currently being built by KBR, a former subsidiary of Halliburton, for the U.S. military in southern Iraq that has been deemed unnecessary.

These were some of the allegations of waste, fraud and abuse that were revealed at two hearings Wednesday on Capitol Hill to lawmakers by newly created investigative bodies charged with oversight of federal government contracting.

'Do we have criminals working for us?' Senator Claire McCaskill, a Democrat from Missouri, asked a senior State Department official, demanding to know why an employee of ArmorGroup North America, the company in charge of providing embassy guards in Afghanistan, had made counterfeit purchases from his wife's company.

McCaskill, who is the chair of the newly created Senate Subcommittee on Contracting Oversight, held a 90-minute hearing into ArmorGroup's five-year, 189.3-million-dollar contract that was awarded in July 2007 by the State Department.

The company employs approximately 100 Nepali guards at 800 dollars a month under the contract as well as dozens of British, Canadian, New Zealander and U.S. guards at salaries of about 8,000 dollars a month.

Many of the guards who were hired by ArmorGroup allegedly did not speak sufficient English to communicate with embassy staff, according to internal government memos that were made public by the committee staff, despite the fact that the language ability was written into the contract.

ArmorGroup was accused of failing to provide an adequate number of guards, failing to make sure that the guards had the appropriate security clearances and failing to provide adequate weapons training and ammunition supplies for the guard.

A Mar. 10, 2008 memo from Heidi McMichael, the State Department representative responsible for oversight of the Kabul embassy contract, charged that the company did not have 75 percent of the medical technicians available in case of an emergency that were required under the contract.

Five months later, another memo from Joseph DeChirico, another State Department official, alleged that ArmorGroup had no plans for a 'mass casualty incident or an extreme loss of personnel due to mass resignation, hostile fire or loss of manpower due to illness.'

Spot checks on guard posts as recently as March 2009 over a two-day period showed that the guards were often absent for hours at a time, McCaskill told the hearing.

'I am not satisfied with the record of mismanagement that is before us today and the oversight this contract had,' a visibly angry McCaskill told William Moser, the deputy assistant secretary of state for logistics management, the government official who was in charge of the contract who testified at the hearing on Wednesday. 'So my question for the hearing today is 'Is this the best we can do?

'I'm not going to say that these were exaggerations (but) people on the ground say this was okay. The previous contractor was so bad that ArmorGroup was a major improvement,' an uncomfortable Moser replied. 'At no point were embassy staff in danger.'

Samuel Brinkley, a vice-president of Wackenhut Services Inc., the company that recently bought ArmorGroup, told the senators that the logistics manager who had awarded contracts to his wife's company had left ArmorGroup. Brinkley stated that most of the other problems had been fixed after Wackenhut bought the company.

'We are very proud that we can do this job now,' he said, noting that the company was now losing one million dollars a month on the embassy contract, as a result of the changes that had been made.

Moser informed the senators at the hearing that the State Department had decided to extend the contract if ArmorGroup and Wackenhut were willing to continue.

'That defies common sense,' McCaskill told Moser.

Commission on Wartime Contracting

The Kabul embassy contract was dwarfed by the sheer number of projects that were examined by a different oversight body at a hearing the same day in the U.S. House of Representatives.

The Commission on Wartime Contracting in Iraq and Afghanistan, an independent bipartisan body that was created by the U.S. Congress last year, issued an interim report on the shortfalls in 154 billion dollars worth of contracts issued by the U.S. government in Iraq and Afghanistan which employ 240,000 individuals, about 80 percent of whom are foreign nationals.

The commission did a peer review of 537 reports that had been issued to date by 11 government oversight organisations like the Special Inspectors General and the Government Accountability Office. All told, the commission staff calculated that investigators had issued 1,287 different recommendations to fix waste, fraud and abuse in the Pentagon but many had never been implemented.

The 111-page report also documents poor management, weak oversight, and a failure to learn from past mistakes as recurring themes in wartime contracting.

A field mission to investigate these contracts firsthand by commission staff revealed that Houston-based KBR was building a 30-million-dollar dining facility at Camp Delta near Kut in southern Iraq, despite the fact that the company had just completed a 3.36-million-dollar renovation of the old dining facility, making the new one redundant. (Commissioners blamed the poor planning on the part of the military not the contractor).

The commission singled out contracting in Afghanistan for particular attention. Michael Thibault, the co-chair of the commission, noted that out of the 504 oversight officials that the military estimated that it needed to oversee contracting in Afghanistan, just 166 were actually in the field in April 2009. He also noted that the Pentagon had just four auditors in Afghanistan.

Thibault was incensed that the Pentagon rarely withheld money from contractors for bad performance.

'Money speaks. You need to motivate a contractor. If you don't penalise them, what's the motivation?' Thibault told reporters after the hearing. 'Take away 10 percent of a 100-million bill and that's going to motivate (the contractor) to go to the government and say OK, I'm going to do this right now.'

Commissioner Charles Tiefer, the former top lawyer for the U.S. House of Representatives, told members of Congress that the investigators were unable to discover the extend of the fraud because they were not allowed to examine the work of sub-contractors. Although companies like ArmorGroup and KBR work directly for the U.S. government, an estimated 70 percent of the work is done by sub-contractors like First Kuwaiti Trading Company, Prime Projects International from Dubai or Tamimi of Saudi Arabia.

'Let's take First Kuwaiti - technically we cannot audit them, we can only go to the prime like KBR, look at their documentation and trigger an indirect audit,' Tiefer told IPS. 'Because they are a Kuwaiti company, we don't have legal access. It's not like we can issue a subpoena or convene a grand jury. There's no transparency.'

Thibault also noted that many of the soldiers assigned to check up on the contractors had never received the formal training necessary to comply with oversight duties. He cited one example of a soldier in Afghanistan who had been ordered to take an eight-hour class online to do his work, but told investigators that he has been unable to complete the class over a 30-day period because of slow Internet access.

Members of Congress invited a single representative of industry to respond to these charges: Alan Chvotkin, executive vice president and counsel at the Professional Services Council, a trade group for federal government contractors.

'We recognise there are bad actors in every field, and there are some in federal procurement. Waste of funds, this is certainly regrettable (but) we were struck by the fact that the examples cited did not, in fact, speak to abuse or fraud,' Chvotkin told the lawmakers.

'Overall, there is no question that the vast majority of contractors, government and military personnel have not only acted honourably but courageously,' he said.

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service

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