Commentary

The Holy Grail, Part Four

LOGCAP is the Holy Grail of the private military contracting industry.

LOGCAP — the Logistics Civil Augmentation Program — is an initiative established by the U.S. Army in 1985 to use civilian contractors in wartime and other contingencies. The contract covers everything from fixing trucks to warehousing ammunition to doing the laundry, running mess halls and building whole bases abroad.

The first comprehensive LOGCAP umbrella contact was awarded in August 1992 and was used in December 1992 to support all U.S. services and U.N. forces in Somalia. Other areas where LOGCAP has been implemented include Rwanda, Haiti, Saudi Arabia, Kosovo, Ecuador, Qatar, Italy, southeastern Europe, Bosnia, Panama, Korea and Kuwait.

LOGCAP is not the only military service logistics program using civilian contractors. The Air Force, for example, has the Air Force Contract Augmentation Program, established in 1997, for a wide range of non-combatant, civil engineering services during wartime, contingency operation and humanitarian efforts. AFCAP provides for contractor support to relieve active duty and air reserve personnel in the areas of food service.

But LOGCAP is by far the biggest and most lucrative. On Oct. 1, 1996, LOGCAP management was transferred to the U.S. Army Material Command. In September 2006 the Army Sustainment Command was created to serve as the “logistics integrator” for the contingency contracting and sustainment needs of the military worldwide. ASC oversees about 65,000 contractors and manages about $25 billion in contracts.

In June 2007 the ASC awarded LOGCAP IV contracts to three companies — DynCorp International LLC, Fluor Intercontinental Inc. and KBR. KBR, of course, held the LOGCAP III contract.

The losing companies filed protests with the Government Accountability Office. The GAO sustained the protests on Oct. 5, 2007, and as a result the Army reopened the competition. On April 18 the Department of Defense announced the Army had settled the competition and re-awarded contracts to the original three companies.

The LOGCAP IV contract calls for the three companies to compete four task orders; each company may be awarded up to $5 billion for troop support services per year, the Army can award a maximum annual value of $15 billion, and the maximum contract value is $150 billion.

The contract is considered one of the biggest deals in the contracting services industry. It has ballooned in value from $2 billion, when it was first awarded in 1992, to $23 billion under the previous LOGCAP III contract.

The contract will cover a range of services: supply operations, including food, water, fuel, spare parts and other items; field operations, including food, laundry, housing, sanitation, waste management, postal services and morale, welfare and recreation activities; and other operations, including engineering and construction; support to the communication networks; transportation and cargo services; and facilities and repair.

Like the Energizer Bunny, LOGCAP just keeps going and going and getting bigger and bigger. And its growth has brought about certain problems. Under LOGCAP III, for example, media and other reports cited the apparent lack of effective management control over the administration of the contracts and the oversight of the contractors.

And since the Democrats regained power in the 2006 congressional elections, numerous bills have been proposed to ensure proper accountability and oversight in federal contracting.

According to the Congressional Research Service, the FY 2008 Defense Authorization Act contains provisions that address contract waste, fraud, abuse and mismanagement.

Other provisions in the act require the secretary of defense to provide a plan for addressing skill shortfalls in the Department of Defense acquisition workforce; provide for a periodic and independent management review of Department of Defense contracts; prohibit the awarding of “no-bid” contracts and non-competitive grants; and establish a commission on wartime contracting to investigate contracts in Iraq and Afghanistan.

Other legislative initiatives include H.R. 3033, the Contractors and Federal Spending Accountability Act of 2008; H.R. 5712, the Close the Contractor Fraud Loophole Act; H.R. 3928, the Government Contractor Accountability Act of 2007; and H.R. 4881, the Contracting and Tax Accountability Act of 2008.

Whether the bills are necessary remains to be seen. The problem with using private contractors may not be that new laws are necessary. Instead, it may simply be that the government lacks sufficient resources to enforce the laws it has on the books.

Regardless, it is appropriate that Congress looks at LOGCAP, as opposed to focusing on private security contractors, for the same reason that Willie Sutton robbed banks; because that is where the real money is.

To its credit, when the Army awarded LOGCAP IV, it did so with a different acquisition strategy. It was based on a full and open competition. Instead of using a single contractor, as was the case with LOGCAP III, the contract called for multiple contractors. Competitions were held and the contracts were awarded based on what represented the best value to the government.

Under the new strategy, the three contractors may compete for individual LOGCAP task orders, creating a competitive environment meant to control costs and enhance quality.

That is a good start, but the key to ensuring effective oversight will be in proper contract administration. And in recent years this has been a problem as the size, shape and complexity of logistical support service contracts have grown with the technical requirements. But at the same time the size of the federal contractor workforce has decreased. Thus there is now an imbalance — there are fewer federal contracting officials to manage the large-scale contracts. Indeed, in some cases the government has sought to hire contractors to do the job that federal employees used to perform.

Additionally, LOGCAP contracts have often bypassed the process to define realistic funding, appropriate time frames and other important requirements through the use of “undefinitized” contract actions. Such actions do not require that the Department of Defense contracting official write a completed performance work statement before the work is performed.

David Isenberg is an analyst in national and international security affairs. He is also a member of the Coalition for a Realistic Foreign Policy, an adjunct scholar with the Cato Institute, contributor to the Straus Military Reform Project, and a US Navy veteran.