THE BLOG
06/13/2010 05:12 am ET | Updated May 25, 2011

Contractors Overseeing Contractors

Holy freaking Yahweh! I go away for just a week and private military contractor news busts out all over. Thus I'll be doing more posts than normal this week in an effort to catch up.

Let's start with the report the U.S. Government Accountability Office released earlier today on the subject of contingency contracting.

While the widespread dependence of government on private contractors is no longer front page news, the fact that the government also relies in a big way on private contractors to help manage contracts is startling, if not surprising.

The GAO report is titled "Improvements Needed in Management of Contractors Supporting Contract and Grant Administration in Iraq and Afghanistan."

Contract and grant administration functions represent the government's primary mechanism for assessing whether it is getting the expected products or services from contractors or whether grantees are performing in accordance with grant programs. Examples of such functions include on-site monitoring of contractor activities, supporting contracting and program offices on contract-related matters, and awarding grants and monitoring grantee performance. Using contractors to support these functions can provide benefits, such as flexibility to meet immediate needs, but it can also introduce risks the government needs to consider and manage.

For example, contractors performing certain contract or grant administration functions may closely support the performance of inherently governmental functions, which increases the risk that government decisions will be inappropriately influenced by, rather than independent from, contractor actions. In addition, reliance on contractor support to meet agency missions can increase the risk of conflicts of interest among companies and individuals, particularly for cases in which contractors closely support inherently governmental functions.

How reliant is the U.S. government on private contractors? Good question. Unfortunately the government does not know. The report found that:

DOD, State, and USAID's use of contractors to help administer contracts and grants was substantial, although the agencies did not know the full extent of their use of such contractors. GAO found that the agencies had obligated nearly $1 billion through March 2009 on 223 contracts and task orders active during fiscal year 2008 or the first half of fiscal year 2009 that included the performance of administration functions for contracts and grants in Iraq and Afghanistan. The specific amount spent to help administer contracts or grants in Iraq and Afghanistan is uncertain because some contracts or task orders included multiple functions or performance in various locations and contract obligation data were not detailed enough to allow GAO to isolate the amount obligated for other functions or locations. Overall, the agencies relied on contractors to provide a wide range of services, including on-site monitoring of other contractors' activities, supporting contracting or program offices on contract-related matters, and awarding or administering grants.

Well, okay, we all understand that government might need to turn to contractors as it does not have enough qualified personnel of its own to manage contracts. So long as the government has a policy in place on how to use contractors for contract management and the contractors are competent it should be okay. So what is the policy? Surprise, there isn't one.

Decisions to use contractors to help administer contracts or grants are largely made by individual contracting or program offices on a case-by-case basis. In doing so, the offices generally cited the lack of sufficient government staff, the lack of in-house expertise, or frequent rotations of government personnel as key factors contributing to the need to use contractors. Offices also noted that using contractors in contingency environments can be beneficial, for example, to meet changing needs or address safety concerns regarding the use of U.S. personnel in high-threat areas. GAO has found that to mitigate risks associated with using contractors, agencies have to understand when, where, and how contractors should be used, but offices' decisions were generally not guided by agencywide workforce planning efforts.

Well, at least the government is smart enough to avoid the obvious conflict of interest issue that critics would raise about the risks associated with contractors helping to administer other contracts or grants, isn't it?

Agencies generally complied with requirements related to organizational conflicts of interest, but USAID did not include a contract clause required by agency policy to address potential conflicts of interest in three cases. Also, some State officials were uncertain as to whether federal ethics laws regarding personal conflicts of interest applied to certain types of contractors. In almost all cases, the agencies had designated personnel to provide contract oversight. DOD, State, and USAID contracting officials generally did not, however, ensure enhanced oversight as required for situations in which contractors provided services closely supporting inherently governmental functions despite the potential for loss of government control and accountability for mission-related policy and program decisions.