12/13/2011 01:04 pm ET | Updated Feb 12, 2012

Let's All Do the SIGOCO

For the latest on the effectiveness of oversight on private military and security contractors (PMSC) people should take a moment to peruse the hearing of the National Security, Homeland Defense and Foreign Operations Subcommittee of the House Oversight and Government Reform Committee. On December 7 it held a hearing titled "Oversight in Iraq and Afghanistan: Challenges and Solutions," chaired by Representative Jason Chaffetz (R-UT).

The witnesses included: Defense Department Inspector General Gordon Heddell; Deputy State Department Inspector General Harold Geisel; Acting U.S. Agency for International Development Inspector General Michael Carroll; Special Inspector General for Iraq Reconstruction and Stuart Bowen; Acting Special Inspector General for Afghanistan.

The witness statements are online but the transcript is not; at least not yet.

Boiled down to a single question, the issue is whether taxpayers are getting their money's worth when the government uses PMSC. In this hearing the inspectors general community shared its perspective together on one panel. Ironically, the Defense Department, State Department, USAID and SIGAR will not have IGs in January and President Obama has yet to nominate any replacements.

For those nitpickers who follow little things like inconsistencies, one might note that upon taking office, President Obama promised that his administration would be, quote, "the most open and transparent in history." But, as Rep. Jason Chaffetz noted at the hearing, "you cannot achieve transparency without inspectors general."

In addition to Defense, State and USAID, special inspectors general were established to focus specifically on efforts in Iraq and Afghanistan. (Special Inspector General for Iraq and Afghanistan Reconstruction, respectively.)

It bears note that the ranking member Rep. John Tierney has introduced H.R. 2880, which seeks to disband SIGIR and SIGAR and establish a special inspector general for overseas contingency operations. Stuart Bowen, the head of SIGIR, and the recently disbanded Commission on Wartime Contracting in Iraq and Afghanistan support this idea.

Also we've heard a lot in the past few years that while the U.S. government made lots of mistakes with regard to contracting in Iraq and Afghanistan in the early years of those wars, things are much better now. But are they? Let's consider some excerpts from the hearing.

REPRESENTATIVE JOHN TIERNEY (D-MA): Last year I led a six-month subcommittee investigation of a $2 billion Department of Defense trucking contract in Afghanistan. This investigation found that the trucking contract had spawned a vast protection racket in which warlords, criminals and insurgents extorted contractors for protection payments to obtain safe passage. A follow- up hearing held by this subcommittee in September showed that the department has made little progress in rooting out bad actors who undermined our anti-insurgency efforts in Afghanistan. We know now that many of these bad actors continue to serve as U.S. government contractors.


I'd like to address recent findings by the Department of Defense inspector general that shed light on some of the problems of one of our largest contractors in Afghanistan. That report revealed that the Supreme Group, the prime contractor on the multibillion dollar Defense Department's assistance contract in Afghanistan, is under investigation for hundreds of millions of dollars in overbilling. I understand that there is now a criminal inquiry of the Supreme Group's overbilling.

These allegations raise significant concerns about the Defense Logistics Agency and their ability to properly manage those large-scale contracts and to protect taxpayer dollars from waste and fraud. They also raise concerns about the use of no-bid cost-plus contracts that are so common in contingency operations. As we speak, the Defense Logistics Agency is preparing to award a new $10 billion to $30 billion contract to provide food and supplies for our troops in Afghanistan for five years.

How bad was the Supreme contract?

REP. TIERNEY: In your report, Mr. Heddell, on the subsistence prime vendor contract for Afghanistan, you found that while Supreme Group provided the products that were required by the contract the Defense Logistics Agency failed to provide sufficient oversight of contract cost and performance. Specifically, you found that the agency overpaid the vendor nearly a hundred million dollars in transportation costs, paid the vendor $455 million to airlift fresh fruits and vegetables without properly incorporating those requirements into the contract and allowed Supreme to bill the Army over $50 million in costs for the wrong appropriation year.

What recourse do you have as inspector general when the agency fails to properly manage a contract, and that failure leads to hundreds of millions of dollars in losses to the taxpayer?

MR. HEDDELL: Well, thank you, Congressman Tierney. I appreciate the question. I can -- I mean, obviously, this is an example of just about how bad it can get, and clearly this happened. This contract was created back in 2005. It wasn't a well-designed, well-thought-out contract, probably like many contracts during that period. Consequently, we've spent some $3 billion on this contract, and as you said, we overpaid the prime vendor $98 million in transportation costs; we overpaid them 25.9 million (dollars) in triwall, cost of boxing, corrugated boxes and so on; and as you indicated, $455 million in services to airlift fruit and vegetables from the United Arab Emirates into Afghanistan without even including that in the contract, all of that as a result of not planning properly and using our contract -- designing a contract that was not in the best interests of the American people.

Do we need a Special Inspector General for Overseas Contingency Operations?

REP. TIERNEY: Timing is perfect on that. So let's explore this a little. I mean, I think it's a healthy debate and I appreciate everybody's position on that. The SIGOCO concept, the Special Inspector General for Contingency Operations, would not be duplicative if it's carried out in the way that the legislation is drafted and the way it's intended. (Inaudible) -- there is nobody responsible for contingency operations unless they are specially appointed...

MR. BOWEN: Yes, Mr. Tierney. First and foremost, SIGOCO would be cross-jurisdictional. As hard as the Congress might try, as much as the -- as my friends and fellow IGs would like, they have to stay within their stovepipe to do their oversight, which means each of them have to be present, as my friend, Gordon Heddell, noted in-country carrying out oversight. But frequently, as we've learned in Iraq, as we see in Afghanistan, programs merge money, and when they merge money you're going to ultimately have different IGs attacking it or perhaps no one addressing it because of that merger. SIGOCO would allow that, that cross-jurisdictional power.

Second, it would be the primary mission of SIGOCO to carry out this oversight. We know that had SIGOCO existed in 2003 we would have averted the waste of billions of dollars. We know that had SIGAR existed in 2002, we would have averted the waste of billions of dollars because of the aggressive presence of investigation and audit on the ground that would have been there.

Third, you would have a staff that, when they sign up, they sign up to go to a conflict zone. That's not something that my friends and colleagues can require of their staff now. They can't say hey, you're going to be going to a war zone to do oversight, and that was a problem, frankly, in 2005 and 2006, 2007, getting people to volunteer to go to Iraq, which was a very dangerous place. Still is. Afghanistan is today. And finally, as I said in my testimony, this would save money. That's the watch word for this era.