08/08/2012 09:43 am ET Updated Oct 02, 2012

How to Get a Mule's -- I Mean Contractor's -- Attention

The Commission on Wartime Contracting in Iraq and Afghanistan (CWC) may be gone, but it is hardly forgotten. At least not by the U.S. Government Accountability Office which just issued a report regarding implementation of the recommendations of the CWC's final report, issued in August 2011.

And just how is that implementation going? According to the report summary:

DOD reported having taken or planned actions that directly align with about half of the CWC recommendations applicable to it, and State and USAID each reported having taken or planned actions that directly align with about one-third of the recommendations applicable to each of them. Officials from the three agencies explained that for the remaining recommendations no actions were taken or planned that directly aligned with the specific recommendation. This was because, for example, the agencies had determined that existing policies or practices already meet the intent of the recommendations or had disagreed with the recommendations.

Give credit where it is due. Some of what the Pentagon, State, and USAID are doing is unambiguously good, if long overdue. For example:

  • DOD issued a final rule to amend the Defense Federal Acquisition Regulation Supplement (DFARS) in February 2012 to improve the oversight of contractor business systems, including the ability to withhold a percentage of payments on certain covered contracts when a contractor's business systems contain significant deficiencies. This action aligns with the CWC's recommendation to strengthen authority to withhold contract payments for inadequate business systems.
  • State issued guidance in October 2011 describing a process for drafting a determination memorandum each time the potential need to suspend or debar a contractor arises, including for those cases in which no action against the contractor is ultimately recommended. This guidance aligns with a CWC recommendation to strengthen enforcement tools by requiring a written rationale for not pursuing a proposed suspension and debarment.
  • USAID issued guidance in January 2012 that requires sustainability analysis for all projects and developed a tool that contains questions, issues, and examples to help USAID project design teams think through project sustainability objectives and maximize sustainable outcomes. This guidance aligns with a CWC recommendation related to project sustainability (i.e., ensuring that host nations will be able to operate and maintain U.S.-funded projects on their own).

On the other hand, this is the federal government we are talking about so you know they are going to at least one thing which is going make you shake your head in disbelief. That would be the unwillingness of all three agencies to do this:

None of the three agencies agree with the recommendation requiring performance incentives and performance assessments as tools for preventing human trafficking by contractors. Officials from each agency explained that contractors should not need incentives to comply with anti-trafficking laws and other ongoing initiatives, such as training for contract administration personnel, were better tools to help combat human trafficking.

Recall what the CWC final report said on this point:

U.S. contingency contractors, opportunistic labor brokers, and international criminal organizations have taken advantage of the easy flow of people, money, goods, and services to capitalize on this source of revenue and profit.43 Their actions bring discredit to the United States and act as a barrier to building good diplomatic relations.
P. 92

The CWC was also quite clear that this is a continuing, not a past, problem.

At many times during its travels and hearings, the Commission uncovered tragic evidence of the recurrent problem of trafficking in persons by labor brokers or subcontractors of contingency contractors.3 Existing prohibitions on such trafficking have failed to suppress it. Labor brokers or subcontractors have an incentive to lure third-country nationals into coming to work for United States contractors, only to be mistreated or exploited.

The report I co-wrote, released last year, documented this problem with respect to a KBR subcontractor.

At the end of June the ACLU released a detailed report "Victims of Complacency" examining the ongoing trafficking and abuse of Third Country Nationals ("TCNs"), tens of thousands of whom are hired yearly through U.S. Government ("USG") contracts to work in support of U.S. military and diplomatic missions in Iraq and Afghanistan.

So there is no question that this is a serious issue. Accordingly, the CWC final report, in its Recommendation 12, called for strengthening enforcement tools by:

Facilitate the increased use of suspensions and debarments for contingency contractors by revising regulations to lower procedural barriers and require a written rationale for not pursuing a proposed suspension and debarment.

  • Make consent to U.S. civil jurisdiction a condition of contract award.
  • Expand the power of inspectors general.
  • Amend acquisition regulations to require contracting-officer consent for the award of subcontracts valued at or above300,000 to foreign companies when performance will predominantly be conducted overseas in support of contingency operations.
Direct agencies to incentivize contingency contractors to end trafficking in persons by labor brokers and subcontractors by requiring prime contracts to include performance incentives, such as award fees, and mandate that an assessment of contingency contractors' management of trafficking in persons be included in performance assessments.

It is this last recommendation that the DOD, State, and USAID, disagree with.

The Pentagon response said, "DOD officials stated the department does not plan to implement this recommendation. Officials stated that the department is committed to combating trafficking in persons and implementing the department's "zero tolerance" policy but does not intend to incentivize contractors to do so. DOD identified numerous initiatives underway in this area, including policy mandates and awareness initiatives. For example, in November 2011, DOD published additional contract administration duties to maintain surveillance over contractor compliance with trafficking in persons requirements for all DOD contracts."

State officials stated the department does not plan to implement this recommendation. Officials stated that State does not agree that incentivizing contractors with additional payments is the best way to accomplish the goals of the recommendation. Instead, State issued additional guidance and took action to strengthen anti-trafficking efforts. For example, State issued detailed contract administration guidance and developed training for contracting officer representatives on how to monitor contractor compliance with countering trafficking in persons requirements. State also collaborated on the development of governmentwide training on trafficking in persons prevention responsibilities for acquisition professionals. Further, State created and issued a new contract clause on recruitment and housing of non-professional third country nationals. The clause requires recruitment plans, fair recruitment practices, and, as appropriate, a plan to provide adequate housing conditions for workers.

USAID officials stated the agency does not plan to implement this recommendation. Officials explained that while they would support assessing contractor performance as it pertains to management of trafficking in persons, there is no need to incentivize contractors to comply with the law. They explained that all USAID contracts and grants already contain the standard Federal Acquisition Regulation provisions related to human trafficking and that the agency has issued additional guidance and directives. Also, USAID established a working group for continued oversight of trafficking issues and enforcement, which is developing updated training for contracting officers and contracting officer representatives.

It is actually reasonable, at least in my view, for DOD, State, and USAID, to argue that they should not have to make award fees to "incentivize" contractors with award fees. The way the system currently works it allows labor brokers and recruitment agents to scam third country nationals a dozen ways from Sunday (see p. 28 of the ACLU report for a depiction of how this typically works.). Putting more money into the system would most likely allow the current process to be even further corrupted.

But I would argue that what they should be doing is go in the opposite direction. When a contractor, or more likely a subcontractor, abuses its employees it should be heavily fined. Relying on the proper implementation of the Federal Acquisition regulations, given the current dismal state of the government acquisition corps is an invitation to do nothing. Since the industry usually argues that it should be allowed to police itself it should also have to bear the burden when its self-policing proves insufficient.

Harry Truman reportedly once said that the way to get a mule's attention "is to hit him between the eyeballs with a two by four." Substitute contractor for mule and big fine for two by four and you have a workable solution.