- The Washington Times - Monday, April 7, 2014

In a staggering loss of money even by Pentagon standards, the U.S. military and two contractors left American taxpayers on the hook for more than $700 million in food, laundry and other services that should have been billed to countries that sent troops to Afghanistan.

Coalition countries tacitly agreed to reimburse the Army, but U.S. regional commands in Afghanistan frequently failed to pass along the charges, according to audit records obtained by The Washington Times through the Freedom of Information Act.

The failures, which spanned a 27-month period from 2010 to 2012, included contractors, who didn’t report the costs of services to coalition forces, and poorly trained military overseers who neglected to enforce key contract terms with the two companies, identified as DynCorp and Fluor.

What’s more, the lapses occurred just as sequestration loomed and Pentagon leaders scrambled to slash spending. Indeed, by one measure, the cost of Afghanistan-based billing failures represents nearly 60 percent of the $1.2 billion that the Pentagon saved by furloughing 640,450 civilian employees.

The billing problems, detailed in an internal Army Audit Agency report sent to U.S. commanders in Afghanistan last summer, also raise questions about oversight of the Army’s Logistics Civil Augmentation Program, a multibillion-dollar outsourcing program that uses contractors to support deployed troops.

“The mismanagement of $700 million in reimbursements is mind-blowing, and we need to hold all parties involved accountable,” said Scott Amey, general counsel of the Project on Government Oversight. “Contractors need to estimate coalition partner costs, and the Army must get bills out the door and push to recoup every penny that is owed.”

Charles Tiefer, a professor at the University of Baltimore law school who served on the U.S. Wartime Contracting Commission, said the report showed that contractors were “making their lives easier, treating Uncle Sam as their personal piggy bank.”

“The contractors have always been good about making sure they’ve been paid, but they’re failing miserably at keeping and forwarding the bills to our allies,” he said.

Mr. Tiefer said it’s hard to understand why the military didn’t push to bill coalition forces.

“The Army has been subsidizing our allies by paying their support costs and as far as getting money back from our allies, in a sense they do owe us, but I’m afraid that horse has left the barn,” he said. “All we can do is lock the barn door in the future.”

Given the scope of billing lapses, recouping lost money could be difficult.

Just to identify the myriad services DynCorp and Fluor provided to coalition forces, the U.S. Forces-Afghanistan command relies on CC-35 transaction reports. Army auditors uncovered 178 reports that were never processed, including a $152,000 food bill for French troops and another for $42,000 to Korean troops. The documents reviewed by The Times didn’t give a complete list of countries’ unpaid bills.

Last summer, Army officials acknowledged that “a percentage” of the CC-35 reports still couldn’t be processed, according to a memo. The problem: “a lack of signatures and back up documentation.”

In an email statement to The Times Monday, Col. Jane Crichton, spokeswoman for U.S. Forces Afghanistan, said the problem was uncovered thanks to an audit request from the U.S. Forces-Afghanistan deputy commander.

“The problem resided with the contractor failure to capture cost for each coalition partner receiving support through the contract and absence of a reconciliation mechanism between the support contractors and USFOR-A,” she wrote in an email.

Col. Crichton said the command has since “implemented a proactive, collaborative process” to address the findings. She also said command recouped about $40 million in fiscal 2014.

“USFOR-A continues building an enduring legacy of transparent stewardship and oversight through a proactive and aggressive approach to accomplish the mission in a manner that is fiscally responsible and flexible, in accordance with the very fluid operational environment of Afghanistan,” she wrote.

Fluor officials declined to comment, but a spokeswoman for DynCorp said the company took steps in 2012 to track the data. The company also said DynCorp was never contacted to participate in the review.

“Contrary to assumptions made in the audit report, the Letter of Technical Direction (LOTD) and Contract Data Requirements List (CDRL) containing reporting requirements, details, timeline and the official notice to proceed in providing data, were received on 30 September 2012,” spokeswoman Ashley Burke wrote.

“Once the LOTD and CDRL were received, DynCorp International began gathering the requested data immediately and the first monthly report was submitted in October 2012,” she wrote.

Ms. Burke referred additional questions to the Army.

The company’s timeline is at slight odds with the Army Audit Agency, which reported that it wasn’t until three months later, in December 2012, when DynCorp submitted its first report.

“Our review showed that the contractors (Fluor and DynCorp) were not providing the data and that no government representatives were enforcing performance by the contractors,” Army auditors wrote in their report to commanders last summer.

“The [Logistics Civil Augmentation Program] contractor didn’t — in accordance with contract requirements — track, maintain, and report cost date for each coalition partner.”

Outsourcing

Nearly every aspect of military life relies on contract companies, which provide food, fuel and laundry, medical supplies, repair shops and garbage disposal, transportation, housing and a host of other services to deployed troops. In 2010, contract employees outnumbered even U.S. troops in Afghanistan by 112,000 to 94,000, according to a Government Accountability Office estimate.

Despite troop drawdowns, those costs continue. As Afghans held a presidential election last week, 33,500 U.S. troops remained along with 17,676 troops from dozens of other countries, according to the International Security Assistance Force figures.

The Army’s decades-old, multibillion-dollar military outsourcing program provides base support for these deployed troops. At one point in 2011, under the current contract known as LOGCAP IV, DynCorp and Fluor supported more than 130 bases in Afghanistan, records show.

The previous contract, LOGCAP III, went to KBR, which won it in a competitive bid in 2001. Critics complained that the company continued to win task orders worth tens of billions of dollars for another decade without competition.

By 2011, the U.S. had paid out more than $36 billion to KBR under LOGCAP III, according to the Wartime Contracting Commission, which said the lack of competition led to questionable billing.

Army officials said awarding the new contract to multiple companies would incorporate “lessons learned” to increase competition, control costs and “enhance quality.” But Army audit records reviewed by The Times reveal some familiar problems.

Lack of training

Under the North Atlantic Treaty Organization Mutual Support Act of 1979, the Pentagon can enter into “acquisition and cross-servicing agreements,” or ACSA’s, with allies to receive and provide logistics support.

But when military commanders appointed coordinators to oversee these potentially expensive agreements in Afghanistan, those duties were heaped on in addition to other primary jobs.

Indeed, coordinators didn’t even know about the cross-sharing program prior to their assignments, and they usually received little, if any, training, auditors found.

Meanwhile, hundreds of millions of dollars were at stake.

“ACSA coordinators weren’t provided sufficient training on the ACSA program and performed the function as an additional duty on a part-time basis,” auditors wrote.

It’s a familiar complaint when it comes to Pentagon contracting.

In June 2010, the Government Accountability Office found military contractor monitors assigned to act as the “eyes and ears” for contract officers usually weren’t training prior to deployment.

Some monitors with no engineering experience were even asked to oversee construction projects, including plan specifications that weren’t in English.

Michael Fischetti, a former Pentagon acquisition official who is now executive director of the National Contract Management Association, said the Army’s billing troubles reflect a broader training problem across government.

Budget cuts and high-profile training conferences that drew criticism for lavish spending have put training at the top of the list for potential trims, he said.

“They’ve gone a lockdown on training,” Mr. Fischetti said. “A lot of the progress they’ve been making has been halted. There should have been more training here.”

Col. Crichton said the augmentation program office now provides a monthly contract data requirement list to U.S. Force-Afghanistan, and ACSA coordinators are trained.

In their report last summer, Army auditors estimated the command should be able to recoup about $384 million from coalition countries for last year and this year “once sound procedures are in place and operating.”