DOD, State, and USAID Obligated Over $17.7 Billion to about 7,000 Contractors and Other Entities for Afghanistan Reconstruction During FY 2007-2009

This audit, the first that I led as the Analyst in Charge, identified the recipients of contracts, grants, and cooperative agreements from Fiscal Year 2007 through Fiscal Year 2009.  ?Since 2001, the United States has appropriated about $55 billion for the reconstruction of Afghanistan—primarily for the Departments of Defense (DOD) and State, and the U.S. Agency for International Development (USAID). DOD, State, and USAID rely extensively on contractors and other implementing partners to undertake reconstruction projects.  However, information on reconstruction contractors and other entities and the financial mechanisms used—contracts, cooperative agreements, and grants—is not routinely reported.

DOD, State, and USAID provided us with data on the $17.7 billion in obligations they reported for Afghanistan reconstruction during fiscal years 2007 through 2009. As we describe in this report, we identified about 7,000 contractors and other entities involved in Afghan reconstruction. However, a relatively small number of contractors and other entities accounted for the majority of obligations. At DOD, out of the more than 6,600 contractors that received obligations for Afghan reconstruction, 44 that we identified received more than $6.3 billion, or about 55 percent of the $11.5 billion that four DOD contracting organizations reported obligating. Similarly, one contractor, DynCorp International, accounted for about 75 percent of the $2.4 billion that 2 bureaus at State reported obligating. Finally, at USAID, 5 of the 280 contractors or other entities accounted for more than half of the $3.8 billion in contract, cooperative agreement, and grant obligations.

Although the obligation data was in some cases more than three years old, this is the first analysis of its kind—namely, identifying the principal contractors and other entities involved in reconstruction efforts in Afghanistan and the funding mechanisms used.  As a result of this report, U.S. agencies involved in implementing reconstruction programs in Afghanistan are working to improve the quality of data on their spending.

As the Analyst in Charge, my responsibilities included scoping the engagement, developing key research findings, conducting the analysis, and serving as the principal author of the report.  Additionally, I was responsible for supervising staff, briefing senior managers internally as well as external stakeholders (such as relevant Committee staff).  When this report was released, it was also covered extensively in the media (link), and I participated in a number of briefings with media organizations to highlight the challenges in effectively overseeing the billions being spent on Afghan reconstruction projects.

 

DHS: Billions Invested In Major Programs Lack Appropriate Oversight

This 2008 audit reviewed the Department of Homeland Security’s process for approving and monitoring its major investments, including procuring U.S. Coast Guard ships and aircraft, border surveillance and screening equipment, nuclear detection equipment, and systems to track finance and human resources.  We found that while DHS investment review process calls for executive decision making at key points in an investment’s life cycle—including program authorization—the process has not provided the oversight needed to identify and address cost, schedule, and performance problems in its major investments. Poor implementation of the process is evidenced by the number of investments that did not adhere to the department’s investment review policy—of DHS’s 48 major investments requiring milestone and annual reviews, 45 were not assessed in accordance with this policy. At least 14 of these investments have reported cost growth, schedule slips, or performance shortfalls.  In addition, many major investments lacked basic acquisition documents necessary to inform the investment review process, such as program baselines, and two out of nine components—which manage a total of 8 major investments—do not have required component-level processes in place.

The investment review framework also integrates the budget process; however, budget decisions have been made in the absence of required oversight reviews and, as a result, DHS cannot ensure that annual funding decisions for its major investments make the best use of resources and address mission needs. GAO found almost a third of DHS’s major investments received funding without having validated mission needs and requirements—which confirm a need is justified—and two-thirds did not have required life- cycle cost estimates. At the same time, DHS has not conducted regular reviews of its investment portfolios—broad categories of investments that are linked by similar missions—to ensure effective performance and minimize unintended duplication of effort for investments.

As part of this audit, my first as a full-time analyst for GAO, I reviewed DHS investments made by U.S. Customs and Border Protection and the Transportation and Security Administration and developed a number of recommendations to DHS to ensure that the department fully implements and adheres to its investment review process.  As a result of this report, DHS re-evaluated its investment review process, making a number of changes to improve performance.

 

Planning Challenges Could Increase Risks for DOD in Providing Utility Services When Needed to Support the Military Buildup on Guam

As part of a major force realignment in the Pacific, 29,000 U.S military personnel and their families are scheduled to relocate from military bases in Japan to Guam by 2014.  In order to support such a transition (which will increase Guam’s military  population by more than two and a half times), DOD is constructing a variety of new facilities to house these servicemembers and their families.  However, existing utility systems that are being used extensively to support construction activities are at or near their maximum capacities, and will require significant enhancements to meet increased demands.

This 2009 audit evaluated DOD’s planning to implement the infrastructure upgrades necessary to support the military’s increased demands, finding that DOD lacked a comprehensive utility infrastructure plan which took into account the needs of Guam’s civilian population.  Additionally, the audit evaluated DOD’s timeframes for moving military personnel to Guam, finding that it provided little flexibility to accomodate any construction or utility infrastructure upgrade delays.  Without such a comprehensive plan or realistic timeframes, DOD lacks an important planning tool to address the challenge of one of the largest relocation of military personnel since the end of the Second World War and cannot fully provide consistent, detailed information to DOD’s stakeholders.

As part of this audit, I charted the expected increase in water, wastewater, and solid waste demand given the scheduled increase in demand and contributed to developing the recommendation that DOD develop a comprehensive utility plan for Guam, in cooperation with the government of Guam, to strengthen DOD’s management of its utility planning efforts and provide additional transparency among its stakeholders.  DOD concurred with our team’s recommendation, and is working to implement changes to its utility infrastructure development program.

Defense Contracting: Improved Insights and Controls Needed Over DoD’s Use of Time and Materials Contracts

Government Accountability Office Report

This 2007 GAO report documented the use of time and materials and labor hours contracts at the Department of Defense. The use of this contract type is generally not preferred by the government given the increased risk of cost, schedule, or performance lag. However, the total value of these contracts increased $10 billion from 1996 to 2005, and the report found that their increased use stems from their ability to be awarded quickly. The report also found that wide discrepancies existed in monitoring contract performance as well as uncertainties regarding the accurate valuation of subcontracted labor.

This report contributed directly to a substantive change in DoD acquisitions policy that seeks to more clearly identify the appropriate use of this contract type. It also points to the continuing evolution of the government-contractor workforce and the challenges that governmental entities face in defining their requirements. It also achieved $50 million in financial savings to the Federal government.

As part of this report I led the audit in contracts valued at over $30 million, interviewing contract officers and contractors as well as conducting contract file reviews. Additionally, I gathered significant data for a survey on subcontracted labor, helped formulate the survey design as part of a work team, and developed a methodology for the file review.