Military contractors are hard to fire
By RICHARD LARDNER, Associated Press Writer Sat Feb 2,
6:00 AM ET
WASHINGTON - ITT Federal Services International, a
defense contractor hired to maintain battle gear for
U.S. troops in Iraq, repeatedly failed to do the job
Combat vehicles ITT declared as repaired and ready for
action flunked inspections and had to be fixed again.
Equipment to be sanitized for return to the United
States was found caked with dirt. And ITT's computer
database for tracking the work was rife with errors.
Formal "letters of concern" were sent to the
contractor. Still, the Army didn't fire ITT. Instead,
it gave the Colorado Springs, Colo.-based company more
work to do. Since October 2004, ITT has been paid $638
million through the Global Maintenance and Supply
The Army's ongoing arrangement with ITT, detailed in
an audit from the Government Accountability Office,
shows how captive the military has become to the
private sector for overseas support. Even when
contractors don't measure up, dismissing them may not
be an option because of the heavy pace of operations.
Sen. Claire McCaskill, D-Mo., co-author of legislation
creating a special commission to examine wartime
contracting, said poor-performing contractors are more
likely to get bonuses than to be penalized.
"It has just been a mess," McCaskill, a former state
auditor, said in an interview with The Associated
Press. "It's bad enough how much this war is costing.
But it's heartbreaking the amount of money that has
just gone up in smoke."
In ITT's case, there were too few soldiers to handle
the maintenance duties and no other contractors ready
to step in quickly, according to Redding Hobby, the
Army Sustainment Command's executive director for
field support operations.
"I'm not sure that our manning levels would have
allowed us to do anything except wring our hands and
worry and work people harder and work people
overtime," Hobby said in a telephone interview.
In a brief statement, ITT said it objected to the
GAO's conclusions and has "taken numerous corrective
actions." The company also said it has met the Army's
Contract personnel working for the Defense Department
now outnumber U.S. forces in Iraq and Afghanistan;
there are 196,000 private-sector workers in both
countries compared to 182,000 troops.
Contractors are responsible for a slew of duties,
including repairing warfighting equipment, supplying
food and water, building barracks, providing armed
security and gathering intelligence.
The dependence has come with serious consequences.
During a congressional hearing on Jan. 24, Jack Bell,
a senior Pentagon acquisition official, called the
situation "unprecedented" and one "that, frankly, we
were not adequately prepared to address."
A shortage of experienced federal employees to oversee
this growing industrial army is blamed for much of the
waste, fraud and abuse on contracts collectively worth
billions of dollars.
"We do not have the contracting personnel that we need
to guarantee that the taxpayer dollar is being
protected," said William Moser, the State Department's
deputy assistant secretary for logistics management.
"We are very, very concerned about the integrity in
the contracting process," added Moser, who appeared at
the same hearing as Bell. "We don't feel that we've
had major scandals up to now, but we don't feel like
that we can continue in the same situation."
The office of the Special Inspector General for Iraq
Reconstruction has 52 open cases related to bribery,
false billing, contract fraud, kickbacks and theft; 36
of those cases have been referred to the Justice
Department for prosecution, according to the inspector
The Army Criminal Investigation Command is busy, too.
The command has 90 criminal investigations under way
related to alleged contract fraud in Iraq, Kuwait and
Afghanistan, according to spokesman Chris Grey. Two
dozen U.S. citizens have been charged or indicted so
far 19 of those are Army military and civilian
employees and more than $15 million in bribes has
changed hands, Grey said.
To deal with the problem, the Army is implementing
many of the recommendations of a blue-ribbon panel
formed last year to reform contracting procedures. The
most significant are the creation of a contracting
command to be led by a two-star general and the
addition of 1,400 acquisition personnel.
David Maddox, a retired four-star general who served
on the panel, said the Army understands the need to
change. He's less sure the message has spread
throughout the Defense Department. That's necessary to
drive the broader changes needed to curb future
problems in defense contracting.
"The Army is moving out," Maddox said. "I'm a little
more concerned with the degree DoD is moving out."
The audit by the GAO, Congress' investigative arm,
does not say there were any improprieties stemming
from the ITT contract. Rather, neither the contractor
nor the government were ready for the demands placed
At one point, although the Army had documented several
incidents of poor performance, ITT was paid an
additional $33 million to overhaul 150 Humvees a
month. Over a nearly yearlong period, the contractor
never came close to meeting the mark but still got the
money, according to the GAO.
Many of the problems occurred in 2005 and 2006, when
the insurgency in Iraq was at its height and there was
a heavy burden on the contractor to get equipment back
into the fight as quickly as possible, according to
Hobby, the Army Sustainment Command official.
The terms of the contract called for ITT to be
compensated for all labor costs. That meant the
company was often paid twice to fix equipment it
didn't repair correctly the first time.
"Although it sounds bad economically, back at the time
we were trying to (implement) a repair program that
would maintain equipment for our soldiers, and that
was a good alternative," Hobby said of the ITT
contract. "It was expensive. We knew there were risks
there. And, quite frankly, we didn't have the
government (personnel) in place to ensure success. But
we've learned an awful lot of lessons from this."
The ITT contract and other similar support
arrangements will be changed so a company's profits
are linked to performance, Hobby said.
"We are transitioning to a contract that gives an
incentive to the contractor," Hobby said. "Our
argument would be, 'We paid you to fix these vehicles,
they didn't get fixed on time, so you lose your award
fee.' A penalty, so to speak."
ITT's performance has improved substantially, Hobby
said, and the Army will decide in the next few months
whether to extend the arrangement for another year.
Still, he doesn't diminish the gravity of the GAO's
"I think if Joe Sixpack or Sally Homemaker read that
report, they would probably have the same feeling,"
Hobby said when asked why ITT's contract was not
terminated. "I share your pain."
On the Net:
Army Sustainment Command: http://www.aschq.army.mil