RL33834
Defense Contracting in Iraq: Issues and Options for Congress
August 15, 2008
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Summary
This report examines logistical support contracts for troop support services in Iraq primarily administered through the U.S. Army's Logistics Civil Augmentation Program (LOGCAP). LOGCAP is an initiative designed to manage the use of civilian contractors that perform services during times of war and other military mobilizations. On April 18, 2008, DOD announced the Army's LOGCAP IV contract awards to three companies - DynCorp International LLC, Fort Worth, TX; Fluor Intercontinental, Inc, Greenville, SC; and KBR, Houston, TX, through a full and open competition. The LOGCAP IV contract calls for each company to compete for task orders. Each company may be awarded up to $5 billion annually for troop support services with a maximum annual value of $15 billion. Over the life of LOGCAP IV, the maximum contract value is $150 billion. Congress is concerned about the Federal oversight and management of DOD contracting in Iraq, particularly under LOGCAP. Recent assessments from the Government Accountability Office (GAO), DOD Office of the Inspector General (DOD-IG), and the Special Inspector General for Iraq Reconstruction (SIGIR) reveal a lack of accountability for large sums of money spent for Iraq contracts. Congress is also concerned about contractor insurance premiums through the Defense Base Act (DBA); such premiums comprise significant costs under LOGCAP. The DBA requires that many Federal government contractors and subcontractors provide workers' compensation insurance for their employees who work outside of the United States. The U.S. Army's LOGCAP contract covers costs for DBA insurance and includes significant overheard and other costs beyond the costs of the actual insurance claims. In 2007, the U.S. Army audited DBA costs under LOGCAP and uncovered rising program costs and wide fluctuations in insurance rates. Another potential issue of congressional interest is a July 2008 GAO report focused on the performance of the Defense Contract Audit Agency (DCAA). GAO auditors uncovered many improper management practices. As a result, DOD has asked the Defense Business Board to examine these issues and report its findings within 60 days. The Fiscal Year (FY) 2008 Defense Authorization Act (P.L. 110-181) contains provisions that are intended to reduce instances of DOD contract waste, fraud, abuse, and mismanagement. Other provisions require the Secretary of Defense to provide a plan for addressing skill shortfalls in the DOD acquisition workforce; provide for a periodic and independent management review of DOD contracts; prohibit the awarding of sole source contracts and non-competitive grants; and establish a commission on wartime contracting to investigate contracts in Iraq and Afghanistan. The House and Senate versions of their proposed FY2009 Defense Authorization bills contain new provisions that would extend these provisions for all Federal contracting. This report will be updated as warranted.
