Panel links poor US Army contract system to fraud

Army overwhelmed by scope of Iraq contracts, panel says




Digg del.icio.us Newsvine Reddit Facebook What's this? By Matt Kelley, USA TODAY
WASHINGTON —

The Army was understaffed and unprepared for overseeing the billions of dollars in contracts needed to fight the Iraq war and slow to recognize and react to problems of fraud and waste, an expert panel concluded Thursday.
The Pentagon should add as many as 2,000 military and civilian contract managers, centralize its operations and update regulations to avoid repeating the contracting mistakes made in Iraq, the panel's report said. There are now about 10,000 contracting officers. The lack of properly trained managers contributed to problems with waste, abuse and corruption, according to the commission's chairman, former Pentagon acquisition chief Jacques Gansler.

"It's a tipping point for the Army. It usually takes a crisis to make these changes," Gansler said at a Pentagon news conference. "We have a crisis, so we think we can make these changes."

Asked about the report at a separate news conference, Defense Secretary Robert Gates said he was "dismayed by a lot of the findings" in the report but "encouraged by the path forward offered by the recommendations." Gates said the panel's suggestions seem reasonable and the Pentagon would pursue implementing them.

Army Secretary Pete Geren appointed the commission in August in response to a series of scandals, many of them involving contracts overseen by a regional financial office at Camp Arifjan, Kuwait. The largest bribery case of the Iraq war so far involves Army Maj. John Cockerham, a contracting officer at Arifjan in 2004 and 2005 who is awaiting trial on charges he took nearly $10 million from businessmen. Cockerham has pleaded not guilty.

The Army has 83 criminal probes involving contracts for Iraq and Afghanistan worth $6 billion, said Chris Grey, a spokesman for the Army Criminal Investigation Command. Investigators have determined more than $15 million in bribes have changed hands, Grey said. Twenty-three military and civilian government workers have been charged so far.

Geren said he would study the panel's recommendations and work to implement them quickly. Geren said most of the Army's contracting workers are ethical but "handicapped by a system that's not properly organized or properly resourced for the demands of this conflict."

The panel's recommendations include:

•Expanding the Defense Contract Management Agency, which helps to manage contracts, and putting it under the command of a three-star general.

•Enhancing the training and career advancement opportunities for both civilian and military contracting officers.

•Including contracting officers and operations in the Army's training to familiarize all soldiers with contracting.

Pentagon officials acknowledged Thursday the Army was overwhelmed by the billions of dollars in contracts involving the Iraq and Afghanistan conflicts.

"They thought they could get the work done by deploying people inside the Army," Lt. Gen. Ross Thompson said when asked why Pentagon officials didn't send more contract managers into Iraq and Kuwait. "It's now obvious to everyone they didn't get the workforce size right."

The Army contracting office at Camp Arifjan, for example, had fewer than 30 workers during 2005 and 2006, said Thompson, a top Army contracting official. About 60 to 70 work there now, he said.

In response to the corruption scandals, the Army has launched a massive review of Iraq contracts. Contracting officers have selected for review random samples from among 6,000 contracts worth nearly $3 billion managed at Camp Arifjan from 2003 through 2006. Ten officers in Kuwait are reviewing more than 300 of those contracts worth less than $25,000 each. Another team at an Army financial center in Michigan is reviewing more than 300 contracts worth more than $25,000, said Jeff Parsons of the Army Materiel Command.
----------------

By Kristin Roberts

WASHINGTON, Nov 1 (Reuters) - An independent panel on Thursday called for an overhaul of the U.S. Army's military contracting operations in Iraq and Afghanistan, saying systemic problems such as a lack of oversight had contributed to fraud.

"This is a systemic issue within the Army and within the DoD (Department of Defense)," said Jacques Gansler, former undersecretary of defense for acquisitions and chairman of the commission that studied the problem.

"It usually takes a crisis to make change. We have a crisis, we can make those changes," he told reporters.

The group, appointed by the Army in August, highlighted problems in the Army's management of contracts that help supply and support troops in Iraq and Afghanistan. Those ranged from too few personnel to manage contracts to poor training and little oversight.

Defense Secretary Robert Gates said he was "dismayed by a lot of the findings" in the report but encouraged by the group's suggested improvements.

The panel found the number of personnel responsible for managing contracts in Kuwait, Iraq and Afghanistan dropped as the number of contracts and their dollar value soared over 12 years.

For example, personnel at the Army Materiel Command, which provides technology and acquisition support for troops on the ground, dropped 53 percent since 1995 as the dollar-value of contracts climbed 382 percent, according to the commission.

Only about 50 percent of all Army contracting personnel are certified to do their jobs, the commission found.
'PROBABLY MORE THAN A COINCIDENCE'

The group did not study the ongoing probes of possible fraud in military contracting, but said the Army was involved with a disproportionate number of the cases.

Of the total contracting workforce in Kuwait, 28 percent are Army personnel. But the Army is involved in 77 of 78 open fraud investigations, Gansler said.

"It's probably more than a coincidence is the conclusion we've reached," he said. "We think it's much more due to leadership and training."

The commission recommended restructuring the organization in part by establishing an Army Contracting Command to create more streamlined authority. It sought a separate command unit to manage all contracts, including State Department contracts, in individual war zones.

It also urged a 25 percent increase in the contracting workforce. It said Congress should authorize 10 more officer positions to improve oversight and encourage the Army to place a higher priority on contract management.

Gates said the Pentagon would pursue the panel's recommendations.

"One of the lessons that I took away from the report is the need for all of the services, but especially the Army, to focus on rebuilding contracting as an attractive career path," he said.