Political Science Defense Acquisitions: Management

Political Science

Defense Acquisitions: Management and Oversight of Independent Contractors

In recent years, the Department of Defense has turned increasingly to independent contractors for the performance of essential services. Though generally touted as a means of improving efficiency and cost-effectiveness, the use of private contractors has frequently meant exactly the opposite - poor management and cost overruns. In a study released on January 17, 2007, the Government Accountability Office released a report on yet another investigation conducted into these difficulties. Testimony given before the Senate Subcommittee on Armed services by Katherine V. Schinasi, Managing Director Acquisition and Sourcing Management, detailed a host of shortcomings in the procurement process. In short, everything from the process of awarding contracts, to the method of overseeing their awarding, analysis of costs vs. benefits, management and extension of already existing contracts, and allocation of funds, were found to be plagued with errors and inconsistencies. All this came at a time when reliance on independent contractors has increased more than seventy-two percent over 1992 expenditures. (GAO, 2007, p. 3) Everything from professional and administrative services, to information technology, housekeeping, and so forth, is now increasingly handed over to outside entities, often with little accountability. In one area - medical services - reliance on outside contractors has increased by a whopping 412%. (GAO, 2007, p.3) Beyond the problem of increased reliance on independent contractors, the investigation recognized two other areas of difficulty: (1) the failure to follow sound business practices when acquiring services, and (2) the seeming inability of the Department of Defense to follow through on plans for improvement of its acquisitions process. (GAO, 2007, p. 1)

Numerous parties hold a vested interest in the elimination of problems within the Department of Defense acquisitions process. The military itself is a primary stakeholder, as are the independent contractors, the end recipients of services - in particular in Iraq - and the American taxpayer. The cost overruns and mismanagement associated with independent contractors have become particularly acute since the beginning of the Iraq War as varied interest groups compete for different priorities. The Department of Defense has as its primary interest, the proper functioning of the military establishment. To this end, it has eliminated many civilian positions within the military that formerly oversaw the acquisitions process. The testimony noted that the Department of Defense's civilian workforce is "not balanced by age and experience." (GAO, 2007, p.3) Workers are not knowledgeable in modern business paradigms. The lack of qualified government personnel results in a considerable portion of cost-estimates being performed by the contractors themselves - a fact that works directly against the interest of both the taxpayers and the military. (GAO, 2007, p.4) the diversion of troops and other personnel to the theater of war in Iraq has created acute shortages and emergency needs that can only be filled on an ad hoc basis. The military commonly relies on cost-reimbursement contracts, and other open-ended arrangements that permit military officers a maximum of flexibility at the expense of scrutinizing results and expenditures. (GAO, 2007, pp. 4-7) Neither the taxpayer, nor the Iraqi interest is best served by allocating funds to companies that cannot prove their ability to perform necessary work. Department of Defense officials and commanders on the ground appear to adopt a preference for working with companies with which they are familiar - without regard to the feasibility of these arrangements in each particular case. There is little or no public bidding on contracts, and contract arrangements are poorly spelled out, or not described at all. Furthermore, additional cost overruns are caused by the reliance on interagency contracts that actually demand an additional fee on the part of the Department of Defense. (GAO, 2007, p.9)

There is little difference in performance either before or after the awarding of contracts. Companies that were not checked into prior to contracting are barely supervised once they begin to perform the required work. Officials at the Department of Defense, and also those at the Department of the Interior acting for DOD, issue task orders that go "beyond the scope of underlying contracts;" commonly failing to justify non-compliance with regular procedures that ensure best value for the government. (GAO, 2007, p.10) it is as if Department of Defense officials see outside contractors as but members of the usual military command - enlisted personnel who can be ordered to do anything without regard to difficulty or expense. Contractors add to the problem by emphasizing customer service and revenue generation, rather than adherence to government policy. (GAO, 2007, p. 10) a lack of business acumen on the part of DOD and military officials is made up for by an overemphasis on the business aspects of work by the independent contractors themselves. The Department of Defense employs a highly fragmented system of acquisition and supervision. Procurement of services is spread across numerous commands. Inspection and supervision are performed ineffectually and at numerous locations and levels. (GAO, 2007, p. 11) Much supervision is reactive rather than strategic and proactive. Problems are caught after they happen, or reviews are conducted in such a manner as to have virtually no influence on the process itself, being little more than formalities. (GAO, 2007, p.12) the Department of Defense does not possess normative positions for measuring standards of work or compliance with best practice regulations. (GAO, 2007, p.12)