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Thursday, May 6, 2010

Defense Logistical Support Contracts in Iraq and Afghanistan: Issues for Congress

Valerie Bailey Grasso
Specialist in Defense Acquisition

This report examines Department of Defense (DOD) logistical support contracts for troop support services in Iraq and Afghanistan administered through the U.S. Army's Logistics Civil Augmentation Program (LOGCAP), as well as legislative initiatives which may impact the oversight and management of logistical support contracts for the delivery of troop support services. 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. As of March 2010, each company has been awarded at least one task order under LOGCAP IV. Over the life of LOGCAP IV, the maximum contract value is $150 billion. The U.S. Army Sustainment Command awarded the first performance task order on September 25, 2008, to Fluor Intercontinental, Inc., for logistical support services in Afghanistan. 

LOGCAP, an Army program designed to manage civilian contractors, is now in transition. The current LOGCAP III contractor supports the drawdown in Iraq by providing logistical services, theater transportation, augmentation of maintenance services, and other combat support services. According to Army contracting officials, all LOGCAP requirements in Kuwait have successfully transitioned from LOGCAP III to LOGCAP IV contracts. The transition of requirements is continuing from LOGCAP III to LOGCAP IV contracts, and will be used for combat support services in Afghanistan. Twelve tasks orders have been awarded under LOGCAP IV, and a total of $1.8 billion has been obligated under LOGCAP IV contracts. 

Congress is concerned about the federal oversight and management of DOD contracting in Iraq and Afghanistan, particularly under programs like LOGCAP. Recent assessments from the Government Accountability Office (GAO), DOD Office of the Inspector General (DOD-IG), the Special Inspector General for Iraq Reconstruction (SIGIR), and the Defense Contract Audit Agency reveal a lack of accountability for large sums of money spent for Iraq contracts. According to the congressional testimony of Charles Williams, director of the Defense Contract Management Agency, there are more than 600 oversight positions still vacant in Iraq and Afghanistan. Congress is also concerned about the size of 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 March 2009, the House Armed Services Committee (HASC) appointed a Panel on Defense Acquisition Reform to conduct a systematic review of the defense acquisition system. On March 23, 2010, the panel issued its final report, and provided the HASC its findings and recommendations. Largely as a result of the panel's work, H.R. 5013, the Implementing Management for Performance and Related Reforms to Obtain Value in Every Acquisition Act (IMPROVE) of 2010, was introduced on April 14, 2010. The bill seeks to improve the management and oversight of DOD's procurement of goods and services. The bill was amended by the HASC on April 21, 2010, discharged by the House Oversight and Government Reform Committee on April 23, 2010, and reported favorably in a HASC vote of 56-0.

Date of Report: April 28, 2010
Number of Pages: 44
Order Number: RL33834
Price: $29.95

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