Order Code RL33834
Defense Contracting in Iraq:
Issues and Options for Congress
Updated May 6, 2008
Valerie Bailey Grasso
Specialist in Defense Acquisition Policy
Foreign Affairs, Defense, and Trade Division

Defense Contracting in Iraq: Issues and Options
for Congress
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. It provides for the awarding of contingency, or bridging contracts, as
well as the inclusion of contingency clauses in peacetime contracts.
In June 2007 the Army Sustainment Command (ASC) awarded LOGCAP IV
contracts 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 losing companies filed protests with the Government
Accountability Office (GAO). GAO sustained the protests on October 5, 2007 and
as a result the Army reopened the competition. On April 18, 2008, DOD announced
that the Army had settled the competition and re-awarded contracts to the original
three companies. The LOGCAP IV contract calls for the three companies to compete
for task orders; each company may be awarded up to $5 billion for troop support
services per year, the Army could award a maximum annual value of $15 billion, and
the maximum contract value was $150 billion.
The first three LOGCAP contracts represented a substantial shift in the type and
size of contracts for troop support services. Under LOGCAP III, media and other
reports cited the apparent lack of effective management control over the
administration of the contracts and the oversight of the contractors. Some observers
have noted that certain types of contracts like “costs-plus” have characteristics that
can make oversight difficult. Given the size and scope of Iraq contracts and the
challenge of managing billions of DOD-appropriated dollars, many have suggested
it appropriate to inquire whether these types of contracts can be managed more
effectively.
The second session of the 110th Congress may examine several bills to ensure
proper accountability and oversight in federal contracting. The Fiscal Year (FY)
2008 Defense Authorization Act (P.L. 110-181) contains provisions that address
contract waste, fraud, abuse, and mismanagement. Other provisions in the act 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 “no-bid” contracts and non-competitive
grants; and establish a commission on wartime contracting to investigate contracts
in Iraq and Afghanistan. Other legislative initiatives include H.R. 3033, the
Contractors and Federal Spending Accountability Act of 2008; H.R. 5712, the Close
the Contractor Fraud Loophole Act; H.R. 3928, the Government Contractor
Accountability Act of 2007; and H.R. 4881, the Contracting and Tax Accountability
Act of 2008. This report will be updated as warranted.

Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Purpose and Scope . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Air Force Contract Augmentation Program . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Logistics Civil Augmentation Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
LOGCAP Contracts (1992-2007) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
LOGCAP IV Contract Award . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
The planning contract was awarded to Serco . . . . . . . . . . . . . . . . . . . . . 3
ASC selected the performance contractors . . . . . . . . . . . . . . . . . . . . . . 4
Protests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Contract Details . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Congressional Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Background . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Awarding of Defense Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Full and Open Competition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Emergency Contracting Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Contingency Contracting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Rapid Acquisition Methods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Audits, Investigations, and Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Role of Federal Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Special Inspector General for Iraq Reconstruction (SIGIR) . . . . . . . . . 8
Latest SIGIR Review . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
DOD Inspector General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Government Accountability Office (GAO) . . . . . . . . . . . . . . . . . . . . . 11
Potential Oversight Issues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Contract Oversight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Contract administration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
DOD Contracting Officials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Development of Contract Requirements . . . . . . . . . . . . . . . . . . . . . . . 14
Use of Indefinite-Delivery/Indefinite-Quantity Contracts . . . . . . . . . . 15
Costs and the Use of No-Bid and Sole-Source Contracts . . . . . . . . . . 15
Cost-reimbursement Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Use of Overhead Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Acquisition Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
The Gansler Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Potential Options for Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Option 1: Implementing the Gansler Commission Recommendations . . . . 20
Option 2: Expanding the SIGIR’s Jurisdiction . . . . . . . . . . . . . . . . . . . . . . 21
Option 3: Convening a Study of the Federal Employee and Contractor
Workforce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Option 4: Requiring More Detail for Better Oversight . . . . . . . . . . . . . . . . 22
Option 5: Establishing a Dedicated Office to Conduct Audits and
Investigation of DOD Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Appendix A. Selected Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Congress . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Congressional Research Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Government Accountability Office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Special Inspector General for Iraq Reconstruction . . . . . . . . . . . . . . . . . . . 25
Department of Defense Inspector General . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Army Audit Agency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Gansler Commission . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Appendix B. Selected Legislative Initiatives on Iraq Contracting . . . . . . . . . . . 26
Selected Legislation Introduced in the 110th Congress . . . . . . . . . . . . . . . . 26
H.R. 3033, Contractors and Federal Spending Accountability Act
of 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
H.R. 5712, Close the Contractor Fraud Loophole Act . . . . . . . . . . . . . 26
H.R. 3928, Government Contractor Accountability Act of 2007 . . . . 26
H.R. 4881. Contracting and Tax Accountability Act of 2008 . . . . . . . 26
H.R. 4102, Stop Outsourcing Security Act . . . . . . . . . . . . . . . . . . . . . 26
S. 2147, Security Contractor Accountability Act of 2007 . . . . . . . . . . 26
H.R. 528, Iraq Contracting Fraud Review of 2007 . . . . . . . . . . . . . . . 27
H.R. 663, New Direction for Iraq Act of 2007 . . . . . . . . . . . . . . . . . . 27
H.R. 4102, Stop Outsourcing Security Act . . . . . . . . . . . . . . . . . . . . . 27
S. 2147, Security Contractor Accountability Act of 2007 . . . . . . . . . . 27
H.R. 528, Iraq Contracting Fraud Review of 2007 . . . . . . . . . . . . . . . 27
H.R. 663, New Direction for Iraq Act of 2007 . . . . . . . . . . . . . . . . . . 27
H.R. 897, Iraq and Afghanistan Contractor Sunshine Act . . . . . . . . . . 27
Selected Legislation Passed in the 110th Congress . . . . . . . . . . . . . . . . . . . . 28
P.L. 110-181, the FY2008 National Defense Authorization Act,
H.R. 4986 (formerly H.R. 1585) . . . . . . . . . . . . . . . . . . . . . . . . . 28


Defense Contracting in Iraq: Issues and
Options for Congress
Introduction
Purpose and Scope
This report will examine logistical support contracts for troop support services
(also known as service contracts1) in Iraq, primarily administered through a smaller
program, the United States Air Force Contract Augmentation Program (AFCAP) and
a larger program, the United States Army’s Logistics Civil Augmentation Program
(LOGCAP).2 This report will focus primarily on contracts involving Department of
Defense (DOD) appropriated funds, although some projects involve a blending of
funds from other agencies.3
Air Force Contract Augmentation Program
The U.S. Air Force has a smaller contingency contracting support program for
services in Iraq. The Air Force Contract Augmentation Program (AFCAP)
administers logistical support service contracts in Iraq. AFCAP is the largest
contingency support contract awarded by the Air Force. AFCAP is an “umbrella”
contract, similar to the U.S. Army’s LOGCAP. It was designed to provide an on-call
capability for troop sustainment and support. The program was established in 1997
for a wide-range of non-combatant, civil engineering services during wartime,
contingency operation, and humanitarian efforts. AFCAP provides for contractor
support to relieve active duty and air reserve personnel in the areas of food service,
1 Federal Acquisition Regulation (FAR) 37, Subpart 37.1 defines “service contracts” as
contracts that directly engage the time and effort of a contractor whose primary purpose is
to perform an identifiable task rather than to furnish an end item of supply.
2 Department of the Army. Logistics Civil Augmentation Program (LOGCAP). Army
Regulation (AR) 700-137, Introduction, 1-1. Purpose, p. 1.
3 For a fact sheet on the application of federal procurement statutes to contracts for the
reconstruction of Iraq, see CRS Report RS21555, Iraq Reconstruction: Frequently Asked
Questions Concerning the Application of Federal Procurement Statutes
, by John R. Luckey;
for a discussion on Iraqi Relief and Reconstruction Fund (IRRF) contracting issues, see CRS
Report RL31833, Iraq: Recent Developments in Reconstruction Assistance, by Curt Tarnoff.
For a discussion on private security contracting see CRS Report RL32419, Private Security
Contractors in Iraq: Background, Legal Status
, and Other Issues, by Jennifer K. Elsea and
Nina M. Serafino. For a discussion of war-related costs see CRS Report RL33110, The Cost
of Iraq, Afghanistan, and Other Global War on Terror Operations Since 9/11
, by Amy
Belasco. For a discussion on the FY2008 DOD appropriations and authorization bills, refer
to CRS Report RL33999, Defense: FY2008 Authorization and Appropriations, by Pat
Towell, Stephen Daggett, and Amy Belasco.

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lodging, carpentry, plumbing, electrical, mechanical, air conditioning, laundry plant
operations, fire protection emergency management, project and program
management.
Initially, AFCAP began as a five-year, $475 million program; now it is a 10-
year, $10 billion program. AFCAP is managed by the Air Force Civil Engineer
Support Agency at Tyndall Air Force Base and the Air Force Services Agency in San
Antonio, Texas. The contract consists of administrative task orders awarded to six
companies: Washington Group International, CH2M Hill Global Services,
URS/Berger JV, Bechtel National, DynCorp International and Readiness
Management Support. The AFCAP contractor maintains a core staff in theater to
plan, organize, and acquire resources on an as-needed basis.4
Logistics Civil Augmentation Program
LOGCAP was established by the U.S. Army on December 6, 1985 with the
publication of Army Regulation 700-137. LOGCAP is an initiative to manage the
use of civilian contractors who perform services in support of DOD missions during
times of war and other military mobilizations. The use of LOGCAP contracts
augments combat support and combat service support to military forces.5
On October 1, 1996, LOGCAP management was transferred to the U.S. Army
Material Command. In September 2006 the ASC was created to serve as the
“logistics integrator” for the contingency contracting and sustainment needs of the
military worldwide. ASC oversees about 65,000 contractors and manages about $25
billion in contracts.6
LOGCAP Contracts (1992-2007)
The first LOGCAP contract (LOGCAP I) was awarded on August 3, 1992 to
Brown and Root Services of Houston, Texas (also know as KBR). Reportedly, the
contract was competitively awarded and consisted of a cost-plus-award-fee contract
for one year followed by four option years. The Army Corp of Engineers reportedly
held a competition to award the second LOGCAP contract (LOGCAP II). The
contract, a cost-plus award fee contract for one base year followed by four option
4 $10 Billion AFCAP III Award Provides Expeditionary Engineering. Defense Industry
Daily
: Military Purchasing News for Defense Procurement Managers and Contractors, at
[http://www.defenseindustrydaily.com/10b-afcap-iii-program-contract-provides-
expeditionary-engineering-01468/].
5 LOGCAP contracts have been previously awarded for work in Rwanda, Haiti, Saudi
Arabia, Kosovo, Ecuador, Q atar, Italy, southeastern Europe, Bosnia, South Korea, Iraq, and
Kuwait. Under LOGCAP, private sector contractors are used to provide a broad range of
logistical and other support services to U.S. and allied forces during combat, peacekeeping,
humanitarian and training operations.
6 [http://www.aschq.army.mil/home/missionvision.htm].

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years was awarded to Dyncorp on January 1, 1997. The third LOGCAP contract
(LOGCAP III) was awarded in 2001 to Halliburton/KBR.7
LOGCAP III, a ten-year contract (one base year followed by nine option years),
was awarded to Halliburton/KBR to perform a variety of tasks. Initial press reports
indicated that the 2001 LOGCAP III contract would be for the development of a
contingency plan for extinguishing oil well fires in Iraq; however, subsequent press
reports indicate that the contract included such tasks as providing housing for troops,
preparing food, supplying water, and collecting trash. This contract was awarded
under a cost-plus-award-fee, Indefinite-Delivery/Indefinite-Quantity (ID/IQ)
contract.8 The 2001 contract was based on specific task orders which are issued
individually and only for those services that DOD felt were necessary to support the
mission in the near term. During 2003, LOGCAP III contract rose to more than $3.5
billion. According to one press account, Halliburton/KBR reportedly earned a fixed
1% profit above costs on LOGCAP III, with the possibility of an additional 2%
incentive bonus,9 while another press account reported that the Halliburton/KBR
LOGCAP III contract was a cost-plus, award fee contract that earned a 2% fixed fee
with the potential for an extra 5% incentive fee.10
The fourth LOGCAP contract (LOGCAP IV) was executed with a different
acquisition strategy. According to the Army, the LOGCAP IV contract award as
based on a full and open competition. Instead of using a single contractor, the
contract called for multiple contractors. Competitions were held and the contracts
were awarded based on what represented the best value to the government.11 In best
value source selections, the government may make trade offs to make awards based
on factors other than costs or technical superiority. The use of multiple LOGCAP
contractors is reportedly intended to reduce the government’s risk. Under the new
strategy, the three performance contractors may compete for individual LOGCAP
task orders, creating a competitive environment meant to control costs and enhance
quality.
LOGCAP IV Contract Award
The planning contract was awarded to Serco. In August 2006 the
Army held a competition to select a logistical planning and program support
contractor for LOGCAP IV. Two proposals were received and in February 2007 the
ASC selected Serco, Inc., of Vienna, VA. This contract will have a minimum value
7 KBR was formerly known as Brown and Root Services. Brown & Root Services was the
original LOGCAP contractor.
8 Indefinite delivery/indefinite quantity contracts, also known as ID/IQ contracts, supply an
indefinite quantity of supplies, goods, or materials for an indefinite period of time. See
FAR, Part 16, Types of Contracts.
9 Jaffe, Greg and King, Neil, Jr. U.S. General Criticizes Halliburton. Wall Street Journal,
March 15, 2004.
10 See the Center for Public Integrity’s website at [http://www.publicintegrity.org/wow/]
under the section for Windfalls of War, U.S. Contractors in Afghanistan and Iraq.
11 FAR, Part 15. Contracting by Negotiation.

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of $613,677 with a contract period of one base year followed by up to four one-year
options with a maximum annual contract value of $45 million and a maximum
contract value of $225 million.12
The ASC news release announcing the initial award selection described the
range of logistical and program services provided under the contract. They appear
on ASC website.
! Augmenting the Army’s capability to develop and update worldwide
management and staffing plans for contingencies;
! working with LOGCAP IV performance contractors to assure that
they understand these plans;
! helping theater planners integrate LOGCAP into their plans;
! assisting planners in incorporating a broad range of contracted
logistics support;
! developing scopes of work officially referred to as procurement
work statements;
! preparing independent government cost estimates which are
compared against the contractor’s bids to assure valid costs for task
orders;
! conducting analysis of how performance contractors will do the
work outlined in the task orders’ scopes of work;
! analyzing performance contractors’ costs;
! working with the Army to measure LOGCAP IV contractor
performance; and
! recommending process improvements in the above actions.13
ASC selected the performance contractors. The Army conducted a
competition to select up to three performance contractors for services similar to those
rendered under LOGCAP III.14 Solicitations were issued in October 2006 and six
12 U.S. Army Sustainment Command, February 16, 2007; News Release, U.S. Army
Sustainment Command, June 27, 2007.
13 Ibid, p. 1.
14 From the Army’s FY2008 Budget Estimates for the Global War on Terrorism: LOGCAP
augments combat support and combat service support force structure by reinforcing military
assets with civilian contract support. The program provides primarily base life support
services to the forces in theater. Base life support services provide a full spectrum of
services, including food service, power generation, electrical distribution, facilities
management, dining facility operations, pest management, hazardous and non-hazardous
waste management, latrines, water systems, billeting management, fire fighting and fire
protection services, and laundry service operations. In Iraq, the program provides for the
Multi-National Force — Iraq base logistics support, base camp reorganization, the
International Zone, Camp Bucca Prisoner of War base operations support, and contractor
support management in theater. In Afghanistan, the program manages base operations
support for the Coalition Joint Operations Area — Afghanistan, and the Kabul, Bagram,
Kandahar, and Salerno airfields. In Kuwait, the program manages Camps Spearhead, Udari,
Arifjan; theater Retrograde operations; the theater-wide transportation mission; theater oil
analysis and test facilities; management and diagnostic equipment, and bulk fuel operations.
(continued...)

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proposals were received. In June 2007 the ASC selected three companies to serve
as performance contractors - DynCorp International LLC, Fort Worth, TX; Fluor
Intercontinental, Inc, Greenville, SC; and KBR, Houston, TX.
Protests.
On June 27, 2007 the losing companies filed protests with GAO
over the LOGCAP IV award decision.15 GAO sustained the protests on October 5,
2007. The Army reopened the competition. Five companies submitted bids. On
April 17, 2008, the Army announced that it would reawarded the LOGCAP IV
contract to the three companies previously awarded contracts under LOGCAP IV.
Contract Details. The LOGCAP IV contract will cover a range of services:
! supply operations, including food, water, fuel, spare parts, and other
items
! field operations, including food, laundry, housing, sanitation, waste
management, postal services, and morale, welfare and recreation
activities; and
! other operations, including engineering and construction; support to
the communication networks; transportation and cargo services; and
facilities and repair.16
LOGCAP IV contracts were awarded as ID/IQ contracts with one base year
followed by nine option years. Each company will compete for task orders. Each of
the three contracts will have a maximum value of $5 billion per year, with a
collective annual maximum value of $15 billion and lifetime maximum value of
$150 billion for LOGCAP IV.17
Congressional Interest
During the first session of the 110th Congress, Congress held a series of
hearings on Iraq contracting activities. Legislative initiatives in the FY2008 Defense
Authorization Act (P.L.110-181) would provide increased oversight and
accountability for DOD contracting during combat operations. Policymakers were
14 (...continued)
Army Operations and Maintenance, Volume 1, February 2007, p. 13, at
[http://www.asafm.army.mil/budget/fybm/fybm.asp].
15 Kelley, Matt. GAO Challenges $150B Contract Awarded By Army: Urges Review of 10-
year Deal to Support Troops. USA Today, October 31, 2007, p. 5A. According to the
article, the ASC spokesperson identified was Daniel Carlson. According to Dan Gordon,
a GAO official identified in the article, the ruling was issued under seal. Also, see GAO
Upholds Protests to Army’s Award of $50 Billion for LOGCAP 4. Engineering News-
Record
, November 5, 2007, Construction Week; pg. 9, Vol. 259, No. 16. An ASC
spokesperson announced that the LOGCAP III contract would be extended while the Army
made a final decision.
16 Sheftick, Gary. Three Firms to Vie for LOGCAP Services in Theater. Department of
Defense, U.S. Army Release
. April 18, 2008.
17 U.S. Army Sustainment Command. ASC Selects LOGCAP IV Contractors, June 27,
2007. Visited October 30, 2007 at [http://www.aschq.army.mil/commandnews/default.asp].

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concerned about Iraq contracts for several reasons including the expense and
difficulty of managing logistical support contracts; allegations and reported instances
of contract waste, fraud, abuse, and financial mismanagement; and questions
regarding DOD’s capacity to manage such contracts. Some policymakers have raised
questions as to whether DOD has the right mix of acquisition workforce personnel
trained and equipped to oversee these large-scale contracts. Congress has extended
the tenure of the Office of the Special Inspector General for Iraq Reconstruction
(SIGIR). From March 2004 through April 2008 SIGIR has performed audits and
investigations, and presented recommendations for improving the management of
Iraq reconstruction and relief activities.18
Background
Awarding of Defense Contracts
In most cases, federal government contracts are awarded under “full and open
competition.” However, there are exceptions, particularly during times of war.
Full and Open Competition. In general, authorities that govern the
awarding of most federal government contracts can be found in the United States
Code (U.S.C.) and the Federal Acquisition Regulation (FAR). The Competition in
Contracting Act of 198419 explicitly states that the federal government “shall obtain
full and open competition through use of the competitive procedures in accordance
with the requirements of this title and the FAR.”20 The FAR and the Defense Federal
Acquisition Regulation Supplement (DFARS) give DOD at least seven exceptions
to the use of other than full and open competition in the awarding of contracts.21
18 See the Special Inspector General for Iraq Reconstruction, Quarterly Report to Congress,
April 30, 2008, at [http://www.sigir.mil/reports/quarterlyreports/default.aspx]. The SIGIR
replaced the Inspector General for the Coalition Provisional Authority (CPA-IG). As
provided for in P.L. 108-106, the SIGIR provides an independent and objective audit,
analysis, and investigation into the use of U.S.-appropriated resources for Iraq relief and
reconstruction. The SIGIR, Stuart W. Bowen, Jr., was appointed as CPA-IG on January 20,
2004. He reports to both the Department of State and the Department of Defense, provides
quarterly reports and semi-annual reports to Congress, and has offices in Baghad and
Arlington, VA. For a summary of the history of U.S. reconstruction assistance in Iraq, see
CRS Report RL31833, Iraq: Recent Developments in Reconstruction Assistance, by Curt
Tarnoff.
19 41U.S.C. 253. CICA can also be found in Title 10 U.S.C., Chapter 137, and was included
in Section 805 of the FY2004 National Defense Authorization Act (P.L. 108-136).
20 41 U.S.C. 253 (a)(1)(A).
21 The Defense Federal Acquisition Regulation and AIDAR are supplements to the FAR.
See DFARS, Subpart 206.3, and AIDAR, Subpart 706.3, Other Than Full and Open
Competition. The exceptions are: (1) There is only one responsible source available to
fulfill the contract requirements; (2) the federal agency’s need for these goods or services
is of such an unusual and compelling urgency that the federal government would be
seriously injured if this contract were not awarded; (3) the federal government needs to
ensure that suppliers are maintained in the event of a national emergency, or to achieve
(continued...)

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Two of the seven circumstances are (1) when the Secretary of Defense
determines that DOD’s need for a property or service is of such an “unusual and
compelling urgency” that the United States would be seriously injured unless DOD
is permitted to limit the number of sources from which it solicits bids or proposals;
and (2) when the use of full and open competition would compromise national
security.
Emergency Contracting Authorities. Title 41 USC Section 428a grants
special emergency procurement authority to heads of executive agencies where it is
determined that a procurement is to be used in support of a contingency operation,
or to facilitate defense against or recovery from nuclear, biological, chemical, or
radiological attack.
Contingency Contracting. Contingency contracting differs from emergency
contracting - the first usually describes situations where urgent requirements are
necessitated by disasters, while the second usually describes military, humanitarian,
or peacekeeping operations.22 DOD has developed initiatives to strengthen DOD
contracting operations, particularly in contingency contracting situations.23 Section
817 of the National Defense Authorization Act for Fiscal Year (FY) 200624 directs
the Secretary of Defense, in consultation with the Chairman of the Joint Chiefs of
Staff, to develop a joint policy for contingency contracting during combat operations
and post-conflict operations no later than one year from the bill’s enactment.
Sections 815 and 854 of the John Warner National Defense Authorization Act for
FY2007required DOD to report to Congress on contingency contracting requirements
and program management, and to develop instructions to implement a contingency
contracting program. The report was issued in October 2007.25
21 (...continued)
industrial mobilization, or to establish or achieve or maintain an engineering, development,
or research capability; (4) The federal government has an international agreement to make
this acquisition through means other than through full and open competition; (5) a statute
specifically authorizes or requires that the contract be made through a specific source; (6)
The use of full and open competition may compromise national security; (7) The public
interest would be better served by use of other than full and open competition. The
procedures for submitting written justifications to use other than full and open competition,
including review requirements and delegation of authority, are outlined in DFARS, Subparts
206.303-1 and 206.304, and AIDAR 706.3. For a more detailed discussion on the seven
exceptions to the use of full and open competition, refer to CRS Report RS21555, Iraq
Reconstruction: Frequently Asked Questions Concerning the Application of Federal
Procurement Statutes
, by John R. Luckey.
22 Drabkin, David, and Thai, Khi V. Emergency Contracting in the US Federal Government.
Journal of Public Procurement 2007, Vol. 7, No. 1, p. 84.
23 For further information on DOD Procurement and Acquisition Policy governing
contingency contracting, refer to [http://www.acq.osd.mil/dpap/pacc/cc/about.html], visited
November 7, 2007.
24 P.L. 109-16.
25 Report on DOD Program for Planning, Managing, and Accounting for Contractor Services
and Contractor Personnel during Contingency Operations, accompanied by a memorandum
(continued...)

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Rapid Acquisition Methods. Section 811 of the FY2005 National Defense
Authorization Act26 grants the Secretary of Defense limited rapid acquisition
authority to acquire goods and services during combat emergencies. Also, Title 10,
Section 2304 outlines the use of ID/IQ task orders, sealed bidding, certain contract
actions, and set-aside procurement under section 8(a) of the Small Business Act27 as
examples of ways to expedite the delivery of goods and services during combat
operations or post-conflict operations.
Audits, Investigations, and Reports
Role of Federal Agencies. No one federal agency has the sole mission to
audit, investigate, or oversee DOD-appropriated funds for troop support services
under LOGCAP. Multiple agencies share responsibility, among them the Defense
Contract Audit Agency (DCAA), the Defense Contract Management Agency
(DCMA), the Army Audit Agency (AAA), and the DOD Inspector General.
Special Inspector General for Iraq Reconstruction (SIGIR). Media
reports suggests that a perceived lack of transparency in the earliest Iraq contracts led
to the appointment of the Special Inspector General for the Coalition Provisional
Authority (now SIGIR). SIGIR Stuart Bowen has audited and investigated contracts
for Iraq reconstruction and relief funds, although some projects have involved a
blending of IRRF funds with DOD appropriated funds.28 The SIGIR’s additional
investigations into LOGCAP contracts have largely described LOGCAP contracts as
lacking transparency, oversight, and financial accountability, and his investigations
have documented some cases of waste, fraud, abuse, and financial mismanagement.
According to the Congressional Budget Office, the SIGIR has produced more than
150 reports, audits, or investigations of reconstruction-related activities.29 Estimates
have been made that the SIGIR’s work has resulted in significant benefits to the
federal government.30
25 (...continued)
to the Honorable Richard B. Cheney from the Honorable P. Jackson Bell, Deputy Under
Secretary of Defense for Logistics and Materiel Readiness, October 15, 2007. Section 815
covers the implementation of DOD Instruction (DODI) 3020.41,Contractor Personnel
Aut hor i zed t o Accompany Ar me d F o r c e s , O c t o b e r 3 , 2 0 0 5, at
[http://www.dtic.mil/whs/directives/corres/html/302041.htm].
26 Section 806 of the Bob Stump National Defense Authorization Act for Fiscal Year 2003
(10 U.S.C. 2302 note) is amended through the passage of Section 811.
27 15 U.S.C. 637(a).
28 For a discussion of contract funds for Iraqi Relief and Reconstruction projects, see CRS
Report RL31833, Iraq: Recent Developments in Reconstruction Assistance, by Curt Tarnoff.
Also, for a discussion on federal procurement statutes as they affect Iraq reconstruction
projects see CRS Report RS21555, Iraq Reconstruction: Frequently Asked Questions
Concerning the Application of Federal Procurement Statutes
, by John R. Luckey.
29 Paying for Iraq Reconstruction. An Update of the January 2004 analysis. Congressional
Budget Office, December 8, 2006.
30 Senator Collins Works To Extend The Term of the Office that Oversees Billions in Iraqi
(continued...)

CRS-9
In June 2007 the SIGIR released a report based on its partial audit of Task Order
130, awarded to KBR on April 27, 2006 to provide support services to officials at the
U.S. Embassy in Iraq as well as other Iraq sites. This report found substantial
deficiencies in both KBR’s ability to provide enough data for the SIGIR to perform
an adequate audit and investigation of (what appeared to be) gross overcharges for
fuel and food services. Additionally, the report found that the government’s
oversight and management of the contract was inadequate and contributed to the
SIGIR’s inability to completely audit and investigate the contract - including an
evaluation of the government’s ability to provide oversight and management.31
Overall, the SIGIR has recommended that the federal government “generally
avoid the use of sole-source and limited-competition contracting actions.”32 The
report concludes that the use of sole-source and limited competition contracting in
Iraq should have ended sooner, and that contracts issued previously under limited or
sole-source competition should have been subject to re-competition.
Latest SIGIR Review
The latest LOGCAP review is a continuation of a past review of LOGCAP Task
Order 130 (awarded on April 27, 2006 with an estimated value of $283 million) and
a new review of LOGCAP Task Order 151 (awarded on June 6, 2007 with an
estimated value of $200 million). Both task orders were awarded to KBR for support
services to the Chief of Mission and Multi-National Force-Iraq staffs (located at the
U.S. Embassy-Iraq) and for services at other Chief of Mission sites within Iraq
(located in Baghdad, Basra, Al Hillah and Kirkuk.) SIGIR conducted its review at
KBR sites in Baghdad and involved interviews with personnel responsible for the
administration and oversight from DCMA, DCAA, and DOS; personnel with the
Joint Area Support Group-Central appointed as the Contracting Officer’s Technical
Representatives (COTRs); the LOGCAP Task Order 151 Support Officer; personnel
at the Army’s Logistic and Budget Offices, and KBR managers and operational
personnel. 33 From the report, here is an excerpt which described the costs.
Because these task orders provided support to both the Department of Defense
(DOD) and Department of State (DOS) missions in Iraq, DOD and DOS agreed
30 (...continued)
Reconstruction Dollars. Press Release of the United States Senate Committee on
Governmental Affairs, November 13, 2006. Also, see SIGIR website [http://www
.sigir.mil/] for audits reports.
31 Logistics Civil Augmentation Program Task Order 130: Requirements Validation,
Government Oversight, and Contractor Performance. SIGIR 07-001, June 22, 2007, at
[http://www.sigir.mil/reports/pdf/audits/07-001.pdf]
32 Lessons in Contracting from Iraq Reconstruction. Lessons Learned and
Recommendations from the SIGIR, July 2006.
33 Both Task Orders are a continuation of services previously awarded under Task Order
100 and Task Order 44. Logistics Civil Augmentation Program Task Orders 130 and 151:
Program Management, Reimbursement, and Transition. SIGIR-08-002, October 30,
2007,Appendix A, Scope and Methodology p. 22, at [http://www.sigir.mil
/reports/pdf/audits/08-002.pdf]

CRS-10
that the reimbursement of costs associated with these task orders would be shared
60% by DOS and 40% by DOD. The total cost of these four task orders is
approximately $1.5 billion.34
Overall, the SIGIR’s audit and investigation found that the federal government
and KBR had improved its oversight and management of Task Orders 130 and 151.
However, the report identified areas where the government should make specific
improvements in both oversight and management.35
DOD Inspector General. Thomas F. Gimble, Principal Deputy Inspector
General for the Department of Defense, testified at the September 20, 2007 hearing
before the House Armed Services Committee on “Accountability During
Contingency Operations: Preventing and Fighting Corruption in Contracting and
Establishing and Maintaining Appropriate Controls on Materiel.”36 In his testimony
he described DOD’s past and present efforts to provide oversight for contracting
during contingency operations.
To date, over $550 billion has been appropriated to the Department of Defense
in support of the men and women of our Armed Forces in Southwest Asia and
the fight against terrorism. To provide oversight, we have over 225 personnel
working on 29 audits and 90 investigations that address a wide variety of matters
to include contracting, accountability, and required documentation. Additionally,
we are working with other DoD organizations, such as the Army Audit Agency,
the Army Criminal Investigation Command, and the Defense Finance and
Accounting Service, to evaluate and provide recommendations for actions
addressing these critical mission support areas.37
He also described the formation of a new partnership to combine the efforts of
multiple federal agencies to combat both waste, fraud, abuse, and mismanagement
of Iraq reconstruction contracts.
More recently, as a result of the magnitude of alleged criminal activities within
the Iraqi theater, a group of Federal agencies has formalized a partnership to
combine resources to investigate and prosecute cases of contract fraud and public
corruption related to U.S. Government spending for Iraq reconstruction. The
participating agencies in the International Contract Corruption Task Force
(ICCTF) are DCIS; Army CIDs Major Procurement Fraud Unit; the Office of the
Inspector General, Department of State; the FBI; the Special Inspector General
for Iraq Reconstruction; and the Office of the Inspector General, Agency for
International Development.
34 Logistics Civil Augmentation Program Task Orders 130 and 151: Program Management,
Reimbursement, and Transition. SIGIR-08-002, October 30, 2007, pages 1-2, at
[http://www.sigir.mil/reports/pdf/audits/08-002.pdf]
35 Ibid, pp. 4-20.
36 Statement of Mr. Thomas F. Gimble, Principal Deputy Inspector General, Department of
Defense, before the House Armed Services Committee, September 20, 2007.
37 Ibid, p. 1.

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The ICCTF has established a Joint Operations Center which is a case
coordination cell and criminal intelligence element aimed at achieving maximum
interagency cooperation to successfully prosecute fraud and corruption cases in
support of the war effort in Iraq. The mission and objectives of the ICCTF are
a shared responsibility of the participating agencies. Case information and
criminal intelligence are shared without reservation and statistical
accomplishments will be reported jointly.
As a result of closed and ongoing investigations, five Federal criminal
indictments and ten Federal criminal information have been issued, and two
Article 32 hearings under the Uniform Code of Military Justice have been
conducted. As a result of the investigations, nine U.S. persons and one foreign
person have been convicted of felonies, resulting in a total of approximately
fifteen years of confinement and eleven years of probation. Four individuals and
one company were debarred from contracting with the U.S. Government;
nineteen companies and persons were suspended from contracting; and two
contractors signed settlement agreements with the U.S. Government. In all, $9.84
million was paid to the U.S. in restitution; $323,525 was levied in fines and
penalties; $3,500 was forfeited; and $61,953 was seized.38
Government Accountability Office (GAO). GAO has identified DOD
contract management as a high risk area and monitors DOD’s performance with
periodic progress updates.39 GAO has conducted numerous studies of Iraq
contracting including several studies of logistical support contracts.40 Since 2003
GAO has issued a number of Iraq-related reports and testimonies to Congress.
The Comptroller General David Walker appeared in July 2007 before the Senate
Homeland Security and Governmental Affairs Committee to discuss four specific
challenges facing federal agencies in the oversight and management of contracts.
There he made several important observations:
Managing risks when requirements are in transition requires effective oversight.
DOD lacked the capacity to provide sufficient numbers of contracting, logistics,
and other personnel, thereby hindering oversight efforts. The challenges faced
in Iraq are a symbol of systematic challenges facing DOD. DOD cannot develop
a complete picture of the extent to which it relies on contractors to support its
operations. Information on the number of contractor employees, and the services
they provide, is not aggregated within DOD or its components. DOD recently
established an office to address contractor support issues, but the office’s
specific roles and responsibilities are under study. DOD and its contractors need
to clearly understand DOD’s objectives and needs. To produce desired outcomes
with available funding and within required time frames, they need to know the
goods or services required, the level of performance or quality desired, the
schedule, and the cost.41
38 Ibid, pp. 11-13.
39 “High Risk Area: Defense Contract Management.” GAO-05-207, February 2005.
40 GAO-04-854, Military Operation. DOD’s Extensive Use of Logistics Support Contracts
Requires Strengthened Oversight. July 2004.
41 GAO-07-358T, p. 13. Also see GAO-07-1098T. Federal Acquisitions and Contracting.
(continued...)

CRS-12
Potential Oversight Issues
Potential contract oversight issues that Congress may choose to examine include
various aspects of contract administration such as contract costs, development of
contract requirements, costs-reimbursement and sole-source contracts; transparency
and the size, shape, and skill diversity of the acquisition workforce.
Contract Oversight. One rationale often cited for the outsourcing of program
management to industry is that DOD no longer has the in-house expertise needed to
manage such complicated acquisition programs. Some Members of Congress may
want DOD to develop a long-term plan to restore in-house expertise to make the
government a smarter customer. Because of several cases in which high profile
weapons acquisition programs have been affected by escalating costs and technical
shortcomings, Congress may choose to review the management of individual
programs and the evolution of DOD’s acquisition management processes with an eye
toward using the FY2008 funding bills to strengthen the government’s hand in
dealing with industry. As an example, Secretary of the Navy Donald C. Winter and
Chief of Naval Operations Adm. Michael G. Mullen have reported that the Navy
intends to reclaim some of the authority over ship design it has ceded to industry.
Congress may also choose to study the Army’s Future Combat System (FCS) and
may question the amount of managerial discretion the Army has vested in the Lead
System Integrator (LSI).42
Contract administration. Contract administration includes contract
management and contract oversight. FAR Part 37 states that “agencies shall ensure
that sufficiently trained and experienced professionals are available to manage
contracts.”43 The burden rests with the federal government to ensure that enough
appropriately-trained professionals are available to manage contracts. This is
essential, particularly before the requirements generation process, when the
government determines the scope of work to be completed. Contract management
is also described in the Office of Federal Procurement Policy’s (OFPP) “Guide To
Best Practices for Contract Administration” where it states that “The technical
administration of government contracts is an essential activity....absolutely essential
41 (...continued)
Systemic Challenges Need Attention. Statement of David M. Walker, Comptroller General
of the United States, July 17, 2007; GAO-07-145. Military Operations: High-Level DOD
Action Needed to Address Long-standing Problems with Management and Oversight of
Contractors Supporting Deployed Forces, December 2006, p. 53.; and GAO-04-854.
Military Operations: DOD’s Extensive Use of Logistics Support Contracts Requires
Strengthened Oversight. July 2004, p. 67.
42 For a discussion of the LSI concept, see CRS Report RS22631, Defense Acquisition: Use
of Lead System Integrators (LSIs) — Background, Oversight Issuers, and Options for
Congress
, by Valerie Bailey Grasso; CRS Report RL33753, Coast Guard Deepwater
Program: Background, Oversight Issues, and Options for Congress
, by Ronald O’Rourke;
and CRS Report RL32888, The Army’s Future Combat System (FSC): Background and
Issues for Congress
, by Andrew Feickert.
43 FAR Part 37.

CRS-13
that those entrusted with the duty ensure that the government gets all that it bargains
for...and they must be competent in the practice of contractor administration.”44
Over the past few years the size, shape, and complexity of logistical support
service contracts have grown with the technical requirements. However, the size of
the federal contractor workforce has decreased. There is now an imbalance - there
are fewer federal contracting officials to manage the large-scale contracts and in
some cases the government has sought to hire contractors to do the job that federal
employees use to perform. For example, GAO reported that military officials
utilizing LOGCAP had little understanding of LOGCAP or their contract
management responsibilities. Additionally, some logistical support units intended
to assist military commanders had no prior LOGCAP or contracting experience.45
Two former OFPP administrators, Steven Kelman and Allan Burman, stated that
the current contracting situation creates a crisis. Here they offer their assessment.
Hiring contracting officials is hardly the way to dress for political success - who
wants to bring in more “bureaucrats?” — but there can’t be well-managed
contracts without people to manage them. The current situation creates a vicious
circle: Overstretched people make mistakes, producing demands for more rules,
creating additional burdens, giving people even less time to plan effective
procurement and manage performance.46
It is important that both civilian and military procurement sectors have qualified
and experienced contract professionals. In the case of service contracts, having
professionally trained contracting personnel could be even more critical than
contracts for tangible goods. With tangible goods, there is an identifiable product.
In the absence of a product, it becomes even more important that DOD and the
contractor both exercise good stewardship of federally appropriated dollars.
DOD Contracting Officials. Contracting officials are expected to make
tough decisions. As an example, Ms. Bunnatine Greenhouse, formerly the highest
ranking civilian at the U.S. Army Corps of Engineers (USACE), raised important
questions on the rationale for awarding KBR contracts without competition. She
objected to the awarding of one contract award as well as the five-year contract
term.47 The basis for her refusal to approve the proposed five-year, sole-source
contract between KBR and the U.S. Army [for the Restore Iraqi Oil (RIO) contract]
was because: (1) KBR had been paid $1.9 million to draft a contingency plan to
design the “guts” of the contract, including the process, budget, and other details; and
(2) selecting KBR for the five-year contract would violate procurement protocol, as
44 OFPP Guide at [http://www.acqnet.gov/comp/seven_steps/library/OFPPguide-bp.pdf].
45 Logistical support units write performance statements of work, prepare independent
government cost estimates, and review contractor estimates on behalf of the government.
See GAO-04-854. Military Operations: DOD’s Extensive Use of Logistics Support
Contracts Strengthen Oversight, July 21, 2004.
46 Burman, Allan and Kelman, Steven. “Better Oversight of Contractors,” The Boston
Globe
, January 16, 2007, p. A9.
47 Schnayerson, Michael. “Oh, What a Lucrative War,” Vanity Fair, April 2005, p. 9.

CRS-14
(reportedly, Ms. Greenhouse stated) contractors who draw up a contingency plan
cannot be allowed to bid on the job to execute the same plan.48 She stated that
bidding on the contract would give KBR an unfair advantage over any competitors.
When pressured to sign the KBR contract, Ms. Greenhouse added the following
contract language: “I caution that extending this sole source effort beyond a one-year
period could convey an invalid perception that there is not strong intent for a limited
competition.”49 The contract was later investigated by the SIGIR.50 Various media
reports suggested that in the case of Bunnatine Greenhouse, a trained and
experienced senior DOD contract management official was eventually demoted and
later fired for doing her job.51
Another senior DOD civilian testified that he made a decision to award KBR a
task order under the LOGCAP contract without conducting any competition.
Michael Mobbs, then-Special Assistant to the Undersecretary of Defense for Policy,
testified that he made the decision to award KBR the contingency planning contract
over the objections of an attorney with the Army Materiel Command. The attorney
had determined that the oil-related task order was outside of the scope of the
LOGCAP troop support contract. Later, GAO concluded that the lawyer’s position
was the correct one and that the work “should have been awarded using competitive
procedures.”52
Development of Contract Requirements. LOGCAP contracts have often
by-passed the process to define realistic funding, appropriate time frames, and other
important requirements through the use of “undefinitized” contract actions.
Undefinitized contract actions53 do not require that the DOD contracting official write
a completed performance work statement before the work is performed. Some
48 For additional information, see CRS Report RL32229, Iraq: Frequently Asked Questions
About Contracting
, by Valerie Bailey Grasso (Coordinator).
49 Vanity Fair, p. 149.
50 It should be noted here that the KBR sole-source contract, according to the SIGIR,
complied with applicable federal regulations for sole-source contracts, according to the
SIGIR. The SIGIR concluded that “the justification used was that KBR had drafted the
Contingency Support Plan (CSP), had complete familiarity with it, had the security
clearances necessary to implement it, and the contract needed] to be immediately available
to implement.” Lessons In Contracting and Procurement. Iraq Reconstruction. Special
Inspector General for Iraq Reconstruction. July 2006, p. 20.
51 Witte, Griff. Halliburton Contract Critic Loses Her Job. Washington Post, August 29,
200, p. A11. For additional information, see the following documents: Letter to Tom Davis,
Chairman, Committee on Government Reform, House of Representatives, from Henry A.
Waxman, Ranking Minority Member, House of Representatives, November 10, 2004;
Testimony of Bunnatine Greenhouse before the Senate Democratic Policy Committee, June
27, 2005; and Letter to Donald Rumsfeld, Secretary of Defense, from Senators Byron L.
Dorgan and Frank Lautenberg, and Representative Henry A. Waxman, August 29, 2005.
52 Briefing by Michael Mobbs, Special Assistant to the Undersecretary of Defense for
Policy, for staff of the House Government Reform Committee, June 8, 2003. Also, see
GAO-04-605. Rebuilding Iraq: Fiscal Year 2003 Contract Award Procedures and
Management Challenges, June 2004.
53 Also referred to as undefinitized task orders.

CRS-15
proponents of undefinitized task orders have stated that they give the contractor more
flexibility in getting work started sooner. However, recent DCAA audits have found
that these undefinitized task orders have given KBR a significant cost advantage.
Auditors have found that DOD contracting officials were more willing to rely on
KBR’s costs estimates, estimates later found to be greatly inflated. According to
DCAA auditors, DOD contracting officials rarely challenged these cost estimates.
The estimates became the baseline from which KBR established their costs upon
which to bill the government, which later increased their overall profit.
In testimony before the Senate Armed Services Committee, the SIGIR stated
that contracting personnel must be provided with an adequate description of a
customer’s needs. The inability to properly define and prepare requirements
appeared to be a significant oversight challenge in the Iraq contracting process.54
Use of Indefinite-Delivery/Indefinite-Quantity Contracts. FAR Subpart
16.5 defines ID/IQ contracts.55 In the case of ID/IQ contracts, task and delivery
orders are issued; these orders do not define a firm quantity of goods or services.56
Task orders are the “to do” portion of the contract, the contractor’s action list.
LOGCAP contracts allow task orders to be approved as needed without being subject
to competition among multiple contractors. Each task and delivery order acts like a
single contract, potentially allowing costly amounts of work to be performed on a
non-competitive basis. Task Order 59 was one of the largest single task orders on
the LOGCAP III contract. It was issued in May 2003 and includes various discrete
functions, supporting up to 130,000 U.S. troops, and has reportedly resulted in
estimates of charges to the government of about $5.2 billion dollars from June 2003
through June 2004.
Costs and the Use of No-Bid and Sole-Source Contracts. Much has
been written in the media about the use of sole-source contracting in Iraq.57 In
general, most authorities believe that government contract costs are influenced
significantly by the degree of competition; that having several competitors will
reduce overall cost. However, questions have been raised as to whether contract costs
in a war zone are inherently uncontrollable. DOD has argued that Iraq contracting
54 Testimony of the Special Inspector General for Iraq Reconstruction, before the Senate
Armed Services Committee, February 7, 2006.
55 FAR Subpart 16.5 Indefinite delivery/indefinite quantity contracts, also known as IDIQ
contracts, supply an indefinite quantity of supplies, goods, or materials, for an indefinite
period of time. See FAR, Part 16, Types of Contracts. There are three types of indefinite-
delivery contracts: definite-quantity contracts, requirements contracts, and indefinite-
quantity contracts. The appropriate type of indefinite-delivery contract may be used to
acquire supplies and/or services when the exact times and/or exact quantities of future
deliveries are not known at the time of contract award. Pursuant to 10 U.S.C. 2304d and
section 303K of the Federal Property and Administrative Services Act of 1949, requirements
contracts and indefinite-quantity contracts are also known as delivery order contracts or task
order contracts.
56 Indefinite-quantity contracts are also known as delivery order contracts or task order
contracts.
57 Sole-source contracts are contracts which are not subject to competition.

CRS-16
costs are expensive because of the uncertainty of war-related requirements for goods
and services. Government contingency contracting in times of war has often favored
using programs such as LOGCAP because it enables contracting officials to move
quickly to secure contractors, who in turn can be deployed quickly into the combat
theater.
While full and open competition is the standard for government contracting,
full and open competition has not been the standard for contracting for troop support
services under LOGCAP. One report stated that of the $145 billion in non-
competitive contracts awarded by the federal government in 2005, $97.8 billion was
awarded in “no-bid” contracts. Of that $97.8 billion in contracts, $63.4 billion was
awarded under the rationale that only one contractor could supply the needed goods
or services. The remaining $34.4 billion was awarded in no-bid contracts under a
variety of other exceptions to full and open competition. $8.7 billion was awarded
for emergency situations, and $2.9 billion was awarded for circumstances where a
statute authorizes or requires restricted competition.58 Finally, $47.2 billion in
contracts was awarded in cases where the competitive range was limited to a small
group of companies (referred to as a “limited”competition).
The Special Investigations Division of the House Government Reform
Committee has issued a report titled “Dollars, not Sense: Government Contracting
Under the Bush Administration.” According to this report, in 2000 the federal
government awarded $67.5 billion in non-competitive contracts; that figure rose to
$145 billion in 2005, an increase of 115%. While the contracts awarded were larger,
the value of contracts overseen by the average government procurement official rose
by 83% (between 2000-2005).
Cost-reimbursement Contracts. Cost-reimbursement contracts can be:
(1) cost-plus award fee; (2) cost-plus incentive fee; or (3) cost-plus fixed fee.59 In
2000, the federal government spent $62 billion on cost-plus contracts; in 2005, that
figure increased to $110 billion. Nearly half of all costs-plus contracts ($52 billion)
were costs-plus award fee contracts. LOGCAP was the single largest cost-plus award
fee contract, and at one time was valued at about $16.4 billion.60 In costs-plus
contracts, contractor’s fees rise with contract costs. Increased costs means increased
fees to the contractor. There is no incentive for the contractor to limit the
government’s costs.
Use of Overhead Fees. The SIGIR’s past investigations into reconstruction
contracts revealed that, in some contracts, overhead expenses accounted for more
than half of the costs that Kellogg, Brown, and Root (KBR) billed the federal
58 Dollars, Not Sense: Government Contracting Under the Bush Administration. United
States House of Representatives, Committee on Government Reform - Minority Staff,
Special Investigations Division, p. 7-9.
59 Cost-reimbursement types of contracts provide for payment of allowable incurred costs,
to the extent prescribed in the contract. These contracts establish an estimate of total cost
for the purpose of obligating funds and establishing a ceiling that the contractor may not
exceed (except at its own risk) without the approval of the contracting officer.
60 Army Field Support Command, Media Obligation Spreadsheet, April 20, 2006.

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government. A recent audit report, “Review of Administrative Task Orders for Iraq
Reconstruction Contracts,” found that relatively high overhead costs were charged,
and that these costs were significantly higher than work performed by other
companies in Iraq. For these contracts, overhead costs ranged from 11% to 55% of
projected contract budgets. For example, the SIGIR found that in five KBR projects,
administrative costs outdistanced the costs of the projects alone. For example, the
report cites a project where administrative costs totaled about $52.7 million, while
the actual project costs were about $13.4 million. In another case, the combined
administrative costs for five contractors totaled about $62 million, while the direct
construction costs totaled $26.7 million.61 The SIGIR found that overhead expenses
accounted for more than half of the costs KBR billed the federal government.
Overhead fees can also result as a part of fees passed from one contractor to
another. One such example is the case of Blackwater Security Firm’s contract for
private security services in Iraq. Blackwater’s contract paid workers who guarded
food trucks a salary of $600 a day. The company added overhead costs and a 36%
markup to its bill, then forwarded the bill to a Kuwaiti company. The Kuwaiti
company then added costs and profit, then sent the bill to the food company. The
food company did the same, and finally sent the bill to KBR. KBR passed its cost
to DOD. Yet the U.S. Army stated in a congressional committee hearing that it had
never authorized KBR to enter into a subcontracting relationship with Blackwater.
The matter remains pending.62
Transparency. Transparency allows the federal government to better
administer contracts and oversee contractors. For example, the federal government
has had difficulty getting certain contractors to provide important information on
their invoices and billing statements. The SIGIR released a series of audit and
investigative reports which drew attention to barriers that hampered the government’s
efforts. In one report, SIGIR Bowen reported that it was difficult to complete the
investigation into the KBR contracts because KBR “routinely and inappropriately
marked their data as proprietary.”63
Another problem with a lack of transparency is the relationship between the
federal government, the prime contractor, and the subcontractors. The federal
government has a contractual relationship with the prime contractor, not with
subcontractors. Thus the government may be somewhat limited in providing full
accountability for tax-payer dollars. While the prime contractor-subcontractor
relationship is between private sector companies, the monies are from public funds.64
61 Powers, Mary Buckner. Congress Moves To Reinstate Iraq Contracting Overseer.
Engineering News-Record, Vol. 257, No. 19, p. 13. November 13, 2006.
62 “Watching War Costs,” The News & Observer, Raleigh, NC, December 9, 2006.
Retrieved January 21, 2007, at [http://www.nexis.com/research/search/submitViewTagged].
63 Powers, Mary Buckner. Congress Moves To Reinstate Iraq Contracting Overseer.
Engineering News-Record, Vol. 257, No. 19, p. 13. November 13, 2006.
64 “Commentary: Watching War Costs,” The News & Observer, Raleigh, NC, accessed on
January 10, 2007 at [http://www.nexis.com/research/search/submitViewTagged].

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Acquisition Workforce. According to DOD, its acquisition workforce has
been reduced by more than 50 percent between 1994-2005.65 In future years, between
2006-2010, half of the federal acquisition workforce will be eligible to retire.66 It has
been reported that DOD does not have sufficient numbers of contractor oversight
personnel, particularly at deployed locations. This limits DOD’s ability to assure that
taxpayer dollars are being used in a judicious manner. For example, in recent
testimony before Congress, a GAO official reported that if adequate staffing had been
in place, the Army could have realized substantial savings on LOGCAP contracts in
Iraq.67 The GAO official also stated that one DCMA official, who is responsible for
overseeing the LOGCAP contractor’s performance at 27 locations, reported that he
was “unable to visit all of those locations during his six-month tour to determine the
extent to which the contractor was meeting the contract’s requirements.”68
Earlier mandates to reduce the size of the DOD acquisition workforce reflected
Congress’ view that the workforce had not been downsized enough — that reductions
continued to lag in proportion to the decline in the size of the overall defense budget,
in general, and to the acquisition portion of the defense budget, in particular. At that
time, Congress and DOD were at odds over the need for further reductions in the
defense acquisition workforce. Reducing the defense acquisition workforce had been
viewed by the Congress, in the past, as a necessary requirement for eliminating
wasteful spending, and providing DOD with increased funding for other priorities.
65 In 1998, the House National Security Committee asked GAO to review DOD’s progress
in achieving a 25-percent reduction in the acquisition organizations’ workforce, examine the
potential savings associated with such reductions, determine the status of DOD efforts to
redefine the acquisition workforce, and examine DOD’s efforts to restructure acquisition
organizations. GAO concluded that “DOD has been reducing its acquisition workforce at
a faster rate than its overall workforce and is on schedule to accomplish a 25-percent
reduction by the fiscal year 2000. However, potential savings from these reductions cannot
be precisely tracked in DOD’s budget. In addition, some of the potential savings from
acquisition workforce reductions may be offset by other anticipated costs. Such costs
include those for contracting with private entities for some services previously performed
by government personnel (i.e., substituting one workforce for another.” U.S. Congress.
General Accounting Office. Defense Acquisition Organizations: Status of Workforce
Reductions. Report to the Chairman, Committee on National Security, House of
Representatives. GAO/NSIAD-98-161. June 1998. 20 pages. For another source of data
on the federal acquisition, see Report on the Federal Acquisition Workforce, FY2003-2004,
Federal Acquisition Institute Report, Executive Summary, p. vii.
66 S. Assad, Director, Defense Procurement and Acquisition Policy, in testimony before the
Acquisition Advisory Panel, June 13, 2006, p. 57-58 (excerpted from the Final Panel
Working Draft, Report of the Acquisition Advisory Panel to the Office of Federal
Procurement Policy and the U.S. Congress, December 2006.
67 GAO-07-359T. Defense Acquisitions: DOD Needs to Exert Management and Oversight
to Better Control Acquisition of Services. Statement of Katherine V. Schinasi, Managing
Director, Acquisition and Sourcing Management, before the Subcommittee on Readiness
and Management Support Committee on Armed Services, United States Senate, January 17,
2007.
68 GAO-07-359T, p. 8.

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Staffing shortages in the defense contracting personnel to oversee Iraq contracts
have become part of a larger, systemic problem within DOD.69 In reducing the size
and shape of the federal acquisition workforce, an unanticipated result has been the
increase in the growth of the private sector service contracts. With the growth in
service contracting; the increase in the number of complex, billion dollar contracts;
and the decline in the number of federal acquisition workforce employees, some
officials have asserted that there are not enough DOD contracting officials, onsite in
Iraq, who are available and experienced enough to manage the complexities of the
new acquisition programs, or oversee private sector contractors.
It appears to some that DOD has downsized the federal acquisition workforce,
particularly those that oversee large-scale contracts like LOGCAP, to dangerously
low levels. They note that the past downsizing of the defense acquisition workforce
has resulted in the loss of technical personnel and a talent drain on DOD’s ability to
meet its mission and objectives. There are concerns over potential deficits and
imbalances in the skills and experience levels of personnel who manage large-scale
weapon acquisition programs and defense contracts.
The Gansler Commission. The Secretary of the Army commissioned a
study headed by former Deputy Secretary of Defense Jacques Gansler to analyze
“structural weaknesses and organizational deficiencies in the Army’s acquisition and
contracting system used to support expeditionary operations.” Dr. Gansler has
recently presented the Commission’s findings and recommendations before
Congress.70 Here is an excerpt of the Commission’s analysis of the acquisition
workforce.
The expeditionary environment requires more trained and experienced military
officers and non-commissioned officers (NCOs). Yet, only 3 percent of Army
contracting personnel are active duty military and there are no longer any Army
contracting career General Officer (GO) positions. The Army’s acquisition
workforce is not adequately staffed, trained, structured, or empowered to meet
the Army needs of the 21st Century deployed warfighters. Only 56 percent of the
military officers and 53 percent of the civilians in the contracting career field are
certified for their current positions. Notwithstanding a seven-fold workload
increase and greater complexity of contracting, the Institutional Army is not
supporting this key capability. Notwithstanding there being almost as many
contractor personnel in the Kuwait/Iraq/Afghanistan theater as there are U.S.
military, the Operational Army does not yet recognize the impact of contracting
and contractors in expeditionary operations and on mission success. What should
69 The same observations were made about the U.S. Coast Guard’s Deepwater contract.
According to Admiral Thad Allen, Commandant, the issue concerns “the capacity of our
acquisition staffs to deal with the myriad definitization of task orders, particular line items,
the ability to interact with the extensive amount of nodes that you have in Integrated Coast
Guard Systems...I’m not sure that we understood going how much we had to be prepared to
handle the work load in terms of capacity and competency in human capital, and that’s one
of the main things I’m focusing on.” Cavas, Christopher P. Millions for Deepwater, No One
to Spend It. U.S. Coast Guard Adds Acquisition Experts for Modernization. Defense News,
Vol. 22, No. 2, January 8, 2007, p. 1.
70 Senate Armed Services Committee, Subcommittee on Readiness and Management Support
on December 6, 2007. [http://armed-services.senate.gov/e_witnesslist.cfm?id=3048].

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be a core competence — contracting (from requirements definition, through
contract management, to contract closeout) — is treated as an operational and
institutional side issue.71
The Commission’s report recommends that the Army makes systemic and
fundamental changes in the way it conducts business, and has divided its
recommendations into four major areas as described here.
! Increase the stature, quantity, and career development of military and
civilian contracting personnel (especially for expeditionary
operations);
! Restructure the organization and restore responsibility to facilitate
contracting and contract management in expeditionary and CONUS
operations;
! Provide training and tools for overall contracting activities in
expeditionary operations; and
! Obtain legislative, regulatory, and policy assistance to enable
contracting effectiveness in expeditionary operations.72
Potential Options for Congress
Congress may choose to consider the following options when examining DOD
contracts for troop support: (1) implementing of the Gansler Commission’s
recommendations; (2) broadening of the jurisdiction of the SIGIR to include DOD
contracts for troop support services (like LOGCAP contracts); (3) convening of a
study of the federal employee and contractor workforce; (4) requiring more detail to
give Congress better information to perform its oversight role; and (5) establishing
a dedicated office to conduct audits and investigation of DOD contracts.
Option 1: Implementing the Gansler Commission
Recommendations

Perhaps the most significant recommendation of the Gansler Commission is that
the Army address some institutional and cultural issues that may provide an obstacle
to moving forward. The Commission interviewed a number of knowledgeable Army
officials and concluded with the following observations about the challenges that the
Army will face in making significant improvements in its business operations, as
described here in the report:
Those charged with getting the job done have provided valuable insight into the
doctrine, policies, tools, and resources needed for success. Clearly, the Army
must address the repeated and alarming testimony that detailed the failure of the
institution (both the Institutional Army and the Department of Defense) to
71 U.S. Army. Urgent Attention Required: Army Expeditionary Contracting, Report of the
Commission on Army Acquisition and Program Management, November 1, 2007, p. 10, at
[http://www.army.mil/docs/Gansler_Commission_Report_Final_071031.pdf].
72 Ibid, p. 13.

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anticipate, plan for, adapt, and adjust acquisition and program management to the
needs of the Operational Army as it has been transformed, since the end of the
Cold War, into an expeditionary force. The Institutional Army has not adjusted
to the challenges of providing timely, efficient, and effective contracting support
to the force in Operation Iraqi Freedom (more than half of which is contractor
personnel). Essentially, the Army sent a skeleton contracting force into theater
without the tools or resources necessary to adequately support our warfighters.
The personnel placed in that untenable position focused on getting the job done,
as best they could under the circumstances — where support is needed in a
matter of hours, or, at best, days. They used their knowledge, skill, limited
resources, and extraordinary dedication to get contracts awarded. Alarmingly,
most of the institutional deficiencies remain four-and-a-half-years after the
world’s best Army rolled triumphantly into Baghdad.73
Option 2: Expanding the SIGIR’s Jurisdiction
Another option is to give the SIGIR the authority to audit and investigate DOD
logistical support contracts in Iraq. The SIGIR has already established a presence in
Iraq, and has issued more than 150 reports, including audits and investigations. His
efforts have largely resulted in the arrest of five people, and the convictions of four
of them, with more than $17 million in assets seized.74 The SIGIR has made several
recommendations related to his audit and investigation of contracts under his
jurisdiction. His observations and insights may be relevant and appropriate for the
contract administration and oversight of DOD contracts for troop support services.75
Option 3: Convening a Study of the Federal Employee and
Contractor Workforce

Congress may want to convene a study of the federal employee and contractor
workforce. The study could examine three important questions: (1) Is there an
appropriate balance of federal employee and contractor roles? (2) Is there an
appropriate federal role and presence in the oversight area? and (3) Is the federal
government attracting the right types of acquisition professionals?
Congress could require a separate report, from each military service, on the size,
scope, costs, and structure of its acquisition workforce (including military, civilian,
and contractor personnel).
73 Ibid, p. 16.
74 Senator Collins Works To Extend The Term of the Office that Oversees Billions in Iraqi
Reconstruction Dollars. Press Release of the United States Senate Committee on
Governmental Affairs, November 13, 2006.
75 As an example, the SIGIR recommends the creation of an “enhanced contingency FAR”
to simplify the rules governing contingency contracting. SIGIR, Lessons in Contracting and
Procurement, July 2006, p. 97.

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Option 4: Requiring More Detail for Better Oversight
Congress could require DOD to provide more details for better congressional
oversight. There are five questions that Congress could consider: (1) Should DOD
move to limit sole-source or limited competition for Iraq contracts? (2) Should DOD
use more fixed-priced contracting in Iraq? (3) Should task and delivery orders have
certain dollar constraints? (4) Should task orders be subject to public notice? and
(5) Should larger contracts be divided into smaller contracts, with better-defined,
discrete tasks?
To create more transparency and openness in defense acquisitions regarding
contract administration, costs, and performance, Congress could require a separate
report from each military service. Each report could include data on the size, scope,
costs, and structure of all contracts, particularly no-bid, sole-source, and costs-
reimbursement contracts.
Congress also could require that specific criteria be met before certain contract
arrangements can be approved by DOD or by Congress. In addition, Congress could
require a periodic re-competition of certain types of contracts, like LOGCAP, that
have the potential of spanning for many years. Congress could also require, for
example, that task orders beyond a certain size be treated as a separate contract, and
thus subject to competition among multiple contractors.
And finally, Congress could require that large defense contracts be subject to
competition, and that a minimum of three contractors should be selected for
contractors beyond a certain size. It appears, from available press accounts, that
some contracts for services in Iraq could have been segregated and opened for
competitive bidding. By administering smaller contracts, financial oversight might
be easier. This may give small businesses more of an opportunity to compete for
contracts in Iraq.
Option 5: Establishing a Dedicated Office to Conduct Audits
and Investigation of DOD Contracts

One of the recommendations of the SIGIR is to “designate a single, unified
contracting entity to coordinate all contracting in theater.”76 One way to accomplish
this is to establish a Contingency Contracting Corp (a DOD initiative currently
underway is studying the issue) that will deploy to Iraq and establish a standing
presence. However, what additional resources might be necessary in order to provide
better contract management and oversight of DOD-appropriated funds?
Given that the mission of the DOD Inspector General’s office is to promote
“integrity, accountability, and improvement of Department of Defense personnel,
programs and operations to support the Department’s mission and to serve the public
76 Lessons in Contracting and Procurement, SIGIR, July 2006, p. 95.

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interest”,77 should the DOD Inspector General have a stronger presence in Iraq?
Given the many problems associated with LOGCAP contracts, oversight agencies
like the DOD IG could have a pivotal role in preventing future contractor waste,
fraud, or mismanagement.
Congress may want to consider creating a singularly dedicated office for the
audit and investigation of DOD contracts for troop support services.
77 From the DOD Inspector General’s website at [http://www.dodig.osd.mil/mission.htm].

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Appendix A. Selected Reports
During the last four years, the Congressional Research Service, General
Accounting Office, Department of Defense Inspector General, Army Audit Agency,
Air Force Audit Agency, and the Special Inspector General for Iraq Reconstruction
have issued numerous reports on Iraq contracting issues, including those listed
below.
Congress
Dollars, Not Sense: Government Contracting Under the Bush Administration.
Prepared by the Special Investigations Division, Committee on Government Reform-
Minority Staff, U.S. House of Representatives, June 2006.
Congressional Research Service
CRS Report RL33110, The Cost of Iraq, Afghanistan, and Other Global War on
Terror Operations Since 9/11, by Amy Belasco.
CRS Report RL32419, Private Security Contractors in Iraq: Background, Legal
Status, and Other Issues, by Jennifer K. Elsea and Nina M. Serafino.
CRS Report RS21555, Iraq Reconstruction: Frequently Asked Questions Concerning
the Application of Federal Procurement Statutes, by John R. Luckey.
CRS Report RL31833, Iraq: Recent Developments in Reconstruction Assistance, by
Curt Tarnoff.
CRS Report RL32229, Iraq: Frequently Asked Questions About Contracting, by
Valerie Bailey Grasso (Coordinator), Rhoda Margesson, Curt Tarnoff,
Lawrence Kumins, Kyna Powers, Carolyn C. Smith, and Michael Waterhouse.
Government Accountability Office
GAO-07-1098T. Federal Acquisitions and Contracting. Systemic Challenges Need
Attention. Statement of David M. Walker, Comptroller General of the United
States, July 17, 2007.
GAO-07-359T. Defense Acquisitions: DOD Needs to Exert Management and
Oversight to Better Control Acquisition of Services. Statement of Katherine V.
Schinasi, Managing Director, Acquisition and Sourcing Management.
Testimony Before the Subcommittee on Readiness and Management Support,
Committee on Armed Services, U.S. Senate, January 17, 2007.
GAO-07-145. Military Operations: High-Level DOD Action Needed to Address
Long-standing Problems with Management and Oversight of Contractors
Supporting Deployed Forces, December 16, 2006.

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GAO-06-800T. DOD Acquisitions: Contracting for Better Outcomes. September
7, 2006.
GAO-06-838R. Contract Management: DOD Vulnerabilities to Contracting Fraud,
Waste, and Abuse, GAO-06-838R, July 7, 2006
GAO-05-274. Contract Management: Opportunities to Improve Surveillance on
Department of Defense Service Contracts, March 17, 2005.
GAO-05-207. GAO, High Risk Series: An Update, January 2005.
GAO-04-854. Military Operations: DOD’s Extensive Use of Logistics Support
Contracts Requires Strengthened Oversight, July 19, 2004.
Special Inspector General for Iraq Reconstruction
Quarterly Report to Congress, April 30, 2008
Department of Defense Inspector General
Semi-Annual Report to Congress. October 1, 2006-March 31, 2007
Semi-Annual Report to Congress. April 1, 2006-September 30, 2006.
Semi-Annual Report to Congress. October 1, 2005-March 31, 2006
Semi-Annual Report to Congress. April 1, 2005-September 30, 2005.
Semi-Annual Report to Congress. October 1, 2004-March 31, 2005.
Army Audit Agency
(The website is restricted to military domains (.mil) and to the Government
Accountability Office)
Report Number A-2005-0043-ALE Logistics Civil Augmentation Program in
Kuwait, U.S. Army Field Support Command, November 24, 2004.
Gansler Commission
U.S. Army. Urgent Attention Required: Army Expeditionary Contracting, Report of
the Commission on Army Acquisition and Program Management, November 1,
2007, at [http://www.army.mil/docs/Gansler_Commission_Report_Final_071031.
pdf].

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Appendix B. Selected Legislative Initiatives
on Iraq Contracting
Selected Legislation Introduced in the 110th Congress
The House has approved four bills, as noted below.
H.R. 3033, Contractors and Federal Spending Accountability Act of
2008. This provision would require the Administrator of General Services to
establish and maintain a database on defense contractors containing updated
information on criminal, civil, or debarment and suspension proceedings as well as
establish the Interagency Committee on Debarment and Suspension. Congress would
require a report within 180 days of the act’s enactment.
H.R. 5712, Close the Contractor Fraud Loophole Act. This provision
would require federal contractors to report violations of federal criminal law and
over-payments on contracts valued greater than $5 million.
H.R. 3928, Government Contractor Accountability Act of 2007. This
provision would require “covered” government contractors to submit certification
and other financial disclosure requirements in cases where the contractor receives 80
percent or less of their annual gross revenue from federal contracts. Contractors
covered by this provision are those receiving more than $25 million in annual gross
revenues from federal contracts, but are not publicly traded companies required to
file reports with the Security and Exchange Commission.
H.R. 4881. Contracting and Tax Accountability Act of 2008. This
provision would require tax compliance as a prerequisite fo r receiving federal
contracts, and would prohibit contract awards to certain delinquent federal tax
debtors.
Several other have been introduced during the 110th Congress. Each could
potentially impact DOD contracting in Iraq, as described below.
H.R. 4102, Stop Outsourcing Security Act. This provision would require
that only U.S. federal government personnel provide security to personnel at U.S.
diplomatic or consular mission in Iraq by six months after enactment, and require the
President to report to Congress s on “the status of planning for the transition away
from the use of private contractors for mission critical or emergency essential
functions by January 1, 2009, in all conflict zones in which Congress has authorized
the use of force.”
S. 2147, Security Contractor Accountability Act of 2007. This
provision would expand the coverage of the Military Extraterritorial Jurisdiction Act
(MEJA) to include all persons “while employed under a contract (or subcontract at
any tier) awarded by any department or agency of the United States, where the work
under such contract is carried out in a region outside the United States in which the
Armed Forces are conducting a contingency operation.”

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H.R. 528, Iraq Contracting Fraud Review of 2007. This provision would
require the Secretary of Defense, acting through the Defense Contract Audit Agency,
to review all Iraq defense contracts for reconstruction or troop support involving any
contractors, subcontractors, or federal officers or employees indicted or convicted for
contracting improprieties.
H.R. 663, New Direction for Iraq Act of 2007. These bill contains
provisions addressing war profiteering, the recovery of funds from terminated
contracts, and other issues A select number of additional legislative initiatives,
proposed during the 110th Congress, that may impact defense contracting will follow.
H.R. 4102, Stop Outsourcing Security Act. This provision would require
that only U.S. federal government personnel provide security to personnel at U.S.
diplomatic or consular mission in Iraq within six months after bill enactment, and
would require that the President report to specified congressional committees on “the
status of planning for the transition away from the use of private contractors for
mission critical or emergency essential functions by January 1, 2009, in all conflict
zones in which Congress has authorized the use of force.”
S. 2147, Security Contractor Accountability Act of 2007. This
provision would broaden the Military Extraterritorial Jurisdiction Act (MEJA) to
include all persons “while employed under a contract (or subcontract at any tier)
awarded by any department or agency of the United States, where the work under
such contract is carried out in a region outside the United Sates in which the Armed
Forces are conducting a contingency operation.”
H.R. 528, Iraq Contracting Fraud Review of 2007. This provision would
require the Secretary of Defense, acting through the Defense Contract Audit Agency,
to review all defense contracts relating to reconstruction or troop support in Iraq
involving any contractors, subcontractors, or federal officers or employees that have
been indicted or convicted for contracting improprieties.
H.R. 663, New Direction for Iraq Act of 2007. This bill contains
provisions on war profiteering, the recovery of funds from terminated contracts, and
congressional oversight over Iraq contracts.
H.R. 897, Iraq and Afghanistan Contractor Sunshine Act. This
provision would require the Secretaries of Defense, State, Interior, and the
Administrator of the U.S. Agency for International Development to provide Congress
with copies and descriptions of all contracts and task orders valued at over $5
million.

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Selected Legislation Passed in the 110th Congress
P.L. 110-181, the FY2008 National Defense Authorization Act, H.R.
4986 (formerly H.R. 1585). Several provisions contained in H.R. 4986 focus on
the management and oversight of DOD contracts.78 Key provisions are listed below.
! Section 802 prohibits future contracts for the use of new Lead
System Integrators;79
! Section 813 requires the Comptroller General to report to Congress
on potential modifications to the organization and structure of DOD
Major Defense Acquisition Programs;
! Section 816 directs the Under Secretary of Defense for Acquisition,
Technology, and Logistics to conduct an annual review on the
systematic deficiencies in Major Defense Acquisition Programs;
! Section 830 directs the Comptroller General to report to Congress on
DOD’s use of noncompetitive awards;
! Section 841 establishes a commission to study federal contracting in
Iraq and Afghanistan, called the “Commission on Wartime
Contracting;”
! Section 842 requires the DOD Inspector General, the SIGIR for Iraq
Reconstruction, and the SIGIR for Afghanistan Reconstruction to
collaborate on the development of comprehensive plans to perform
a series of audits on DOD contracts, subcontracts, and task and
delivery orders for the performance of logistical support activities of
coalition forces in Iraq and Afghanistan, as well as audits for federal
agency contracts, subcontracts, and task and delivery orders for the
performance of security and reconstruction functions in Iraq and
Afghanistan;
! Section 851, which would require that the Secretary of Defense (as
part of the Strategic Human Capital Plan for 2008) include a
78 Excerpts from H.R. 1585 discuss the rationale for legislative initiatives focused on the
oversight and accountability for contracts in Iraq and Afghanistan: “The committee remains
concerned about the level of oversight for contracting in Iraq and Afghanistan. These
countries present uniquely complex challenges for contracting and contract oversight, but
U.S. efforts in these countries will continue to require significant contractor support. The
committee believes that government responsibilities for a range of issues involving
contracting in Iraq and Afghanistan are unclear. The committee believes that clarification
of roles and responsibilities for contracting in Iraq and Afghanistan and increased oversight
will enhance the effectiveness of U.S. Government efforts in both countries.
79 For a brief discussion on the role of the Lead System Integrator, see CRS Report
RS22631, Defense Acquisition: Use of Lead System Integrators (LSIs) — Background,
Oversight Issues, and Options for Congress
, by Valerie Bailey Grasso.

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separate section of the report focused on the military and civilian
acquisition workforce;
! Section 852 establishes a Defense Acquisition Workforce
Development Fund;
! Section 861 requires coordination between the DOD, the
Department of State, and the United States Agency for International
Development through the creation of a Memorandum of
Understanding between the three agency heads on matters relating
to contracting in Iraq and Afghanistan;
! Section 862 requires that the Secretary of Defense prescribe, within
120 days of enactment, regulations on the selection, training,
equipping, and conduct of personnel performing private security
functions under a covered contract or covered subcontract in a
combat area. These regulations would include processes for
registering, processing, and accounting for such personnel; and
authorizing and accounting for weapons, and investigating the death
and injury of such personnel, their discharge of weapons, and
incidents of alleged misconduct. The regulations would also provide
guidance to combatant commanders on orders, directives, and
instructions to contractors and subcontractors performing private
security functions relating to force protection, security, health,
safety, relations and interaction with locals, and rules of
engagement;
! Section 863 requires the Comptroller General to review annually all
contracts in Iraq and Afghanistan and report to Congress on the total
number of contracts and task orders, total number of active contracts
and task orders, total value of all contracts and task orders, the
degree to which DOD has awarded noncompetitive contracts, the
total number of contractor personnel (including the total number of
contractor personnel performing security functions and the total
number of contractor personnel killed or wounded); also, Section
863 would require the Secretaries of Defense and State to provide
the Comptroller General full accesses to the database as described
in Section 861;
! Section 871 establishes a Defense Materiel Readiness Board;
! Section 872 grants authority to the Secretary of Defense to designate
critical readiness shortfalls; and
! Section 941 requires the Secretary of Defense to conduct a
comprehensive assessment of the roles and missions of the military
forces, known as a quadrennial roles and missions review.