Contractors Rarely Held Responsible for Misdeeds in Iraq

It seems the media is starting to get a handle on the real issues with contracting. Earlier this month, on the heels of the final nails in the coffin of the Special Inspector (although the nails could be removed by a Democrat Congress), comes the Washington Post article with surprising and ‘new’ awareness of limited accountability in Iraq.

The list of alleged contractor misdeeds in Iraq has grown long in the past 3 1/2 years. Yet when it comes to holding companies accountable, the charges seldom stick.

Critics say that because of legal loopholes, flaws in the contracting process, a lack of interest from Congress and uneven oversight by investigative agencies, errant contractors have faced few sanctions for their work in Iraq.

Doing a fair job of identifying problems, it does drop the ball on the Custer Battles case. The federal judge’s ruling was based on the origin of payments and not on the amount itself. The federal judge ruled that the plaintiffs could only go after the money the US paid Custer Battles and not after monies paid by the CPA, which was ostensibly, if far from reality, an Iraqi or at least non-US entity.

More critical are the examples of incomplete projects.

For example, auditors reviewed 14 projects by one contractor, Parsons Corp., and found that 13 had serious defects. Among the problem contracts was one to build 142 health clinics. Only six have opened.

Yet Parsons will not have to return any of its profit, nor is it likely to face any kind of formal punishment. Its contracts were what are called “cost-plus” deals, widespread in Iraq, in which the government bears much of the risk.

And we wonder how we’re not winning believers that we can make the country a better place.

The article does bring out an interesting point:

Bowen said the government should have been willing to fire contractors when it realized that projects were going awry. “I started pushing for terminations for default, which is how you hold underperforming contractors responsible, in the summer of 2005,” Bowen said.

But his calls were rarely heeded. The reason? “Litigation fear,” he said. “It was viewed as too much trouble.”

Because the contracts are so poorly written and managed, the government is afraid or coerced into not terminating. That may be part of the problem but Griff Witte, the WaPo reporter, gets down to brass tacks and nails one of the problems of endemic outsourcing:

Frederick F. Shaheen, an attorney with the firm Greenberg Traurig LLP who represents contractors, said firing a contractor is difficult because the military is so dependent on them.

If an official were to try to cancel a meal-service contract, for example, “some colonel is going to be on the phone to you ripping your lips off saying, ‘Why aren’t my troops being fed?’ ” Shaheen said.

The threat of canceling a contract “is normally the sharpest quiver in the bag of the contracting officer. But there’s no arrowhead on it any more,” Shaheen said. “So the checks and balances are gone. The system is broken.”

Ah, one of the hidden problems of contracting.