Contract Management: Contracting for Iraq Reconstruction and for 
Global Logistics Support (15-JUN-04, GAO-04-869T).		 
                                                                 
General Accounting Office (GAO) discussed some of the work the it
is undertaking to address various operations and rebuilding	 
efforts in Iraq. Specifically, GAO has a body of ongoing work	 
looking at a range of issues involving Iraq, including Iraq's	 
transitional administrative law, efforts to restore essential	 
services to the Iraqi people, and the effectiveness of logistics 
activities during Operation Iraqi Freedom, among others.	 
Importantly, given the challenging security environment in Iraq  
and the various other accountability organizations involved in	 
the oversight process, it is attempting to coordinate its	 
engagement planning and execution with other organizations as	 
appropriate. In this testimony it discussed (1) its report	 
(GAO-04-605) that was released yesterday on the contract award	 
procedures for contracts awarded in fiscal year 2003 to help	 
rebuild Iraq and (2) its preliminary findings on the military's  
use of global logistics support contracts. These support	 
contracts have emerged as important tools in providing deployed  
military services with a wide range of logistics services.	 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-04-869T					        
    ACCNO:   A10505						        
  TITLE:     Contract Management: Contracting for Iraq Reconstruction 
and for Global Logistics Support				 
     DATE:   06/15/2004 
  SUBJECT:   Armed forces abroad				 
	     Army procurement					 
	     Competitive procurement				 
	     Contract administration				 
	     Contract oversight 				 
	     Contracting officers				 
	     Cost plus award fee contracts			 
	     Defense contingency planning			 
	     Department of Defense contractors			 
	     Limited procurement				 
	     Logistics						 
	     Military cost control				 
	     Military operations				 
	     Personnel management				 
	     Procurement practices				 
	     Service contracts					 
	     Sole source procurement				 
	     Task orders					 
	     Air Force Contract Augmentation Program		 
	     Army Balkan Support Contract			 
	     Army Logistics Civil Augmentation			 
	     Program						 
                                                                 
	     DOD Operation Iraqi Freedom			 
	     Navy Construction Capabilities Contract		 
	     Iraq						 

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GAO-04-869T

United States General Accounting Office

GAO Testimony

Before the Committee on Government Reform, House of Representatives

For Release on Delivery

Expected at 11:00 a.m. EDT CONTRACT

June 15, 2004

MANAGEMENT

      Contracting for Iraq Reconstruction and for Global Logistics Support

Statement of David M. Walker Comptroller General of the United States

GAO-04-869T

Chairman Davis, Ranking Member Waxman, and Members of the Committee:

I appreciate the opportunity to be with you today to discuss some of the
work the General Accounting Office (GAO) is undertaking to address various
operations and rebuilding efforts in Iraq. Specifically, GAO has a body of
ongoing work looking at a range of issues involving Iraq, including Iraq's
transitional administrative law, efforts to restore essential services to
the Iraqi people, and the effectiveness of logistics activities during
Operation Iraqi Freedom, among others. Importantly, given the challenging
security environment in Iraq and the various other accountability
organizations involved in the oversight process, we are attempting to
coordinate our engagement planning and execution with other organizations
as appropriate.

Today, I would like to discuss (1) our report that we released yesterday
on the contract award procedures for contracts awarded in fiscal year 2003
to help rebuild Iraq1 and (2) our preliminary findings on the military's
use of global logistics support contracts. These support contracts have
emerged as important tools in providing deployed military services with a
wide range of logistics services.

Before I discuss our findings, I would like to briefly touch upon the
scope of these two efforts. First, given the widespread congressional
interest in ensuring that Iraq reconstruction contracts are awarded
properly and administered effectively, we initiated a review under my
authority that focused on reconstruction-related contract actions by the
Department of Defense (DOD) (primarily the U.S. Army, including the Army
Corps of Engineers), the U.S. Agency for International Development
(USAID), and the Department of State. Specifically, we judgmentally
selected 25 fiscal year 2003 contract actions, consisting of 14 new
contracts awarded using other than full and open competition and 11 task
orders issued under existing contracts. These 25 contract actions
represented about 97 percent of the nearly $3.7 billion that had been
obligated for Iraqi reconstruction through September 30, 2003. We
conducted this work between May 2003 and April 2004 in accordance with
generally accepted government auditing standards.

1 See U.S. General Accounting Office, Rebuilding Iraq: Fiscal Year 2003
Contract Award Procedures and Management Challenges, GAO-04-605
(Washington, D.C.: June 1, 2004).

Second, our work on the military's use of global logistics support
contracts, initiated at the request of the Ranking Members of this
committee and the House Committee on Energy and Commerce, is one of a
series of studies we have done on the military's use of private
contractors to support deployed forces.2 This work looks broadly across
each of the services and includes four contracts: (1) the Army's Logistics
Civil Augmentation Program (LOGCAP) contract; (2) the Air Force's Contract
Augmentation Program (AFCAP) contract; (3) the U.S. Army, Europe's Balkan
Support Contract (BSC); and (4) the Navy's Construction Capabilities
(CONCAP) contract. We have completed our fieldwork and are now drafting
our report, which we expect to publish this summer. In performing our
work, we examined a wide range of contract documents and contracting
guidance and met with contracting officers, contract customers, and the
contractors to gain a comprehensive understanding of the contracts, the
contract management process, and the issues related to using these
contracts. We conducted this work between August 2003 and June 2004 in
accordance with generally accepted government auditing standards.

With regard to the award of fiscal year 2003 Iraq reconstruction
contracts, we found that agencies generally complied with applicable laws
and regulations governing competition when using sole-source or limited
competition approaches to award new contracts. However, they did not
always do so when issuing task orders under existing contracts. In several
instances, we found that contracting officers issued task orders for work
that was not within the scope of the underlying contracts. The out-ofscope
work under these orders should have been awarded using competitive
procedures or, because of the exigent circumstances involved, supported by
a justification for other than full and open competition in accordance
with legal requirements. In this regard, given the needs relating to and
the challenges associated with Iraq reconstruction efforts, such
justifications were likely possible but needed to be made and documented
to comply with the law and protect the taxpayer's interests.

Summary

2 See, for example, U.S. General Accounting Office, Contingency
Operations: Opportunities to Improve the Logistics Civil Augmentation
Program. GAO/NSIAD-97-63 (Washington, D.C.: Feb. 11, 1997); U.S. General
Accounting Office, Contingency Operations: Army Should Do More to Control
Contract Cost in the Balkans. GAO/NSIAD-00-225 (Washington, D.C.: Sept.
29, 2000); and U.S. General Accounting Office,

Military Operations: Contractors Provide Vital Services to Deployed Forces
But Are Not Adequately Addressed in DOD Plans, GAO-03-695 (Washington,
D.C.: June 24, 2003).

We made several recommendations to the Secretary of the Army, including
reviewing out-of-scope task orders to address outstanding issues and take
appropriate actions, as necessary. We also recommended that the Secretary
of Defense evaluate the lessons learned in Iraq and develop a strategy for
assuring that adequate acquisition staff and other resources can be made
available in a timely manner. DOD generally concurred with our
recommendations.

With regard to DOD's use of global logistics support contracts, we found
mixed results in each of the four areas we reviewed: planning, oversight,
efficiency, and personnel. For example, we found that some DOD customers
planned quite well for the use of the contracts, following service
instructions and including the contractor early in planning. Conversely,
we found that the use of the LOGCAP contract in Kuwait and Iraq was not
adequately planned, nor was it planned in accordance with applicable Army
guidance. Given the lack of early and adequate planning and contractor
involvement, two key ingredients needed to maximize LOGCAP support and
minimize cost-a comprehensive statement of work and early contractor
involvement-were missing. We also found that while oversight processes
were in place and functioning well in some places, there were several
areas needing improvement, such as in reaching agreement on terms,
specifications and prices of services to be delivered. We also found that
while some military commands actively looked for ways to save money,
others exhibited little concern for cost considerations. Finally,
shortages in personnel trained in contract management and oversight is
also an issue that needs to be addressed. Our report will make a number of
recommendations to address these shortcomings.

Compliance with Competition Requirements

We found that the agencies responsible for rebuilding Iraq generally
complied with applicable requirements governing competition when awarding
new reconstruction contracts in fiscal year 2003. While the Competition in
Contracting Act of 1984 requires that federal contracts be awarded on the
basis of full and open competition, the law and implementing regulations
recognize that there may be circumstances under which full and open
competition would be impracticable, such as when contracts need to be
awarded quickly to respond to unforeseen and urgent needs or when there is
only one source for the required product or service. In such cases,
agencies are given authority by law to award contracts under limited
competition or on a sole-source basis, provided that the proposed actions
are appropriately justified and approved.

We reviewed 14 new contracts that were awarded in fiscal year 2003 using
other than full and open competition: a total of 5 sole-source contracts
awarded by the Army Corps of Engineers, the Army Field Support Command,
and USAID; and 9 limited competition contracts awarded by the Department
of State, the Army Contracting Agency, and USAID. For 13 of these new
contracts, agency officials adequately justified their decisions and
complied with the statutory and regulatory competition requirements. For
example, USAID officials awarded seven contracts under limited competition
and two sole-source contracts citing an exception to the competition
requirements that was provided for under the Federal Property and
Administrative Services Act.3 USIAD concluded that the use of standard
competitive procedures would not enable it to put in place foreign aid
programs and activities for Iraq in a timely manner. We found that USAID's
justification and approval documentation supporting the award of these
contracts complied with applicable requirements. As I will shortly discuss
in more detail, we also found that the Army Corps of Engineers properly
justified the award of a sole-source contract to restore Iraq's oil
infrastructure. In one case, however, the Department of State justified
and approved the use of limited competition under a unique authority that,
in our opinion, may not be a recognized exception to the competition
requirements. At the same time, State took steps to obtain some
competition by inviting offers from four firms. In addition, it is likely
that State could have justified and approved its limited competition under
recognized exceptions to the competition requirements.

With respect to issuing a task order under an existing contract, the
competition law does not require competition beyond that obtained for the
initial contract award,4 provided the task order does not increase the
scope of the work, period of performance, or maximum value of the contract
under which the order is issued. The scope, period, or maximum value may
be increased only by modification of the contract, and competitive
procedures are required to be used for any such increase unless an
authorized exception applies. As we noted in our report released
yesterday, determining whether work is within the scope of an existing

3 The Act's authority for waiving competitive contracting procedures that
would impair foreign aid programs was recently recodified and enacted into
positive law (40 U.S.C. S: 113(e)).

4 If more than one contractor was awarded a contract, however, then all
the contractors are required to be provided a fair opportunity to be
considered for the task order.

task order contract is primarily an issue of contract interpretation and
judgment by the contracting officer.

o  	We found several compliance problems when agencies issued task orders
under existing contracts. Specifically, of the 11 task orders we reviewed,
7 were, in whole or part, not within scope. For example, the Defense
Contracting Command-Washington (DCC-W)5 improperly used a General Services
Administration (GSA) schedule contract to issue two task orders to the
Science Applications International Corporation with a combined value of
over $107 million for work that was outside the scope of the schedule
contract. One order involved developing a news media capability-including
radio and television programming and broadcasting-in Iraq. The other
required the contractor to recruit people identified by DOD as subject
matter experts, enter into subcontracts with them, and provide them with
travel and logistical support within the United States and Iraq. The GSA
schedule contract, however, was for management, organizational, and
business improvement services for federal agencies. In our view, the
statements of work for both task orders were outside the scope of the
schedule contract.

o  	Another example of an agency issuing a task order that was outside the
scope of the underlying contract involved the Army Field Support Command's
$1.9 million task order for contingency planning for the Iraqi oil
infrastructure mission under the LOGCAP contract with Kellogg Brown &
Root.6 This task order, issued in November 2002, required the contractor
to develop a plan to repair and restore Iraq's oil infrastructure should
Iraqi forces damage or destroy it. Because the contractor was
knowledgeable about the U.S. Central Command's planning for conducting
military operations, DOD officials determined that the contractor was
uniquely positioned to develop the contingency support plan. DOD also
determined that developing the contingency plan was within the scope of
the overall LOGCAP contract. We have concluded, however, that preparation
of the contingency support plan for this specific mission (i.e. restoring
Iraq's oil infrastructure) was beyond the scope of the contract.
Specifically, we read the LOGCAP statement of work as providing for
contingency planning only when the execution of the mission involved is
within the scope of the

5 DCC-W, a division within the office of the Administrative Assistant to
the Secretary of the Army, provides administrative support, including
contracting support, to DOD components located in the National Capital
Region.

6 The LOGCAP contract, which was competitively awarded in 2001, requires
the contractor to provide the Army and other entities with planning and a
broad range of logistics services in wartime and other operations. The
Army has used LOGCAP to support both military operations and
reconstruction efforts in Iraq.

contract. In this regard, all parties-including GAO and DOD-agree that
repairing Iraq's oil infrastructure would not have been within the scope
of the LOGCAP contract. Consequently, we concluded that planning the oil
infrastructure restoration was also not within the scope of the contract.
The Army Field Support Command should have prepared a written
justification to authorize the work without competition. In light of the
exigent circumstances, such a justification was likely possible but needed
to be made and documented to comply with the law and protect the
taxpayer's interests.

o  DOD planners believed early on that issuance of this task order would

result in Kellogg Brown & Root being uniquely qualified to initially
execute the plan for restoring the Iraqi oil infrastructure, the so-called
"RIO contract." Subsequently, the RIO contract was awarded in March 2003
to Kellogg Brown & Root.7 The contracting officer's written justification
for the sole-source contract outlined the rationale for the decision.8 The

justification was approved by the Army's senior procurement executive, as
required. We reviewed the justification and approval documentation and
determined that it generally complied with applicable legal standards. We
made several recommendations to the Secretary of the Army to review
out-of-scope task orders to address outstanding issues and take
appropriate actions, as necessary. DOD generally concurred with the
recommendations and noted that it was in the process of taking corrective
actions. DOD also agreed with our recommendation that the Secretary of
Defense evaluate the lessons learned in Iraq and develop a strategy for
assuring that adequate acquisition staff and other resources can be made
available in a timely manner.

I will now turn to discussing our ongoing work on DOD's use of global
logistics support contracts. As I previously noted, we looked at four such
contracts, which have been used by all the military services to provide a
wide array of services, including operating dining facilities and
providing housing, in more than half a dozen countries, including Iraq,
Kuwait, and Afghanistan. In total, the estimated value of the work under
the current contracts is $12 billion, including $5.6 billion for work in
Iraq through

7 According to the Army Corps of Engineers, more than $2.5 billion had
been obligated on the contract as of May 2004.

8 As we reported, DOD concluded that there was only one source with the
capability to perform emergency repairs to the oil infrastructure given
(1) the classified nature of the planning efforts, (2) the contractor's
role in those efforts, and (3) the imminent commencement of hostilities.

DOD's Use of Logistics Support Contracts

May 2004. Before summarizing our preliminary findings, let me first make
an overall observation about the vital services that these types of
contracts provide. The contractors and the military services have, for the
most part, worked together to meet military commanders' needs, sometimes
in very hazardous or difficult circumstances. For example, the LOGCAP
contract is providing life and logistics support to more than 165,000
soldiers and civilians under difficult security circumstances in Iraq,
Afghanistan, Kuwait, and Djibouti, and customers told us they are
generally pleased with the service the contractor is providing. The AFCAP
contractor is providing air traffic management at air bases throughout
central Asia, supplementing scarce Air Force assets and providing needed
rest for Air Force service members who also perform this function. Using
the CONCAP contract, the Navy has constructed detainee facilities
(including a maximum security prison) at Guantanamo Bay on time and within
budget. Projects at Guantanamo have increased the safety of both the
detainees and the U.S. forces guarding them and resulted in real savings
in reduced personnel tempo. Finally, the BSC continues to provide a myriad
of high quality services to troops in Kosovo and Bosnia, and the customer
works with the contractor to identify costs savings.

Within this overall context, we found mixed results in each of the four
areas we reviewed-planning, oversight, efficiency and personnel-with
variations occurring among the four contracts and among the various
commands using them. Our report, which will be issued later this year,
will make a number of recommendations to address the shortcomings we
identified in these areas.

Planning

In assessing DOD's planning, we found that some customers planned quite
well for the use of the contracts, following service guidance and
including the contractor early in planning. For example, in planning for
Operation Iraqi Freedom, U.S. Army, Europe, was tasked with supporting the
anticipated movement of troops through Turkey into Iraq, and our review of
that planning showed that the command followed applicable Army guidance to
good effect. In October 2002, the command brought contractor personnel to
its headquarters in Europe to help plan and develop the statement of work.
According to a briefing provided by U.S. Army, Europe, contractor planners
brought considerable knowledge of contractor capabilities, limitations,
and operations, and their involvement early in the planning efforts
increased understanding of the requirements and capabilities, facilitated
communication regarding the statement of work, and enhanced mission
completion.

Conversely, we found that the use of LOGCAP in Kuwait and Iraq was not
adequately planned, nor was it planned in accordance with applicable Army
guidance. Given the lack of early and adequate planning and contractor
involvement, two key ingredients needed to maximize LOGCAP support and
minimize cost-a comprehensive statement of work and early contractor
involvement-were missing. Specifically:

o  	A plan to support the troops in Iraq was developed in May 2003, but
was not comprehensive because the contractor was not involved in the early
planning and it did not include all of the dining facilities, troop
housing, and other services that the Army has since added to the task
order. According to an official from the 101st Airborne Division, there
was a lack of detailed planning for the use of LOGCAP at the theater and
division levels for the sustainment phase of the operation. He added that
Army planners should develop a closer working relationship with the
divisions and the contractor.

o  	Task orders were frequently revised. These revisions generated a
significant amount of rework for the contractor and the contracting
officers. Additionally, time spent reviewing revisions to the task orders
is time that is not available for other oversight activities. While
operational considerations may have driven some of these changes, we
believe others were more likely to have resulted from ineffective
planning. For example, the task order supporting the troops in Iraq was
revised 7 times in less than 1 year. Frequent revisions have not been
limited to this task order. Task order 27, which provides support to U.S
troops in Kuwait (estimated value of $426 million as of May 2004), was
changed 18 times between September 2002 and December 2003, including 5
changes in one month, some on consecutive days. As of May 11, 2004, the
contracting office, DCMA, and the contractor had processed more than 176
modifications to LOGCAP task orders.

Contract Oversight 	In some cases, we found that contract oversight
processes were in place and functioning well. For example, the Defense
Contract Management Agency (DCMA) had principal oversight responsibility
for the LOGCAP and AFCAP contracts and the BSC,9 and DCMA generally
provided good overall contract oversight, although we found some examples
where it could have improved its performance. For example:

9 While oversight of a contract is the responsibility of the contracting
officer, the contracting officer may delegate some oversight
responsibilities to DCMA.

o  	Effective oversight of the diverse functions performed under the
contracts requires government personnel with knowledge and expertise in
these specific areas. DCMA contract administrators are contracting
professionals, but many have limited knowledge of field operations. In
these situations, DCMA normally uses contracting officer's technical
representatives. Contracting officer's technical representatives are
customers who have been designated by their units and appointed and
trained by the administrative contracting officer. They provide technical
oversight of the contractor's performance. We found that DCMA had not
appointed these representatives at all major sites in Iraq. Officials at
the 101st Airborne Division, for example, told us that they had no
contracting officer's technical representatives during their year in Iraq,
even though the division used LOGCAP services extensively.

o  	For task orders executed in southwest Asia, the AFCAP procuring
contracting officer delegated the property administration responsibility
to DCMA administrative contracting officers. However, contract
administrators in southwest Asia did not ensure that the contractor had
established and maintained a property control system to track items
acquired under the contract. In addition, DCMA contracting officers in
southwest Asia did not have a system in place to document what the
contractor was procuring in support of AFCAP task orders and what was
being turned over to the Air Force. As a result, as of April 2004, neither
DCMA nor the Air Force could account for approximately $2 million worth of
tools and construction equipment purchased through the AFCAP contract.

An important element of contract administration is the definitizing of
task orders, that is, reaching agreement with the contractor on the terms,
specifications, or price of services to be delivered. All of the contracts
included in our review were cost-plus award fee contracts. These contracts
allow the contractor to be reimbursed for reasonable, allowable, and
allocable costs incurred to the extent prescribed by the contract and
provide financial incentives based on performance. Cost-plus award fee
contracts allow the government to evaluate a contractor's performance
according to specified criteria and to grant an award amount within
designated parameters. Award fees can serve as a valuable tool to help
control program risk and encourage excellence in contract performance. To
reap the advantages that cost-plus award fee contracts offer, the
government must implement an effective award fee process. Any delays in
definitizing task orders, however, make cost-control incentives in these
award fee contracts less effective as a cost control tool since there is
less work remaining to be accomplished and therefore less costs to be
controlled by the contractor.

While we found that AFCAP and BSC task orders were definitized quickly,
and CONCAP task orders do not require definitization since the terms,
specifications, and price are agreed to before work begins, we also found
that many LOGCAP task orders remain undefinitized for months, and
sometimes more than a year, after they were due to be completed and after
billions of dollars of work had been completed. Because task orders have
not been definitized, LOGCAP contracting personnel have not conducted an
award fee board. I would like to note, however, that this condition is not
limited to the LOGCAP contract. We stated in our report released yesterday
that the Army Corps of Engineers has yet to definitize its March 2003
contract to rebuild Iraq's oil infrastructure or one of its contracts to
rebuild Iraq's electrical infrastructure and recommended that the
undefinitized contracts and task orders be definitized as soon as
possible. DOD agreed with this recommendation and identified a number of
steps being taken to do so.

                             Economy and Efficiency

We again found mixed results in evaluating the attention to economy and
efficiency in the use of contracts. In some cases, we saw military
commands actively looking for ways to save money in the contracts. For
example, U.S. Army, Europe, reported savings of approximately $200 million
under the BSC by reducing labor costs, by reducing services, and by
closing or downsizing camps that were no longer needed. The $200 million
is almost 10 percent of the current contract ceiling price of $2.098
billion. In addition to these savings, U.S. Army, Europe, routinely sends
in teams of auditors from its internal review group to review practices
and to make recommendations to improve economy and efficiency. In others,
however, most notably the LOGCAP contract in Iraq and Kuwait, we saw very
little concern for cost considerations. It was not until December 2003,
for example, that the Army instructed commands to look for ways to
economize on the use of this contract. Similarly, we found that the Air
Force did not always select the most economical and efficient method to
obtain services. It used the AFCAP contract to supply commodities for its
heavy construction squadrons, although use of the contract to procure and
deliver commodity supplies required that the Air Force pay the
contractor's costs plus an additional award fee. Air Force officials said
that they used AFCAP because not enough contracting and finance personnel
were deployed to buy materials quickly or in large quantities. AFCAP
program managers have recognized that the use of a cost-plus award fee
contract to buy commodities may not be the most cost-effective method and
said that the next version of the contract may allow for either firm-fixed
prices or cost-plus fixed fee procurements for commodity purchases.

Personnel and Training

Concluding Observations

We found that shortages of personnel have also made contract oversight
difficult. For example, while DCMA has deployed contracting officers to
several countries throughout southwest and central Asia and the Balkans to
provide on-site contract administration, DCMA officials believe that
additional resources are needed to effectively support the LOGCAP and
AFCAP contracts. Administrative contracting officers in Iraq, for example,
have been overwhelmed with their duties as a result of the expanding scope
of some of the task orders. Additionally, some Army and Air Force
personnel with oversight responsibilities did not receive the training
necessary to effectively accomplish their jobs. Finally, we found that
military units receiving services from the contracts generally lacked a
comprehensive understanding of their contract roles and responsibilities.
For example, commanders did not understand the part they played in
establishing task order requirements, nor did they fully understand the
level of support required by the contractors.

In conclusion, Mr. Chairman, the United States, along with its coalition
partners and various international organizations and donors, has
undertaken an enormously complex, costly, and challenging effort to
rebuild Iraq in an unstable security environment. At the early stages of
these efforts, agency procurement officials were confronted with little
advance warning on which to plan and execute competitive procurement
actions, an urgent need to begin reconstruction efforts quickly, and
uncertainty as to the magnitude and term of work required. Their actions,
in large part, reflected proper use of the flexibilities provided under
procurement laws and regulations to award new contracts using other than
full and open competitive procedures.

With respect to several task orders issued under existing contracts,
however, some agency officials overstepped the latitude provided by
competition laws by ordering work outside the scope of the underlying
contracts. This work should have been separately competed, or justified
and approved at the required official level for performance by the
existing contractor. Importantly, given the war in Iraq, the urgent need
for reconstruction efforts, and the latitude allowed by the competition
law, these task orders reasonably could have been supported by
justifications for other than full and open competition.

Logistics support contracts have developed into a useful tool for the
military services to quickly obtain needed support for troops deployed to
trouble spots around the world. Because of the nature of these contracts,
however-that is, cost-plus award fee contracts-they require significant

government oversight to make sure they are meeting needs in the most
economic and efficient way possible in each circumstance. While the
military services are learning how to use these contracts well, in many
cases the services are still not achieving the most cost-effective
performance and are not adequately learning and applying the lessons of
previous deployments. Because of the military's continuing and growing
reliance on these contracting vehicles, it is important that improvements
be made and that oversight be strengthened.

Contact and Acknowledgment

(120361)

Mr. Chairman and Members of the committee, this concludes my statement. I
will be happy to answer any question you may have.

For further information, please contact Neal P. Curtin at (757) 552-8111
or [email protected] or William T. Woods at (202) 512-4841 or
[email protected]. Individuals making key contributions to this statement
include Robert Ackley, Ridge Bowman, Carole Coffey, Laura G. Czohara, Gary
Delaney, Timothy J. DiNapoli, George M. Duncan, Glenn D. Furbish,

C. David Groves, John Heere, Chad Holmes, Oscar W. Mardis, Kenneth E.
Patton, Ron Salo, Steven Sternlieb, Matthew W. Ullengren, John Van Schaik,
Adam Vodraska, Cheryl A. Weissman, and Tim Wilson.

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Additional copies are $2 each. A check or money order should be made out
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Orders for 100 or more copies mailed to a single address are discounted 25
percent. Orders should be sent to:

U.S. General Accounting Office 441 G Street NW, Room LM Washington, D.C.
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To order by Phone: 	Voice: (202) 512-6000 TDD: (202) 512-2537 Fax: (202)
512-6061

To Report Fraud,	Contact: Web site: www.gao.gov/fraudnet/fraudnet.htm

Waste, and Abuse in E-mail: [email protected]

Federal Programs Automated answering system: (800) 424-5454 or (202)
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Jeff Nelligan, Managing Director, [email protected] (202) 512-4800

Public Affairs 	U.S. General Accounting Office, 441 G Street NW, Room 7149
Washington, D.C. 20548
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