Private Sector Has Firm Role at the Pentagon

The Defense Department is paying a firm called AECOM Technology Corp. to do work in Iraq once reserved mostly for military managers and other public employees, an arrangement that shows how far the government has gone in its decade-long effort to turn over much of its work to private contractors.

Under the $22 million contract, awarded in March, the Los Angeles-based engineering firm's subsidiaries will help the Pentagon buy goods and services, plan projects and administer contracts in Iraq related to reconstruction work. The firm will also monitor other contractors who are overseeing billions of dollars worth of electrical, water and communications projects. And the firm will assist on audits of projects, according to company documents.

The AECOM contract is the latest example of a transformation of the military acquisition system that started more than a decade ago and has contractors making decisions once made by government staffers. From 1990 to 2000, the Defense Department cut its procurement and acquisition staff from about 461,000 to 231,000, according to a 2000 report by the Defense Department's inspector general. Many duties that had been handled by the government were gradually shifted to the private sector.

David J. Nash, head of the Program Management Office of the Coalition Provisional Authority in Iraq, said the shift is crucial to the complex task of Iraq reconstruction. "What we have is a bit of a private-sector model," he said in an interview from Iraq. "What we've tried to create here is a very agile approach" that uses private-sector management expertise.

Some procurement and military experts contend that the expanded use of contractors has made accountability more difficult. The government is investigating whether Halliburton Inc. charged the government improperly for meals and gasoline. The military is examining allegations that civilian contract interrogators were involved in abusing prisoners at the Abu Ghraib prison. Concerns also are growing about the use of private armies following the deaths of armed guards working for Blackwater Security Consulting, a company hired to protect L. Paul Bremer, the U.S. civilian administrator of Iraq, several military facilities and other companies operating in Iraq. Congress has raised questions about conflicts of interests among the companies hired to help the government manage the $18.4 billion allocated to help rebuild Iraq.

"How much control do we have over these organizations?" said Conrad C. Crane, director of the U.S. Army Military History Institute at the Army War College in Carlisle, Pa. "It's at a point that it's here to stay. You can't go back. We have to make sure it's going to work."

The roots of these changes go back to the early 1990s, when Congress and the Clinton administration were trying to cut costs and making federal contracting more efficient. In 1992, when Congress pressed the Defense Department to cut back on nonessential personnel and focus resources on the fighting forces, the acquisition staff was reduced. Two years later, Congress passed the Federal Acquisition Streamlining Act of 1994, giving agencies broader authority to buy goods and services, while narrowing their responsibility to negotiate. In 1996, Congress approved the Clinger-Cohen Act, which allowed the use of multi-agency contracts, easing the way for one agency to handle contracts for others.

Behind all that activity was a document, revised many times, called the Office of Management and Budget Circular A-76. "Competition enhances quality, economy, and productivity," and government has an obligation to use contractors whenever possible, it says.

As the personnel cuts at the Pentagon accelerated in the 1990s, there was a fierce debate inside the government. Some Pentagon officials warned that a lack of oversight could result. One of them was Dennis H. Trosch, who worked for more than two decades in the Defense Department's general counsel's office. Though he agreed that some outsourcing could improve efficiency, Trosch said he and others warned that reliance on private companies would probably lead to problems.

"From where I was, I felt the government was losing control and accountability," said Trosch, who retired in May 1996 as the department's deputy general counsel for acquisition and logistics.