Report Faults Pentagon's Reliance on Contractors

By Dana Hedgpeth
Washington Post Staff Writer
Thursday, March 27, 2008

Government auditors said yesterday that the Pentagon relies too much on contractors who often work alongside their government counterparts, cost more and sometimes take on responsibilities they are not supposed to.

The Government Accountability Office said that as the government's workforce has shrunk, its demand for services has mushroomed and procurement deals have become more complex and hard to manage. That has forced agencies to hire more contractors. Last year, the Defense Department spent $158.3 billion on services -- a 76 percent increase over the past decade, and more than what it spends on supplies, equipment and major weapons systems, according to the report.

The GAO looked at the Army Contracting Agency's Contracting Center of Excellence, which does procurement for 125 divisions at the Pentagon, as a case study of how the Defense Department handles and oversees its procurement operations. In fiscal 2007, the CCE spent nearly $2 billion, a small fraction of the Army's nearly $100 billion worth of purchases.

The GAO found that 42 percent of the Army's CCE procurement specialists are contractors, up from 24 percent in fiscal 2005. The report said relying so much on contractors creates "the risk of loss of government control over and accountability" for government programs.

Nearly all of the contracting specialists, who often perform some of the same functions as their government counterparts, work for CACI International of Arlington.

The company -- which develops technology systems for the Pentagon, intelligence and civilian agencies -- did $1.3 billion worth of business with the government in fiscal 2007, according to Eagle Eye, a research group that tracks government contacts. CACI ranks among the top 50 largest contractors in the country.

"We found the line separating government from contractor personnel to be blurry," the GAO report said. "There is no physical separation; the two work side by side in identical office space, and contractor employees are not identified as such on their cubicles. The only apparent distinction is their different badge color."

The watchdog agency also looked at 42 randomly selected contracts from fiscal years 2006 and 2007 and found that contractors had prepared contract documents, made requests for legal reviews, recommended who to pick, assisted in negotiating the deals and administered the contracts.

Joseph I. Lieberman (I-Conn.), chairman of the Senate Homeland Security and Governmental Affairs Committee, said the issues the GAO points out are "unacceptable and must be rooted out."

"We must be assured that contract dollars are awarded so that taxpayers get the best value for their money and not to increase the fortunes of a contractor or its employees," he said in a statement.

CACI said in a statement that it supported "any effort by the government to effectively acquire and use contractor resources to fill workforce or expertise shortages wherever needed. CACI has consistently provided our armed forces with good value."

The report also said that some contractors are paid $74.99 per hour -- 27 percent more than government employees who are doing the same work -- and that they had, on average, 18 years of contracting-related experience, compared with government workers' average of 12 years. Army contracting officials said they "face chronic difficulties in recruiting and retaining contract specialists" because of competition from other agencies and the private sector.

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