Army Carefully Considering Next Worldwide Logistics Contractors

The United States Army is still deciding to which companies it will award a major contract that supports U.S. troops stationed around the world. Past versions of the contract were plagued by contractor misconduct that resulted in waste, fraud, abuse, and consequent harm to service members. The Army has delayed the award date multiple times, but one can hope it is to ensure the contract is granted to companies that will faithfully execute it.

The contract, called the Logistics Civil Augmentation Program (LOGCAP) V, is currently capped at $82 billion and will consist of four to six contracts lasting up to ten years­—a five-year base term followed by five one-year options. Contractors will provide services ranging from supplying food, water, and shelter to performing facilities maintenance and construction.

The previous version of the contract, LOGCAP IV, was awarded to DynCorp International LLC, Fluor Intercontinental, Inc., and Kellogg Brown & Root Services, Inc. (KBR). Two of the companies allegedly committed misconduct while working on it. Employees accused Fluor of retaliating against them after they claimed the company manipulated reports to hide lost government property. Firefighters on military bases accused KBR of denying them pay and benefits, and the company was disqualified from fulfilling part of the contract for refusing to take action after an employee viewed sensitive and proprietary information. KBR is the contractor that originally drew controversy to the LOGCAP contracts in 2001. KBR’s former CEO, Dick Cheney, was Vice President of the United States when LOGCAP III was awarded to the company. The government and employees sued the company numerous times for waste, fraud, and abuse. Most famously, KBR exposed thousands of troops stationed in Iraq to unsafe wastewater that the troops used when showering, washing clothes, brushing their teeth, and occasionally making coffee. Troops may have suffered health problems due to exposure. KBR was awarded LOGCAP IV despite its track record on LOGCAP III.

The other incumbent, DynCorp, has not been charged with misconduct while working on LOGCAP IV, but it too has a history of malpractice on other government contracts. Ecuadorians accused the company of causing extreme physical and mental harm as well as property damage after the contractor sprayed pesticides over Colombia and Ecuador to eradicate cocaine and heroin crops. DynCorp employees also pleaded guilty to overcharging the State Department for rent in Iraq.

LOGCAP IV expired in April 2018, but the Army has repeatedly delayed awarding LOGCAP V. According to LOGCAP V project manager Jerome Jastrab, the decisions will be announced around December 2018. In the meantime, services will continue to be provided by the three incumbents whose contracts were extended for up to two one-year terms. LOGCAP IV ended up costing approximately $22 billion prior to the extension, although the government capped it at $150 billion. The Army has not publicly disclosed the dollar amount of the contract extensions.

In October 2017, the Army hosted Industry Day, an event for companies that were interested in bidding on contracts and learning more about contract expectations. Representatives from LOGCAP IV incumbents Fluor and KBR attended; DynCorp was not present at the event. While the Army only allowed three representatives from most companies to attend the event, Fluor was allowed seven.

There are plenty of other companies also looking to come away with a piece of LOGCAP V. One such company is Pacific Architects and Engineers (PAE), once a subsidiary of Lockheed Martin. PAE has created two separate joint ventures with defense suppliers—one with Parsons Corporation and the other with Vectrus Systems—in hopes of increasing its chances of winning. The joint ventures are headed by Scott Welker, who was a senior official at the Army contracting headquarters three months prior to leading the ventures. All three companies were at Industry Day, with Vectrus being allowed six representatives despite the three-person limit.

The new companies have also had their share of alleged and proven misconduct while working on other government contracts. Most recently, PAE paid the government $5 million for failing to conduct, and falsely billing the government for, personnel background checks. Prior to this, PAE paid $1.15 million for bid-rigging on a services contract in Afghanistan. Vectrus, who is teaming up with PAE, retaliated against employees who were cooperating with an investigation into illegal activities at Bagram Air Base in Afghanistan. The jury awarded the employees $1.7 million in damages. Parsons, the other defense supplier partnering with PAE, failed to complete two thirds of the projects assigned in a construction contract in Iraq, prompting the Army to ask the company to show cause for why it should not be debarred.

The Army is taking steps to improve performance and to safeguard against contractor fraud and misconduct in the next LOGCAP contract. First, the contract will be awarded on a competitive basis in hopes that competition will improve contractor accountability. This was the approach implemented in LOGCAP IV and resulted in far fewer instances of misconduct than the previous, sole-source contract. Second, the Army will require contractors to create crisis action plans to prepare for unforeseen or sudden warfighter needs. These plans will be put to the test during the three planning exercises per year now required at bases in each region. In principle, implementing these measures will help contractors respond more quickly to troop needs.

In addition, the Army is learning from mistakes from past contracts. They agreed to implement in LOGCAP V all corrective actions suggested by the Department of Defense Inspector General in a LOGCAP IV audit to increase accountability and effective contractor oversight.

While nothing is certain about which companies will win the LOGCAP V contract, it’s good to see the government designing the contract with safeguards, such as requiring contractors to submit crisis action plans, to ensure they do what they’re supposed to and are held accountable when they don’t. Hopefully the extra time that was needed to amend LOGCAP V and to deliberate over who will win the contracts will result in improved decisions when it comes to the contractors the Army chooses and, ultimately, in improved logistical support for our troops.