Senate Passes McCaskill Provisions to Crack Down on Defense Contracting

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September 21, 2007 -- WASHINGTON, D.C. – The United States Senate yesterday gave unanimous approval to three provisions sponsored by U.S. Senator Claire McCaskill that will help reduce fraud, waste, and abuse in defense contracting in Iraq and Afghanistan. The three amendments were added to the National Defense Authorization Act for Fiscal Year 2008, which authorizes funding for the Department of Defense.

“We are spending billions of dollars in Iraq and Afghanistan each month, and we need to make sure every penny is being used wisely,” McCaskill said. “These amendments will bring greater scrutiny to defense contracting in a way that will help prevent abuse as we move forward.”

As a former auditor, McCaskill has examined current contracting procedures and oversight in multiple hearings and during a visit to Iraq earlier this year. McCaskill used the feedback and information she has received to write legislation that will increase oversight and save tax dollars. Her amendments will require independent reviews of all service contracts, tighten restrictions on “undefinitized” contracts, and provide training to military personnel who perform contract oversight.

While in Iraq, McCaskill heard that service contracts – such as contracts with companies that provide food service, maintenance, security and other duties for the military – suffered from a lengthy history of insufficient oversight. In reaction, McCaskill offered an amendment that requires independent reviews of major service contracts. The reviews will specifically look at the appropriateness of the contract type, the sufficiency of management and oversight personnel assigned to the contract, and the sufficiency of past and ongoing auditing efforts. The independent reviews are modeled after those that occur for many equipment procurement contracts.

“Undefinitized” contracting – contracts in which the terms of the contract were unsettled when it was entered into by the Department of Defense – was another area that raised red flags for McCaskill. Although this type of contract may be needed in rare, time-sensitive situations, McCaskill offered an amendment that would tighten restrictions on such contracts after it was reported that “undefinitized” contracts were becoming more routine, used in non-emergency situations and had become subject to abuse. Specifically, the amendment requires stricter management and approval of “undefinitized” contracts and limits profit payments to contractors until the terms of the contract are finalized.

The Senate also accepted McCaskill’s amendment, which she offered with Senator Tom Carper of Delaware, who traveled with her during her Iraq visit, to require the Department of Defense to develop a policy for providing training for military personnel who work with contracts and contractors on a regular basis but who are not part of the military acquisition workforce. Currently, many military officers without a significant background or training in contracting law interact regularly with contractors on the battlefield. Their lack of contracting experience leads to less effective oversight and creates a risk for waste and abuse. The training required by this amendment will ensure that personnel know the laws related to contracting and what their responsibilities are for contractor oversight and management.

McCaskill is continuing to push for additional reform measures to protect American tax dollars spent in the Iraq. She, along with Senator Jim Webb (D-VA), has introduced an amendment to the Defense authorization bill that would create an independent commission to investigate and study wartime, contingency and reconstruction contracting in the spirit of the World War II-era Truman Commission. The commission would then make specific policy recommendations to help prevent future fraud and waste.

“The amendments we passed this week are just the beginning,” McCaskill said. “Waste in defense contracting is not a new issue. We need to learn from past mistakes and bring greater accountability and scrutiny to the process.”

The amendment would also expand the charter of the Special Inspector General for Iraq Reconstruction (SIGIR), a largely independent auditing body that targets waste, fraud and abuse with Iraq reconstruction funding. The Webb-McCaskill amendment would allow SIGIR to audit all contracting related to Iraq, including service contracts, to further root out waste.

Source: Senator Claire McCaskill