Last spring, Air Force combat engineers in the United Arab Emirates needed to speed up work on a $25.4 million project to upgrade an air base in the Persian Gulf nation for possible future use by the United States. Some quick research found that a key piece of construction equipment, a concrete paver, could shave as much as two months off the project and would allow the 820th RED HORSE Squadron, Nellis AFB, Nev., to complete the airfield overhaul before its six-month rotation in the Gulf was up.
Maj. Patrick Morris, deputy commander for the engineering unit, called a few US vendors and found getting the equipment would cost as much as $240,000. So, Morris did what Air Force personnel who need services and construction equipment overseas are increasingly doing. He called Readiness Management Support and told them what he needed. The Panama City, Fla., logistics company, a subsidiary of Johnson Controls, holds a wide-ranging logistics contract to provide the Air Force with equipment and services worldwide.
Using a network of local vendors in the Middle East, RMS was able to find the paver at a fraction of the cost ($12,000) and deliver it quickly enough for the airfield to be finished ahead of schedule.
"If using a contractor is the most efficient way to do it, then we'll do it that way," said Morris.
To War With Contractors
In January 2002, the Air Force awarded RMS a $450 million eight-year deal, the service's largest logistics service contract yet in the growing market. Since 1997, RMS has earned more than $200 million providing airmen and, in some cases, other federal agencies (covered under the Air Force contract) everything from power generators for overseas bases to engineers who can assist in surveying airfields on foreign soil.
More specifically, jobs covered under the wide-ranging contract, known as the Air Force Contract Augmentation Program (AFCAP), have included:
Dwight E. Clark, AFCAP program manager for RMS, said hiring contractors for support services allows the Air Force to quickly procure supplies and services for contingency operations where they may not be readily accessible and also saves money by allowing the service to rapidly scale back support work as soon as RMS is no longer needed. "They use us when they need us and then let us go," said Clark.
Kathleen I. Ferguson, Air Force deputy civil engineer, described AFCAP as "a force multiplier that allows us to get the right material and right equipment to the right place at the right time."
The Air Force increasingly is relying on contractors as a way to free up forces for more pressing duties. Last year, the service asked the Pentagon to increase Air Force end strength by about 7,000 troops. The other services had similar post-9/11 requests, but Defense Secretary Donald H. Rumsfeld rejected such plans. Instead, Rumsfeld told the services that they should try to find those additional service members from within their existing forces. One way, he said, is to move military personnel out of jobs that can be outsourced to contractors.
Air Force senior leaders agreed. "Just increasing end strength does not mean we're doing things smarter," said Air Force Secretary James G. Roche. "We're just doing more of what we did. We as leaders have the responsibility to look and see [if] there are smarter ways of doing things."
The Air Force is not alone. All the military services are increasingly hiring contractors to provide support services behind the lines to stretch limited dollars and free up uniformed personnel for front-line warfighting duties. The Army has paid more than $2.2 billion to Brown & Root Services of Houston, since troops were first sent to Bosnia in 1995, to build, operate, and maintain bases throughout the Balkans. Over the past decade, Navy spending on service contracts for bases has more than doubled--from $728 million in 1991 to $1.48 billion. It recently hired contractors to build prison facilities for al Qaeda detainees at Guantanamo Bay, Cuba.
Military logisticians are fond of saying contractors have been a part of war since they were hired to feed and care for the Continental Army's cavalry horses during the Revolutionary War, but there's little question that the military's use of contractors has expanded rapidly since the Berlin Wall came down.
The Numbers Are Growing
About 5,200 contractors supported some 500,000 US troops during the Persian Gulf War. That's a ratio of one contractor for every 100 military personnel. In the Balkans, the ratio dropped, and at times, there have been more service providers on the ground than troops. One Army contractor in Kosovo boasted that private workers were doing all jobs that did not require them to carry guns.
Indeed, a General Accounting Office report found about 10 percent of the $13.8 billion spent on Balkan operations from 1995 through March 2000 went to contractors. "The Department of Defense has increasingly relied on contractors rather than soldiers to provide some services in the Balkans as force-level ceilings have been reduced," GAO auditors said in a 2000 report.
In preparation for war with Iraq, officials said, contractors were sure to play a role larger than in 1991. There could be one contractor for every 10 troops in the Persian Gulf, according to Peter W. Singer, a fellow at the Brookings Institution in Washington, D.C. Already, DOD employs thousands of contractors throughout the Middle East for maintaining warehouses of pre-positioned supplies and for building and supporting bases.
For example, DynCorp Technical Services, a logistics services company based in Fort Worth, Tex., has a seven-year, $30-million-per-year contract to maintain Air Force war reserves in Oman, Qatar, and Kuwait.
USAF also used contractors in Operation Enduring Freedom in Afghanistan. RMS provided the engineers and generators in former Soviet states to power several airfields now being used by US and allied forces. Since February 2001, the Air Force has awarded RMS some 65 service jobs worth about $90 million, mainly for tasks supporting the war on terrorism.
Pentagon leaders have made it clear they want to use industry on the battlefield whenever possible. The Quadrennial Defense Review, a planning drill conducted every four years, suggested in 2001 that contracting out battlefield services will become as common as hiring private firms to build tactical aircraft. "Only those functions that must be performed by DOD should be kept by DOD," stated the QDR. It continued: "Over the last several decades, most private sector corporations have moved aggressively away from providing most of their own services. ... Aggressively pursuing this effort to improve productivity requires a major change in the culture of the department."
The Pentagon also required a change in how the contracts are managed and structured. According to retired Army Gen. William G. Tuttle Jr., a former head of Army Materiel Command, the military services used hundreds of contractors in Vietnam and the Persian Gulf under individual contracts, but they now hire a single company, like RMS, to serve as prime contractor. The prime then manages scores of subcontractors and vendors under an umbrella logistics contract like AFCAP. Having a single contractor responsible for all the work improves accountability, said Tuttle.
Each of the services has created Indefinite-Delivery/Indefinite-Quantity contracts that allow logistics work to be awarded to one prime contractor that then issues work orders to pre-approved vendors and smaller subcontractors. Those vendors and subcontractors compete to offer their goods and services at set prices on the contract.
IDIQs have come into vogue across the federal marketplace in recent years as part of acquisition reforms that allow agencies to get what they need more quickly and at lower prices. The contracts do not have a set value, but instead set a price cap for the entire contract that cannot be exceeded.
In the Defense Department, the IDIQ contracts came of age in the Balkans, when the Army, facing harsh deadlines, had to build facilities for thousands of troops. At the height of the conflict, the Army employed some 20,000 contractor personnel to build and then run bases for upward of 20,000 GIs in Bosnia and Kosovo.
The Air Force Approach
Based on the Army's success, the Air Force, in 1997, awarded its first Air Force Contract Augmentation Program contract to RMS. It had a potential value of $450 million over five years. During those five years, the Air Force ordered $170 million in goods and services from AFCAP. In 2001, the Air Force held a competition for a new AFCAP deal and again awarded that work to RMS. The new RMS contract runs for eight years, but the value remains at $450 million. (The Air Force decided not to raise the contract value above the original deal since it never came close to reaching the cap.)
Unlike the Army, the Air Force has not used AFCAP to provide thousands of support workers. Instead, the Air Force primarily has used the contract approach to provide engineering experts, special power and construction equipment, and supplies at various sites around the world. As of October, Clark said, RMS and its subcontractors employed as many as 400 managers, engineers, and mechanics to provide and oversee AFCAP services. Only about a dozen employees administer the contract from Panama City. The bulk of RMS workers are forward deployed.
"Whenever possible, we use local labor to keep costs down," said Clark, adding that those workers are paid local wages and are always supervised by on-site managers who are US citizens. Using local workers builds support with local nations, he said.
The AFCAP contract is a performance-based pact that pays contractors extra fees for meeting or exceeding specific goals. For example, RMS can receive a bonus of six percent of the cost of the work for exceeding goals. "We get all of it or none of it," said Clark.
The Air Force Civil Engineer Support Agency manages AFCAP and relies on various sources to decide how well a contractor is performing. The primary on-site government representatives come from the Defense Contract Management Agency and the specific Air Force unit requesting AFCAP contracting support.
DCMA, which oversees 325,000 defense acquisition contracts valued at $850 billion, provides contract officers at forward deployed locations to handle the day-in and day-out duties of contract management, such as issuing start and stop work orders, accepting and rejecting work orders, and ensuring the proper subcontractors and vendors are being used.
Every six months, the DCMA and Air Force unit quality assurance and technical representatives at the job site submit a five-page review rating the goods and services provided. (The scale is zero-100.) Generally, RMS rates above average, scoring in the 80s and 90s, Air Force officials said.
There have been no detailed independent assessments of AFCAP to date, although GAO is currently conducting a review of the logistics services contract. While such contracts save the services money, questions will always remain about the loyalty of contractors in a war zone and whether the military is liable for their safety.
Paul V. Lombardi, president and chief executive officer for DynCorp, argues that those concerns are overstated. He maintained that if military officials were really concerned about contractors deserting a war zone, DOD would not be increasingly contracting out logistics services.
More recently, the threat of terrorism has raised concerns about whether it's wise for the military to use foreign workers at overseas installations. Both Air Force managers and contractors said subcontractors, vendors, and foreign workers undergo background checks and are always accompanied by US military personnel or US citizens. In UAE, RED HORSE members kept the contractors off base altogether, hiring a local company to manufacture concrete off site and then trucking it onto base with US vehicles and personnel.
Morris said that AFCAP offers the latitude to be more creative, but procurement and security rules still are followed.
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