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Contracting Agility in LOGCAP-Kuwait

To end fraud and waste in contracting and improve support to Soldiers, the Logistics Civil Augmentation Program in Kuwait has expanded its responsibilities beyond supporting the LOGCAP contract.

During the monthly U.S. Army Central Command (ARCENT) class for contracting officer’s representatives in Kuwait, the briefer from the Logistics Civil Augmentation Program (LOGCAP) would ask, “Does anyone here know what LOGCAP means in Kuwait?” In response, most of the students would answer “KBR,” meaning the company supporting the LOGCAP III contract. However, in Kuwait, LOGCAP now means more than the LOGCAP contract. It also refers to the team of logistics support officers (LSOs) and logistics management specialists (LMSs) who support all contracts in the Kuwait area of operations. So, what caused this change?

Traditional LOGCAP

LOGCAP provides contingency support to augment the Army force structure. With large global commitments, the Army must use contractors to provide logistics support in theaters of operations so that military units can be released for other missions. In essence, contractors provide the Army with additional means to adequately support its forces. This is not a new concept for the Army, which has used contractors to provide supplies and services since the Revolutionary War.

LOGCAP was established in 1985 to plan for contingencies and leverage existing civilian resources. When the initial LOGCAP contract expired, it was competed again, with DynCorp International LLC winning the second contract in January 1997. In 2001, the Army Materiel Command awarded the third contract, LOGCAP III, to KBR. Since then, it has been the primary support contract of the Global War on Terrorism in Iraq, Afghanistan, Kuwait, Djibouti, and Georgia. The benefits of the LOGCAP contract to warfighters include offsetting the Soldiers’ operating tempo, maintaining high-technology and low-density skills, allowing the transfer of Soldiers from combat support and sustainment units to combat units, and providing capabilities that the Army does not possess.

According to 2008 reports, over 160,000 contractor personnel were employed in Kuwait, Iraq, and Afghanistan. The contracts they administered involved most services and supplies. It was estimated that the military had spent in excess of $19 billion for the logistics support of operations. As an integral part of the LOGCAP team, the Defense Contract Management Agency (DCMA) administers the LOGCAP contract in theater and provides quality oversight of the contract’s execution. DCMA develops, trains, and manages contracting officer’s representatives (CORs) in supported units and evaluates contractor performance, ensuring that Federal acquisition programs, supplies, and services meet all requirements.

(Photo by COL Scott S. Haraburda)

The Requirements Generation Process

The contracting process begins with a unit that has a task that requires contracting support. The unit contacts the LOGCAP-Kuwait office and communicates the required task to an LSO or LMS. The LSO helps the unit generate a requirements memorandum, which is signed by the first lieutenant colonel or colonel in the chain of command. That officer validates the requirement and certifies that the unit has exhausted all organic resources capable of providing the needed support. After validating the requirement, the LSO helps the unit develop the requirements-based scope that defines the exact need. The new requirement is then written in performance-based language as a performance work statement (PWS).

While developing this PWS, the unit provides estimated cost-generating requirements to the LOGCAP office’s cost analyst, who then develops an independent Government cost estimate (IGCE). As this estimate is being developed, the contracting officer issues a request for proposal to a contractor to use for its formal proposal to meet the requirements of the PWS. After receiving the contractor’s ceiling price proposal or the IGCE, the LSO assists the unit in developing and submitting a packet for acquisition approval. This approval can be obtained from either an acquisition review board or by completing a purchase request and commitment form.

Once the acquisition is approved, the unit resource manager, such as the S–8 or G–8, approves the funding and places the budget into the spend plan. The contracting officer then issues a contract to the contractor so it can begin execution of the contract. At the same time, the contracting officer conducts negotiations with the contractor to finalize the specific requirements and costs of the contract. The last step in this process is oversight of the contractor, which is conducted through the administrative contracting officer and his appointed CORs.

Flexibility is essential for effective logistics performance; logistics structures and procedures must be adapted to changing situations, missions, and concepts. Contract support is guided by a legal document (the contract) outlining a PWS for both parties’ intent and expectations. Unfortunately, if mission requirements change, the PWS may require modifications if it is not written in sufficiently broad terms. If the PWS is changed, the contract may require modification, which many times results in cost changes.

The key areas addressed in contract planning are contractor legal status; planning requirements; mission-essential services; visibility; deployment, theater reception, and in-theater management processes; force protection and security; and medical care. Obtaining optimal capabilities involves integrating military and contractor planning, which is effectively accomplished by including LSOs in the planning process.

In planning for LOGCAP support, the art and science of writing contracts is critical to ensuring flexibility, sustainability, and survivability on the battlefield. Every commander and logistician, from the field commander down, must be knowledgeable about the contract process, and the COR must be able to adapt to the constantly changing environment.

Contracting Crisis

During a probe of contingency contracting in 2007, it became clear that a serious problem involving fraud, waste, and abuse existed in Southwest Asia. By that summer, the situation had become so alarming that the Secretary of the Army, Pete Geren, established the independent Commission on Army Acquisition and Program Management in Expeditionary Operations to review recent operations and provide recommendations for improving the effectiveness and efficiency of future operations. This commission released what became known as the Gansler Report in October 2007. The report identified two significant logistics issues:

  • Although the number of contractor personnel in the Kuwait-Iraq-Afghanistan theater almost equals the number of U.S. military personnel deployed there, the operational Army does not yet recognize the impact of contracting and contractors on expeditionary operations and mission success.
  • What should be a core competence—contracting (from requirements definition, through contract management, to contract closeout)—is treated as an operational and institutional side issue.

When the Gansler Report was issued, over 70 fraud cases were open for investigation, involving about 100 personnel. Confirmed bribes totaled an excess of $15 million. People with relatively little training or background in Government contracting had committed the significant majority of fraudulent actions. They were either CORs or had other duties related to the contracting process. Many of the investigations involved Soldiers who did not really understand contract law.

When Secretary Geren visited the Kuwait contracting office in September 2007, he was so impressed with the requirements generation process of the LOGCAP-Kuwait office that he directed that it be used for all requirements within Kuwait. In essence, the LOGCAP process was identified and directed as a management control in the contracting process. Since then, the LOGCAP office has been leaning forward to support the warfighter while the decisionmakers in the United States determine the best way to support them.

CORs are an essential part of managing contracts. However, the Gansler Report found that they were typically assigned their COR responsibilities as an “extra duty” and possessed no COR-related experience. The result was that CORs were often inexperienced Soldiers who were assigned as CORs because they had the available time. They also received little, if any, training. The report concluded that the number of CORs was insufficient and that they had a high turnover rate, which frequently left many gaps in contract oversight. The Gansler Report recommended that “all logistics officers and NCOs [noncommissioned officers] should be earmarked as potential CORs.”

To ensure that CORs had sufficient operational knowledge of contracting, they were provided with theater-specific COR training. The Army Contracting Command-Kuwait developed a 3-day supplemental COR course that augmented the COR course taught by the Defense Acquisition University (DAU) and the Army Logistics Management College (ALMC). As part of this supplemental course, the students learned about each agency involved in the contract. The LOGCAP office has a 1-hour block that provides necessary information about its requirements generation process.

LOGCAP Reachback

The Army Sustainment Command (ASC) established a robust contracting and logistics reachback capability to pass the management and execution of specific contracts and acquisition requirements back to the United States. This change was designed to strengthen the management of the Kuwait contracting and logistics operations. The LOGCAP-Kuwait office would provide management and oversight in support of all contracts that were passed back to the ASC offices in the continental United States.

This sounded simple enough when it started in October 2007, but it posed challenges. The LOGCAP-Kuwait office had to overcome the inevitable “not done that way before” obstacle when it took on the reachback effort. For the first time, the LSOs assisted all of the units in Kuwait with developing their requirements, no matter which contract vehicle would be used to provide the capabilities. Of course, it took some education and marketing to get the word out, but now the LOGCAP office is the first stop for customers trying to get contract services in place in a timely and efficient manner.

(Photo by Jim Hinnant, 401st Army Field Support Brigade)

In a matter of days after the reachback effort started, the LOGCAP office took on over $1 billion in annual requirements. For Kuwait, these included supply, maintenance, transportation, public works, information management, training, and services. The Military Surface Deployment and Distribution Command (SDDC) also gave the LOGCAP office requirements for stevedoring and related terminal services for Umm Qasr, Jordan, Qatar, the United Arab Emirates, Oman, Bahrain, Saudi Arabia, and Pakistan.

The LOGCAP office used its effective program management processes to support this reachback effort. The processes included the requirements generation process as well as schedule, risk, and change management processes.

Schedule management. The schedule was the center of the contracting process and logistics plans. This was the foundation on which resource estimation was based, execution of task elements was monitored, and progress toward success was measured. The LOGCAP team frequently used milestones, timelines, and other schedules to assist supported units in obtaining their contracted services and supplies.

Risk management. Risk management does not mean avoiding chances. The LOGCAP office used this process to assess the benefit-to-risk ratio and then developed plans to manage the risks or uncertainties involved in each logistics effort. If the supported units failed to consider risk, the result could be substantial loss for the unit, including the possibility that the logistics program would fail. In assisting units, the LOGCAP office was proactive in obtaining requirements early in the decisionmaking process and in developing contingency plans in case of sudden changes in requirements.

Change management. Change management was critical to ensuring the success of supported units. In Kuwait, changes came from all directions: from supported units, from other logistics units, and from errors introduced into the requirements process, to name a few. The LOGCAP office developed a flexible response capability that assisted in managing the frequent changes in logistics requirements. The biggest change for the office was the internal change from supporting just one contract under LOGCAP to supporting hundreds of contracts under the reachback effort. It did this by becoming aware of the rationale behind each change, acquiring the abilities to implement the changes, and institutionalizing procedures to sustain the changes.

In addition to moving large and bulky contracts back to ASC, the reachback effort required the accomplishment of more daunting tasks. Since each of the base camps in Kuwait required similar services, such as tents, electric power, latrines, water provision and removal, copiers, cable and telephone services, and facility operations and maintenance, it made sense to consolidate hundreds of individual yet similar contracts into a handful of larger, more robust contracts. The LSOs, as the interface between the supported unit and contracting, constantly monitored expiring contracts and communicated with everyone to ensure that no requirement fell through the cracks.

This logistics effort took a great deal of synchronization of all the required timelines, which normally meant bridging or extending contracts to prevent lapses in service. Obviously, the transitions were of the utmost importance to maintain the continuity of services and were monitored by the contracting officers, LSOs, and supported units. Consolidating contracts reduced costs to the Government by decreasing management fees and increasing efficiencies in performance. In the end, the reachback effort with ASC successfully corrected the fraud, waste, and abuse found in Kuwait in 2006 and 2007.

Transition to LOGCAP IV

LOGCAP IV is the next iteration of the LOGCAP contingency contracting plan. From 2001 to 2008, KBR was the sole contractor supporting the LOGCAP III contract. The follow-on contingency performance contracts have been awarded to three separate companies as “indefinite quantity/indefinite delivery” contracts with 1 base year and 9 option years. Each contract has a maximum value of $5 billion per year, which means a total annual maximum value of $15 billion and a lifetime maximum value of $150 billion.

(Photo by Jim Hinnant, 401st Army Field Support Brigade)

The use of multiple LOGCAP contractors is designed to reduce risk to the Government, which no longer needs to rely on a single company to execute the entire LOGCAP contract at a time of very high demand for military logistics and support services. Under this new strategy, the three performance contractors may compete for individual LOGCAP task orders, creating a competitive environment intended to control costs and enhance quality. The three companies awarded the LOGCAP IV contract were DynCorp International LLC of Fort Worth, Texas; Fluor Intercontinental, Inc., of Greenville, South Carolina; and KBR, which is based in Houston, Texas.

The transition from a single company to three companies entails a great deal of planning and coordination to effect change while continuing to provide service to the warfighter. The incumbent contractor, KBR, will continue services until the transition is complete. The most daunting challenge is the transfer of Government-furnished property, which has to be inventoried, technically inspected, and repaired before it can be transferred. The transfer has to occur from KBR to the Government and then from the Government to the new companies. Extreme diligence is always a must in such situations to ensure that all equipment is accounted for properly.

The LOGCAP IV transition is occurring in three phases. The first phase is transition of services in the Kuwait area of responsibility (AOR), which is the smallest of the three AORs that will be transitioning. The second phase will be transition of the Afghanistan AOR, with the Iraq AOR transition following shortly thereafter as the third phase. The actual transition started in July 2008 with site visits throughout Kuwait by several representatives from each of the three contractors. The Kuwait transition has become a test bed for developing lessons learned to ensure smooth transitions in Afghanistan and Iraq. Shortly after the initial visits, the contracting officer sent a solicitation for existing requirements to the three companies. Following award of contracts for these requirements later in 2008, they were transferred to the winning company in the spring of 2009. The current plan is to complete the transition of all existing requirements to the LOGCAP IV contracts by the end of 2010.

The initial success of the LOGCAP reachback and transition efforts can be traced to the LOGCAP-Kuwait office’s ability to change its processes quickly as mission requirements shift. As a pioneer in creating logistics doctrine on the battlefield, the LOGCAP program in Kuwait has proven itself to be a value-added force multiplier in ARCENT’s full-spectrum logistics effort. It has the potential of doing the same for other global locations. In the meantime, LOGCAP-Kuwait remains focused on customer support and providing full-spectrum logistics support.

According to the Gansler Report, all logisticians should understand the importance of contracting:

Over half of the personnel currently in Iraq and Afghanistan are contract employees. This puts Army contracting (writing, negotiating, monitoring, and achieving accountability and enforcement of the contracts), along with modern (information-based) logistics support, squarely at the forefront of our challenges in supporting expeditionary operations. It also invokes command-level issues: Commanders must have timely situational awareness of contracts and contractor personnel and assets on the battlefield, to properly plan, synchronize operations, and manage the supply chain.

To meet this goal, logisticians should accomplish the following to effectively support the warfighter:

  • Understand the processes involved in using contractors on the battlefield.
  • Complete the ALMC–DAU COR course.
  • Include the effective use of contractors in logistics annexes to operation plans.
  • Be flexible in a rapidly changing logistics environment, by doing such things as leveraging and synchronizing both organic and contracted sources of supplies.

In 2003, no one imagined the scope, scale, operating tempo, and duration of this war. Preparations to manage the logistics efforts in future contingencies must leave sufficient degrees of freedom for the unforeseen circumstances of the modern irregular warfare. The bottom line in preparing to employ contractors on the battlefield is that there is no going back. Contractors are now part of force deployment, and as such, they must be included at all levels of logistics planning and training.
ALOG

Colonel Scott S. Haraburda is the lead logistics support officer in the LOGCAP-Kuwait office. He has a doctoral degree in chemical engineering from Michigan State University and is a graduate of the Army War College. He is a registered professional engineer in the state of Indiana.

Lieutenant Colonel Frances A. Bloom is a logistics support officer in the LOGCAP-Kuwait office. She has a B.S. degree in life science/medical technology from Indiana State University and an M.B.A. degree from American Intercontinental University. She is a graduate of the Army Command and General Staff College.

Major Robert T. Keck is a logistics support officer in the LOGCAP-Kuwait office. He has a B.S. degree in animal science from Texas A&M University. He is a graduate of the Transportation Officer Advanced Course and the Combined Arms and Services Staff School.