Rebuilding Iraq:

Actions Needed To Improve Use of Private Security Providers

GAO-05-737: Published: Jul 28, 2005. Publicly Released: Jul 28, 2005.

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The United States is spending billions of dollars to reconstruct Iraq while combating an insurgency that has targeted military and contractor personnel and the Iraqi people. This environment created a need for those rebuilding Iraq to obtain security services. GAO evaluated the extent to which (1) U.S. agencies and contractors acquired security services from private providers, (2) the U.S. military and private security providers developed a working relationship, and (3) U.S. agencies assessed the costs of using private security providers on reconstruction contracts.

The civilian U.S. government agencies and reconstruction contractors in Iraq that GAO evaluated have obtained security services, such as personal and convoy security, from private security providers because providing security to them is not the U.S. military's stated mission. U.S. military forces provide security for those Department of Defense (DOD) civilians and contractors who directly support the combat mission. In Iraq, the Department of State and other federal agencies contract with several private security providers to protect their employees. Under their contracts, contractors rebuilding Iraq are responsible for providing their own security and have done so by awarding subcontracts to private security providers. As of December 2004, the agencies and contractors we reviewed had obligated more than $766 million for private security providers. The contractors' efforts to obtain suitable security providers met with mixed results, as they often found that their security provider could not meet their needs. Overall, GAO found that contractors replaced their initial security providers on more than half the 2003 contracts it reviewed. Contractor officials attributed this turnover to various factors, including the absence of useful agency guidance. While the U.S. military and private security providers have developed a cooperative working relationship, actions should be taken to improve its effectiveness. The relationship between the military and private security providers is one of coordination, not control. Prior to October 2004 coordination was informal, based on personal contacts, and was inconsistent. In October 2004 a Reconstruction Operations Center was opened to share intelligence and coordinate military-contractor interactions. While military and security providers agreed that coordination has improved, two problems remain. First, private security providers continue to report incidents between themselves and the military when approaching military convoys and checkpoints. Second, military units deploying to Iraq are not fully aware of the parties operating on the complex battle space in Iraq and what responsibility they have to those parties. Despite the significant role played by private security providers in enabling reconstruction efforts, neither the Department of State, nor DOD nor the U.S. Agency for International Development (USAID) have complete data on the costs of using private security providers. Even at the contract level, the agencies generally had only limited information readily available, even though agency and contractor officials acknowledged that these costs had diverted a considerable amount of reconstruction resources and led to canceling or reducing the scope of some projects. For example, in March 2005, two task orders for reconstruction worth nearly $15 million were cancelled to help pay for security at a power plant. GAO found that the cost to obtain private security providers and security-related equipment accounted for more than 15 percent of contract costs on 8 of the 15 reconstruction contracts it reviewed.

Status Legend:

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  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: To improve agencies' ability to assess the impact of and manage security costs in future reconstruction efforts, the Secretary of State, the Secretary of Defense, and the Administrator, U.S. Agency for International Development, should establish a means to track and account for security costs to develop more accurate budget estimates.

    Agency Affected: Department of State: Agency for International Development

    Status: Closed - Implemented

    Comments: In June 2006 the State Department issued a procurement information bulletin to improve its knowledge on the amount and impact of security-related costs on its contracts. The Department noted that DOD, USAID and the State Department had agreed to include requirements for reconstruction contractors to report all costs for private security supplies and services that the contractor or any subcontractor may have to acquire necessary for the successful performance of the contract. Under the Department's bulletin, for all future contracts where performance or delivery takes place in Iraq, contractors will be required to include in their proposal an estimate of all costs expected to be incurred by the contractor, or any tier of subcontractor, for private security goods or services that the contractor or subcontractor obtained as part of contract performance. The contractors will be required to report similar information when submitting invoices for payment for goods and services provided.

    Recommendation: To improve agencies' ability to assess the impact of and manage security costs in future reconstruction efforts, the Secretary of State, the Secretary of Defense, and the Administrator, U.S. Agency for International Development, should establish a means to track and account for security costs to develop more accurate budget estimates.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In June 2006 USAID's Chief Financial Officer (CFO) provided GAO an update of its actions to address issues raised in GAO's report on the use of private security contractors in Iraq. With regard to improving USAID's knowledge on the amount and impact of security-related costs on USAID's contracts, the CFO noted that one of the challenges of tracking security costs was the difficulty in establishing a standard definition. The CFO noted that USAID's Iraq mission had developed a working definition based on an informal survey of what its partners include as security costs, as well as through internal USAID discussions. This informal approach resulted in variations in what was identified as security costs. The CFO stated that USAID had now developed a standard definition of security costs that will be applied to all new contracts and agreements, and which should result in more accurate reporting of security costs. Further, the CFO noted that its Iraq mission is also adding a security cost field into a prototype of its new Management Reporting System to allow USAID to analyze and better report security costs.

    Recommendation: To ensure that commanders deploying to Iraq have a clear understanding of the role of private security providers in Iraq and the support the military provides to them, the Secretary of Defense should develop a training package for units deploying to Iraq which provides information on the Reconstruction Operations Center, typical private security provider operating procedures, any guidance or procedures developed by MNF-I or Multi-National Corps-Iraq applicable to private security providers (such as procedures outlined in the December 2004 order to reduce blue on white incidents), and DOD support to private security provider employees. The training package should be re-evaluated periodically and updated as necessary to reflect the dynamic nature of the situation in Iraq.

    Agency Affected: Department of State: Agency for International Development

    Status: Closed - Implemented

    Comments: According to information provided by the director of the joint staff, the Army and the Marine Corps are including private security contractor scenarios in situational training exercises or mission rehearsal exercises. Also JFCOM has incorporated PSC operations into their unified endeavor mission rehearsal exercises for units deploying to Iraq or Afghanistan.

    Recommendation: To ensure that Multi-National Force-Iraq (MNF-I) has a clear understanding of the reasons for blue on white violence, the Secretary of Defense should direct the Combatant Commander, U.S. Central Command, to direct the Commander, MNF-I, to further assess all of the blue on white incidents to determine if the procedures outlined in the December 2004 order are sufficient. Furthermore, if the procedures have not proven to be effective, we recommend that the Commander, MNF-I, develop additional procedures to protect both U.S. military forces and private security providers.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: Although it is unclear if a review of blue on white incidents has taken place, we noted in our June 2006 testimony that the number of Blue on White incidents has decreased significantly. The intent of the recommendation, to reduce the number of blue on white incidents, appears to have been met.

    Recommendation: To assist contractors operating in hostile environments in obtaining security services required to ensure successful contract execution, the Secretary of State, the Secretary of Defense, and the Administrator, U.S. Agency for International Development, should explore options that would enable contractors to obtain such services quickly and efficiently. Such options may include, for example, identifying minimum standards for private security personnel qualifications, training requirements and other key performance characteristics that private security personnel should possess; establishing qualified vendor lists; and/or establishing contracting vehicles which contractors could be authorized to use.

    Agency Affected: Department of State: Agency for International Development

    Status: Closed - Not Implemented

    Comments: In our July 2005 report on the use of private security providers in Iraq, we noted there were no U.S. or international standards that would establish security provider qualifications in such areas as training and experience requirements, weapons qualifications, and similar skills that are applicable for the type of security needed in Iraq. Security industry associations and companies have discussed the need for and desirability of establishing standards, but as of June 2006, no such standards had been developed or implemented. As we reported in our 2005 report, reconstruction contractors had difficulty hiring suitable security providers. Contractors replaced their security providers on five of the eight reconstruction contracts awarded in 2003 that we reviewed. Contractor officials attributed this turnover to various factors, including their lack of knowledge of the security market and of the potential security providers and the absence of useful agency guidance in this area. In our report, we recommended that the State Department, USAID, and DOD explore options that would enable contractors to obtain security services quickly and efficiently. Such options may include identifying minimum standards for private security personnel qualifications, training requirements and other key performance characteristics that private security personnel should possess; establishing qualified vendor lists; and/or establishing contracting vehicles which contractors could be authorized to use. In response to our recommendation, the State Department noted in November 2005 that it had met with representatives from DOD and USAID to discuss ways to assist contractors in acquiring security services. According to the State Department, all agencies agreed that it was not practical to prequalify vendors or establish contracting vehicles, in part due to concerns regarding the agency's liability if contractors failed to perform. Rather, they determined that they could best assist contractors by providing access to information related to industry best practices and other security-related material.

    Recommendation: To assist contractors operating in hostile environments in obtaining security services required to ensure successful contract execution, the Secretary of State, the Secretary of Defense, and the Administrator, U.S. Agency for International Development, should explore options that would enable contractors to obtain such services quickly and efficiently. Such options may include, for example, identifying minimum standards for private security personnel qualifications, training requirements and other key performance characteristics that private security personnel should possess; establishing qualified vendor lists; and/or establishing contracting vehicles which contractors could be authorized to use.

    Agency Affected: Department of Defense

    Status: Closed - Implemented

    Comments: In our July 2005 report on the use of private security providers in Iraq, we noted there were no U.S. or international standards that would establish security provider qualifications in such areas as training and experience requirements, weapons qualifications, and similar skills that are applicable for the type of security needed in Iraq. Security industry associations and companies have discussed the need for and desirability of establishing standards, but as of June 2006, no such standards had been developed or implemented. As we reported in our 2005 report, reconstruction contractors had difficulty hiring suitable security providers. Contractors replaced their security providers on five of the eight reconstruction contracts awarded in 2003 that we reviewed. Contractor officials attributed this turnover to various factors, including their lack of knowledge of the security market and of the potential security providers and the absence of useful agency guidance in this area. In our report, we recommended that the State Department, USAID, and DOD explore options that would enable contractors to obtain security services quickly and efficiently. Such options may include identifying minimum standards for private security personnel qualifications, training requirements and other key performance characteristics that private security personnel should possess; establishing qualified vendor lists; and/or establishing contracting vehicles which contractors could be authorized to use. In response to our recommendation, the State Department noted in November 2005 that it had met with representatives from DOD and USAID to discuss ways to assist contractors in acquiring security services. According to the State Department, all agencies agreed that it was not practical to prequalify vendors or establish contracting vehicles, in part due to concerns regarding the agency's liability if contractors failed to perform. Rather, they determined that they could best assist contractors by providing access to information related to industry best practices and other security-related material.

    Recommendation: To assist contractors operating in hostile environments in obtaining security services required to ensure successful contract execution, the Secretary of State, the Secretary of Defense, and the Administrator, U.S. Agency for International Development, should explore options that would enable contractors to obtain such services quickly and efficiently. Such options may include, for example, identifying minimum standards for private security personnel qualifications, training requirements and other key performance characteristics that private security personnel should possess; establishing qualified vendor lists; and/or establishing contracting vehicles which contractors could be authorized to use.

    Agency Affected: Department of State

    Status: Closed - Not Implemented

    Comments: In our July 2005 report on the use of private security providers in Iraq, we noted there was no U.S. or international standards that would establish security provider qualifications in such areas as training and experience requirements, weapons qualifications, and similar skills that are applicable for the type of security needed in Iraq. Security industry associations and companies have discussed the need for and desirability of establishing standards, but as of June 2006, no such standards had been developed or implemented. As we reported in our 2005 report, reconstruction contractors had difficulty hiring suitable security providers. Contractors replaced their security providers on five of the eight reconstruction contracts awarded in 2003 that we reviewed. Contractor officials attributed this turnover to various factors, including their lack of knowledge of the security market and of the potential security providers and the absence of useful agency guidance in this area. In our report, we recommended that the State Department, USAID, and DOD explore options that would enable contractors to obtain security services quickly and efficiently. Such options may include identifying minimum standards for private security personnel qualifications, training requirements and other key performance characteristics that private security personnel should possess; establishing qualified vendor lists; and/or establishing contracting vehicles which contractors could be authorized to use. In response to our recommendation, the State Department noted in November 2005 that it had met with representatives from DOD and USAID to discuss ways to assist contractors in acquiring security services. According to the State Department, all agencies agreed that it was not practical to prequalify vendors or establish contracting vehicles, in part due to concerns regarding the agency's liability if contractors failed to perform. Rather, they determined that they could best assist contractors by providing access to information related to industry best practices and other security-related material.

    Recommendation: To improve agencies' ability to assess the impact of and manage security costs in future reconstruction efforts, the Secretary of State, the Secretary of Defense, and the Administrator, U.S. Agency for International Development, should establish a means to track and account for security costs to develop more accurate budget estimates.

    Agency Affected: Department of Defense

    Status: Closed - Not Implemented

    Comments: With regard to improving DOD's knowledge of the amount and impact of security-related costs on its contracts, DOD had agreed with the Department of State and the US Agency for International Development (USAID) to include requirements for reconstruction contractors to report all costs for private security supplies and services that the contractor or any subcontractor may have to acquire necessary for the successful performance of the contract. As of June 2006 however, DOD had not taken any steps to do so. The Director, Defense Procurement and Acquisition Policy, testified that DOD would review its current requirements and determine what additional actions would be necessary to develop and implement a means for tracking security-related costs in Iraq.

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