Warfighter Support:

A Cost Comparison of Using State Department Employees versus Contractors for Security Services in Iraq

GAO-10-266R: Published: Mar 4, 2010. Publicly Released: Mar 4, 2010.

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The U.S. government's reliance on contractors, including the State Department's and Department of Defense's (DOD) use of private security contractors in Iraq, has been well documented. We and others have examined many of the challenges the government faces using contractors in Iraq, including issues related to the scope of private security contractors' activities, the challenges in providing sufficient oversight, the appropriate accountability processes, and difficulties in conducting background screenings of foreign national contractor employees. What has not been so well examined is the comparative cost of using civilian employees or military members versus the cost of using contractors, particularly private security contractors, during contingency operations such as Operation Iraqi Freedom. Generally, when costs have been discussed, the focus has been on the daily rate paid to contractor employees, rather than on the total costs of using State Department or DOD personnel. However, in October 2005, the Congressional Budget Office (CBO) issued a study that compared the cost of using military personnel, federal civilians, or contractors to provide logistic support for overseas operations. The study concluded that over a 20-year period, using Army military units would cost roughly 90 percent more than using the contractor. Also, in an August 2008 report on contractor support in Iraq, the Congressional Budget Office conducted a comparison of one contractor's costs to provide private security services in Iraq versus estimated military costs. The report concluded that for the 1-year period beginning June 11, 2004, the costs of the private contractor did not differ greatly from the costs of having a comparable military unit performing similar functions. Because of the broad level of interest by Congress in issues dealing with Iraq, the Comptroller General performed this review under his authority to conduct evaluations on his own initiative. For this engagement, congressional interest specifically focused on determining the costs to the Department of Defense and the State Department of using private security contractors for security services versus using federal employees to provide the same services. We focused our review on the comparison of the State Department's costs to use private security contractors--to perform both personal and static security functions--as opposed to using State Department employees to perform those same functions.

Our comparison of likely State Department costs versus contractor costs for four task orders and one contract awarded by the State Department for security services in Iraq showed that for three of the task orders and the contract, the cost of using State Department employees would be greater than using contractors, while the State Department's estimated cost to use federal employees was less for the other task order. For example, using State Department employees to provide static security for the embassy in Baghdad would have cost the department approximately $858 million for 1 year compared to the approximately $78 million charged by the contractor for the same time period. In contrast, our cost comparison of the task order for providing personal security for State Department employees while in the Baghdad region--which required personnel that have security clearances--showed that for this task order, the State Department's estimated annual cost would have been about $240 million, whereas the contractor charged approximately $380 million for 1 year. However, because the State Department does not currently have a sufficient number of trained personnel to provide security in Iraq, the department would need to recruit, hire, and train additional employees at an additional cost of $162 million. Contract requirements are a major factor in determining whether contractors or government personnel are less expensive--especially factors such as whether personnel need security clearances. However, there are other factors that may play a role in the decision of whether to perform security services with federal employees or enough federal employees than to acquire contractors. Additionally, the government could potentially be faced with incurring some administrative costs from having to take actions to reduce government personnel if they are no longer needed. When using contractors, the department also incurs administrative costs for awarding the task orders and contract and providing oversight; however, the State Department was unable to estimate these costs. Finally, some costs associated with providing Iraq security services using federal employees--such as developing new career fields, providing additional overhead, and building new housing--are difficult to quantify.

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