Army creates new command to improve purchasing in war zones and at home

WASHINGTON -- The Army is ordering a major overhaul of the way it buys supplies for troops in combat zones as the number of criminal investigations into wartime contract fraud nears triple figures.

Chief among the moves is the formation of a new contracting command to better manage military purchasing in Iraq, Afghanistan and Kuwait, according to a memo written by Army Secretary Pete Geren and obtained by The Associated Press.

To be run by generals, the post will control an enterprise stained by scandal and long unappreciated by other sectors of the Army.

Geren's one-page memo, dated Jan. 30, directs the Army's existing contracting agency to be replaced by the new command, which is being designed to have broad authority over the acquisition of items ranging from bottled water to bullets.

The Army Contracting Command will be headed initially by Jeffrey Parsons, a civilian official, an appointment that underscores how few senior Army officers there are with extensive credentials in defense contracting.

The position eventually will be filled by a two-star general who will have two one-star generals as deputies.

One deputy will oversee contracting for "expeditionary" forces, which are the troops mobilized for action. The goal is to exercise more control over contracts awarded in places such as Camp Arifjan in Kuwait. Arifjan is a major gateway for U.S. troops as they move in and out of Iraq. Annual spending there has ballooned from $150 million before the start of the war to roughly $1 billion, and along with the increases have come dozens of ongoing fraud cases.

The second deputy will support contracting done by Army bases in the United States and overseas.

Parsons, a retired Air Force colonel, is director of contracting for the Army Materiel Command at Fort Belvoir, Va.

Parsons and acting Army undersecretary Nelson Ford were scheduled to announce today the steps the Army is taking to improve its purchasing operations.

The Army also plans to hire 1,400 additional contracting personnel in an effort to expand a work force that was too small and poorly prepared to deal with the heavy demands of the wars in Iraq and Afghanistan.

The extra 400 military and 1,000 civilians will represent about a 25 percent increase. Currently, the Army has about 5,800 contracting employees.

It's expected to take two to three years to hire all of the 1,400 personnel. Another five years to 10 years will be needed before they are properly trained and have enough experience to handle a job in a hostile area, Lt. Gen. Ross Thompson, a senior Army acquisition official, told the Senate Armed Services readiness subcommittee in early December.

The command's formation and the planned hirings come just a few months after an independent panel sharply criticized the Army's ability to award and manage contracts, especially for combat forces.

The panel, chaired by former Pentagon acquisition chief Jacques Gansler, said the Army's contracting employees were "understaffed, overworked, under-trained, under-supported and, most important, undervalued."

Those shortcomings created an environment ripe for the contract fraud scandals now plaguing the Army, the panel concluded.

The Army Criminal Investigation Command has 91 ongoing criminal investigations related to contract fraud in Iraq, Kuwait and Afghanistan, according to spokesman Chris Grey.

Grey said 26 U.S. citizens have been charged with contract fraud -- 19 of those are military and civilian government employees -- and more than $15 million in bribes has changed hands.

In its 106-page report, the Gansler panel rebuked the Army for sending a "skeleton contracting force" into Iraq to support the troops.

"Alarmingly, most of the institutional deficiencies remain 4 1/2 years after the world's best Army rolled triumphantly into Baghdad," the panel said in its Oct. 31 report.

The panel recommended creation of the contracting command to not only ensure tax dollars are spent wisely, but to transform a workforce held in low regard.

Firm evidence of the problems in Army contracting was found in the lack of general officers in contract management slots. In the 1990s, there were five Army generals in key contracting positions. By the time the war in Iraq began there were none, which meant the contracting ranks lacked clout and few opportunities for career advancement.

The number of contracting personnel also was dropping, according to the commission. At the same time, the Army was spending much more money on gear and services, from about $23 billion to more than $100 billion in 2006.

The disconnect between increased workload and smaller staff is most acute at Army Materiel Command where the contracting workforce dipped by 53 percent and budgets skyrocketed by 382 percent.

In addition to forming the contracting command, the Army has made other moves to curb waste, fraud and abuse. Service officials recently transferred oversight for nearly $4 billion in Iraq war contracts from the procurement office in Kuwait to an Army organization in Illinois.

The Army also assigned a pair of teams to pore over hundreds of contracts issued by the Kuwait office since 2003. The goal of the teams was to ensure these contracts were free of fraud and had been awarded properly. One team in Kuwait inspected 339 contracts each under $25,000 in value; another team in Warren, Mich., checked over 313 contracts each worth more than $25,000.

Both found problems during their reviews and alerted the Army Audit Agency and the Criminal Investigation Command, according to an information paper prepared by Army Materiel Command. The paper did not say how many contracts had flaws, nor did it say exactly what the problems were.