State Dept has contracting oversight issues in Iraq

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The United States will likely be involved in Iraq at some level for a long time. It still has contracting going on via the State Dept. Recently State’s Office of Inspector General looked at whether contracting activity was properly staffed to ensure oversight. For more, the Federal Drive with Tom Temin turned to the director of the OIG’s office of audits, Mike Vennemann.

Tom Temin: Mr. Vennemann, good to have you on.

Mike Vennemann: Thanks for having me, Tom.

Tom Temin: And in Iraq, then, of course, the military is gone. So it’s pretty much State Department is the United States in Iraq, is that fair to say?

Mike Vennemann: That’s fair to say. We still have a large presence there. And we have to execute our mission.

Tom Temin: And what is the scope of contracting that goes on there? Is it all related pretty much to maintenance of the mission?

Mike Vennemann: That’s the majority of the contracting things. I would consider Life Support Services, operations and maintenance, medical services, things like that, to execute the mission, support the staff.

Tom Temin: Alright. And a few years ago, you looked at the contracting activity itself, and found that certain required staff members that accompany a contracting officer, particularly the technical person, they used to call it the COTR. Now it’s the contracting officer’s representative, and the technical evaluator, were not part of a major contract. Tell us more what you found, then. And then we’ll fast forward to what you’ve found at the relook.

Mike Vennemann: Sure. So over the past five years, what we’ve found is that the contracts there, they have to have these CORs assigned to them, which require a certain level of expertise, that’s determined by [the Office of Management and Budget], and that’s gonna affect COR certification. So there’s a combination of education and experience. And when you have a larger contract, it requires a more extensive type oversight, so you need the most experienced people. And what we found is that within Iraq, it’s hard to staff those positions with the most qualified people to be the eyes and ears for the contracting officer.

Tom Temin: Is there any particular thing that they’re buying that particularly requires the COR, the core?

Mike Vennemann: All of those Life Support Services, we’re talking about billions of dollars of contracts. And these contracts, they do require somebody to have some technical expertise and subject matter expertise within life support services and operations and maintenance and medical services. Without that you have a potential vulnerability.

Tom Temin: Life Support Services means more than just medical. What is it they’re actually looking at?

Mike Vennemann: So life support services could be anything from food to fuel, we’re talking about waste services, water, etc. So anything that would support all of the Foreign Service officers to execute the mission.

Tom Temin: And so the acquisitions are principally from local contractors in Iraq, then.

Mike Vennemann: Well, the contractors are actually based out of the US and then they will subcontract to local vendors as necessary. It can be a combination of things.

Tom Temin: But since it is Iraq, it’s different from being in the United States. So it’s crucial to look at what you’re actually getting delivered in terms of quality levels, as well as proper quantities and delivery and all that kind of stuff. But basically, you want to make sure it’s unadulterated, I would say.

Mike Vennemann: Absolutely. So you need to have people on the ground. And that means that we have people in Iraq who need to be able to accept and inspect the services and the goods that they’re receiving. And if you don’t have that subject matter expertise and know what it is that you’re looking at, you may miss some things. And over the years, we have definitely found some vulnerabilities. I can tell you since 2016, OIG has reported $109 million in question costs on those contracts in Iraq.

Tom Temin: And I imagine the COR has to maybe get out of the embassy walls and maybe visit certain subcontractors and so forth. And that takes various skills, I would imagine.

Mike Vennemann: It would. I will say that in Baghdad, for example, we are lucky where they don’t have to get outside the embassy walls, because the deliveries will take place at the embassy so they have a good chance to perform oversight alongside the contractors.

Tom Temin: All right. We’re speaking with Mike Vennemann, he’s division director for the Middle East region office for audits in the Office of the Inspector General at the State Department. And so a couple of years ago, you recommended they go ahead and find these qualified people to go along with the contracting officer. And now you’ve looked recently, and what did you find? Did they follow those earlier recommendations?

Mike Vennemann: So in the earlier project, we had made 13 recommendations and they have taken some steps, the department has. There are some additional steps that they need to take to make sure that they have a robust core workforce, contract oversight representative workforce, just really looking at what we have. In other words, the acquisition workforce, and whether we could take additional steps to boost that COR workforce.

Tom Temin: Are these workforce billets funded by State Department?

Mike Vennemann: They are funded by State Department. And right now, they are comprised of foreign service officers who typically do the oversight. And when there is a challenge, the State Department could actually assign civil service personnel under the hard-to-fill program or they could actually reach out and hire personal services contractors (PSCs).

Tom Temin: It sounds like a tall order, though, if you have to be a foreign service officer, that’s a whole set of qualifications and history and training. And then if you also have to be an OMB-level certified COR. That’s a whole different set of training and background. So I imagine those are difficult individuals to find.

Mike Vennemann: Sure. And I think that’s the challenge is that to perform contract oversight in Iraq, you’re looking at Foreign Service officers whose primary responsibility are diplomatic type functions. And so when we’re looking at the vulnerability here, it really comes down to this is an ancillary duty for those Foreign Service officers, they have other issues that they need to take care of, as well. And so trying to come up with a robust system of government technical monitors and CORs that could oversee these programs effectively would benefit the department.

Tom Temin: That’s kind of an interesting twist that you mentioned here, too, that in the overseas situation, being a contracting officer’s representative can also have elements of diplomacy in it.

Mike Vennemann: It could. With the contracts that we looked at, we did have Foreign Service officers that their primary responsibility, which is unique, was to be the COR. Typically, they would have primarily diplomatic functions. In this case, the diplomatic functions are supposed to be more ancillary. But that’s the difficult thing. The Foreign Service officers are trained to be diplomats. And now you’re asking them to do something totally different than what they’re accustomed to. And that’s one of the challenges: finding somebody who has not only that COR expertise, the experience in education, but also has the subject matter expertise in the contract that they’re overseeing.

Tom Temin: Sure. And when I said diplomacy, I guess what I meant was, it’s almost like commercial diplomacy, because you are dealing with companies doing business with the United States in Iraq. And there’s all sorts of cultural issues, I imagine, that surround that, different than if XYZ oil company is delivering to your house to fill your tank with oil from the United States.

Mike Vennemann: Absolutely. And when they are conducting this diplomacy with the contractors, they are primarily working with somebody that’s US based, and then they drive out the message, it seems to work pretty well. I’ve seen how they’re doing it on the ground, it’s just a matter of getting the most experienced people there.

Tom Temin: All right. So State still has to get some of those people in. What are briefly the most recent recommendations and did State agree with you?

Mike Vennemann: Sure. One of the things that we’ve asked them to do is to really assess the contracts that are out there and develop a list of qualifications in subject matter that they would like to see for their foreign service officers that are assigned to oversee the contracts. And they are conducting a study according to their response. And we expect to hopefully resolve that issue. We also asked that the Bureau of Near Eastern Affairs and the Office of the Procurement Executive coordinate on a strategic human capital plan with the focus of addressing COR workforce shortfalls. They’re in the process of coordinating that and there are a lot of things for them to consider to make sure that they have the robust workforce. And we look forward to working with the department to clear that.

Tom Temin: Mike Vennemann is division director for the Middle East region office for audits in the Office of the Inspector General. Thanks so much for joining me.

Mike Vennemann: Thank you very much, Tom.

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