Report: Defense Department's No-Bid Contracts Put "Troops In Iraq At Risk"

A study completed in late June by the Pentagon's Inspector General concludes that the Department of Defense (DoD) has risked the lives of U.S. troops in Iraq due to malfeasance in awarding and monitoring contracts for badly-needed armored vehicles.

The study, which was requested by Democratic Congresswoman Louise Slaughter of New York, found that since 2000 the DoD has awarded "sole-source" contracts valued at $2.2 billion to just two companies, Force Protection, Inc.(FPI) and Armor Holdings, Inc (AHI).

Inspector General auditors found that the Marine Corps Systems Command (MCSC) made these two companies the sole providers of armored vehicles and armor kits for troops, despite knowing that other suppliers may have produced the equipment so desperately needed in Iraq substantially faster. Both manufacturers fell far behind delivery schedules, while AHI also produced inadequate and faulty equipment.

"We determined the MCSC justification for awarding the sole-source contracts was questionable because MCSC officials knew that viable competition was available and were aware of significant concerns with FPI’s delivery capability," said the report about the MCSC's rationale for looking at no suppliers other than FPI. "In addition, Marine Corps officials did not pursue competition as contracts continued to be awarded, which raises concerns about the recurring justification for urgency."

"The Marine Corps Systems Command continued to award contracts for armored vehicles to Force Protection, Inc., even though Force Protection, Inc., did not perform as a responsible contractor and repeatedly failed to meet contractual delivery schedules for getting vehicles to the theater," the report continued.

Representative Slaughter has long been active in pursuing explanations for why equipment shortages have dogged American forces in Iraq and she kicked off this lengthy study of military procurement with a letter to the Inspector General in April 2006.

"I am concerned with the DoD's procurement history for armored vehicles," wrote Slaughter in the letter. "As with body armor, the DoD failed at the outset of the Iraq war to equip our troops with the armored vehicles to protect them from improvised explosive devices (IEDs)."

And Slaughter responded on Wednesday to the report's findings, which shine a bright spotlight on how no-bid defense contracts are one of the reasons the troops have fared so poorly under the Bush administration.

"This report indicates that contracts were given to companies that were unable to deliver vital equipment to our soldiers in the field, unnecessarily putting their lives at risk. These sole-source contracts were handed out even though serious questions were being raised at the time about the wisdom of such decisions.

"The Inspector General found that Armored Holdings sent cracked equipment that had been painted over, and even two left doors for the same vehicle, instead of one right and one left. Furthermore, FPI was unable to meet production deadlines even after the Pentagon paid $6.7 million to build up their capability. It was completely unacceptable.

"Our troops were put in harm's way by delayed and faulty equipment that was let into the system by questionable contracts. For the sake of our troops in the field, now and in the future, we need to learn more about who knew what, and why military officials who were aware of other competitors were overruled."

The report also noted significant problems with the up-armor kits manufactured by AHI subsidiary, Simula, and said that the DoD did not review and verify the company's production capabilities and quality control processes before awarding the no-bid contract. Military officials could not provide documentation of any market research or investigation of Simula’s production to support sole-sourcing the contract to that company.

Simula failed to deliver approximately 34 percent of the kits in accordance with contract delivery schedule. The DoD issued 64 corrective action requests to Simula documenting discrepancies found in the kits.

“The increase kit installation time, the addition re-inspection of kits in theater, and the late deliveries increased risks to soldiers’ lives," wrote the Inspector General of the situation with faulty armor kits.

The Inspector General's study also found that "survivability performance characteristics" so important to armored vehicles used in combat, were not known for the FPI products before that company was given an exclusive contract to produce the equipment for American troops.

"MCSC officials did not provide any documentation to support the survivability performance characteristics of the Cougar [vehicle]," the report said. "Given that this was the first contract with FPI for this vehicle, we do not believe such data existed, and it could not be provided by MCSC officials to justify a sole-source award."

Slaughter says the whole mess is not surprising and raises far more questions than answers.

"I want to know if there is more influence-peddling involved" in awarding the contracts without competition," said the New York Democrat. "We have to make sure a lesson was learned here."

"It's been business as usual. The lives of our soldiers took a back seat to who got the contracts."