The Ecstasy and Agony of SIGAR

One of the consequences or perhaps accomplishments is the better word, of the use of private military and security contractors in the U.S. wars in Afghanistan and Iraq has been the heightened emphasis on finding the proper means to detect, investigate, fraud, waste and abuse when it occurs.

One of the means the U.S. government has chosen to accomplish this is the creation of the Special Inspector General (SIG) office. In fact, to date it has created three of them: the Special Inspector General for Iraq Reconstruction (SIGIR), headed by Stuart W. Bowen, Jr., the Special Inspector General for Afghanistan Reconstruction (SIGAR) headed by Arnold Fields, a retired Marine general, and the Special Inspector General of the Troubled Asset Relief Program (SIGTARP).

How is that working out you ask? Well, the message is mixed, if the events of yesterday are any indication.

On the plus side yesterday the Senate Subcommittee on Contracting Oversight held a hearing entitled, "Oversight of Reconstruction Contracts in Afghanistan and the Role of the Special Inspector General."

The purpose of the hearing was to examine the role of the Special Inspector General for
Afghanistan Reconstruction (SIGAR) in providing independent oversight of reconstruction contracts in Afghanistan.

Seemingly SIGAR is keeping busy. Here is an excerpt from Mr. Field's testimony:

The U.S. engagement in Afghanistan is now in its 10th year. Since 2002, the United States has invested over $56 billion dollars in the reconstruction of Afghanistan. President Obama has requested an additional $16.2 billion dollars for FY 2011. That would bring the total reconstruction funding to more than $72 billion, surpassing the $57 billion that the Congress has appropriated for Iraq's reconstruction.
Since receiving full funding in June 2009, SIGAR has moved aggressively to fulfill its Congressional mandate to conduct, supervise, and coordinate audits and investigations of programs, operations, and contracts utilizing reconstruction funds. We have conducted audits and investigations in 22 of Afghanistan's 34 provinces.
Over the last 18 months, SIGAR has issued 34 audit reports and made more than 100 recommendations. We made 23 recommendations just in the last five reports. These audits addressed more than $4.4 billion in reconstruction spending and have already helped produce important improvements in the way U.S. agencies are implementing the reconstruction program.
Moreover, we have published nine comprehensive quarterly reports to the Congress.
SIGAR has developed a robust investigations capability. We have 89 ongoing investigations of contract and procurement fraud, as well as corruption. SIGAR
investigators, who, on average, have 24 years of prior experience investigating complex financial crimes and contract fraud, are part of the US and Afghan effort to track cash shipments out of the Kabul airport. SIGAR has also conducted joint investigations that have already resulted in four convictions and the ordered repayment of millions of dollars to the U.S. Government.

In regard to private security contractors this was noteworthy:

One important goal of the new contracting guidance is to prevent U.S. funds from undermining the reconstruction effort by unintentionally fueling corruption, financing insurgents, or strengthening criminal networks. In this regard, SIGAR has been particularly concerned about the role and cost of private security companies (PSCs) and their subcontractors. We are currently conducting an audit of a USACE task order for private security services. Our audit is not only reviewing contract planning, management and costs, but it is also identifying subcontractors. We expect this audit to be completed early next year. We have plans to initiate three more audits related to PSC contracts this year. The first will identify all the PSCs operating in Afghanistan, as well as the costs of their services to the U.S. government since 2007. The second will determine the ability of military commanders to track convoys guarded by PSCs. The third will be a focused contract audit of a PSC contract. SIGAR is also watching the statements and actions of Afghan officials regarding the use of private security contractors and the related impact on costs to the American taxpayer. These changes that have been announced could have a dramatic impact on the existing reconstruction effort and our planned work.

So it appears that just like SIGIR before it that SIGAR is doing necessary and valuable work. Indeed, Stuart Bowen testified that SIGs can be an extremely effective cross-cutting accountability tool in complex, multi-agency operations and concluded that the U.S. government would benefit from the creation of a permanent SIG for contingency operations.

In his written statement he noted:

Hybrid hiring models that provide stability for core staff and maintain flexibility of temporary contingency-specific surges would retain that capacity in a permanent organization. A statute establishing a single contingency SIG could be enacted, providing core authorities, including adequate jurisdiction and personnel authorities, and providing, as is the case for SIGIR and SIGAR, that the agencies administering programs must provide space and support in-theater. A permanent core staff of about 25, at a cost of roughly $5 million per year, could design strong internal controls, high-quality plans, and structures for consistent productivity - ensuring a consistent oversight baseline in the chaotic world of contingency operations. The existence of this core staff would eliminate the need to develop new administrative capabilities (such as budgeting, human resources, information technology, and logistics) each time another overseas contingency operation arose.
We would support the use of excepted-service personnel authorities for the core staff so as to keep the core staff's ethos as close as possible to the standards that will be demanded of the staff brought in temporarily to deal with specific contingencies.
The decision to deploy the SIG to a specific contingency could be made by the Congress, or by the President or some other executive branch authority pursuant to statute. Various "modules" ranging from $8 million to $24 million per year in incremental costs could be envisioned to supplement the core staff to cover specific contingency operations. A look at the combined FY 2010/2011 budgets for SIGIR and SIGAR puts the average cost of Special IG oversight at $60 million annually. Combining these functions into one office could potentially save $20 million per year.

Call it unfortunate but the need for SIG's is not going to go away, even when all U.S. forces are out of Iraq and Afghanistan.

There will be other contingency operations. They may not look like Iraq or Afghanistan. They may occur in Haiti, or Pakistan, or Yemen, or somewhere that is least expected. All indications point to an increase in national security challenges in failed or fragile states. When decisions are taken to engage in stabilization and reconstruction, ensuring the oversight of multiple federal agencies acting in the same space will continue to be a difficult problem, as will be the challenge of quickly deploying appropriate permanent agency oversight personnel. At the same time, given resource constraints, the U.S. government will have to address reconstruction and stabilization much more economically, efficiently, and effectively.
A Special Inspector General for Overseas Contingency Operations can fill this need. It is a mistake not to deploy oversight at the earliest possible stage of a stabilization and reconstruction operation. We need to be able to do so quickly and efficiently. Unless we do so, oversight will be far from what is required, money will be wasted, and program managers, senior leadership in the agencies, and the Congress will be insufficiently informed - and we will be doomed to repeat the mistakes of the past.

So what's the bad news? Well, a bipartisan group of senators has asked the president to remove Arnold Fields as head of the SIGAR, after a negative review this summer put his agency's law enforcement status at risk and prompted the Justice Department to consider suspending the agency's law enforcement powers. Critics question the quality of reports by the agency.

A major complaint is that SIGAR tends to follow the lead of the joint contracting corruption task force, which comprises officials from various agencies. One reviewer said the agency should perform more audits that expose contracting fraud and then find mechanisms to ban those contractors.

Even worse yesterday Sen. Claire McCaskill, head of the subcommittee, released new information regarding a sole-source contract awarded by SIGAR to Joseph Schmitz, a former Defense Department Inspector General. Mr. Schmitz, who resigned from the Defense Department in 2005, received $96,000 for approximately two months' work as an "Independent Monitor" of SIGAR's investigations division.

The decision to hire Mr. Schmitz, who left government service to work for Prince Group LLC, the parent company of the private security company formerly known as Blackwater, infuriated congressional critics.

In a letter to Obama in late September, McCaskill, along with Sens. Tom Coburn, R-OK, Chuck Grassley, R-IO, and Susan Collins, R-ME, called SIGAR a "failing organization" in need of new leadership.

An analysis by Coburn's staff shows that inspectors general at the Pentagon, State Department and U.S. Agency for International Development and for Iraq reconstruction have all been much more efficient than SIGAR at generating savings and recoveries.

During the hearing, McCaskill also noted that an audit cited by Fields as an example of SIGAR's prowess was based largely on work done by the inspector general at USAID.

Yesterday, the Project on Government Oversight jointed the senators in urging the removal of Fields. POGO noted:

One criticism levied against the SIGAR by the four Senators was its failure to have a meaningful strategic plan for auditing and investigations. An IG's strategic plan is a critical tool used to decide what issues should be given priority and is especially important when there are numerous issues competing for the attention of relatively few auditors and investigators. Observers have pointed out that some SIGAR audits have duplicated what is already known.

For example, a January 2010 audit by the SIGAR on U.S. assistance for the construction of a power plant in Kabul "updates and builds upon the audit report issued by the Office of the Inspector General of the U.S. Agency for International Development (USAID) in November 2009," according to the SIGAR audit. The USAID IG audit was issued only two months earlier.

In another example, an August 2010 SIGAR report on "U.S. Reconstruction Efforts in Afghanistan Would Benefit from a Finalized Comprehensive U.S. Anti-Corruption Strategy," which took eleven months to finish, reads like a summary of news reports and previous assessments. "It shouldn't take eleven months to compile information mostly contained in news reports," said POGO Investigator Jake Wiens.

While these are not characteristic of all of SIGAR's audits, they are two out of the eleven audit reports SIGAR has produced in 2010. Last year, most of its earliest audits were severely criticized in a memo written by Hill staffers and obtained by Foreign Policy's blog, "The Cable." As POGO has written in a report on IGs, reaction is one of the best means of measuring an IG's impact. Congress has often unfavorably compared the SIGAR to the Special Inspector General for Iraq Reconstruction on this basis.