As the Latin expression puts it, Quis custodiet ipsos custodes? This is a phrase from the Roman poet Juvenal, which is literally translated as “Who will guard the guards themselves?” It is also sometimes rendered as “Who watches the watchmen?”

This question comes to mind in regard to a report put out by the Government Accountability Office in April. The report, “Contingency Contracting: Improvements Needed in Management of Contractors Supporting Contract and Grant Administration in Iraq and Afghanistan” found that DOD, State, and USAID’s use of contractors to help administer contracts and grants was substantial, although the agencies did not know the full extent of their use of such contractors.

Now it is quite important to note that this is not a report about how well a private contractor fulfills a contract. This report examines the government use of contractors to supervise and provide oversight over other contractors.

This means using contractors to administer contracts and grants, including on-site monitoring of other contractors’ activities, supporting contracting or program offices on contract-related matters, and awarding or administering grants.

These are not just routine bureaucratic functions. Contract and grant administration functions represent the government’s primary mechanism for assessing whether it is getting the expected products or services from contractors or whether grantees are performing in accordance with grant programs.

Legally, there is nothing wrong with this. And there are perfectly legitimate and beneficial reasons where the government might want to do this. These include government personnel shortages, special skills/​lack of expertise among government personnel, flexibility/​surge capacity, frequent rotations of government personnel, and cultural familiarity to name a few.

But using contractors to watch over other contractors can also be risky. GAO found:

Using contractors to support these functions can provide benefits, such as flexibility to meet immediate needs, but it can also introduce risks the government needs to consider and manage. For example, contractors performing certain contract or grant administration functions may closely support the performance of inherently governmental functions, which increases the risk that government decisions will be inappropriately influenced by, rather than independent from, contractor actions.

Functions considered to be inherently governmental include determining agency policy or federal program budget request priorities; directing and controlling federal employees; and awarding, administering, or terminating federal contracts. Similarly, the Federal Acquisition Regulations, section 7.503(d), provides examples of functions that while not inherently governmental, may approach the category. These functions closely support the performance of inherently governmental functions and generally include professional and management support activities, such as those that involve or relate to supporting budget preparation, evaluation of another contractor’s performance, acquisition planning, or technical evaluation of contract proposals. When contractors perform these functions, there is a risk of inappropriately influencing the government’s control over and accountability for decisions that may be based, in part, on contractor work.

In addition, reliance on contractor support to meet agency missions can increase the risk of conflicts of interest among companies and individuals, particularly for cases in which contractors closely support inherently governmental functions.

GAO found that “individual offices’ decisions to use contractors are generally not informed by more strategic, agencywide workforce plans or guidance on the extent to which contractors should be used to support contract or grant administration functions. Agencies’ current strategic human capital plans and guidance generally do not address the extent to which it is appropriate to use contractors, either in general or more specifically to perform contract or grant administration functions. Some DOD, State, and USAID officials noted that they would prefer to use government employees to perform some of the functions currently being performed by contractors. Our work indicated, however, that agencies intend to continue to rely on contractors to perform these functions in Iraq or Afghanistan on a longer-term basis.”

The cost is not cheap. GAO found that the agencies had obligated nearly $1 billion through March 2009 on 223 contracts and task orders active during fiscal year 2008 or the first half of fiscal year 2009 that included the performance of administration functions for contracts and grants in Iraq and Afghanistan.

The specific amount spent to help administer contracts or grants in Iraq and Afghanistan is uncertain because some contracts or task orders included multiple functions or performance in various locations and contract obligation data were not detailed enough to allow GAO to isolate the amount obligated for other functions or locations.

The GAO also found that DOD, State, and USAID use both nonpersonal and personal services contractors to perform contract or grant administration functions.

Nonpersonal services contracts are distinguished from personal services contracts in part by the nature of the government’s relationship with the contractor. Under a nonpersonal services contract, the personnel rendering the services are not subject either by the contract’s terms or by the manner of its administration to the relatively continuous supervision and control of government personnel.

On the other hand, personal services contracts are characterized by an employer-employee relationship created between the government and the contractor. Personal services contracts involve close and continual supervision and control of contractor personnel by government employees rather than general oversight of contractor operations. In general, personal services contractors perform services that are comparable in scope and nature to those of civil service employees and often appear, in effect, to be government employees.

While State and USAID regulations state that personal services contractors generally cannot supervise government employees, serve as contracting officers, or otherwise obligate government funds. DOD regulations do not specifically address whether personal services contractors can supervise government employees or otherwise obligate government funds.

Some contracts deal with issues that are quite sensitive, such as providing security. For example, the State Department obligated just over $200,000 as of March 2009 for a personal services contractor to serve as a deputy program manager at the Bureau of Diplomatic Security to provide management oversight and evaluate the performance of an aviation support contractor in Iraq performing under a task order with obligations of approximately $144 million as of March 2009. The statement of work for the personal services contract stated that the deputy program manager exercised wide latitude for independent action, initiating projects and executing approved new programs under general supervision of the division chief.

And State obligated just over $20 million as of March 2009 toward a nonpersonal services contract to provide program and acquisition support to the Bureau of Diplomatic Security’s Office of Overseas Protective Operations, including for State’s Worldwide Personal Protective Services II contracts. As of March 2009, the department had obligated approximately $1.2 billion toward task orders under these contracts with performance in Iraq or Afghanistan. Contract administration activities performed by the support contractor included reviewing invoices and evaluating contractor price proposals.

Under a nonpersonal services contract to support the Joint Contracting Command-
Iraq/​Afghanistan (JCC‑I/A), contractor personnel made up about 15 percent of JCC‑I/​A’s contracting workforce in Iraq as of December 2008. DOD officials noted that contractors were needed to maintain continuity within the office given that the relatively short deployments of DOD personnel could otherwise result in loss of institutional knowledge.

There is also the risk of conflict of interest. GAO cited one case study as an illustration.

One case study illustrated the challenges of identifying potential organizational conflicts of interest prior to award and the potential effect if one is identified after award. In this case, JCC‑I/A awarded a $1 million contract to support the Armed Contractor Oversight Directorate in Afghanistan. The contractor, which itself was a private security contractor, was assigned a number of responsibilities related to oversight of private security contractors, including monitoring private security contractor activity, documenting and analyzing security incidents, and assisting the government in conducting incident inspections. The contract files we reviewed did not include documentation that the contracting officer assessed the potential for a conflict of interest, though as previously noted, a written analysis would not be necessary unless the contracting officer decided that there was a significant potential conflict of interest. In addition, no clauses were included in the solicitation or contract that precluded the contractor from bidding on other contracts. After the support contract had been awarded and performance had begun, the support contractor competed for and won a separate contract to provide armed guard services in Afghanistan. Subsequent to the award of the second contract, however, a JCC‑I/A attorney became aware of the two contracts and, according to JCC‑I/A officials, alerted a JCC‑I/A contracting official. JCC‑I/A counsel concluded that the contractor’s objectivity in supporting the Armed Contractor Oversight Directorate could potentially be impaired by its performance of armed guard services. Ultimately, JCC‑I/A counsel determined that no mitigation plan would adequately mitigate this conflict. Therefore, JCC‑I/A terminated the ongoing Armed Contractor Oversight Directorate support contract for the convenience of the government and awarded another support contract to a different contractor.

GAO found that DOD, State, and USAID took actions to mitigate conflict of interest and oversight risks associated with contractors helping to administer other contracts or grants, but did not always fully address these risks.

For example, agencies generally complied with requirements related to organizational conflicts of interest, but USAID did not include a contract clause required by agency policy to address potential conflicts of interest in three cases. Also, some State officials were uncertain as to whether federal ethics laws regarding personal conflicts of interest applied to certain types of contractors. In almost all cases, the agencies had designated personnel to provide contract oversight.

DOD, State, and USAID contracting officials generally did not, however, ensure enhanced oversight as required for situations in which contractors provided services closely supporting inherently governmental functions despite the potential for loss of government control and accountability for mission-related policy and program decisions.

GAO concluded that, “Until DOD, State, and USAID fully consider in their workforce planning efforts the extent to which contractors should perform contract and grant administration functions, the agencies will not be positioned to consider the potential implications of relying on contractors to perform these functions, such as a loss of institutional capacity to perform mission-critical functions or greater costs.”