War-zone contracting is a complicated business, because the pressures of combat drive people – not to mention governments – to do things they might not otherwise do. Besides which, it’s boring to wade through all the fine print.
Case in point: a contract to train 80 Afghan wanna-be pilots in both flying and English. Raytheon Technical Services Company got the original contract as part of a much larger package; it subcontracted this piece out to the Horizon International Flight Academy based in Al Ain, United Arab Emirates.
You’ll be shocked – shocked! — to learn that U.S. taxpayers were shortchanged in the deal, according to a new report from the Pentagon’s inspector general:
[The U.S. government] did not obtain fair and reasonable prices for the services received on the firm fixed-price Afghan Air Force pilot and English language training task order. Specifically, [U.S. government] contracting personnel negotiated labor for mentors that were based on a specific senior-level labor category; however, the contractor provided mentors that were in a lower-priced labor category after the task order was awarded and did not pass the cost savings on to the Army. This occurred because [U.S. government] contracting personnel did not verify that the contractor used personnel from the specified negotiated labor categories. As a result, the [U.S. government] will pay approximately $431,638 in Afghan Security Forces funds for inflated labor costs.
That overpayment represents about 20% of the total cost of the contract’s mentor-hiring portion. “Although the contractor advertised that it prides itself on providing cost savings and efficiencies to [the U.S. government] and the Army, the contractor charged the Army too much for the services provided,” the IG noted in a pointed aside. It advised the responsible officials to seek reimbursement from Horizon. The U.S. contract overseers involved told the IG they felt taxpayers were adequately protected because Horizon “was providing training that was commercially available.”
Of course, this example is only the tiniest piece of Raytheon’s total contract, awarded 2007 and slated to run until 2017. “The contract was awarded with a ceiling of approximately $11.2 billion; however, only approximately $1.2 billion of the contract was for specified work,” the IG notes. U.S. government “contracting personnel stated that the remaining $10 billion was for unspecified training efforts to be incorporated into task orders when specific training efforts were identified.”
Ten billion dollars for “unspecified training efforts.” Here’s hoping some of those training efforts involve contract management.