Summary

Despite escalating costs associated with the use of civilian contractors to provide logistics and engineering services in support of contingency operations in Bosnia and elsewhere, the Army lacks basic financial systems to track how contractor funds are being spent and contractor monitoring systems to evaluate contractor performance. The Army has traditionally employed civilian contractors to augment military forces. For example, civilian contractors were used extensively in the Korean and Vietnam Wars. In the case of Bosnia, the Army's latest estimate for contractor support has risen to $461.5 million--about $111 million more than the Army's original estimate. This report makes several recommendations for improving the program from a doctrine, cost control, and contract oversight standpoint. GAO also discusses the potential for unnecessary overhead costs and duplication resulting from the Navy and the Air Force introducing similar support contract programs.

GAO found that: (1) over the last 4 years, the Army has relied on LOGCAP to help support various contingency operations and plans to maintain the capability as an option for providing support in the future; (2) since 1992, the Army has used LOGCAP to provide logistics and engineering support services to U.S. forces in six operations and, on January 30, 1997, awarded a new contract that will keep the program available until 2002; (3) as of December 7, 1996, estimated program costs were about $674.2 million, with the vast majority, about $461.5 million, going to the Bosnian mission; (4) according to the Army, use of the contractor is the choice of last resort but necessary in these missions because of troop ceilings, unavailability of host nation support, and the need to keep military units available to respond to a major regional conflict; (5) LOGCAP cost estimates for the Bosnian mission have increased substantially; (6) the Army's latest revised estimate of $461.5 million exceeds its original estimate of $350.2 million by $111.3 million or 32 percent; (7) GAO's review shows that the difference in the estimates was largely driven by changes in operational requirements once the forces arrived in the Balkan peninsula; (8) weaknesses in financial reporting and contract monitoring systems also contributed to cost increases; (9) GAO's analysis of LOGCAP implementation during the Bosnian peacekeeping mission shows that there are opportunities to make the program more efficient and effective; (10) little doctrine on how to manage contractor resources and effectively integrate them with force structure units exists; (11) the financial reporting and contract monitoring systems during the early phases of the Bosnian mission were not sufficient to provide U.S. Army, Europe officials with information they needed to track the cost of the operation, report on how LOGCAP funds were spent, or monitor contractor performance; (12) Army Materiel Command officials have worked with U.S. Army, Europe to identify problems experienced in Bosnia, and they are taking actions intended to improve program planning and management and reduce costs for future operations; and (13) the Air Force and the Navy recently initiated programs similar to LOGCAP, which may result in unnecessary overhead costs and duplication.