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Oliver Wendell Holmes Jr. counseled that “it is required of a man that he should share the passion and action of his time at peril of being judged not to have lived.” Every workday, particularly in the Washington, D.C., area, men and women live up to this maxim in jobs affecting counterterrorism efforts and the war in Iraq. Most among us are connected to these issues personally or through friends or family that serve. Federal procurement lawyers also become professionally connected to these national security issues when counseling clients. In this article, we give our perspective on lessons learned by the government contracting community from the past five years of fighting in Afghanistan and Iraq. The opinions here have no bearing on the debate about the justification or current conduct of the Iraq war. Nor do they attempt to resolve the precise role of contractors in waging war. Instead, we discuss key lessons learned by the government and the defense industry in light of the recent legal and ethical challenges faced in government contracting during war. Before addressing specific lessons, we must acknowledge one central ethical issue of contracting during war — contractor profit. Profit (some use the more derisive “profiteering”) is an issue fraught with moral ambiguity. It is also a critical legal issue in accounting and recovery of costs under a government contract. The issue has been part of our history since farmers sold goods to Revolutionary War armies. President George Washington complained of profiteering and ordered the development of government weapons facilities in response. Over time and after many conflicts, thousands of acquisition statutes and regulations have been enacted. Even more commissions, panels, and offices have recommended specific acquisition reforms. Those reforms ultimately have acknowledged that the profit motive has a valid place in the free-market system and is, in fact, a fiduciary imperative for the leadership of for-profit companies. It also has spurred dazzling technological innovation that has enhanced national security. As a result, the federal government, under the Federal Acquisition Regulation, recognizes profit as “a motivator of efficient and effective contract performance.” IMPROVING THE SYSTEM This hardly means that the system cannot be improved or that profit should come at the expense of national security or the protection of the men and women in our armed forces. The Department of Defense, the military departments, the legislative branch, inspectors general, trade associations, public interest advocates, and other citizens all recognize this and have proposed improvements. The following comments summarize some of the most critical points for improvement derived from this collective wisdom: •�Promote procurement-process agility. A common critique (particularly at the outset of hostilities) is the frequent disconnect between the requirements of the military personnel on the ground and the funding and contracting mechanisms in place to meet those requirements. Disputes arose because the authority of military commanders and procurement personnel to modify contractual priorities was uncertain and often questioned after the fact. Regulators and policy-makers sometimes need to set aside traditional guidance and policy and provide more contractual flexibility in an operational environment. The gap between the procurement community and the military also needs to be bridged at multiple levels without diminishing the chain of command or diverting soldiers from combat. One good example came from the special inspector general for Iraq reconstruction, who noted that traditionally audits and inspections are conducted by inspectors general, who deliver their reports months later, but, as he reported to Congress, “Iraq reconstruction managers do not have the luxury of waiting months to receive recommendations on how they could be saving money.” •�Enhance the procurement work force, particularly in-country. Increasing the size of the procurement work force, particularly at in-country program offices, is critical. Even before the war, many policy-makers believed the procurement work force was understaffed. Moreover, the federal agency with contracting responsibility is too often not the Defense Department even though the military is the ultimate customer. This creates challenges. A common complaint among contractors in Iraq is a lack of clear contracting authority to meet requirements and, in some instances, poor contract drafting. Serious disputes over contract scope put contractors at risk for following on-the-ground instructions. Inadequate personnel can also give regulators difficulty in overseeing contract performance. High workloads, too few acquisition personnel, and high turnover rates compound these problems. Expanded procurement activity must be accompanied by an expanded corps of acquisition professionals. Otherwise, the opportunity for fraud, waste, and abuse goes up dramatically. •�Establish a separate regulatory regime for contingency operations. Governmentwide procurement rules are needed to govern contingency operations, which address events that may occur, although the possibility is uncertain, the causes are relatively unforeseen, and the precise nature of the event is unknown. Military operations and disaster responses fall into this category. The inadequacy of current regulations and processes was evident early in the Iraq conflict. A single source of contracting regulations and procedures for contingencies could eliminate confusion caused by the application of different regulations by diverse agencies. •�Clarify the legal status of contractors on the battlefield. Contractors accompanying the forces face many ambiguities about their status vis-�-vis the military. Protection of contract personnel by military forces raises issues involving the impact on military planning, mission focus, risk to contractors, and diversion of forces. On the other hand, when contractors were responsible for their own security, questions arose under the Geneva Conventions and other applicable international laws whether contractor personnel may carry weapons. The legal status of contractors as combatants or noncombatants under international law must be better defined, including scenarios in which contractors, as civilians accompanying military forces, are accorded protections under the Geneva Conventions. The further complexity introduced by insurgents or other groups that are not signatories to the conventions must be addressed. Revised regulations to clarify the legal status of contractors and to set better-defined roles and responsibilities under particular contracts are essential. •�Plan to promote full and open competition. Federal law requires “full and open” competition in the award of government contracts. Market forces bring discipline that allows agencies to take advantage of the prices and quality that competition promotes. But agencies were unable to take full advantage of competition to award early contracts in Iraq. Many criticisms of Iraq procurements targeted “no-bid” or “sole source” contracts awarded using other than competitive procedures. Even if these sole-source contracts were properly awarded, these criticisms (right or wrong) undermine public faith in the procurement system. Contract vehicles with multiple pre-qualified contractors who possess expertise in particular disciplines should be in place before the need arises. In addition to enhancing competition, proper planning helps cost, performance, compliance, and risk management. Criticism of contractors is inevitable. Reports of contractor activities in Iraq often focus solely on the scandalous and the tragic. At the same time, war supporters tend to push the “good news” from Iraq to counter opposing views. Regardless of the tone of political discourse, the reality of contractor performance during the war is neither as bleak nor as sinister as portrayed. The vast majority of defense contractors have performed superbly, honestly, and, in many cases, at great personal risk. They have supported the lives of U.S. troops as well as infrastructure projects for electricity, water, security, justice, transportation, communications, buildings, housing, health, and energy. Unfortunately, unprincipled and dishonest actors inevitably appear on the military-procurement scene, particularly during the chaotic times of war. In most instances, our system is prepared to repel such bad actors or punish them for crimes. In fact, many prominent fraud cases and reports of overcharging arising from the Iraq war were initiated by whistle-blowers within organizations, or disclosed by the businesses themselves. Isolated, rogue companies performing contracts in Iraq have paid millions of dollars in penalties for bid rigging, fraud, delivery of faulty parts, and environmental damage. These instances are clearly no grounds for celebration. Yet the fact they came to light demonstrates that our system detects these activities and, where appropriate, severely punishes them. And, of course, the system can do better if action always follows candid assessments of problems. Throughout our history, lessons learned have improved military procurement. The government contracting community has improved its processes a great deal over the past five years, and both the Defense Department and the defense industry have been proactive in addressing the issues discussed here. Federal government lawyers, auditors, regulators, and policy-makers are trained to examine and critique and to protect the public treasury, but they must keep in mind that not all procurement mistakes are fraud or abuse. Working together, public and private sector lawyers can help fix the problems identified and implement the lessons learned to support our nation’s defense.
L. James D’Agostino is a shareholder and David Hickey an associate in the Tysons Corner, Va., office of Greenberg Traurig. Opinions expressed here are solely those of the authors.

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