One of the first things President Bush did when assuming office was to call for the outsourcing of 425,000 federal jobs through a competitive bid process delineated by the Office of Management and Budget (OMB) Circular A-76. Two years later former Secretary of Defense Rumsfeld called for 320,000 jobs in support of the military to be privatized through the same process. While this is a perfect example of a way in which business and government cooperate to address something that is of concern to all of us, the cost of running government and the military, the OMB Circular A-76 process appears to be accountable for the horrible conditions at Walter Reed Army Hospital. Logistics contractor IAP World Wide Services (known for botched ice delivery in the aftermath of Katrina) is at the center of the controversy, and now appears to be making misleading statements to Congress.
According to an Associated Press report “documents from the investigative and auditing arm of Congress map a trail of bid, rebid, protests and appeals between 2003, when Walter Reed was first selected for outsourcing, and 2006, when a five year, $120 million contract was finally awarded.” Further delays caused by Congress and the Pentagon stalled off implementation of the contract by IAP until February 4, 2007 when they began operations at Walter Reed.
The bid process calls for outside contractors to compete with internal service providers for government service contracts. The process allows for a period of protracted bids and rebids coupled with protests and appeals. The idea seems to be that such a process will drive prices to rock bottom.
President of the American Federation of Government Employees, John Gage, believes the Pentagon deliberately protracted the process as IAP aggressively pursued the contract. “They were moving, come hell or high water, to contract these jobs out.”
Meanwhile, federal workers left Walter Reed in droves while the controversy over the contract raged on. The departure of workers concerned over the future of their jobs became so serious that a Walter Reed commander warned of potential mission failure in the fall of 2006. The delays continued.
Bottom fishing for the lowest price while a key medical facility like Walter Reed is in danger of mission failure is like undergoing a four-year search for the cheapest oncologist when one has a cancer diagnosis with a probability of only 6 months to live. Worse yet, in this case the government workers who were already on the job claimed they could complete the work at the lowest cost.
While the maintenance provided by IAP cannot be held accountable for the deteriorating conditions at Walter Reed (they have only been at the job since Feb. 04, 2007), the process by which they got the job is clearly implicated. Still some individuals, like Oversight Committee chair Rep. Henry Waxman (D—CA), blame the performance of IAP for the mess. “They didn’t seem to be doing a very good job even delivering the ice, and from what we see now, they didn’t do a very good job at Walter Reed either.”
One legitimate complaint about IAP’s performance may be that they did not have enough workers on the job, and they may be trying to mislead Congress about it.
According to The State, a South Carolina (where IAP was founded and has corporate offices) news publication, the House Committee on Oversight and Government Reform issued a letter to Walter Reed’s former commander that claims maintenance staff dropped from 300 to 60 while the transfer of duties to IAP was delayed.
On March 7, IAP issued a statement to the press in which they state, “From the first day, IAP has maintained a full complement of employees and subcontractor personnel. On Feb. 4, 2007, 290 IAP and subcontractor personnel began work. Of those 100 personnel were assigned to facility maintenance work.” IAP’s contract calls for them to provide other services in addition to maintenance.
Days later, IAP chairman David Myers sent a letter to key members of Congress where he points out that IAP had 290 personnel on site Feb. 4. The letter fails to mention that only 100 were assigned to maintenance—down by two hundred from the number previously assigned to maintenance cited by the House Committee on Oversight and Government Reform letter. While not a lie, Myers’ letter appears to skirt the truth.
A privately held New York investment firm, Cerberus Capital Management, headed by former Bush Treasury Secretary Jack Snow owns IAP. IAP’s board of directors consists of executives formerly with Kellogg, Brown and Root (KBR). KBR was once a subsidiary of Halliburton, vice-president Cheney’s former company.
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