Iraq, Contingency Contracting and the Defense Base Act - Part III

Author
Susie Dow
Original Publication Date
03/04/2007
Iraq War

Part III: Information, Training & Access

Part I of this series traces how the lack of adequate insurance coverage impacted families already suffering the deaths or uncertainty surrounding the status of their family members serving in Iraq or Afghanistan as civilian contractors.

Part II concentrates on why the appropriate Defense Base Act (DBA) clauses that could have made a difference went "missing in action."

Part III focuses on the Defense Department's (unlike its counterparts in the State Department and United States Agency for International Development (USAID)) inability to provide information, training and access to low cost coverage.

What Went Wrong?

Inadequate planning, staffing and implementation seem to be the main culprits in the Department of Defense's inability to implement Defense Base Act procedures, especially in light of the other government agencies' ongoing success in doing so.

Stepping back five years to see what happened to the Department of Defense's efforts, we start in March of 2002, when two former councils1 combined to create the Defense Acquisition Excellence Council (DAEC). The DAEC was established to:

...address acquisition, technology and logistics issues that cut across organizational and functional boundaries [and] to collectively work issues as well as take actions to accelerate implementation of the Under Secretary of Defense for Acquisition, Technology & Logistics (AT&T) initiatives to achieve acquisition excellence.2

One of the earliest meetings of the new DAEC, 3 March 18, 2003 mentioned in Part I of this series was the same briefing that Deirdre A. Lee, then Director of Defense Procurement and Acquisition, attended but failed to act upon for over 9 months.

The presenter that day who outlined the difficulties with DBA was Alan Chvotkin of the Professional Services Council (PSC). PSC is "the leading national trade association representing the professional and technical services industry doing business with the Federal government"4 In his briefing, Chvotkin showed the slide on the left.

Alan Chvotkin's slide was clear. His action list provided immediate steps to solve the DBA problem. And those immediate steps weren't merely hypothetical -- Chvotkin based his presentation in part on an informal telephone survey he conducted with PSC member companies that had contracts from the Department of Defense.5 A number of those member companies' contracts had not included DBA clauses even though they should have been required to.

Like so many other government contracting matters, overseas contracting requires specialized training and experience. [...] We found that, during the initial phases of the Iraq conflict, the responsibility for contracting was more highly diffused among DoD contracting officers, some of whom did not traditionally award overseas contracts. That lack of familiarity, coupled with the urgency of some awards and the ambiguity of the scope of coverage of the DBA clause, probably contributed to the failures to include this specific provision in all contracts.6 -- Alan Chvotkin

Although it took 9 months to be issued, Director Deirdre A. Lee's memo clearly recognized the severity of the problem that Chvotkin had so succinctly outlined.

Subject: Inclusion of Defense Base Act Clause in DOD Overseas Contracts

It has come to my attention that there may be some inconsistency within the Department regarding the inclusion of the Workers' Compensation Insurance (Defense Base Act) clause at FAR 52.228-3 in our contracts to be performed outside of the United States. [...]

I want to emphasize that the Workers' Compensation Insurance (Defense Base Act) clause FAR 52.228-3 should be included in all DoD service contracts to be performed (either entirely or in part) outside of the United States, as well as in all supply contracts that also require the performance of employee services overseas. [sic]

Despite the strong wording of Director Lee's memo, there were (and continue to be) few opportunities for contingency contracting officers to learn how to determine where, how, and for whom to include the appropriate DBA clauses.

As just one example, as recently as November 2006, a contractor had to point out to its military contracting officer that DBA was required and should be included as a cost in a service contract proposal for the US Army. In response, the contracting officer replied -- in writing -- that having spoken with "legal," DBA was "not required." Yet, the contract was for trucking, a service that is known, even to the general public, as carrying a high risk of injury in its region of operations.7

Training for DBA requirements: A Well-Kept Secret

Prior to December 2003, contractors and subcontractors hoping to learn about DBA and its application to Department of Defense contracts would find little information. In 2001, two years prior to Director Lee's attendance of the meeting, the Department of Labor (DOL), which administers Defense Base Act claims, had growing concerns of employers not carrying DBA.8 To rectify the situation, the DOL's Office of Workers' Compensation Programs (OWCP)'s initiated seminars domestically9 "to inform employers about the obligation to insure their workers and about the severe costs for not doing so." Since this was before the Iraq and Afghanistan conflicts, at that time, there was no mention of seminars for overseas contractors. The OWCP was most concerned about employers, predominately in Florida, with maritime workers as their employees.

Web pages from the Department of Labor were light on DBA information.10 On the Defense Base Act (DBA) Information page,11 there was one link to the DLHWC (Longshore) homepage for more detail on "periodic seminars and workshops for industry groups."

Defense Base Act Seminars and Workshops

The OWCP National Office and district offices hold periodic seminars and workshops for industry groups as the need arises, or upon request. For information on upcoming events, check the official Longshore website.

Indeed, the first known DBA workshop would not be announced until November 14, 200312 and scheduled for December 15, 2003, the day after Ultra Services civilian contractor Ryan Manelick was killed in Iraq. The announcement read:

Due to overwhelming demand, the Department of Labor, Office of Workers' Compensation Programs, will conduct a one day workshop on the Defense Base Act and the War Hazards Compensation Act. The date of the workshop is Monday, December 15, 2003.13

Unfortunately, there appeared to be no such seminars or workshops scheduled for contractors in Afghanistan and Iraq. Unless they were in the United States, overseas contractors who didn't know to secure DBA insurance or its equivalent, they wouldn't learn about it through Department of Labor seminars and workshops.

And, if the civilian contractors working in Iraq looked to the Coalition Provisional Authority(CPA) for information and training on DBA, they certainly wouldn't find much help. Of four documents available online through the CPA, two were dated June 11, 2004 -- 17 days before the CPA handed over sovereignty to the Iraqi people. Of the remaining two, the most extensive, from insurance company Rutherfoord, had a creation date of November 20, 2003 -- eight months after Coalition forces had moved into the region.14 The last and earliest of the four, from American International Group Inc (AIG), with a May 16, 2003 creation date, contained only the following on DBA:

Defense Base Act (DBA) - AIG's member companies have been in the business of writing coverage in response to the DBA for many years. The Act was passed during World War II to provide compensation for disability or death to personnel employed at American military, air and naval bases outside the United States. The Act has evolved to cover contracts and subcontracts approved and financed by any independent establishment or agency of the United States ... Upon adequate lifting of sanctions, we plan to have employees on the ground in Iraq.15

Obviously, overseas contractors weren't going to learn about DBA from the CPA.

In September 2003, the US Army issued a new guidebook, Army Contractors Accompanying the Force (CAF).16 which included two pages on the necessity of Defense Base Act coverage. Acquisition personnel knew contractors may not be aware of the DBA, as pointed out within the guidebook:

Pursuing benefits and remedies under these laws is the responsibility of the contractor employee and/or contractor. Since they may be unaware of this assistance, however, contracting personnel should inform the contractor of these laws if the situation arises.17

The contractor is ultimately responsible.

Insurance in some circumstances is available under the Defense Base Act and Longshoreman's and Harbor Workers Compensation Act administered by the Department of Labor, and the War Hazards Act. It is the contractor's or employee's responsibility to pursue possible benefits under those Acts.18

Eventually, in 2005, two years after the start of the Iraq war, the Defense Contract Management Agency at dcma.mil, which provides Contingency Contract Administration Services,19 published an article by Michael Dudley, Contractors on the Battlefield: Part III20 that summarized Chvotkin's 2003 PowerPoint presentation.

Congress Jumps In

Throughout the Iraq war, there continues to be problems with DBA implementation. Over 100 members of Congress requested reviews related to Iraq and DBA, and finally, in April 2005, the Government Accountability Office (GAO) reported that a review of costs and implementation was needed:

Defense Base Act Insurance: Review Needed of Cost and Implementation Issues21

This report explains DBA requirements; discusses DBA insurance rates, which are higher for DOD than for other agencies; identifies challenges and concerns that federal agencies face when implementing DBA; and suggests that Congress consider requiring that the Director of the Office of Management and Budget (OMB) determine, in coordination with DOD, the Departments of Labor and State, and the U.S. Agency for International Development, what actions should be taken to address issues that came to light during our review.

In response, the Department of Defense (DOD) provided details of a new 1-year pilot program for DBA insurance for the US Army Corps of Engineers, a decision based soley on the escalating costs rather than on protection for contractors who are working in the war theatre, even as the Department of Defense continued to replace its military personnel with private sector civilians.

DOD completed a congressionally directed study in 1996 on the feasibility and desirability of initiating a single-insurer program. While DOD concluded at that time that such a program would not lead to cost savings, the DBA insurance rates defense contractors are now paying have led to concerns among DOD officials over the cost of DBA insurance. To address these concerns, DOD, through the U.S. Army Corps of Engineers, issued a solicitation on March 7, 2005, for a 1-year pilot contract to a single insurer for DBA insurance for all Army Corps of Engineers contractors performing work overseas. 22

On December 1, 2005, the Department of Defense's U.S. Army Corps of Engineers (USACE) finally awarded CNA Financial Group the contract for the new Defense Base Act (DBA) pilot program.23 As of December 2006, almost 4 years of war in the mid-east and, although during the same time period the USAID and State Department had had effective DBA coverage for its contractors, the Department of Defense has only just finished its pilot program.

If successful, the program could revolutionize consistent DBA implementation throughout the Armed Services for civilian contractors working overseas. For the eligible, but uninsured contractors who were kidnapped, injured or killed, the revolution comes much too late.

Contractors at Risk

Four years. Two wars. Two countries. Two contingency operations. Hundreds of billions of dollars in contracts. Tens of thousands of civilian contractors. Thousands of injuries. Hundreds of deaths.

Why was the Department of Defense so inept implementing the Defense Base Act --placing contractors, and their families, at risk? The Government Accountability Office's June 2006 report Contract Management: DOD Vulnerabilities to Contracting Fraud, Waste, and Abuse, 24 may reveal the answer:

DOD's tone at the top allows a certain level of vulnerability to enter into the acquisition process. Senior acquisition officials ultimately shape the environment that midlevel and frontline acquisition personnel operate within, and it is that tone that clearly identifies and emphasizes the values deemed acceptable within the acquisition function. [...] DOD officials told us that, in recent years, the tone set in DOD was one of streamlining acquisitions to get results as fast as possible. While this is a desired outcome of the acquisition process, the acquisitions should still be carried out within prescribed policies and practices.

As the Deputy Secretary of the Army for Policy and Procurement prepares two new guidebooks for contingency contracting: The Army Guidebook for OCONUS Contingency Contracting and CONUS Guide for Supporting Emergencies within the United States and Supporting Overseas Contingencies from CONUS Locations, it is imperative that both include clear guidance on the implementation of the Defense Base Act.

For the families of contractors such as Kirk von Ackermann and Ryan Manelick the Manuals come much too late.

About the Author: Susie Dow is the Editor of the weblog, The Missing Man, which follows articles on Kirk von Ackermann and Ryan Manelick. She is a volunteer researcher and editor at ePluribus Media.

ePluribus Media Contributors: rba, newton snookers, cho, intranets, steven reich, greyhawk, wanderindiana, XicanoPwr, standingup, roxy

Endnotes

1 Single Process Initiative (SPI) Executive Council and the Defense Systems Affordability Council
2DAEC charter letter, March 14, 2002
3 Contractors on the Battlefield: Part III by Mr. Michael J. Dudley, U.S. Army Defense Leadership and Management Program Participant Fall 2004/Winter 2005 - page 3
4 A-76 Revisions, Testimony to US House of Representatives, Committee on Government Reform, by Stan Soloway, June 26, 2003, page 2 See menu: Policy Leadership > Outsourcing/A-76 > Testimony > A-76 Revisions -- 6/2003 (actual link to pdf not available)
5 email from Alan Chvotkin to Susie Dow Friday, July 07, 2006 5:11 PM
6 email from Alan Chvotkin to Susie Dow Friday, July 07, 2006 5:11 PM
7 email to Susie Dow -- source prefers to remain anonymous
8 as documented in the DOL's Office of Workers' Compensation Programs (OWCP)'s annual report.
9Office of Workers' Compensation Programs (OWCP), Annual Report to Congress FY 2001, page 28
10Internet Archive
11Link shown to workshops and seminars:
12Announcement
13Division of Longshore and Harbor Workers' Compensation
14Rutherfoord The Assurance Company
15 AIG Solutions for Iraq Reconstruction
16 ARMY CONTRACTORS ACCOMPANYING THE FORCE (CAF), Guidebook, September 8, 2003 page 18 -- ARMY CONTRACTORS
17ACCOMPANYING THE FORCE (CAF), Guidebook, September 8, 2003 page 17 & 18 include information on DBA
18 ARMY CONTRACTORS ACCOMPANYING THE FORCE (CAF), Guidebook, September 8, 2003 page 17 & 18 include information on DBA
19 Contingency Contract Administration Services
20 Contractors on the Battlefield:Part III by Mr. Michael J. Dudley, DCMA Communicator, Fall 2004/Winter 2005
21United States Government Accountability Office Defense Base Act Insurance: Review Needed of Cost and Implementation Issues April 29, 2005
22http://www.gao.gov/htext/d05280r.html
23 US Army Corps of Engineers Contracts with CNA for Defense Base Act Program, Global Risk Alert, AON, December 13, 2005
24 Contract Management: DOD Vulnerabilities to Contracting Fraud, Waste, and Abuse, GAO-06-838R, pp 6-7 Government Accountability Office, July 7, 2006