Index

Contingency Operations: Army Should Do More to Control Contract Cost in
the Balkans (Correspondence, 09/29/2000, GAO/NSIAD-00-225).

Pursuant to a congressional request, GAO reviewed Army's efforts to
control the costs of its Balkans Support Contract, focusing on whether:
(1) the Army is taking effective actions to contain costs; and (2)
improvements are needed in how the Army and other Department of Defense
(DOD) agencies involved in Balkan operations manage activities under the
primary Balkan contract.

GAO noted that: (1) both the Army and its contractor, Brown and Root
Services, have taken various actions to control the cost of services
provided under the Balkans Support Contract; (2) these actions include a
contract provision requiring the contractor to regularly identify cost
savings, recycling materials from elsewhere in the Balkans and Europe,
and using soldiers to perform tasks such as building construction
whenever possible; (3) nevertheless, the Army should have done more to
control costs; (4) one step it should have taken was to give more
consideration to costs in making decisions on the extent of services to
be provided by the contractor; (5) another step the Army should have
taken was to place greater emphasis on the level and efficiency with
which recurring services were being provided; (6) in July 2000, the Army
directed that a quarterly review be conducted to assess whether all the
services it receives under the contract are still needed; (7) however,
it has not called for the review to include an examination of the level
of these services and the efficiency with which they are being provided;
(8) the Army has also directed that standards be developed for each
service provided at its camps, but as of July 2000 had not set a date
for the standards' completion; (9) each standard is to describe the
service to be performed, the necessary facilities and personnel, when
and how the services are to be performed, and the level at which they
are to be performed; (10) the Army plans to achieve efficiencies in the
level of services and the way in which they are provided by mandating
that officials in Kosovo and Macedonia identify $40 million in cost
savings for fiscal year 2001; (11) the Army expects costs to be reduced
by this amount by reducing the number of contractor personnel providing
services, scaling back service levels, and reducing on-hand inventories;
(12) the Army should improve its management of the Balkans Support
Contract; (13) officials at facilities in the Balkans have not been as
specific as they should have been about what they expect from the
contractor; (14) they frequently have simply accepted the level of
services the contractor provided without questioning whether they could
be provided more efficiently or less frequently and at lower cost; (15 )
GAO found a widespread view among Army and other DOD agencies' officials
in the Balkans that they had little control over the contractor's
actions once it was authorized to perform tasks; and (16) contract
administrators are deployed for a limited time which hinders effective
contract oversight.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  NSIAD-00-225
     TITLE:  Contingency Operations: Army Should Do More to Control
	     Contract Cost in the Balkans
      DATE:  09/29/2000
   SUBJECT:  Contract costs
	     Contract oversight
	     Department of Defense contractors
	     Contract performance
	     Logistics
	     Military cost control
	     Armed forces abroad
	     Internal controls
	     Defense contingency planning
IDENTIFIER:  Bosnia
	     Kosovo
	     Army Logistics Civil Augmentation Program

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GAO/NSIAD-00-225

A

Report to the Chairman, Subcommittee on Readiness and Management Support,
Committee on Armed Services, U. S. Senate

September 2000 CONTINGENCY OPERATIONS

Army Should Do More to Control Contract Cost in the Balkans

GAO/ NSIAD- 00- 225

National Security and International Affairs Division

Lett er

B- 285941 September 29, 2000 The Honorable James Inhofe Chairman,
Subcommittee on Readiness

and Management Support Committee on Armed Services United States Senate

Dear Mr. Chairman: The U. S. military has relied on contractors to provide
supplies and services in support of major contingencies since the
Revolutionary War. In the past decade, however, deployed U. S. forces have
increased significantly their

dependence on contractors for support. In the Balkans, the primary
contractor houses, feeds, and provides a range of other services to about
11, 000 troops and played a key role in building the base camps in Bosnia

and Kosovo. The Department of Defense (DOD) has increasingly relied on
contractors rather than soldiers to provide some services in the Balkans as
force- level ceilings have been reduced, and contracts for support services
represented over $2 billion of the more than $13.8 billion spent on Balkan

operations through March 2000. Moreover, we have identified defense contract
management as a high- risk area of government spending. Based on the
magnitude of contractor costs and the need to ensure that services are
provided as efficiently as possible, you asked us to determine whether

there are opportunities to improve contractor utilization and reduce costs
of Balkan operations without jeopardizing mission success. This report
assesses whether (1) the Army is taking effective actions to contain costs

and (2) improvements are needed in how the Army and other DOD agencies
involved in Balkan operations manage activities under the primary Balkan
contract.

We focused our efforts primarily on the Balkans Support Contract because it
is the largest contract for services to U. S. forces, representing about $2.
2 billion in contract costs spent in the Balkans since December 1995. The
Balkans Support Contract is a cost reimbursement performance- based contract
that sets desired results and allows the contractor, Brown and Root Services
(BRS), considerable flexibility in determining how best to provide the
services the Army requests. We performed our work from July 1999 through
September 2000. Appendix I describes our scope and methodology in more
detail.

Results in Brief Both the Army and its contractor, Brown and Root Services,
have taken various actions to control the cost of services provided under
the Balkans

Support Contract. These actions include a contract provision requiring the
contractor to regularly identify cost savings, recycling materials from
elsewhere in the Balkans and Europe, and using soldiers to perform tasks
such as building construction whenever possible. Nevertheless, the Army

should have done more to control costs. One step it should have taken was to
give more consideration to costs in making decisions on the extent of
services to be provided by the contractor. For example, it allowed the
contractor to provide 100- percent redundancy (i. e. backup) in power
generation for all the U. S. facilities in Kosovo, although only critical

operations such as the command center and the hospital require uninterrupted
power. Another step the Army should have taken was to place greater emphasis
on the level and efficiency with which recurring services were being
provided. For example, Army officials in Bosnia and Kosovo believe that the
contractor has too many local national personnel for the work to be done and
as a result some employees appear to have a lot of idle time. In July 2000,
the Army directed that a quarterly review be

conducted to assess whether all the services it receives under the contract
are still needed. However, it has not called for the review to include an
examination of the level of these services and the efficiency with which
they are being provided. The Army has also directed that standards be
developed for each service provided at its camps, but as of July 2000 had
not set a date for the standards' completion. Each standard is to describe
the service to be performed, the necessary facilities and personnel, when

and how the services are to be performed, and the level at which they are to
be performed. The Army plans to achieve efficiencies in the level of
services and the way in which they are provided by mandating that officials
in Kosovo and Macedonia identify $40 million in cost savings for fiscal year
2001. The Army expects costs to be reduced by this amount by reducing the
number of contractor personnel providing services, scaling

back service levels, and reducing on- hand inventories. The Army should
improve its management of the Balkans Support Contract. Because cost
reimbursement performance- based contracts are relatively new and provide
great latitude in how a contractor provides requested services, many Army
and other Defense Department personnel involved in administering the
contract are uncertain about their authority

under this type of contract. As a result, officials at facilities in the
Balkans have not been as specific as they should have been about what they
expect from the contractor. Moreover, they frequently have simply accepted
the

level of services the contractor provided without questioning whether they
could be provided more efficiently or less frequently and at lower cost. We
found a widespread view among Army and other Department of Defense agencies'
officials in the Balkans that they had little control over the

contractor's actions once it was authorized to perform tasks. There was a
widespread desire on the part of personnel administering the contract for
more training on the government's authority and on how to apply the

contract in real- world situations. Furthermore, key personnel involved in
administering the contract are on rotation schedules, so they all arrive and
leave at about the same time, and they deploy for relatively short periods-
6 months on average. This does not allow continuity in the contract's
administration and hinders effective contract oversight.

We are recommending that the Army evaluate the level and efficiency of
services being provided as part of its newly directed quarterly review of
which recurring services are still needed; set a target date for completing

standards for the services it receives; develop a more extensive training
program for contract administration personnel; and in conjunction with the
Defense Contract Management Agency, take steps to improve continuity in
administering the contract. In written comments on a draft of this report,
the Department of Defense agreed with our recommendations. Brown and

Root also provided written comments, mostly to clarify its position
regarding contract activities in the Balkans. Background U. S. forces in the
Balkans have relied heavily on contractors since

operations there began in December 1995, and reliance on contractors has
grown over the past several years, as U. S. force levels have declined.
Troop ceilings since the onset of Bosnia operations have been lower than the
number of troops the Army calculated that it needed and have steadily
declined, from an initial level of 20, 000 to 4,400 in July 2000. As troop
levels have declined, some support functions performed by soldiers have been
shifted to contractors. The Army contracts with more than 100 firms to
obtain needed goods and services in the Balkans. The largest single

contract is the Balkans Support Contract. BRS is the contractor for the
support contract, which provides a wide array of logistics and engineering
services support for U. S. forces throughout the theater of operations. The
theater of operations encompasses Bosnia, Kosovo, and Macedonia, as well as
other Balkan countries, and Hungary, which has been used as a staging base
for U. S. forces in Bosnia. The bulk of the approximately 11,000 U. S.
military personnel deployed in support of Balkan operations as of July 2000
were in Kosovo (5,600) and Bosnia (4, 400).

The Balkans Support Contract is the latest iteration of a contractual
arrangement for logistics and engineering services related to contingency
operations that predates the deployment of U. S. forces to the Balkans. In
1992, the Army conducted a competitive selection for an umbrella support
contract for military contingency operations under its Logistics Civil
Augmentation Program. 1 BRS was selected as the contractor. When U. S.
military forces deployed to Bosnia in December 1995, the Army decided to use
this contract to build base camps and provide services for its forces. When
this contract expired in 1997, the requirement was again the subject of a
competitive selection process, and the Logistics Civil Augmentation Program
contract was awarded to a different company. 2 However, rather than use this
contract, the Army elected to award a separate sole- source contract to BRS
to continue providing services in the Balkans. Its justification for the
sole- source contract was that (1) BRS had already

acquired the knowledge of how to operate within the laws and regulations of
the countries in which it was providing support, (2) BRS had demonstrated
the ability to support the operation, and (3) changing contractors would
have generated additional costs for activities such as personnel duplication
required for the transition between contractors. On

the basis of this justification, the Army awarded BRS a sole- source
contract for Balkan support through May 1999. 3 In early 1999, the Army
conducted a competitive selection for a new Balkans support contract. BRS
was selected as the contractor, and in February 1999 a new contract was
signed, effective May 1999, for what is now termed the Balkans Support
Contract.

The contract is for a 1- year base period with options for 4 additional
years. The Balkans Support Contract, like BRS' earlier contracts in the
Balkans, is a cost reimbursement performance- based contract. Under such
contracts, the government does not provide detailed specifications and work
descriptions. Functions to be performed by the contractor are typically
articulated in the contract's statement of work as results required rather
than methods of performance of the work. For example, the Balkans Support
Contract requires the contractor to perform functions such as

1 Under this program, a civilian contractor provides logistics and
engineering services to deployed forces. 2 The current Logistics Civil
Augmentation Program contractor, DynCorp, provides services elsewhere under
this program, including support to U. S. troops in East Timor. 3 The
justification was approved by the Assistant Secretary of the Army for
Research, Development, and Acquisition.

providing 24- hour food service operations and operating a vehicle
maintenance section for tactical and non- tactical vehicles. These types of
work statements give the contractor freedom to use the latest commercial
practices and techniques to meet requirements successfully.

The Balkans Support Contract calls for BRS to deliver a wide array of
services throughout the Balkans, including food preparation and service,
laundry, logistics support such as local transportation, building large
portions of the base camps in Kosovo, and performing other construction

as directed by the Army. Figure 1 illustrates the proportion of services the
Army requires that are being provided by BRS. Once a continuing service such
as food preparation and service is authorized, it is called recurring work
and requires no further approval. Work that has not been previously
authorized, from the initial construction of base camps in Bosnia and

Kosovo to one- time tasks such as erecting tents, is called new work.

Figure 1: Selected Support Services Provided by BRS in Bosnia and Kosovo in
Fiscal Year 1999

100% 90% 80% 70% 60% 50% 40% 30% 20% 10%

0% Construction

service Laundry

Water Fuel

equipment Sewage

Hazardous Mail

Maintenance Food

Heavy transport

material

Source: Our analysis based on BRS data.

The estimated cost for BRS to provide support to U. S. forces in the Balkans
since their deployment in December 1995 through fiscal year 2000 is $2. 2
billion. Under the contract, the Army reimburses BRS for allowable direct
costs incurred to support the force. Payments to BRS also include (1) a base
fee of 1 percent of the estimated contract cost, (2) an amount to cover
overhead and general and administrative costs, (3) the cost of capital money
used before cost reimbursement is made, and (4) an award fee of up

to 8 percent of the cost estimate for each award period based on assessed
performance. The base fee and award fee constitute BRS' profit. The Army has
awarded BRS the full award fee for five award periods since the contract was
awarded in May 1997, 99 percent for two periods, and

98 percent for one period. BRS contract costs, by year, are shown in table
1. Table 1: Total Contract Costs, Fiscal Years 1996-2000

(Dollars in millions) 1996 $ 423.5 1997 154.2 1998 198.7 1999 (estimated)
931.6 a 2000 (estimated) 460. 0

Total $2, 168.0

Note: For fiscal years 1996- 98, the table includes costs in Bosnia,
Hungary, Croatia, and Macedonia; for fiscal years 1999- 2000, the table also
includes costs in Kosovo and Albania. a The large increase in costs in
fiscal year 1999 is due to the beginning of Kosovo operations, which
involved significant construction continuing into fiscal year 2000.

As shown in table 1, the cost of contractor support in the Balkans is in the
hundreds of millions of dollars annually. The initial construction of the
base camps in Kosovo is an example of some of the factors affecting the cost
of the contract. Building the camps in 1999 cost approximately $230 million

and is part of the costs in table 1. The larger of the two base camps, Camp
Bondsteel, was designed to accommodate 5,000 people and required the Army
and BRS to build the equivalent of a small town in a wheat field in a few
months. It involved creating an infrastructure of roads, power

generation capacity, and water and sewage systems; housing and work
facilities for the soldiers and contractors; miscellaneous facilities,
including a helicopter airfield and a detention center; and extensive force
protection measures, including a perimeter fence and guard towers. (See fig.
2.)

Figure 2: Camp Bondsteel, Kosovo

A number of Army and DOD agencies have responsibilities under the Balkans
Support Contract. These include (1) the Army Corps of Engineers, which
awarded the initial contract in 1992 as well as the subsequent contracts and
continues to administer the contract and provide the Principal Contracting
Officer; (2) U. S. Army Europe, which develops theater policies and
procedures and approves all new work in the Balkans that costs $100,000 or
more; (3) the Defense Contract Management Agency,

which provides quality assurance specialists, property administrators, and
contract specialists to monitor the cost of services incurred under the
contract; (4) the Defense Contract Audit Agency, which validates the
accuracy and completeness of BRS' cost accounting systems and performs
audits of incurred costs; and (5) Army Task Force commanders at various
locations in the Balkans- including Bosnia, Kosovo, and Macedonia- who
manage and coordinate contractor performance and approve all new work
costing less than $100,000.

The Army Has Taken Both the Army and BRS have taken numerous actions to
control costs Steps to Control Costs

under the contract. However, more could be done to fully consider costs. We
found that the Army but Could Do More in Managing the Balkans

has taken steps to control costs but has not always been fully Support
Contract successful, has not always adequately considered the cost
ramifications of some

decisions, and is exercising minimal control over the costs of many
recurring services.

While the Army is satisfied with the overall responsiveness and quality of
BRS' work, the number of instances we identified suggests that cost was not
given sufficient attention in decision- making until recently. In July 2000,
the Army directed that a quarterly review of services be conducted to ensure
that services being provided are still needed.

Army Considers Cost The Army has repeatedly emphasized the importance of
controlling costs. Control Important and, With In meetings with us on a
number of occasions over the past several years, BRS, Has Taken Some

senior Army officials in Europe have repeatedly emphasized the Actions to
Reduce Costs

importance of stewardship of the government's resources in the Balkans. In
guidance to commanders in the Balkans, U. S. Army Europe recently reiterated
the need to control costs. It has also established an internal audit group
in its command center in Kosovo to help in controlling costs and ensuring
efficient operations. Moreover, one criterion the Army uses to assess BRS'
performance in determining the award fee is cost control and

funds management. Both the Army and BRS have made efforts to reduce costs.
These efforts include using military personnel to perform construction where
possible and reusing building material. For example, in documentation
prepared for us in May 2000, the Army stated that Navy SEABEES participated
in the construction of Camp Montieth in Kosovo, at an estimated saving of

$5 million in labor costs. In Kosovo, we saw soldiers performing some of the
construction of bomb shelters. BRS has reused material from camps that were
being closed for construction at other camps. For example, BRS reported
reusing $264,700 in lumber and $335,715 in concertina wire, a form of barbed
wire, in Bosnia in 1998- 99. It also erected temporary buildings owned by
DOD and transported them to the Balkans from elsewhere in Europe. In a May
2000 memorandum on BRS performance, Army officials reported that BRS was
reusing energy efficient sodium lights

to replace high- maintenance halogen lights and was working to reduce energy
requirements, citing a shift at one facility from generators to commercial
power. This latter action is expected to reduce costs by about

$46,000 a year. The Army and BRS have also worked collaboratively to reduce
costs. For example, they worked together on construction plans for the
vehicle wash facility that is being built at Camp Bondsteel. Army engineers
suggested

changes to the facility that reduced needed concrete by 3, 000 cubic meters.
BRS made the change, which saved $150,000. BRS officials in Kosovo said that
they also recommended other changes, specifically to reduce the number of
wash points, to reduce costs.

To help control costs, the Army also has a review process in place to
determine whether new work requested by commanders is valid and who should
perform that work. In Bosnia, Kosovo, and Macedonia, the Army uses a Joint
Acquisition Review Board to validate the need for all new work estimated to
cost more than $2, 500 4 (lower level officials review and

approve work estimated to cost $2,500 or less). The Board is also charged
with determining whether work that it approves will be performed by
soldiers, BRS, or other contractors or through host nation support. Work
estimated to cost $100, 000 or more must be approved at Army headquarters in
Europe once the board has validated the need for such work. The Board also
receives an independent cost estimate (when data are available) to assist in
deciding who will perform the work. In its more recent March 2000 guidance
on contingency operations financial management, U. S. Army Europe encouraged
commanders to be extremely prudent in managing contingency operation funds.
It also instructed the Board to determine the lowest cost option to
accomplish the mission.

The Army, however, has faced various challenges in controlling costs. The
transfer of fire- fighting services from Army personnel to BRS is an example
of one such difficulty. The Principal Contracting Officer is responsible for
authorizing BRS to perform new tasks. In June 1999, the Officer authorized
BRS to plan fire- fighting services in Bosnia, Kosovo, and Macedonia. In
September 1999, Army officials began questioning the basis for BRS'

fire- fighting plan, which called for a total of 116 people, to include 4
The Joint Acquisition Review Board consists of representatives from the
logistics, engineering, operations, resource management (budget), and
contracting staffs as well as the “camp mayor” and the chief of
the Base Camp Coordinating Agency.

firefighters and associated administrative and maintenance personnel. U. S.
Army Europe officials believed that the number of firefighters and fire
engines was larger than required for the mission. The Commander of Camp

Able Sentry, Macedonia, wrote U. S. Army Europe and BRS officials to express
his concern that no one in his command was consulted about firefighting
requirements and that the base was not big enough to support the number of
firefighters and fire trucks planned by BRS. In October 1999, the Deputy
Chief of Staff for Engineering at Army Headquarters Europe questioned BRS'
fire- fighting plan and asked the Contracting Officer to stop the
contractor's efforts until he could certify BRS' plan. During the next 3
months, the debate over personnel and equipment requirements continued. BRS
revised its plan in a manner that reduced the number of

firefighters to 77. The Army's engineers concluded that no more than 66
firefighters were required. They also continued to disagree with BRS' fire
station design because they felt it exceeded needs. In February 2000,
despite lack of resolution of the difference between the contractor's fire-
fighting plan and what Army engineers stated was needed, U. S. Army Europe's
Deputy Chief of Staff for Logistics said that he believed the two

sides were close enough for him to decide to go forward and directed the
Principal Contracting Officer to authorize BRS to proceed with its plan.

We discussed this matter with BRS in May 2000 and with the Principal
Contracting Officer in June 2000. BRS officials said that their plan
included additional work hours related to a civilian workforce and the need
to train a local civilian fire- fighting force as compared to the Army's
plan, which would have used its own trained firefighters. They also said
that their plan provided an improvement over the Army's capability to
respond to fires. In July 2000, BRS further advised us that the dispute
centered around

differences between what the Army does to fulfill its fire- fighting mission
and what commercial/ municipal firefighters do. The Principal Contracting
Officer told us that he felt that it was necessary to make a decision and
bring this matter to closure, even though some differences remained
unresolved.

Cost Was Not Always Prudent management requires that alternatives be
considered when

Considered in Making making decisions. We identified several examples of
actions taken by the

Decisions on New Army where there is no evidence that cost was taken into
consideration

Requirements when decisions were made, including in building the base camps
in

Kosovo. In fact, some of the same problems we identified in our February
1997 report on Army management of contractor support in Bosnia in 1996, such
as that commanders were sometimes unaware of the cost

ramifications of their decisions, emerged in Kosovo. 5 While we recognize
the importance of quickly deploying and properly caring for U. S. personnel
in the Balkans, we believe that more consideration could be given to costs.
One example involved the level of power generation redundancy (i. e. backup
power) needed in Kosovo. Due to the lack of a reliable source of commercial
power in Kosovo, the Army directed BRS to install power generators when
building the base camps there in 1999. BRS purchased 209 generators for $5.
8 million and leased an additional 96 at a monthly cost of $1. 04 million
that together provide for 100- percent redundancy of power

generation needs. From July 1999 to July 2000, BRS spent $12.9 million on
the leased generators, which have a greater power output than those
purchased. BRS officials told us that they had discussed with task force

officials in Kosovo how much power generation redundancy to have and whether
to lease generators. When the issue of redundancy levels arose in June 1999,
BRS requested that task force officials provide the Army's priority for
power use if the Army did not want 100- percent redundancy.

BRS said that the Army did not provide a priority, and by default, BRS
proceeded with 100- percent redundancy, which it described as the best
business practice. There is no record of why the Army did not provide a

priority list for power use or whether it explicitly wanted 100- percent
redundancy; however, Army officials involved in administering the contract
with whom we met in Kosovo in May 2000, including engineers and contract
administrators, told us that there was too much generator capacity and that
much less redundancy was needed. According to these officials, while 100-
percent redundancy is important for some facilities, such as the
headquarters and the hospital, other facilities such as the barracks, called
SEAhuts, could go without power for several hours without potentially
serious consequences. (See fig. 3.)

5 Contingency Operations: Opportunities to Improve the Logistics Civil
Augmentation Program (GAO/ NSIAD- 97- 63, Feb. 11, 1997).

Figure 3: SEAhut in Kosovo With 100- Percent Power Redundancy

The matter of how much leased generator capacity to maintain appeared to be
nearing conclusion in September 2000. According to the Army and BRS, a
generator consolidation plan has been implemented that will result in 38
generators being returned to the vendor in October 2000. According to the

Army, an additional 10 generator sets will be phased out during the
implementation of the power generation plan. The remaining 48 leased
generators will be purchased in order to avoid high leasing costs. The Army

expects this plan to be complete by April 2001 and to result in $85 million
in savings over 5 years, based on a comparison of the cost of purchasing the
generators versus continuing to lease them. Terminating the leases on 38
generators will produce annual savings of about $5. 1 million.

Costs associated with personalizing the camps as new units arrive were also
not fully considered. There have been nine major rotations by U. S. Army
divisions into Bosnia since U. S. forces first deployed there in December
1995. Incoming units typically add tasks for the contractor to perform
during the rotation, as one major unit leaves and another unit moves in to
replace it. These tasks include putting up new signs with the new unit's
insignia, renaming streets, and rearranging office space. Even

though 49th Armored Division personnel emphasized that they had attempted to
hold down the number of changes made to personalize the base camps compared
with other units that had previously rotated to Bosnia, we found that work
orders more than doubled, from 53 in February

2000 to 134 in March 2000, before declining to 90 in April 2000. Service
requests also increased substantially, from 438 in February 2000 to 713 in
March 2000, and then declined to 328 in April 2000. To reduce the number of
personalized changes in the future, U. S. Army Europe is working to develop
a common camp design and unit- neutral signs. U. S. Army Europe

officials said that in discussions with the commander of the 3rd Infantry
Division, which is scheduled to deploy to Bosnia in September- October 2000,
they have emphasized that there should be no new work tasked to

BRS for camp changes. We also found examples in which the Army did not
adequately review whether some purchases were properly matched to
requirements, resulting in unnecessary expenses. For example, while the
SEAhuts were being built in Kosovo, the Army spent millions of dollars on
furniture purchases that did not involve the Balkans Support Contract. The
Task Force in Kosovo had an internal audit group, which reported that the
Army purchased

$5. 2 million in furniture for the SEAhuts in Kosovo. The internal auditors
reported that some of the furniture potentially will not be utilized for its
intended purpose of living quarter furniture because adequate space is not
available in the SEAhuts. The internal auditors said that as a result the
furniture will be either stored on premises, where space is a premium, or
shipped to another location, incurring additional unknown costs. In
addition, the internal auditors reported that because furniture was shipped
before the SEAhuts were completed, some delivered furniture had to be moved
at least twice, resulting in undetermined costs in addition to costs under
the support contract for processing, assembling, and installing furniture
estimated at $377,000. The internal auditors' report concluded that future
bulk purchases should be reviewed by a task force central activity to
determine reasonableness and ensure that the requester adequately calculated
and documented requirements.

The Army Has Not Once initial construction of the base camps is complete,
the large majority

Routinely Reviewed the of contract costs are for what are termed recurring
services. These are

Level of Recurring Services services provided on a regular basis that
include food preparation, laundry, waste disposal, local transportation,
fire- fighting, the operation of recreation centers, and vehicle washing. In
addition to recurring costs, there are costs for one- time services, called
new work. Although the Army

has a process in place to review new work, until July 2000 it had no process
to examine recurring services. However, this new process for assessing
recurring services is limited. Even though there is no requirement under the
Balkans Support Contract that the Army review the level of services and how
they are provided, the Army is responsible for monitoring and

managing functions performed by the contractor and for providing quality
control oversight of the contractor's services. In Bosnia and Macedonia,
recurring work in fiscal year 1999 accounted for 77 percent of $152 million
in total costs under the support contract. For the part of fiscal year 2000
for which data are available (through May 27, 2000), recurring services
accounted for 93 percent of $118 million in total contract costs in Bosnia
and Macedonia and 92 percent of $112 million in total contract costs in
Kosovo, as shown in figures 4 and 5. 6

Figure 4: Fiscal Year 1999 Support Costs: Bosnia and Macedonia

Bosnia and Macedonia

23% New work

77% Recurring services

6 During fiscal year 1999, the percentages of recurring services and new
work were the opposite in Kosovo because the base camps were being built.
Seven percent of support costs were for recurring services, while 93 percent
were for new work (camp construction).

Figure 5: Fiscal Year 2000 Bosnia and Kosovo Support Costs, Through May 27,
2000

Bosnia and Macedonia Kosovo 7%

8% 93%

92%

New work Recurring services

The Balkans Support Contract contains a long list of services that are to be
performed in each country it covers. For example, among the services to be
performed in Bosnia are the daily collection, removal, and disposal of
trash, food, septic waste, and medical waste materials. The contract also
directs 24- hour food service operations, including preparing three meals a
day using government- furnished food and providing limited food service
during non- meal hours. There is no further definition of the services. BRS
sets the level of services and the number of employees necessary to provide
these services on the basis of its judgment of what constitutes good

business practices. Army and other DOD officials have typically accepted
BRS' judgment and not questioned the level of services being provided. On
the whole, officials throughout the Balkans are very satisfied with the
quality of services provided at the base camps, although many officials
acknowledged that the level of some services may be above and beyond what is
really needed.

Because military personnel serve in the Balkans on a rotational basis for an
average of about 6 months, there is little institutional memory on the part
of DOD personnel as to why services are provided at their current levels.

Incoming military personnel simply accept the existing levels. DOD officials
with whom we met in the Balkans told us that they could not

explain the frequency of services being provided, such as cleaning some
offices as many as four times a day, cleaning latrines three times a day,
and conducting routine construction and maintenance activities 24 hours a
day. BRS also controls the size of the support workforce it uses to deliver

services to the Army. The Army could not explain the basis for the number of
contractor personnel involved in providing services, although some Army and
other DOD officials said that local national contractor employees seemed to
have too much idle time. For example, in a May 2000 memorandum to the chief
of staff of the Army division deployed in Bosnia, the Commander of the
Engineer Brigade in Bosnia wrote that contractor crews working at
construction sites and other work areas were not efficient. The Commander
further wrote that 85 percent of the projects observed had excessive crew
size and that half of these crews had at least 40 percent of their members
not engaged in work. In addition, the Commander wrote cleaning services were
so overstaffed that employees had been observed taking several long breaks a
day because they had

finished all their work. In discussions with us on whether work crews had
idle time, BRS officials said that this was not the case and cited the need
to closely supervise workers for security among the reasons why employees

did not seem to be busy all the time. They also pointed out that due to
prevailing wage rates, local hires are inexpensive. Nevertheless, as of May
2000, the Army had not examined whether the size of the workforce was
appropriate for the amount of work that was being done, despite the
expressed concerns of numerous Army and other DOD officials with whom we
spoke in the Balkans. In June 2000, the Army Corps of Engineers, which has a
key role in the administration of the contract, sent its own personnel to
the Balkans to

assess services and suggested that the level of some services might be cut
back. According to Corps officials, the senior commander in Kosovo rejected
the idea of reducing the level of any services for fear that this might
adversely impact soldier morale or the quality of life.

U. S. Army Europe Has The Commanding General of U. S. Army Europe is
concerned about the cost Recently Taken Additional of Balkan operations and
is seeking to reduce costs, including those Actions to Control Costs

incurred under the Balkans Support Contract. On July 7, 2000, the U. S. Army
Europe Chief of Staff issued a memorandum to task force commanders and staff
elements involved in Balkan operations on monitoring and controlling the
Balkans Support Contract. In the memorandum, the Chief of Staff stated that
deployed commanders' senior

staff, the contracting officer, U. S. Army Europe staff principals, the
Defense Contract Management Agency, and the Defense Contract Audit Agency
all have a shared responsibility to ensure that the Balkans Support Contract
is managed and that costs are controlled. The memorandum

directs three actions to ensure that the Army acquires from the contractor
only what is really needed:

Deployed unit commanders and U. S. Army Europe staff must validate and
approve only requirements to be performed by the contractor that are truly
needed or mission essential. This applies to new work and the addition of
new services to the contract. Deployed commands must provide staff to
augment the Administrative Contracting Officer upon request. These staff are
to assist in ensuring

that the contractor is performing the tasks it has been directed to perform.
Each deployed command and U. S. Army Europe staff component must conduct
quarterly reviews of ongoing recurring services being

performed by the contractor to ensure that only essential services are
demanded. The memorandum does not address whether the level of services and
the efficiency with which they are provided should also be examined. To
provide additional incentives to reduce costs, senior U. S. Army Europe
budget officials told us that they intend to mandate that officials in
Kosovo and Macedonia identify $40 million in cost savings for fiscal year
2001. Task force commanders and the contractor will have to determine how to

reduce the cost of services to achieve these cost savings. According to U.
S. Army Europe officials, BRS has a goal to reduce the contract cost by $20
million in fiscal year 2001 by replacing some highly paid expatriate workers
(those from other countries such as the United States) with local

workers, who have a lower prevailing wage scale, reducing the manning at
dining facilities, and reducing on- hand inventories. Task force commanders
will be responsible for identifying ways to reduce service levels and/ or
find efficiencies in delivering services to achieve the remaining cost
reductions.

In discussing this matter with Defense Contract Management Agency personnel
involved with the contract, we were told that the current level of services
and the cost of support for U. S. forces is the subject of an ongoing
dialogue. They told us that the government needs to do a systemic review of
whether BRS is operating as efficiently as possible under the support
contract and that they have suggested that personnel qualified to make

such an assessment be assigned to their Balkan team. These officials also
believe there needs to be more rigor in the government's oversight of BRS
and that another DOD agency involved in the contract's oversight, the
Defense Contract Audit Agency, could be helpful in this regard.

Finally, in documentation prepared for us in May 2000, U. S. Army Europe
stated that it had directed its staff directorates, such as logistics, to
develop a long- term Balkan base operation strategy. The aim is to determine
a base operation standard for each service required to be performed for a
deployed force. Each standard is to describe the function to be performed,
the necessary facilities and personnel, when and how services are to be
performed, and the level at which they are to be provided. As of July 2000,
U. S. Army Europe officials said that there was no target date for the
effort's completion. To foster competition, U. S. Army Europe is also
exploring whether some

functions now being performed under the support contract can be contracted
separately to contractors other than BRS. For example, barracks renovation
at a base in Hungary that is being used to support U. S. forces in Bosnia is
being done by a local Hungarian firm rather than by BRS. U. S. Army Europe
also intends to break out some of the services now

being performed in Macedonia under the support contract and allow the Joint
Contracting Center to contract for them to see if they can be obtained for
the same or less money. As of July 2000, no target date had been set for
implementing this effort.

Lack of Understanding Effective oversight of the Balkans Support Contract is
being impaired

of the Balkans Support because (1) there is confusion over the government's
authority under the

contract, (2) personnel assigned to contract oversight roles in the theater
Contract Hinders have not been trained sufficiently, and (3) frequent
personnel rotations of DOD's Oversight short duration preclude continuity of
oversight efforts.

Confusion Over the Notwithstanding pre- deployment training on the contract,
deployed Army Contract Has Hindered Cost and other DOD officials responsible
for the Balkans Support Contract Containment

generally agreed that there is a lack of understanding of the government's
authority under the contract. Engineers, logisticians, and administrative
contracting officers among the Army and other DOD officials with whom we met
in the Balkans and elsewhere had little previous experience with cost
reimbursement performance- based contracts. Army and DOD officials

deployed in the Balkans between 1998 and 2000 had the widespread view that
because the support contract is performance- based, they have little control
over the contractor's actions once the contractor is authorized to perform a
task. Although the contract allows the Army and other DOD

officials to leave all performance details to the contractor's judgment, it
does not preclude them from providing the contractor detailed direction.
According to Army Corps of Engineers lawyers involved with the contract, the
government can be as prescriptive as it wishes to be in managing the
contract. For example, in shifting fire- fighting to BRS, the Army could
either provide detailed specifications of the design of the fire stations
BRS is to build or leave all the details up to BRS. Although there is still
disagreement within the Army about the design of fire stations to be built
by BRS in the Balkans, the officials responsible for administering the

contract have allowed BRS to proceed with its design. BRS officials
repeatedly expressed the view that because the company's award fee is based
in part on DOD's satisfaction with BRS' performance, clear

expectations of the services BRS is to provide are in the company's best
interest. The lack of understanding of the government's authority under the
contract on the part of some government officials involved in administering
the contract creates confusion over the roles of the government and the
contractor. In December 1999, the Administrative Contracting Officer at Camp
Montieth, Kosovo, was instructed to issue a notice to BRS to proceed with
the construction of a tent to be used as the post office. Because the

independent government estimate for this construction was $6, 000, the
contracting officer placed a $10,000- construction limit in the notice to
BRS in an effort to moderate cost growth. When the Lead Administrative
Contracting Officer at Camp Bondsteel, Kosovo, became aware of this
limitation, he sent an electronic message to the officer at Camp Montieth,

in effect stating that BRS is the Army's customer and that such funding
limitations affect the Army's relationship with the customer. In fact, it is
the Army who is the customer under the Balkans Support Contract. The extent
of the confusion that exists regarding the contract is evidenced by the
results of a conference held in April 2000 to improve the partnership
between all parties involved with the contract, including the contractor.
Conference participants included representatives from all the government
parties involved in administering the Balkans Support Contract- U. S. Army
Europe, task force representatives, the Corps of Engineers, and the Defense
Contract Management Agency- and the contractor, BRS. At this conference,
participants expressed their views on a variety of topics,

including how well the contract was being managed and the contractor's
performance. Participants cited the need for more uniform guidance from
contract managers, oversight continuity problems caused by frequent
personnel rotations, and the need for contract personnel to be more
knowledgeable of the contract, among other things.

Additional Training Is Army officials responsible for contract oversight in
Bosnia, Kosovo, and

Needed to Eliminate Macedonia cited the need for more preparatory training.
Recognizing the Confusion

need to increase training for contract oversight officials, the Army
initiated a new program in December 1999 for 49th Armored Division staff
before deployment to Bosnia. During the mission rehearsal exercises
preceding deployment, division staff were briefed by the Army Corps of
Engineers and the Defense Contract Audit Agency on the uniqueness of
sustaining a force in the Balkans, on basic information about the contract,
and on the contractor's responsibilities. The staff said that the training
was useful but that more training was needed on the government's authority
and on how

to apply the contract in real- world situations. Although incoming personnel
observe their outgoing counterparts for a short period, and personnel
receive some training before they deploy, task force and contract
administration officials said that this was inadequate.

This is especially true for the personnel with contract oversight
responsibilities as a second job. For example, the camp mayor 7 at the main
base camp in Bosnia in May 2000 was an artillery officer with no

contracting background. He said that he received no training on his
responsibilities as mayor and how to carry them out. Yet, he was responsible
for coordinating the contractor's maintenance program at the camp.

The use of a cost reimbursement performance- based contract in the Balkans
also requires contracting personnel who are accustomed to monitoring fixed-
price contracts to adjust their paradigms in order to use

the contract effectively. Many personnel assigned to the Balkans have never
worked with this type of contract and, other than those from the 49th
Armored Division who received some pre- deployment training, received little
or no training on it. Therefore, they have a limited understanding of the
government's role under such a contract.

7 The camp mayor is an Army officer responsible for authorizing routine
maintenance and projects estimated to cost less than $1, 000 performed under
the Balkans Support Contract.

The need for training is not new. In our previously cited February 1997
report on Army management of contractor support in Bosnia during 1996, we
reported that some key logistics planners for the Bosnia operation had
little knowledge of or experience with the contract (a very similar
predecessor of the current contract) prior to the operation. We also
reported that despite significant efforts to manage the contract
effectively, U. S. Army Europe officials' inexperience and lack of
understanding of the

contract, the contractor's capabilities, and program management created
problems during deployment and resulted in unnecessary costs. We recommended
at that time that commanders be trained to use the contract and that
training include information on contractor capabilities and roles

and responsibilities in planning and execution. DOD agreed with our
recommendation. While some steps have been taken to provide more training,
this lack of training appears to be a continuing problem. The July 7, 2000,
memorandum from the U. S. Army Europe Chief of Staff on monitoring and
controlling the support contract cited the importance of ensuring that the
right people are identified, trained, rehearsed, and motivated to accept
their responsibilities. The memorandum also stated that it is of critical
importance to identify rotating units early so that they can train their
staffs and incorporate their tasks into their mission

rehearsal exercises. In discussing the results of our work with U. S. Army
Europe and Defense Contract Management Agency officials we were told that
they are making information, such as a copy of the contract, available to
personnel who will be involved with the contract early (before they rotate).
They also said that the content of the training is changing to include more
scenarios involving likely contract situations task force personnel and
contract administrators are likely to encounter once they are deployed.
Training also focuses more on what is being done under the contract in the
Balkans now, recognizing that some tasks such as building

camps are complete. Personnel Rotations Further

Army policy is to limit Balkans rotations to 6- month periods. In keeping
Inhibit Effective Oversight

with this policy, the average tour length for military personnel deployed to
the Balkans is in fact 6 months. Numerous officials told us that this is too
short a period to learn the job of managing the support contract and
establish effective working relationships. Many officials involved with
managing the contract said that it was frustrating to have to leave just as
they were beginning to understand their job. The impact of the 6- month
rotation policy is compounded by the fact that most Army task force
personnel responsible for construction and service decisions, as well as

Defense Contract Management Agency contract administration personnel, leave
at about the same time. The lack of a staggered rotation system destroys
continuity for ongoing projects and prevents incoming staff from
understanding why specific decisions were made.

In discussing this matter with the commander of U. S. forces in Kosovo and
Macedonia, he agreed that there is a lack of continuity due to the constant
rotation of personnel. He also said that one alternative might be to have
some military and civilian personnel remain in Kosovo and Macedonia for

longer periods to help establish continuity. In discussing the results of
our work with the head of the Defense Contract Management Agency- Southern
Europe in Germany in July 2000, he also agreed that frequent rotations cause
difficulties in training and continuity. However, task force personnel with
whom we spoke in July 2000 also said that some personnel involved

with administering the contract had begun to rotate at different times from
the main task force.

Conclusions The Army is concerned about controlling the cost of the Balkans
Support Contract and has taken a number of actions to do so. U. S. Army
Europe's recent memorandum directing a quarterly review of recurring
services is an

important step in regaining control over the extent of services provided in
the Balkans. Recent improvements in training for personnel preparing to
deploy to the Balkans who will have contract administration responsibilities
and the recognition that effective contract oversight involves assessing the
efficiency with which services are delivered are also important steps. There
are, however, additional steps that could be taken to reduce costs. To be
more effective, the quarterly reviews need to go beyond examining whether
current services are needed and should include factors such as the level and
efficiency of services. The base operation standards currently being
developed for services that are being provided will be a valuable tool in
assessing the services' level and efficiency. In addition,

including the Defense Contract Management Agency and the Defense Contract
Audit Agency in the quarterly reviews and in the development of the base
operation standards would bring additional expertise to the

process. Further, misunderstandings about the roles of the government and
the contractor have limited the government's oversight of the contract.
Incomplete understanding of the government's authority and responsibilities
under this type of contract, coupled with limited training and a lack of
continuity among contract administration personnel, has led

personnel to simply accept existing practices rather than question them,
even though some services may have appeared to be provided at unnecessarily
high levels. As a result, DOD may be incurring higher costs than necessary.

Recommendations for To better control costs and improve administration of
the Balkans Support Executive Action

Contract, we recommend that the Secretary of Defense direct the Secretary of
the Army to direct the Commanding General, U. S. Army Europe, to (1) examine
the level and frequency of services being provided and assess the economy
and efficiency with which they are being provided as part of the newly

directed quarterly review of recurring services under the Balkans Support
Contract, (2) seek the participation of the Defense Contract Management
Agency and the Defense Contract Audit Agency in these reviews, and (3) set a
target date for completing base operation standards for contractor- provided
services and use these standards in the quarterly reviews and

direct a more extensive pre- deployment training program for all contract
oversight personnel to include (1) the fundamentals of cost reimbursement
performance- based contracting and (2) the

government's authority and responsibilities under the contract. We also
recommend that the Secretary of Defense direct both the Secretary of the
Army and the Director, Defense Contract Management Agency, to provide
greater continuity in managing the Balkans Support Contract by scheduling
rotations so that key contracting personnel, such as administrative
contracting officers, rotate at different times and by considering the
feasibility of a more permanent core of civilian contract administrators.
Agency Comments and

DOD and Brown and Root Services provided written comments on a draft Our
Evaluation of this report, which are reprinted in appendixes II and III. DOD
agreed with our recommendations, but noted that our third recommendation
should be changed to include direction to the Defense Contract Management
Agency because agencies other than the Army provide

personnel to perform contract administration functions on the Balkans
Support Contract. We agreed and modified our recommendation accordingly to
reflect that both the Army and the Defense Contract

Management Agency have personnel involved in administering the contract.

Brown and Root Services stated that contractor support is vital to
contingency operations. Brown and Root Services also provided comments on
contract activities, including power generation redundancy, the size of its
local national workforce in the Balkans, and fire- fighting services to
either clarify or make its position better understood. We modified the

report where appropriate. As agreed with your office, unless you publicly
announce its contents earlier, we plan no further distribution of this
report until 5 days after its issue date. At that time, we will send copies
to the Honorable William S. Cohen, Secretary of Defense; the Honorable Louis
Caldera, Secretary of the Army; and the Honorable Jacob Lew, Director,
Office of Management and

Budget. We will also make copies available to appropriate congressional
committees and other interested parties on request. If you or your staff
have any questions about this report, please call me at (202) 512- 5140.
Another contact and major contributors to this report are listed in appendix
IV.

Sincerely yours, Carol R. Schuster Associate Director National Security
Preparedness Issues

Appendi Appendi xes x I

Scope and Methodology To assess whether the Army is taking effective actions
to control costs, we obtained relevant documents and reports about contract
operations. These included the Balkans Support Contract, cost reports, and
descriptions of the services provided under the contract and the roles and
responsibilities of various organizations involved with the contract. These
documents were provided by a variety of organizations, including the Defense
Logistics Agency, the Defense Contract Management Agency, the Defense
Contract

Audit Agency, the Department of the Army's Deputy Chief of Staff for
Logistics, the U. S. Army Corps of Engineers, U. S. Army Europe, and Brown
and Root Services (BRS). We held numerous meetings with officials from the
Army Corps of Engineers' Transatlantic Program Center, which awarded and
manages the Balkans Support Contract. We also met with and analyzed
documentation provided by U. S. Army Europe logistics and engineer officials
who are responsible for administering the Balkans Support Contract. We did
not, however, examine the appropriateness of the decisions made by the award
fee board in evaluating BRS' performance. To assess the government's audit
oversight of the contract, we met with officials from the Defense Contract
Audit Agency office responsible for

monitoring the contractor. We analyzed documentation the office had obtained
regarding the contractor's financial and accounting system and examples of
purchase orders that the agency had audited.

To understand contractor support in the Balkans first- hand, in April- May
2000 we visited and obtained documentation from, analyzed records of, and
discussed contract procedures with officials from Task Force Eagle in
Bosnia, Task Force Falcon (Forward) in Kosovo, and Task Force Falcon (Rear)
in Macedonia. We obtained and analyzed contractor records pertaining to
projects performed at U. S. base camps in Bosnia, Kosovo, and Macedonia. We
also observed contractor operations at all camps, reviewed records from
boards convened to assess and approve work projects, and discussed
contractor operations with deployed Army and BRS personnel both at the base
camps in the Balkans and at BRS headquarters in Houston,

Texas. To examine whether improvements are needed in how the Department of
Defense (DOD) manages activities under the Balkans Support Contract, we met
with officials involved in administering the contract in the base camps in
Bosnia, Kosovo, and Macedonia, including administrative contracting
officers, deployed Army logisticians, representatives of the Base Camp

Coordinating Agency, and camp mayors. We also met with Army, Defense
Contract Management Agency, and other organization representatives in the
United States and Germany. We discussed with them the amount and

adequacy of training provided and the effect of frequent rotations on DOD's
ability to administer the contract effectively. We also discussed with Army
and BRS officials the results of a partnering meeting, held in Germany in
April 2000, that brought together representatives of the Army, other DOD

organizations, and BRS to examine how to improve contract activities. We
performed our work from July 1999 through September 2000 in accordance with
generally accepted government auditing standards.

Appendi x II Comments From the Department of Defense

Appendi x II I Comments From Brown and Root Services Note: GAO comments
supplementing those in the report text appear at the end of this appendix.

See comment 1. See comment 2.

See comment 3. See comment 4.

See comment 5. See comment 6. See comment 7.

The following are our comments on BRS' letter dated September 14, 2000.
GAO's Comments 1. We revised our report to reflect the proper name for the
contractor and

to clarify that the Army reimburses BRS for allowable direct costs. 2. BRS
states that the Army carefully addressed power requirements in the lengthy
planning process for Kosovo operations and determined

that it wanted BRS to provide 100- percent prime power, 100- percent backup
power, and selected tertiary backup power for selected key facilities. In
fact, the February 24, 1999, statement of requirements resulting from the
Army's planning process for Kosovo operations called for power generation to
be provided at 100- percent of prime

requirement with backup and tertiary backup to critical nodes installations
such as the tactical operations center, hospital, and other designated
facilities. No mention is made of 100- percent backup power. Following the
February 1999 statement of requirements, the

description of the requirement for power generation became less specific. In
the June 18, 1999, notice to proceed that the Defense Logistics Agency
issued to BRS as U. S. forces began to deploy to Kosovo, BRS was told to
provide electrical power generation and distribution for all facilities in
the camps. Army officials at U. S. Army Europe and in Kosovo were unable to
provide us with any

documentation supporting a need for 100- percent power redundancy. In the
absence of specific guidance from the Army on power redundancy, our report
describes the steps BRS took to obtain such guidance and the action it took
when it did not receive such guidance. Regarding the status of leased
generators that can be returned to the vendor, we updated our report to
state that 38 generators are being returned and deleted references to excess
leased generators.

3. Our report was not based solely on our own observations but rather on the
views of some Army and other DOD officials. As we point out, a May 2000
assessment of contractor crew size in Bosnia conducted by

the Commander of the Engineer Brigade provides similar conclusions about the
inefficiency of contractor crews. For balance, we included BRS officials'
explanations for the perception provided by DOD officials. Our intent in
presenting this information was to illustrate the

need for the Army to assess the efficiency of services. 4. We have revised
the report to clarify that BRS' planned fire- fighting force of 116 included
both firefighters and associated administrative

and maintenance personnel. Fire- fighting at U. S. Army facilities in Europe
is the responsibility of U. S. Army Europe's Engineering Directorate.
According to a Directorate official, the number of firefighters proposed by
BRS varied over time because of changing perspectives of BRS personnel
rather than because the Army more clearly defined the mission.

5. BRS stated that it used Appendix C of Military Handbook 1008C,
“Fire Protection for Facilities Engineering, Design, and
Construction,” in determining the requirement for the fire- fighting
mission. According to

Army Corps of Engineers and U. S. Army Europe officials, including officials
involved in developing the military handbook, the handbook was developed for
permanent facilities and was never designed to be applied to a war zone. 6.
BRS stated that the Army only plans to staff manpower sufficient to fight a
single fire, while BRS was assigned both structural fire- fighting

and crash responsibilities. According to a U. S. Army Europe engineer
official, Army firefighters also had both structural fire- fighting and
crash responsibilities, but the Army staffs its units assuming that it would
only have to do one at a time.

7. We describe in our report some of the steps BRS has taken to reduce costs
and the amount of the resulting savings reported by BRS. While BRS provides
data on what it terms cost avoidance measures,

according to Army Corps of Engineers officials responsible for administering
the contract, the Corps has never systematically assessed their validity.
While we agree that BRS has taken steps to reduce costs,

we are not in a position to attest to the sum of such savings.

Appendi x V I GAO Contacts and Staff Acknowledgments GAO Contact Steven H.
Sternlieb (202) 512- 4534 Acknowledgments In addition to the contact named
above, Ray S. Carroll Jr., Lester L. Ward,

and Adam Vodraska made key contributions to this report.

(702007) Lett er

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Contents Letter 3 Appendixes Appendix I: Scope and Methodology 28

Appendix II: Comments From the Department of Defense 30 Appendix III:
Comments From Brown and Root Services 31 Appendix IV: GAO Contacts and Staff
Acknowledgments 36

Tables Table 1: Total Contract Costs, Fiscal Years 1996- 2000 9 Tables
Figure 1: Selected Support Services Provided by BRS in Bosnia and

Kosovo in Fiscal Year 1999 8 Figure 2: Camp Bonsteel Kosovo 10 Figure 3:
SEAhut in Kosovo With 100- Percent Power Redundancy 15 Figure 4: Fiscal Year
1999 Support Costs: Bosnia and Macedonia 17 Figure 5: Fiscal Year 2000
Bosnia and Kosovo Support Costs,

Through May 27, 2000 18

Abbreviations

BRS Brown and Root Services DOD Department of Defense

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Appendix I

Appendix I Scope and Methodology

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Appendix II

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Appendix III

Appendix III Comments From Brown and Root Services

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Appendix III Comments From Brown and Root Services

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Appendix III Comments From Brown and Root Services

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Appendix III Comments From Brown and Root Services

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Appendix IV

United States General Accounting Office Washington, D. C. 20548- 0001

Official Business Penalty for Private Use $300

Address Correction Requested Bulk Rate

Postage & Fees Paid GAO Permit No. GI00
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