Both reports faulted the Pentagon for its inability to provide accurate data on the total number of contractors employed by the Defense Department and the missions those contractors perform.

“Current databases are not sufficiently customized to track important contract data. Even when information is tracked, questions remain as to the reliability of the information,” CRS reported.

One problem is the military services use different methodologies to track contractors. “DOD components used various methods and data sources, including their inventories of contracted services, to estimate contractor [full time equivalents] for budget submissions,” GAO said.

Its analysis found that “the contractor FTE estimates have significant limitations and do not accurately reflect the number of contractors providing services to DOD.” Those limitations included estimating techniques based on potentially inaccurate inventory data, GAO said.

Contract personnel provide a wide range of services, including transportation, construction and base support functions as well as intelligence analysis and private security.

CRS noted that by using contractors on an as-needed basis, the Pentagon can save money and free uniformed personnel to focus on combat operations. The department also can use contractors with specialized skills, such as linguists or weapons maintenance experts, to quickly support specific battlefield needs.

But CRS noted that many analysts believe contractors undermined the military’s credibility and effectiveness in both Iraq and Afghanistan and it criticized Defense for poor planning in how it uses contractors in operational support roles.

“The ineffective use of contractors can prevent troops from receiving what they need, when they need it, and can lead to the wasteful spending of billions of dollars,” CRS said.

GAO said the Pentagon needs to develop a “strategic human capital management” plan that determines the appropriate mix of military, civilian, and contractor workforces and the functions of each.

In a response to the GAO report, Rick Robbins, the department’s director of force manning and requirements, said Defense officials recognized that the contractor FTE information provided in the department’s 2013 and 2014 budget submissions had significant limitations.

He said a reliable, current inventory of contractor FTEs is a fundamental building block for developing future contractor FTE estimates and noted that the department has initiated efforts to improve inventory data by collecting it directly from contractors, using the Army’s Contractor Manpower Reporting Application as a model. - By: NEXTGOV.com

While the Army has pushed to change the LOGCAP III pricing structure to a firm, fixed-price basis, KBR has sued to keep the closeout work under the existing cost-reimbursable arrangement.

The company says the cost-reimbursable model is better because neither the company nor the Army can estimate the scope or duration of closeout work.

“Legal, administrative, compliance, audit response, vendor issues, subcontract close-out and dispute resolution, to name a few, are all unknowns,” the company told the Army in a letter last summer.

In a statement to Federal Times, KBR spokesman John Elolf added, “We have explained the issue in detail to the Army and have asked that we continue with the cost reimbursement style contract that has been historically used by the Army for this type of work.”

Fixed-price contracts and task orders are seen as less risky and less expensive than cost-reimbursable contracts. The Obama administration made it a reform priority to use more firm, fixed-price contracts and fewer cost-reimbursable contracts.

Awarded to KBR in 2001, LOGCAP III — the Logistics Civil Augmentation Program III — has resulted in 160 task orders for everything from dining services for U.S. troops to in-theater delivery of housing.

In a redacted pleading made public last week, the Justice Department, which represents the Army in the contract dispute, said contracting officials hadn’t decided whether to change to a fixed-fee arrangement but rather were only exploring the possibility.

Government lawyers also argued the closeout itself was part of the contract, not a new solicitation, as KBR argues.

They said closeout isn’t a new service the government must procure, nor does the work need to take place during the performance of the contract.

If KBR gets its way in court, the impact would be felt in contracting offices across government, the Justice Department said.

“KBR does not deign to address the implication of its position: if the Court accepts KBR’s novel theory, literally tens of thousands of government contracts will be affected, creating enormous uncertainty for the government and contractors alike,” Justice Department lawyers wrote.

In explaining the potential impact, lawyers speculated that if closeout activities had to be performed during the performance period of a contract, then the government could be forced to end deliveries to accommodate the closeout.

“For example, if an existing contract was about five years of performance, and closeout is estimated at one year, the government would need to direct the contractor to cease deliveries by year four to ensure that sufficient time exists to perform closeout,” the Justice Department filing stated.

Government lawyers also said KBR already invoiced the Army for LOGCAP III closeout work totaling nearly $25 million from 2012 through April 4, 2013, which was the same day the company filed its complaint.

The company’s invoicing raised separate concerns for government lawyers.

“If KBR truly believes that it lacked a contract, then its submission of tens of millions of dollars in invoices may require consideration of the False Claims Act because KBR may have submitted claims for reimbursement … for which it knew it was not entitled,” Justice Department lawyers wrote.

But KBR lawyers argue that LOGCAP III ended in December 2011 without any provisions to close out the contract.

When the Army requested a proposal in 2013 for closeout activities under a firm fixed-price basis, the request was “unquestionably a solicitation for a new contract,” KBR argued.

The pleadings from both sides come as government lawyers ask Judge Victor Wolski to toss the case. He was expected to issue a ruling after hearing from KBR and Army attorneys in arguments scheduled by telephone for May 30.