On June 6, the Commission on Wartime Contracting (CWC) held a hearing to examine the Department of State's (State) continued preparations for taking control of operations in Iraq from the Department of Defense (DOD). In the past, the CWC has been less than sanguine about State's ability to run contingency operations in Iraq and has chided the agency for slow-walking reforms, especially in relation to contract oversight.

On Oct. 1, State will take full responsibility for the U.S. government's presence in Iraq, as the vast majority of U.S. combat troops are scheduled to depart the country by the end of 2011. At that time, the agency will begin performing many tasks the Pentagon has been carrying out for the last eight years. State has experience providing standing and moving security and training security and military personnel – duties the agency currently performs and will continue to perform in Iraq. However, State will also have to supply quick-reaction combat teams, route clearance, recovery of wounded personnel, removal of damaged vehicles, and the detection and disposal of explosive devices – none of which the agency has experience with.

To perform these tasks, State will rely on a large number of private security contractors (PSCs). In addition to the current small army of roughly 19,000 PSCs in Iraq right now, the agency estimates it will need another 6,000 to 7,000 contractors to carry out its responsibilities. The problem is that State does not have a reputation for vigilant contract oversight, and the CWC has been warning the government since the summer of 2010 of the potential serious consequences that would befall it if State and DOD failed to coordinate better before the Iraq transition.

In February, the CWC released its second interim report to Congress and again raised concerns about the DOD-to-State transition in Iraq. The interim report made 32 recommendations that attempted to address the underlying causes of contracting failures and included policy, statutory, and administrative suggestions. Prior to the June 6 hearing, the CWC asked State to comment on any recommendations that would affect its operations.

The CWC found some of State's responses "cursory" and others "logically dubious." Commissioners also told Under Secretary of State Patrick Kennedy, who was the sole witness at the CWC hearing, that the agency's argument against requiring a written rationale from contracting personnel for not pursuing a proposed suspension or debarment – it would be a "burden" – "approaches the borderline of government negligence."

Commissioners became even more incensed when, according to Jake Wiens at the Project On Government Oversight (POGO), "Kennedy could not answer how often recommendations for suspension or debarment are overturned," leading a co-chair, former Rep. Christopher Shays (R-CT), to wonder how the requirement "could be so burdensome if State didn't even know how frequently it occurred."

The CWC was similarly skeptical of State's rejection of the recommendation for the creation of a permanent office of inspector general for contingency operations, an idea pushed by some in Congress, as well. Wiens notes that commissioners cited State's well-documented history of antagonism toward IGs, including a recent example of the agency blocking an investigation by the Special Inspector General for Iraq Reconstruction (SIGIR) with minor bureaucratic excuses.

Despite Kennedy's assertions to the contrary, a recent Inspector General (IG) report provides justifications for the commission's concerns, which, according to Shays, "remain very much alive." In May, the State Department IG released a troubling report on the agency's performance on planning the Iraq transition. While State has "put in place planning and management mechanisms to effectively transition to a civilian-led presence in Iraq," "several key decisions have not been made, some plans cannot be finalized, and progress is slipping in a number of areas."

One of the biggest challenges that lie ahead for the agency is the successful transfer of reconstruction projects to Iraq, an area flush with opportunities for waste, fraud, and abuse. U.S. taxpayers have poured billions of dollars into projects throughout Iraq, yet the Iraqi government will not be able to maintain many of them, a finding recently highlighted by the commission. The State IG found that the agency has transferred over 5,400 projects to Iraq, valued at roughly $15 billion, but security concerns and "poor contractor performance" are "major hindrances to project completion."

While State has made progress in preparing for the day when DOD cedes control of operations in Iraq, there is still much for the agency to do. However, State should not carry all of the blame for potential failures. In July 2010, CWC recommended that Congress "immediately provide additional resources to State to support its increased contracting costs and personnel needs" in relation to the Iraq transition. The fiscal year (FY) 2011 continuing resolution provides just $48.3 billion to State, almost $5 billion less than the Obama administration's request of $53.1 billion – a funding level that did not even reflect the CWC's recommendation.

Image in teaser by Flickr user The U.S. Army, used under a Creative Commons license.