The war within the war

In May, the Defense Department’s Inspector General issued a report detailing the mismanagement of payments worth more than $10 billion to private contractors supporting the American military efforts in the Global War on Terror.
Detailed in the 80-page audit were reports of a cash payment totaling $320.8 million authorized by one signature on an invoice that simply read “Iraqi salary payment”; an $11.1 million payment to American contractor IAP that was unaccompanied by any evidence of what was actually delivered; and the fact that U.S. occupation authorities simply could not account for $8.8 billion in Iraqi oil profits and asset seizures that were disbursed to contractors in the early stages of Operation Iraqi Freedom.
The audit may not have garnered as much attention as reports of Halliburton’s $100 cases of soda or Blackwater’s alleged shoot-first-ask-questions-later approach to security. But it did shed light on the crisis of public perception and finger-pointing that may be awaiting many government contractors when the Bush Administration draws to a close.

Dead aim

Democrats in the House and Senate are already taking dead aim on those within the Defense Department that may be responsible for billions in unaccounted-for spending. And should a Democrat win the White House come November, government and media attention may very well move from the payers to the payees, given the mass exodus from the executive branch that accompanies any transfer of power in the U.S. – especially if those that granted wildly lucrative contracts end up working for the very contractors they awarded in the first place.
Furthering that assumption is the fact that for the last eight years, regulators at the Department of Justice and other enforcement agencies have served under the very administration that took the country to war. Congress may conduct oversight on policy, but the regulators possess the power to take punitive action against entities that illicitly benefited from that policy.
While there are a few ongoing FBI investigations, it’s a safe bet that prosecuting wartime fraudsters will become a top priority should a Democratic Attorney General take the helm.
Henry Waxman (D-CA), chairman of the Committee on Oversight and Government Reform, has already promised major investigations into misconduct, fraud, and abuse in government contracting. And he’s got support from both sides of the aisle. Even John McCain – while out on the campaign trail – touts the fact that he uncovered a contracting scandal that led to the CFO of Boeing being sentenced to federal prison in 2005.
With more than 163,000 contractors working in Iraq, and 36,500 working in Afghanistan, the potential for scandal is great. In other words, it may not be long before the mainstream media makes the money trail its primary focus in a very public Iraq War postmortem.
In the hierarchy of public relations villains, war profiteers rank right at the top. And while a miscalculation here and an accounting oversight there may not technically constitute profiteering, politicians, government watchdogs, and the media will make no such distinctions. Public outcry over an unpopular war in Iraq may be at fever pitch, but is nothing compared to the uproar that will confront any company believed to be profiting illegally from conflicts that have cost thousands of American lives.
The message, it seems, is clear: Contractors need to understand that increased public scrutiny isn’t a matter of if, but rather when. Whether the contractors are multi-billion dollar corporations with longstanding government relationships or “mom and pop” first-timers, they must prepare themselves for the intrinsically “media-genic” nature of Congressional and regulator investigations.
In the midst of such significant consequences, contractors working in Iraq and Afghanistan must take steps now to ensure they are positioned favorably if or when the spotlight lands on them. Aside from flatly denying any wrongdoing, contractors will have to employ a prescient, proactive, and prolonged communications strategy that will make deposits in the trust bank before impending withdrawals leave it in the red.

Lessons to remember

Below are lessons and tactics any contractor must remember when making their case.
Be fully transparent and cooperative. Contractors should consider making financial information public before it is requested by regulators, reporters, or Congress. Most government contract information is already publicly available, so if certain audiences want the information, they’re going to get it. Contractors should blunt this impact by taking the initiative to post contract details to a company website or talk candidly about the company’s profit margin on their own. Making the information easily accessible now diminishes the news hook if or when it’s asked for.
Articulate specialization and expertise. In many cases, the contractors working in Iraq and Afghanistan are the only companies on the planet that can do what they do. Whether it’s securing oil fields, protecting high level officials and diplomats, or providing vital services to troops deployed at the tip of the spear, contractors must define what they bring to the mission and articulate the fact that such expertise is not easy to come by. The message should be that the return the contractor provides is well worth the investment.
Put the focus back on policy. Contractors work within the legal and regulatory framework set forth by Congress itself. If it’s the law that’s flawed, it’s the lawmakers who should be held accountable, not the contractors that abided by existing policy every step of the way.
Get media trained. Contractors should pick their spokespeople wisely and ensure they are ready to face every audience – from Congressional committees to the media pit bulls that won’t be afraid to pursue ambush interviews outside a CEO’s home or in the lobby of the corporate office. Messages must be delivered with clarity and candor – under circumstances that would make even the most grizzled media veteran start to sweat.
Put all landmines on the table upfront. Perhaps most important of all, contractors must be willing to perform an honest internal examination of their own potential liabilities. Because, after all, you can’t prepare for what you don’t know is coming.

Christopher Harvin is vice president of Levick Strategic Communications, a global business and crisis management firm. He served as a former political appointee to the Office of the Secretary of Defense, as a strategic communications advisor in Iraq to the Coalition Provisional Authority, and is a former senior congressional staffer to a current member of the House Armed Services Committee. Mr. Harvin can be reached by email at [email protected] or by phone at 202.973.1326.