By Emelie Rutherford

A former Pentagon official argued before a bipartisan commission yesterday for more emphasis on incentives and less on punishments for wartime contractors–comments that follow similar calls for the Pentagon to use positive methods to motivate defense firms.

Jacques Gansler, the under secretary of defense for acquisition, technology, and logistics, under former President Bill Clinton, told the commission that he did not agree with all 32 proposals in its second interim report on reducing waste tied to contractors in Iraq and Afghanistan. He told the Commission on Wartime Contracting in Iraq and Afghanistan that the report, which it plans to finalize this summer, focuses on punishments such as suspension and debarment “at the expense or the neglect of positive incentives.”

“Missing is a discussion of creating incentives to reward outstanding performance, such as awarding contractors with follow-on work if they achieve higher performance at lower costs,” Gansler said during a commission hearing yesterday on Capitol Hill.

Gansler said incentives and requirements for competition should be balanced. He has concerns about a section in the draft report that calls for creating more competition for wartime contracts.

“I strongly believe in the value of competition to get higher performance at lower cost, but if the threat or option of future competition is enough to get those desired results, then competition should not always be mandated,” he said. “Rather it should be required if the desired results are not achieved. The greatest incentive for a contractor in achieving the desired results is the follow-on award.”

Commissioner Clark Kent Ervin, director of the Homeland Security Program at The Aspen Institute, a non-partisan public policy institute, said that “thousands of years of human history show and common sense shows that human beings need two things in order to act properly, they need carrots and sticks.”

Still, Ervin said contractors receive award fees for good performance, and the commission knows “that process has been abused over the course of our time in Iraq and Afghanistan.”

Gansler, in response, called for creating “the incentive and the management oversight that assures that they’re focused on the things we want.”

The eight-member wartime-contracting commission was created by the fiscal year 2008 Defense Authorization Act and is chaired by former Connecticut Republican congressman Chris Shays and former Defense Contract Audit Agency Deputy Director Michael Thibault. It is charged with assessing the extent of waste, fraud, and abuse in contingency contracts in Iraq and Afghanistan.

Current Under Secretary of Defense for Acquisition, Technology, and Logistics Ashton Carter told the commission last month he also disagreed with the recommendation in the draft report to increase use of suspensions and debarments (Defense Daily, March 29).

Carter further said last week, in comments about all companies the Pentagon buys goods and services from, that the Pentagon is working to “incentivize better performance in industry.”

Those efforts include a nascent Superior Supplier Incentive Program intended to encourage cost reduction and innovation by industry (Defense Daily, April 21). Carter said the idea of providing incentive for defense contractors is “very important” as the Pentagon tries to reduce costs with contracts.

“It’s not about profit for those performing the work,” Carter said last week. “That’s not only wrong, it’s sort of backward. We use profit as an incentive to cut cost.”