She was not amused. The she in this case was United States Secretary of State, Hillary Rodham Clinton and source of her scorn was not her husband Bill. It was the comedy of errors surrounding the services agreement the Department of State had with ArmorGroup, a private contractor for security services at the United States Embassy in
The problem? According to a recent news article, it was a continuous series of contractual breaches topped off by a whistle-blower who confirmed what the Department of State should have known all along – that all of the boo-boos, including the lurid and childish pranks, the understaffing, the petty corruption, and more – interfered with contract performance to the point where it endangered the security of the diplomatic compound and significantly diminished the value of the contract.
How the story unfolds is a vivid example of how the cheapest solution in the short-term is not necessarily the least expensive in the long-term and how a contract alone can’t solve a difficult business problem.
Here’s what happened.
The limited availability of military personal has caused the Department of State to rely on private contractors for security services. Finding private enterprises to work in a war zone isn’t easy. With these few facts you can already see the potential dilemma: outsourcing to a single supplier a “bet the company function” (security in a war zone). It’s a scenario laced with potential public relations landmines, presenting a delicate management situation with weighty ramifications.
Two years worth of e-mails (aka smoking guns) document that through two administrations (aka management changes) the State Department was well aware of the deficiencies in ArmorGroup’s performance. On occasion they withheld payment until ArmorGroup’s performance improved. Improvement, however, was modest. The pee-parties continued, memorialized by photographs (aka more smoking guns) showing naked and drunk security guards urinating on each other and causing one undersecretary to say “this is humiliating.”
State threatened to cancel the $189 million five-year contract. But they didn’t. Re-bidding the project would be costly. In 2007 the contract was renewed. At the Senate hearings a company executive testified they were in full compliance with the terms of the agreement while a representative from State testified that contract performance was satisfactory.
Unfortunately (or fortunately depending on your point of view), it wasn’t until a whistle-blowing security guard came forward and Project on Government Oversight, a nonprofit group, issued a report that a hearing has been scheduled by the Commission on Wartime Contracting in Iraq and Afghanistan for the purpose of examining the Department of State’s management and oversight of the ArmorGroup agreement (aka call for accountability). Hillary wasn’t the only person torqued about the public report issued by the nonprofit organization. The current ambassador to
Sounds like a classic failure to communicate.
The best managers and executives I’ve ever worked for always had a “no surprises” rule. They’d rather hear bad news from their direct reports than a reporter on the news. Looks like a failure to properly communicate up the chain of command robbed the Department of State of a valuable opportunity to address the problem sooner rather than later. A similar communication hiccup recently affected the Washington Redskins.
Contracts memorialize the expectations and performance promises of the parties. They are not a substitute for performance. Contracts still need to be managed.