Battle royale brewing between government contractors, auditors.

• Author: Erwin, Sandra I.
• Position: DEFENCE INDUSTRY

The U.S. government is launching new crackdowns on federal contractors at a time when the Defense Department and other agencies depend more than ever on private-sector help.

The most recent regulatory clampdowns target contractor expenses that increasingly are being challenged by federal auditors. More assertively than in years past, the government is questioning both overhead and direct costs that companies charge under Pentagon contracts, experts said.

Disputes mostly unfold and get resolved behind the scenes, except for the sporadic headline-making feuds between Army auditors and warzone contractors. Just last month, the Justice Department filed a "false claims" suit against the military's largest battlefield contractor, Kellogg, Brown & Root, for passing unauthorized costs for private security guards in Iraq. The company said it intends to fight the allegations.

Tugs of war over expenses have intensified in recent years, said attorneys who represent federal contractors. And clashes are expected to continue as the military increases its reliance on contractors.

"Our way of waging war brings a contractor for every soldier," said Ashton Carter, undersecretary of defense for acquisition, technology and logistics. In Vietnam, there was one contractor for every five soldiers. In Iraq, the ratio increased to one contractor for every 1.2 troops. In Afghanistan, there are more contractors--currently 107,000--than troops, or the equivalent of one per 0.7 soldiers, Carter said in a speech last month at the Center for Strategic and International Studies.

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The independent federal Commission on Wartime Contracting in Iraq and Afghanistan estimated that contracts for logistical support, translation, maintenance, security and other services have exceeded $80 billion over the past five years. Services contracts account for nearly two-thirds, and are mostly managed by the Army.

The Pentagon's penchant for outsourcing work is not going to fade in the foreseeable future. Although the government plans to shift some administrative jobs currently held by contractors to civil servants, the military still will continue to depend on contractors for battlefield support, at least as long as troops are at war.

"We kept saying it's not going to last much longer. ... Now we have to get used to it," Carter said, speaking about the Defense Department reliance on contractors. "We will have to keep doing it."

With vast amounts of money in play, it...