Syria drawdown increases contractor risk

As the U.S. prepares to pull troops out of Syria and Afghanistan, contractors are also at risk. Here are lessons learned from the 2013 troop drawdown.

President Trump ordered the withdrawal of 2,000 troops from Syria on Dec. 19, 2018. The following day, he announced the draw down of 7,000 of the remaining 14,000 troops in Afghanistan. 

When there is any shift in troop size there is a commensurate shift for their contracting companies. As pointed out at the Center for Strategic and International Studies event on the drawdowns, they were announced without input from foreign advisers. The consequence is that we are losing our ability to control the negotiations for how we manage that process.

What are some “Lessons Learned” out of President Obama’s disengagement from Iraq in 2011 and the drawdown of troops in Afghanistan? 

In Afghanistan, the U.S. had 108,000 people (troops and contractors) in 2013 and reduced those numbers to approximately 10,000 by 2015. This had an unanticipated and expensive impact on contractors, their labor force, and for the federally-mandated insurance for those employees under the Defense Base Act (DBA).

Here is what worked -- and what didn’t.

We call this “Base Closure Syndrome.”

What contractors should be concerned about and what to do about it

EVACUATION PLANS

Be clear what the agreement is with the U.S. government for supporting the troops and communicate it to all employees in theater. Are there limitations for when contractor employees can leave? Contractors can’t always rely on military transport to extricate them.

Have a written plan with your evacuation company in the event employees, both American and foreign nationals, are not able to leave by way of military or commercial transport.

Insurance policies may have limitations on how many employees can travel in one transport at one time or they may require notification to the insurer before traveling.

PLAN FOR LOST INCOME

Just when it looked like there was full funding for defense with the $684 billion bill that was passed for fiscal 2019, companies with operations in Syria and Afghanistan must consider “not for them.”

Historically, contractors were able to win by focusing on internal efficiencies such as trimming costs, reallocating capital, investing in resources and varying their contract mix. This was also a driver for continued consolidation in the government contracting space.

EMPLOYEE CLAIMS UNDER DEFENSE BASE ACT

The Defense Base Act (DBA) provides broad benefits for injured expatriate personnel. Insurance companies provide coverage in accordance with the Act. This industry ramped up when the U.S. first went into Iraq in 2003. Since then employees have become well-educated in how to game this system.

Additionally, personal injury attorneys will use any means possible to help returning employees learn how to file DBA claims, including putting representatives on planes coming out of theater.

DBA premiums are important because they are the third most expensive cost for government contractors. First are fixed assets, second are general & administrative expenses and third are premiums for complying with the Defense Base Act. This is the one expense that contractors have the most control over.

MORE DBA CLAIMS

Faced with returning home without a job, employees were more open to risky behavior and they were more likely to file claims for injuries under the Act. Once they returned home, they could choose their own doctor so there was a lack of oversight in the integrity of those doctors.

Often these valued employees were former military and they were trained that their body was a commodity. It was not unheard of for an individual to be willing to have five surgeries on the same knee.

Be sure to have pre-deployment and “pre-after” screenings. I use the term “pre-after” because it should be done while the employee is in theater and before arriving back in their home country. This is a bookends approach to measuring the health and fitness of an employee.

Retain all employee records in a place where they can be found years later. There is no statute of limitations for DBA claims. Many contractors changed their HR systems and lost vital data that could protect them in the event of a claim. Changing systems is especially common in mergers and acquisitions. Have a plan for housing this information.

Returning employees need to know there are opportunities for them. The best outcome is to have internal transfer options available. This means you retain their intellectual capital and have a valued and committed employee. Also consider out-placement services.

One of the worst things is having them watch daytime TV and seeing ad after ad of attorneys offering to help them file a claim.

IMPACT OF REDUCED PAYROLL ON PREMIUMS

In 2011 in Iraq, followed by the drawdown in Afghanistan, the insurance industry experienced claims going up (expenses) and premiums going down because of declining payroll (income). Insurers were paying out $2 (or more) for every $1 they took in. That is not sustainable for any business and some insurers did withdraw from the market.

Those insurers who stayed in the market, had to increase their rates to cover their losses. This caught both the contractors and the government by surprise because it blew their budgets, which were based on pre-downsizing rates. 

Contractors should have a continuous and open dialogue with their insurers so that all parties can plan for the changing needs of the mission to support the troops and the associated costs.

Most “Lessons Learned” from prior drawdowns revolve around personnel. Engaging and supporting contractor employees should be a top priority for every contractor. Putting plans in place and communicating them is key to managing the changeable nature of being a government contractor.

X
This website uses cookies to enhance user experience and to analyze performance and traffic on our website. We also share information about your use of our site with our social media, advertising and analytics partners. Learn More / Do Not Sell My Personal Information
Accept Cookies
X
Cookie Preferences Cookie List

Do Not Sell My Personal Information

When you visit our website, we store cookies on your browser to collect information. The information collected might relate to you, your preferences or your device, and is mostly used to make the site work as you expect it to and to provide a more personalized web experience. However, you can choose not to allow certain types of cookies, which may impact your experience of the site and the services we are able to offer. Click on the different category headings to find out more and change our default settings according to your preference. You cannot opt-out of our First Party Strictly Necessary Cookies as they are deployed in order to ensure the proper functioning of our website (such as prompting the cookie banner and remembering your settings, to log into your account, to redirect you when you log out, etc.). For more information about the First and Third Party Cookies used please follow this link.

Allow All Cookies

Manage Consent Preferences

Strictly Necessary Cookies - Always Active

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data, Targeting & Social Media Cookies

Under the California Consumer Privacy Act, you have the right to opt-out of the sale of your personal information to third parties. These cookies collect information for analytics and to personalize your experience with targeted ads. You may exercise your right to opt out of the sale of personal information by using this toggle switch. If you opt out we will not be able to offer you personalised ads and will not hand over your personal information to any third parties. Additionally, you may contact our legal department for further clarification about your rights as a California consumer by using this Exercise My Rights link

If you have enabled privacy controls on your browser (such as a plugin), we have to take that as a valid request to opt-out. Therefore we would not be able to track your activity through the web. This may affect our ability to personalize ads according to your preferences.

Targeting cookies may be set through our site by our advertising partners. They may be used by those companies to build a profile of your interests and show you relevant adverts on other sites. They do not store directly personal information, but are based on uniquely identifying your browser and internet device. If you do not allow these cookies, you will experience less targeted advertising.

Social media cookies are set by a range of social media services that we have added to the site to enable you to share our content with your friends and networks. They are capable of tracking your browser across other sites and building up a profile of your interests. This may impact the content and messages you see on other websites you visit. If you do not allow these cookies you may not be able to use or see these sharing tools.

If you want to opt out of all of our lead reports and lists, please submit a privacy request at our Do Not Sell page.

Save Settings
Cookie Preferences Cookie List

Cookie List

A cookie is a small piece of data (text file) that a website – when visited by a user – asks your browser to store on your device in order to remember information about you, such as your language preference or login information. Those cookies are set by us and called first-party cookies. We also use third-party cookies – which are cookies from a domain different than the domain of the website you are visiting – for our advertising and marketing efforts. More specifically, we use cookies and other tracking technologies for the following purposes:

Strictly Necessary Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Functional Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Performance Cookies

We do not allow you to opt-out of our certain cookies, as they are necessary to ensure the proper functioning of our website (such as prompting our cookie banner and remembering your privacy choices) and/or to monitor site performance. These cookies are not used in a way that constitutes a “sale” of your data under the CCPA. You can set your browser to block or alert you about these cookies, but some parts of the site will not work as intended if you do so. You can usually find these settings in the Options or Preferences menu of your browser. Visit www.allaboutcookies.org to learn more.

Sale of Personal Data

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Social Media Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.

Targeting Cookies

We also use cookies to personalize your experience on our websites, including by determining the most relevant content and advertisements to show you, and to monitor site traffic and performance, so that we may improve our websites and your experience. You may opt out of our use of such cookies (and the associated “sale” of your Personal Information) by using this toggle switch. You will still see some advertising, regardless of your selection. Because we do not track you across different devices, browsers and GEMG properties, your selection will take effect only on this browser, this device and this website.