[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]




 
           IRAQ: PERCEPTIONS, REALITIES AND COST TO COMPLETE

=======================================================================

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                  EMERGING THREATS, AND INTERNATIONAL
                               RELATIONS

                                 of the

                              COMMITTEE ON
                           GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED NINTH CONGRESS

                             FIRST SESSION

                               __________

                            OCTOBER 18, 2005

                               __________

                           Serial No. 109-106

                               __________

       Printed for the use of the Committee on Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
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                                 ______

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                     COMMITTEE ON GOVERNMENT REFORM

                     TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut       HENRY A. WAXMAN, California
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         MAJOR R. OWENS, New York
JOHN M. McHUGH, New York             EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida                PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota             CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana              ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio           DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania    DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah                   WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee       DIANE E. WATSON, California
CANDICE S. MILLER, Michigan          STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio              CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California          LINDA T. SANCHEZ, California
JON C. PORTER, Nevada                C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas                BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia        ELEANOR HOLMES NORTON, District of 
PATRICK T. McHENRY, North Carolina       Columbia
CHARLES W. DENT, Pennsylvania                    ------
VIRGINIA FOXX, North Carolina        BERNARD SANDERS, Vermont 
JEAN SCHMIDT, Ohio                       (Independent)
------ ------

                    Melissa Wojciak, Staff Director
       David Marin, Deputy Staff Director/Communications Director
                      Rob Borden, Parliamentarian
                       Teresa Austin, Chief Clerk
          Phil Barnett, Minority Chief of Staff/Chief Counsel

Subcommittee on National Security, Emerging Threats, and International 
                               Relations

                CHRISTOPHER SHAYS, Connecticut, Chairman
KENNY MARCHANT, Texas                DENNIS J. KUCINICH, Ohio
DAN BURTON, Indiana                  TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida         BERNARD SANDERS, Vermont
JOHN M. McHUGH, New York             CAROLYN B. MALONEY, New York
STEVEN C. LaTOURETTE, Ohio           CHRIS VAN HOLLEN, Maryland
TODD RUSSELL PLATTS, Pennsylvania    LINDA T. SANCHEZ, California
JOHN J. DUNCAN, Jr., Tennessee       C.A. DUTCH RUPPERSBERGER, Maryland
MICHAEL R. TURNER, Ohio              STEPHEN F. LYNCH, Massachusetts
JON C. PORTER, Nevada                BRIAN HIGGINS, New York
CHARLES W. DENT, Pennsylvania

                               Ex Officio

TOM DAVIS, Virginia                  HENRY A. WAXMAN, California
            Lawrence J. Halloran, Staff Director and Counsel
              R. Nicholas Palarino, Senior Policy Advisor
                        Robert A. Briggs, Clerk
                      Jeff Baran, Minority Counsel


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on October 18, 2005.................................     1
Statement of:
    Bowen, Stuart W., Jr., Special Inspector General for Iraq 
      Reconstruction; Howard J. Krongard, Inspector General, U.S. 
      Department of State; Joseph Christoff, Director, 
      International Trade, U.S. Government Accountability Office; 
      Thomas Gimble, Acting Inspector General, U.S. Department of 
      Defense; Joseph Farinella, Acting Inspector General for 
      Audit, U.S. Agency for International Development; and Joyce 
      Morrow, U.S. Army Auditor General..........................    33
        Bowen, Stuart W., Jr.....................................    33
        Christoff, Joseph........................................    54
        Farinella, Joseph........................................   101
        Gimble, Thomas...........................................    81
        Krongard, Howard J.......................................    46
        Morrow, Joyce............................................   112
    Habeck, Mary, the Paul H. Nitze School of Advanced 
      International Studies; Judy Van Rest, executive vice 
      president, International Republican Institute; and Les 
      Campbell, senior associate and regional director, Middle 
      East and North Africa, National Democratic Institute.......   156
        Campbell, Les............................................   174
        Habeck, Mary.............................................   156
        Van Rest, Judy...........................................   165
Letters, statements, etc., submitted for the record by:
    Bowen, Stuart W., Jr., Special Inspector General for Iraq 
      Reconstruction, prepared statement of......................    36
    Campbell, Les, senior associate and regional director, Middle 
      East and North Africa, National Democratic Institute, 
      prepared statement of......................................   177
    Christoff, Joseph, Director, International Trade, U.S. 
      Government Accountability Office, prepared statement of....    56
    Farinella, Joseph, Acting Inspector General for Audit, U.S. 
      Agency for International Development, prepared statement of   103
    Gimble, Thomas, Acting Inspector General, U.S. Department of 
      Defense, prepared statement of.............................    83
    Habeck, Mary, the Paul H. Nitze School of Advanced 
      International Studies, prepared statement of...............   159
    Krongard, Howard J., Inspector General, U.S. Department of 
      State, prepared statement of...............................    48
    Morrow, Joyce, U.S. Army Auditor General, prepared statement 
      of.........................................................   114
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............     3
    Van Rest, Judy, executive vice president, International 
      Republican Institute, prepared statement of................   168
    Waxman, Hon. Henry A., a Representative in Congress from the 
      State of California:
        Minority report..........................................     6
        Prepared statement of....................................    21


           IRAQ: PERCEPTIONS, REALITIES AND COST TO COMPLETE

                              ----------                              


                       TUESDAY, OCTOBER 18, 2005

                  House of Representatives,
       Subcommittee on National Security, Emerging 
              Threats, and International Relations,
                            Committee on Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2154, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays, Dent, Kucinich, Maloney, 
Van Hollen, Lynch, Higgins, and Waxman, ex officio.
    Staff present: Lawrence Halloran, staff director and 
counsel; J. Vincent Chase, chief investigator; R. Nicholas 
Palarino, Ph.D., senior policy advisor; Robert A. Briggs, 
clerk; Marc LaRoche, intern; Phil Barnett, minority staff 
director/chief counsel; Jeff Baran and Michael McCarthy, 
minority counsels; David Rapallo, minority chief investigative 
counsel; Earley Green, minority chief clerk; and Jean Gosa, 
minority assistant clerk.
    Mr. Shays. A quorum being present, the Subcommittee on 
National Security, Emerging Threats, and International 
Relations hearing entitled, ``Iraq: Perceptions, Realities and 
Cost to Complete,'' is called to order.
    It is as true in Biloxi as in Baghdad: People without 
electricity, clean water or basic governmental services are 
understandably impatient to rebuild their lives, their homes 
and their communities. They don't want empty promises. They 
rightly demand tangible results.
    In Iraq, that progress has been slow, hampered by volatile 
security that disrupts and delays reconstruction while sapping 
fiscal resources. Initial estimates of security costs have 
nearly tripled, from less than 10 percent of total project 
expenses to almost 30. Naive planning assumptions, weak 
performance metrics and limited project oversight have also 
slowed infrastructure repairs, training of security forces and 
efforts to nurture civilian governance. Frequent leadership 
changes and a legacy of Saddam-era corruption divert still more 
resources from Iraq's renewal as a prosperous democratic 
nation.
    As a result, the U.S. reconstruction effort in Iraq shows 
symptoms of suffering the same spiral of delays, reduced 
capabilities and cost overruns that plagues major weapons 
programs at the Pentagon. Planned electricity generation and 
water purification projects are scaled back, while estimates of 
the cost to complete them escalate.
    That cycle of rosy estimates and stunted outcomes exact 
high political costs as well. Limited visible progress 
improving basic services frustrates Iraqis, who wonder why a 
liberating coalition that conquered their nation in less than 2 
months can't keep the lights lit after 2 years.
    Similar problems beset the critical program to train Iraqi 
security forces. Culturally off-key assumptions about the 
transferability of Western law enforcement and military 
doctrines to the Iraq security mission wasted limited training 
time. Classes in handgun etiquette had little relevance to 
police and soldiers facing an insurgency armed with AK-47's.
    At the same time, efforts to build civil society, the rule 
of law and democratic institutions have been far more 
successful, propelled by the inspiring courage of average 
Iraqis who voted in January and on Saturday. But democracy is 
no silver bullet against entrenched Ba'athists and imported 
jihadists. Voting hours have to result in increased kilowatt 
hours or the killers will have all the time they need between 
elections to feed the insurgency on popular discontent and 
factional discord.
    U.S. support for reconstruction, security and governance 
programs has helped the Iraqis make undeniable progress toward 
a better future. But the billions of appropriated dollars being 
spent in Iraq are an investment by the American people in their 
security as well. We in Congress have a fiduciary obligation to 
continually assess the execution and sustainability of our 
investment strategy.
    Major aspects of that assessment have been vigorously 
pursued by the Special Inspector General for Iraq 
Reconstruction, the Government Accountability Office and the 
Inspectors General from other departments and agencies active 
in Iraq. Their findings and recommendations provide a detailed 
view of the strengths and weaknesses of our stewardship of 
Iraqi sovereignty. Other witnesses this morning will offer 
unique perspectives on security strategy and on the just-
completed constitutional drafting and ratification process.
    We appreciate the time, dedication and expertise of all our 
witnesses, and we welcome their testimony.
    At this time, it is the pleasure of the chair to recognize 
the ranking member of the full committee, Mr. Waxman.
    [The prepared statement of Hon. Christopher Shays follows:]

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    Mr. Waxman. Thank you very much, Mr. Chairman, and thank 
you for holding this hearing today.
    The efforts to rebuild Iraq are failing. The Bush 
administration has spent literally billions of taxpayer dollars 
on reconstruction in Iraq, yet progress has been limited or 
nonexistent, and much of that money has been squandered.
    Today I am releasing a report that compares the 
administration's rhetoric with the reality on the ground 2\1/2\ 
years after the invasion. The report finds that the 
administration has failed to deliver on its promises in three 
of the most important reconstruction sectors in Iraq: oil, 
electricity and water.
    [The information referred to follows:]

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    Mr. Waxman. Today's testimony by Mr. Bowen, the Special 
Inspector General for Iraq Reconstruction, confirms these 
findings. He, too, has concluded that there is a great chasm 
between what the administration has promised and what it has 
delivered. Mr. Bowen calls this the ``Reconstruction Gap.''
    Well, how big is the ``Reconstruction Gap?'' Here is what 
we found in our report. In the oil sector, the administration 
said 2 years ago that it would restore prewar oil production 
levels so that Iraq could finance its own reconstruction. 
Remember when we were told this wouldn't cost us anything, Iraq 
will pay for the reconstruction efforts out of their oil 
revenues?
    But today Iraq's oil production and export levels are still 
well below prewar levels. We have spent over $2 billion, and 
the situation is actually worse than when we arrived. According 
to Mr. Bowen's testimony, Iraqis don't even expect to reach 
prewar production levels by January 2006.
    In the electricity sector, the administration promised to 
increase Iraq's peak electricity output to 6,000 megawatts. Two 
years later, after spending $4 billion, peak output remains 
stagnant at about 4,600 megawatts, nearly the same as what it 
was before the war began. In fact, embassy officials in Baghdad 
told our staffs in August that we will never meet demand.
    In the water sector, the administration promised that 90 
percent of Iraqis would have access to clean, drinkable water. 
But despite spending over $1 billion, we are nowhere near this 
goal. Today, a third of Iraqis still lack access to potable 
water, close to the prewar conditions, and these figures, which 
come from our embassy in Baghdad, may be overly optimistic. The 
Government Accountability Office asked for documentation of any 
progress in providing clean water to Iraqi families, but the 
administration could provide none.
    How did this happen? Why is the reconstruction failing?
    In my view, there are several reasons. First, the 
administration failed to provide a secure environment for the 
reconstruction. This has caused long delays and soaring 
security costs. GAO found the security costs exceeded 25 
percent of spending under some contracts, which forces billions 
of dollars to be diverted from reconstruction projects. The 
administration argues these security costs were unexpected, but 
they were warned repeatedly about the likelihood of a vicious, 
lengthy insurgency.
    The administration's failure-flawed contracting approach 
has also contributed greatly to the Reconstruction Gap. Instead 
of maximizing competition, the administration opted to award 
enormous cost-plus monopoly contracts to favored contractors 
like Halliburton. Then it turned over key oversight 
responsibilities to private contractors with blatant conflicts 
of interest.
    The administration's failures in the reconstruction effort 
have very real consequences. We are not building what needs to 
be built to meet the basic everyday needs of Iraqis. Our 
Nation's credibility is further eroded and American taxpayers 
are losing confidence in the entire enterprise.
    Despite these horrendous efforts and failures, the 
administration presses on, apparently in a state of denial. 
Vice President Cheney said just this month that progress in 
Iraq was superb. This statement is totally disconnected from 
reality; it is not based on any real measurement of progress.
    The first step toward reform must be transparency and 
accountability. That is why I hope the report we are releasing 
today and the testimony of the expert witnesses before us will 
contribute to a greater understanding of the problems crippling 
the reconstruction effort.
    When Hurricane Katrina hit, the President and other senior 
administration officials told the public that everything was 
under control and that the response was proceeding smoothly. 
But because the hurricane struck a major American city and the 
pictures of devastation were broadcast on TV sets around the 
Nation, the public could see how hollow these reassurances 
were. The difference, however, between Biloxi and Baghdad is 
that American TV crews can get to Biloxi and New Orleans, but 
outside of Baghdad and even in that city itself, the country is 
so far away that security concerns make it hard for the most 
intrepid reporters to cover the story. Few people fully 
understand how disastrous our reconstruction efforts have been.
    This hearing is one step in providing a measure of 
accountability, and I commend the chairman for his efforts. And 
I look forward to the testimony of today's witnesses.
    [The prepared statement of Hon. Henry A. Waxman follows:]

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    Mr. Shays. The Chair would now recognize the distinguished 
gentleman, the ranking member, Mr. Kucinich, of this 
subcommittee.
    Mr. Kucinich. Thank you very much, Mr. Chairman. I want to 
thank you and Ranking Member Waxman for the opportunity to be 
here today and to congratulate Mr. Waxman on the release of 
that report, which I am sure is going to be of interest to 
every Member of Congress. I want to bid the members of the 
panel, good morning.
    It is tempting for some to tout the successes of this past 
weekend's referendum on the draft Iraqi constitution, as there 
were earlier reports of high voter turnout and for the orderly 
conduct of Iraqis at the polls. But yesterday, the Independent 
Electoral Commission of Iraq stated that it would audit the 
unusually high numbers and results coming from those provinces. 
The commission's statement came after Sunni lawmaker Meshaan 
al-Jubouri claimed fraud had occurred in the vote, including 
instances of voting in hotly contested regions by pro-
constitution Shiites from other areas.
    Democracy will not be successful in Iraq--or anywhere else, 
for that matter--unless it is proven to be without fraud. 
Furthermore, democracy will not succeed unless the 
reconstruction efforts that underpin democracy are realized and 
are sustainable. The Iraqi people need statecraft, not 
stagecraft.
    The Bush administration has claimed that economic 
reconstruction would contribute to stability in Iraq, that 
goods and services would help the Iraqi people. On the surface, 
it appears there is much activity. Congress has allocated some 
$30 billion in assistance for reconstruction efforts. We are 
helping to restore water, sanitation and other infrastructure, 
and we are rebuilding schools and communities, providing 
medicine and foods, helping to restore ports and vital sectors 
of the economy, efforts that are eerily parallel to those so 
desperately needed in our own country in the wake of Hurricanes 
Katrina and Rita.
    Yet more than 2 years after our troops entered Iraq, the 
truth is that most Iraqis still do not have reliable 
electricity throughout the day. They still do not have adequate 
health care or clean water and sanitation. Childhood 
malnutrition is on the rise and so is disaffection with U.S. 
companies receiving the bulk of reconstruction contracts.
    This doesn't seem like much progress to me, and as the 
course of Inspectors General and Auditors will attest to today, 
the reality on the ground is that reconstruction of Iraq is 
dependent on security, not the other way round. It seems to me 
we are great at building Potemkin villages, but not so good at 
rebuilding Iraqi society.
    The panel of witnesses here today will testify to the 
enormous obstacles and costs of reconstruction in Iraq. They 
will illustrate the serious mismanagement, the shoddy 
recordkeeping, the looting, and the serious cost overruns, 
constant delays and underperforming reconstruction projects 
that the American taxpayers are footing the bill for.
    In fact, 25 to 50 percent of the costs for any 
reconstruction project in Iraq goes straight toward providing 
security for the site and the workers. In fact, it seems that 
the only people who are prospering in Iraq are the Halliburtons 
and Blackwaters of the world. It is truly a Faustian deal that 
the administration has struck.
    Now we have learned that the DOD IG is MIA. The Department 
of Defense Inspector General office has not had any auditors in 
Iraq in over a year. Are we to conclude that no one is watching 
the $141 billion worth of military spending in Iraq, no one is 
preventing waste, fraud and abuse on behalf of the American 
taxpayers?
    The fox, Halliburton, is guarding the henhouse, while 
declaring it has lost its taste for chicken. Violence is 
surging. The lives of over 1,900 American soldiers have been 
lost thus far, and there are estimates that over 42,000 
soldiers have been wounded. By some counts, 100,000 innocent, 
noncombatant Iraqis have been killed. How many more lives will 
be lost before this administration gets the message?
    Mr. Chairman, as you know, I have never supported the use 
of force in Iraq, and I continue to believe that our occupation 
in Iraq has been counterproductive. The American people are 
correct when increasing numbers of them are disaffected from 
this war. The prospects for a representative Iraqi Government 
remain dim at best. The prospects for the breaking apart of 
Iraq into separate pieces are rising, particularly without 
Sunni Arabs buying into the process. Throwing more U.S. money 
into Iraq or more and more American soldiers into harm's way 
will not right the wrongs.
    I hope that today's hearing will shine some light on the 
truth of the situation in Iraq. Furthermore, I hope the experts 
here today will provide a realistic projection of how much it 
will take to reconstruct Iraq.
    Thank you.
    Mr. Shays. Mr. Dent, you have the floor.
    Mr. Dent. Thank you, Mr. Chairman.
    I would like to thank Chairman Shays for holding this 
important hearing on the status of the U.S. support for the 
Iraqi Government's reconstruction and security programs. I 
think it is important to take note of the progress that has 
been made in the rehabilitation of Iraq.
    In August, I joined a four-member congressional delegation 
to Iraq, and I had the opportunity to witness some of the 
reconstruction efforts down in Basra, up in Kirkuk. I saw the 
generating facility that was being established up there. I 
think it was referred to as ``the mother of all generators,'' 
and I was quite impressed by the capabilities of many of our 
people, not just military, but civilian personnel, in their 
efforts to reconstruct that nation.
    I was also struck by the number of auditors over there. It 
was my understanding there is ratio of about one-and-a-half 
construction managers to auditors. It seemed like quite a high 
number. I would like to find out today during this hearing if 
there is a coordination between all the various inspector 
generals from DOD, State and all the Army, everywhere else. 
There seemed to be inspectors just about everywhere. I would 
really like to get some insight as to the coordination of that 
effort.
    That said, again, I was struck by the progress that was 
made up in Kirkuk with generators. I saw some interesting sites 
down in the port of Umm Qasr near Basra, and, again, I just 
appreciate the efforts of all involved.
    I realize we have a tremendous and daunting objective there 
in Iraq trying to rebuild a country and establish 
representative government, all under very difficult--while 
fighting insurgency is clearly a daunting objective.
    I look forward to hearing your comments today.
    Mr. Shays. I thank the gentleman.
    Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman. I want to thank you and 
Ranking Member Waxman for your continued willingness to examine 
U.S. efforts to stabilize and rebuild Iraq. I also want to 
thank the panelists for helping this subcommittee with our 
work.
    On the heels of Saturday's referendum, I appreciate the 
opportunity to discuss the progress of, as well as the 
prospects for, Iraq reconstruction, security and self-
governance. In addition, I am interested in following up on 
some the issues that arose before this subcommittee back in 
June as we conducted the first congressional hearing on the 
administration's management of the Development Fund for Iraq, 
which is the successor to the United Nations Oil-for-Food 
program. We talked about a number of outstanding issues.
    For instance, we talked about the indictments of a former 
Halliburton procurement manager and a general manager of the 
Halliburton subcontractor, stemming from a kickback scheme that 
saw the U.S. Government overcharged by about $3\1/2\ million. 
It is also the indication there may be other cases of a similar 
nature out there.
    We also discussed thousands of pages of documents 
subpoenaed from the Federal Reserve Bank of New York by this 
subcommittee, indicating there was an 11th-hour spending spree 
in the final days of the Coalition Provisional Authority's 
existence with nearly half of the currency shipped into Iraq 
under U.S. discretion and direction, totaling more than $5 
billion flowing into the country, in the final 6 weeks before 
control of the Iraqi Fund was returned to the interim Iraqi 
Government in June 2004.
    Regrettably, the extent of financial waste we are seeing 
here, as well as fraud and abuse, has amounted to a lost 
opportunity to help the Iraqi people. It has frustrated our 
overall policy in Iraq, an effort for which we have sacrificed 
a great deal financially and, more importantly, in the lives of 
our men and women in uniform.
    Accordingly, I would very much like to hear the witnesses' 
perspectives on where we are in terms of tracking the flow of 
up to $20 billion that has been either stolen or misallocated, 
and implementing safeguards to ensure greater transparency and 
accountability in contracting as we continue toward the 
stabilization and reconstruction of Iraq.
    A few weeks back, I concluded my third visit to Iraq and 
had an opportunity to review some of the construction going on. 
In particular, we are building a port of entry, rebuilding a 
port of entry, in al Qaim, which is right on the Syrian border. 
There is extensive construction there, and it was good to 
finally see some Iraqi security forces controlling their own 
borders.
    As someone who spent 18 years in the building trades, I 
know my way around a constructionsite, and I have to say I was 
very disappointed with the quality of the materials that were 
there. We went through most of the building materials. I don't 
think I could find a straight 2 by 4 on that job site. They 
tell me it was supplied by an Indian contractor. Just on a 
threshold basis, I could see that the quality of the materials 
was not up to par. It is not something that we would be proud 
of.
    The American taxpayer is paying for this effort, and it is 
bad enough what the situation over there is now. I just look 
forward to the day when we withdraw. I would hope that the work 
we have done there and the American taxpayer has paid for is of 
top quality. Otherwise, our reputation and image suffer even 
further, which is deplorable given the quality and nature of 
the sacrifice we are making in Iraq right now.
    So I would like to hear about what our efforts are in terms 
of overseeing the construction there. If we are getting ripped 
off, I would rather be ripped off by an American contractor 
than an Indian contractor. If we can't stop it, I would rather 
have the money flowing into this country and keep it in our 
economy.
    But obviously I think the answer is to stop the corruption, 
stop the sub-par and shabby construction, and make sure we do a 
good job over there; and try to get out of there as soon and as 
safely as possible.
    Thank you, Mr. Chairman. I appreciate your courtesy.
    Mr. Shays. Mr. Higgins, would you like to be recognized?
    Mr. Higgins. No.
    Mr. Shays. I just didn't know, you were so far back over 
there, if it meant you didn't want to.
    Let me just take care of some housekeeping here.
    I ask unanimous consent that all members of the 
subcommittee be permitted to place an opening statement in the 
record and the record remain open for 3 days for that purpose. 
Without objection, so ordered.
    I ask further unanimous consent that all witnesses be 
permitted to include their written statements in the record. 
Without objection, so ordered.
    Let me just announce our panel. It is an extraordinary 
group. We are very grateful to each of you. I am sorry you are 
so kind of closed up here.
    We have the Honorable Stuart W. Bowen, Jr., Special 
Inspector General for Iraqi Reconstruction. We have the 
Honorable Howard J. Krongard, Inspector General, Department of 
State. We have Mr. Joseph Christoff, Director, International 
Trade, U.S. Government Accountability Office. We have Mr. 
Thomas Gimble, Acting Inspector General, Department of Defense. 
We have Mr. Joseph Farinella, Acting Inspector General for 
Audit, U.S. Agency for International Development. And we have 
Ms. Joyce Morrow, U.S. Army Auditor General.
    As you know, this is an investigative committee, and we 
swear in our witnesses. We invite you to stand to be sworn.
    Is there anyone else that might respond to a question that 
we might ask you that you might prefer for them to speak? If 
so, if they could stand to be sworn in, that way we don't have 
to do it twice. Is there anyone you would ask on your staff?
    [Witnesses sworn.]
    Mr. Shays. Note for the record that every one of our 
witnesses has responded in the affirmative.
    Before inviting testimony, I want to say that we want a 
very candid conversation. We don't want you to leave this room 
without saying what needs to be put on the record. If we fail 
to ask the question, then tell us, and we will ask you what 
your question is that you can answer. But we want everything on 
the table.
    I would just say that I believe as I am going to look at 
this, I am looking at the political, the security and the 
reconstruction. As I look at the political, my view is it has 
been significant progress. One of my measures is, if the press 
doesn't talk about it, it must have been a success.
    Second, on security, having been there 10 times, I have 
seen the ebb and flow, and from my perspective, in April 2003, 
I think we dug a huge hole by disbanding the army, police, 
border patrol and their government.
    We have been coming up. Compared to where we are in 2003, 
maybe not as much progress; compared to the hole we dug, 
significant progress.
    In reconstruction, I have some very real concerns: 
thousands of schools, lots of money spent. I am particularly 
interested in your comments on that.
    So you do have a pretty diverse view on this subcommittee. 
You are going to be asked, I think, some very tough questions, 
and we want very honest answers.
    With that, we will go in the order that you are at. We have 
a large panel. I will allow you to go over 5 minutes, but I 
don't want you to go to 10. I just want to make sure it is on 
the record.
    Mr. Bowen.

 STATEMENTS OF STUART W. BOWEN, JR., SPECIAL INSPECTOR GENERAL 
FOR IRAQ RECONSTRUCTION; HOWARD J. KRONGARD, INSPECTOR GENERAL, 
     U.S. DEPARTMENT OF STATE; JOSEPH CHRISTOFF, DIRECTOR, 
  INTERNATIONAL TRADE, U.S. GOVERNMENT ACCOUNTABILITY OFFICE; 
  THOMAS GIMBLE, ACTING INSPECTOR GENERAL, U.S. DEPARTMENT OF 
DEFENSE; JOSEPH FARINELLA, ACTING INSPECTOR GENERAL FOR AUDIT, 
 U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT; AND JOYCE MORROW, 
                   U.S. ARMY AUDITOR GENERAL

               STATEMENT OF STUART W. BOWEN, JR.

    Mr. Bowen. Thank you, Mr. Chairman.
    Mr. Shays. Is your mic on and is it near enough to you? We 
need you to project fairly loudly.
    Mr. Bowen. Thank you, Chairman Shays, Ranking Member Waxman 
and members. I thank you for the opportunity to address you 
today on the oversight of U.S. reconstruction efforts in Iraq 
provided by my office, the Special Inspector General for Iraq 
Reconstruction [SIGIR]. I am charged with auditing and 
investigating operations funded by the Iraq Relief and 
Reconstruction Fund [IRRF].
    This hearing is timely, coming just 12 days before the 
release of our seventh quarterly report on the reconstruction 
oversight in Iraq, and in it we will provide 10 new audits, 12 
new inspections, and an update on substantial progress we have 
made on the investigative front.
    In September, I returned from my ninth trip to Iraq since 
my appointment as Inspector General, and I was encouraged 
during that trip by the progress that I see that Ambassador 
Khalilzad and his team are making. They are exerting strategic 
control over the reconstruction program by focusing on what I 
see are the most important issues before them now.
    One, sustainment. Sustainment means ensuring that both what 
we provide and the overall Iraqi infrastructure are well 
planned to endure, both after we turn over those projects and 
after we leave, that there is an infrastructure in place that 
will provide power, light, water--potable water.
    That was not something that was well thought out ahead of 
time, but in the last months, is being addressed aggressively. 
In the course of our audit, we recommended they create an 
office of sustainability. They took that suggestion, the 
Ambassador's office, the Iraq reconstruction management office, 
and they are formulating a formal policy to ensure that there 
is coordinated sustainment across the board as we move forward.
    We have seen much progress, over 2,000 projects completed, 
but we are facing continuing challenges. Mr. Waxman referenced 
the ``Reconstruction Gap,'' and that is an issue that we 
address in detail for the first time in this report. It is not 
a new issue; it has been developing over this year, and it is a 
consequence of cost-to-complete, or the lack of adequate cost-
to-complete data. Cost-to-complete is not budget-to-complete; 
it is how much it is going to cost to finish the projects you 
start.
    The bill that created the IRRF required that cost-to-
complete data be reported quarterly to the Congress, and that 
mandate has not been consistently, or even met since then, but 
I believe that we are there now and that IRMO has developed a 
good plan for pushing forward more detailed cost-to-complete 
data.
    We have invested over $30 billion in appropriated funds for 
Iraq reconstruction. As of today, only 7 percent of these funds 
are yet to be committed. Substantial portions of this funding 
has been used to provide for security against insurgent 
attacks, which obviously has left less funds available than 
planned for construction activities; thus, the ``Reconstruction 
Gap''--one of the causes at least. The ``Reconstruction Gap,'' 
in simplest terms, are what was the realistic scope of projects 
we intended to complete in the 2004 plan, what are we actually 
going to complete, what is actually, realistically achievable 
at this point.
    There has been substantial descoping because of 
reprogramming and shifting of funds to security. Those are 
necessary shifts; not criticizing those shifts, but what I am 
saying is by forwarding that plan in 2004, we made an effective 
promise of a level of infrastructure we would provide, and we 
are going to provide something less than that. That needs to be 
addressed, whether through donor funds, World Bank loans or 
subsequent appropriations.
    My staff is advancing our audit and investigative 
inspections work rapidly in Iraq. We have 45 personnel assigned 
to Baghdad; half of them are auditors, 10 investigators and 
inspectors. We have completed, to date, 26 audit reports, and 
we have 16 more audits under way. I have auditors and criminal 
investigators working here in Arlington, as well following up 
on the issues that are raised in Iraq.
    We are working together with other inspectors general, in 
particular the Department of State IG, on an audit of the INL 
appropriation. We have continued to engage the Iraq Inspector 
General's counsel, addressing Mr. Dent's point, which seeks to 
coordinate and, among the IGs who provide oversight in Iraq, to 
ensure that there is deconfliction of audit objectives and that 
all audit areas are being addressed.
    SIGIR is a temporary organization, and thus I want to 
ensure that our oversight is real-time. By that, I tell my 
auditors to get out; when they find a problem, to not play hide 
the ball, but to bring it to management's attention and achieve 
solutions. The sustainment office is an example of that.
    Our award fee correction during the course of the audit is 
another one. I am pleased with the responsiveness of management 
over there as we identify problems. They have been responsive.
    We continue to work hard over there, and we recognize that 
there is much left to be done. We expect and hope that the 
revision in our statute will be forthcoming and that over the 
next 2 years we will continue to exert effective oversight and 
help promote program success in Iraq.
    Thank you.
    Mr. Shays. Thank you, Mr. Bowen.
    [The prepared statement of Mr. Bowen follows:]

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    Mr. Shays. Mr. Krongard.

                STATEMENT OF HOWARD J. KRONGARD

    Mr. Krongard. Mr. Chairman, members of the subcommittee, 
thank you for the opportunity to discuss the Office of 
Inspector General's oversight of Department of State programs 
affecting Iraq reconstruction, governance and security, all of 
which are critical elements to ensuring stability in Iraq.
    With limited resources during the past year, OIG has 
conducted high-valued projects that identify and recommend ways 
in which programs can operate more efficiently and 
economically. This has facilitated the Secretary of State's 
vision for transformational diplomacy. Obviously, the 
complexities involved for achieving stability in Iraq are 
formidable, the amount of resources need is unprecedented and 
the demand for accountability is imperative.
    OIG's Iraq oversight has included eight program and 
management assessments, seven audits and supervision of three 
DCAA audits. Our assignments have resulted in recommendations 
for enhancing offsite support, reducing security 
vulnerabilities, improving training and staff effectiveness and 
identifying potential cost recoveries for the U.S. Government. 
However, the recently completed compendium of Rule of Law 
programs in Iraq and the joint assessment of the DOD OIG of the 
Iraqi police training programs are projects most relevant to 
today's hearing.
    OIG was aware of some 19 entities, including U.S. 
Government agencies, NGO's and private contractors, as well as 
foreign countries and multinational organizations, that were 
contributing in one form or another to ``Rule of Law' 
activities in Iraq. We set out to create an inventory of such 
activities, to identify overlaps and duplication and to find 
gaps that might exist.
    While there is no commonly agreed upon definition for 
``Rule of Law,'' we take it to mean a broad spectrum of 
activities, including a constitution, legislation, a court 
system and courthouses, a judiciary, police, lawyers and legal 
assistants, due process procedures, prisons, a commercial code, 
and anticorruption activities. To successfully implement an 
emerging Rule of Law, these activities must proceed somewhat 
sequentially and not randomly.
    Exclusive of approximately $1 billion, which was allocated 
for police training, OIG identified approximately $400 million 
of U.S.-funded multiple agency programs, all of which come 
under the general supervision of Embassy Baghdad. Of that 
amount, $300 million fund major bricks-and-mortar programs for 
building the physical justice infrastructure, and the remaining 
$100 million provides for a variety of capacity-building 
programs.
    OIG noted that security requirements and logistics must be 
heavily factored into the current cost of doing business in 
Iraq, since security expenditures for individual projects range 
from 6 percent to as much as 80 percent of the total cost. 
Security issues detract from the efficiency and productivity of 
all project activity and can occasionally call into question 
the value of proceeding with an activity at all.
    Our report, which will be issued this week, and is based on 
work performed over a 9-week period in Washington, Baghdad, 
Basra, Fallujah, Mosul and Hilla, includes numerous 
observations and more than 20 recommendations. Overall, OIG 
observed that most of the ``Rule of Law'' funding appeared to 
be well spent. However, a fully integrated strategic plan does 
not exist and is critically needed if Iraqi governance is to be 
effectively promoted and achieved. Moreover, a new phase is 
beginning, and its defining characteristic must be the 
successful transition from a U.S.-funded and directed program 
to a sustainable Iraqi-directed program.
    As you are well aware, a successful democracy in Iraq will 
require an effective anticorruption regime. OIG found that a 
trio of institutions were taking hold: the Commission on Public 
Integrity, a system of inspectors general in each of 29 Iraqi 
Government ministries and agencies, and the Board of Supreme 
Audit. However, we also noted that the first two are totally 
new to Iraq; collaboration is imperfect and competition among 
them exists, which, by the way, is not uncommon in a democracy.
    We urged that the United States encourage and support Iraqi 
efforts to design and establish a training facility for all 
three anticorruption institutions. Our report should provide a 
valuable framework from which those numerous entities 
participating in ``Rule of Law'' activities in Iraq can go 
forward in a more integrated and effective manner.
    OIG also conducted a joint review with the DOD OIG to 
assess Iraqi police training programs in Iraq and Jordan. This 
onsite assessment was self-initiated by both OIGs after 
recognizing a need for conducting the work. In light of the 
difficult circumstances that exist, our team concluded that 
Iraqi police training programs have achieved a qualified 
success. The police performed well during the January election. 
The visibility of police on Iraqi streets increased and polls 
indicated a growing public respect for and confidence in the 
police force.
    If police training programs are to succeed, the Iraqi 
Government must take full ownership of the program and assume 
responsibility for leadership and management of the force the 
Coalition is helping create.
    The two OIGs made a number of recommendations to strengthen 
the role of the Iraqi Ministry of Interior in these respects. 
By the time of the report's issuance, improvements in cross-
communication between coalition leaders and the Ministry of 
Interior were already evident. Whatever the problems and 
misgivings, we recognized a consensus that the Iraqi police 
were improving and more capable as a result of Coalition 
training.
    Mr. Chairman, with your indulgence, I would like to point 
out that our OIG was able to perform the foregoing oversight 
activities because we received a $1.7 million supplemental 
appropriation in 2005 specifically for Iraq activities. We have 
no such funds for 2006 at the present time and do not have 
resources to continue these oversight activities in Iraq. The 
principal activity currently being planned, as Mr. Bowen 
indicated, is a joint review with his office of major INL 
programs to determine INL has adequate controls to ensure funds 
are properly expended in accordance with Federal regulations.
    Thank you, Mr. Chairman. I will be pleased to answer 
questions at the appropriate time.
    [The prepared statement of Mr. Krongard follows:]

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    Mr. Shays. Mr. Krongard, what is the amount that you need 
to have next year to have the similar amount you had this year?
    Mr. Krongard. Roughly the same amount, slightly higher, 
between $1\1/2\ million and $2 million for Iraq.
    Mr. Shays. A special allocation. Thank you.
    Mr. Christoff.

                 STATEMENT OF JOSEPH CHRISTOFF

    Mr. Christoff. Mr. Chairman, members of the subcommittee, 
thank you for inviting GAO to this important hearing.
    Over the past 3 months, GAO has issued several reports on 
security costs and reconstruction issues in Iraq, and my 
testimony today is based on those reports. I will first discuss 
who is funding Iraq's reconstruction, and then describe the key 
challenges the United States faces.
    First, the funding: For the past 2\1/2\ years, the United 
States has served as the chief protector and builder in Iraq. 
Through August 2005, the United States provided about $30 
billion and disbursed about $13 billion to rebuild Iraq's 
infrastructure and train and equip its security forces. 
International donors have provided $2.7 billion of the $13.6 
billion they pledged for reconstruction efforts. Most of the 
remaining pledges are in the form of loans that the Iraqi 
Government has just begun to tap.
    Iraqi funds have been used primarily to support government 
operations. Food and fuel subsidies account for 40 percent of 
the $28 billion in planned expenditures for 2005. As a result, 
the Iraqi Government's ability to contribute to the rebuilding 
efforts has been constrained.
    More importantly, these collective efforts may not be 
enough to rebuild and stabilize Iraq. Initial needs estimates 
assume that reconstruction would take place in a peacetime 
environment and, therefore, did not include additional security 
costs. Iraq's infrastructure was more severely degraded than 
originally estimated and widespread looting and sabotage 
compounded the problem.
    Further, the initial estimates assumed that Iraqi revenues 
and private sector financing would cover Iraq's long-term 
requirements. However, these sources of financing may not meet 
the needs. In the oil sector alone, the Iraqi Government 
estimates that it will need $30 billion over the next several 
years to achieve its oil production goals.
    The United States faces three key challenges in stabilizing 
and rebuilding Iraq. The first is security. The continuing 
strength of the insurgency has made it difficult for the 
multinational force to transfer security responsibilities to 
Iraqi forces and draw down U.S. forces.
    We reported in March that the Coalition faced challenges in 
developing the force structure, readiness and leadership of 
Iraqi troops. Since then, the multinational force has begun to 
embed training teams within Iraqi units and develop measures to 
assess troop readiness.
    DOD reports that one Iraqi battalion is at readiness Level 
1, that is, fully capable of conducting counterinsurgency 
operations without Coalition support. Thirty-seven units are 
capable of conducting operations with Coalition support, Level 
2; 78 units are partially capable, Level 3.
    Iraqi forces have made progress in developing the skills 
needed to assume control of counterinsurgency operations. 
However, they will not be able to operate independently for 
some time because they need logistical capabilities, ministry 
capacity and command control and intelligence structures.
    GAO's forthcoming classified report on Iraq's security 
situation will provide the Congress information on the 
capabilities of Iraqi security forces and the conditions for 
drawing down U.S. forces.
    The second challenge the U.S. faces is measuring impact. 
Most U.S. measurements are output oriented and do not assess 
how U.S. efforts are making a difference in the lives of the 
Iraqi people. In the electricity sector, the U.S. tracks the 
number of megawatts added to the power grid, but it is not 
tracking the number of hours of uninterrupted service Iraqis 
receive daily. In the water sector, the United States reports 
the number of projects completed rather than the amount of 
clean water reaching Iraqi households.
    GAO has recommended that the State Department establish 
outcome measures to assess how U.S. efforts are in rebuilding 
Iraq.
    The third challenge is sustainability. The Iraqi Government 
has not been able to sustainably rebuild infrastructure due to 
shortages of power, trained staff and supplies. As of July 
2005, $52 million in water and sanitation projects were not 
operating or were operating at low capacity due to these 
problems.
    In the electricity sector, some power plants are using low-
grade oil to fuel turbine engines designed to operate on 
natural gas. This requires additional training to operate and 
maintain them, which Iraqi power plant officials told us they 
did not receive. Additional training and preparation are needed 
for the Iraqis to successfully operate and maintain U.S.-built 
facilities.
    Mr. Chairman, that concludes my statement. I would be happy 
to answer the subcommittee's questions.
    Mr. Shays. Thank you.
    [The prepared statement of Mr. Christoff follows:]

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    Mr. Shays. Mr. Gimble, if you would, in your statement, 
just explain, one, if it is true that DOD has not been looking 
at Iraq in the last year, and, if so, why not, sometime during 
statement.

                   STATEMENT OF THOMAS GIMBLE

    Mr. Gimble. Yes, sir.
    Mr. Chairman, members of the subcommittee, thank you for 
the opportunity to appear before the subcommittee today to 
discuss the DOD IG oversight role related to Iraq 
reconstruction, governance and security efforts. My testimony 
today will describe our activities with respect to that role, 
which includes providing oversight to other DOD audit and 
investigative organizations.
    Congress initially established the Special Inspector 
General for Iraq Reconstruction with the specific 
responsibility to oversee the $18.4 billion Iraq Reconstruction 
and Relief Fund. In support of this mission, the DOD IG 
provided on a full or part-time basis a significant number of 
staff members to SIGIR and its predecessor, the Coalition 
Provisional Authority Inspector General.
    Recognizing the SIGIR responsibility pertaining to the 
$18.4 billion, the DOD audit community has focused its efforts 
on the additional emergency supplemental appropriations of 
$65.2 billion for fiscal year 2004 and of $76 billion for 
fiscal year 2005 to support the Global War on Terror and U.S. 
operations in Iraq and Afghanistan.
    Specifically, as of August 31, 2005, the Defense Contract 
Audit Agency had issued 622 reports with significant cost 
questioned, deficiencies and, in some cases, referrals for 
investigations of possible fraud. The service audit agencies 
collectively have issued 14 audit reports and have 16 ongoing 
efforts.
    The DOD IG limited its audit role to preclude duplicative 
efforts because of the extensive oversight already provided by 
SIGIR, the DOD audit community and the Government 
Accountability Office. However, we do provide an oversight role 
with respect to the service audit agencies and the Defense 
Contract Audit Agency. Overall, the DOD IG, as shown in the 
attachment to my prepared statement, has issued 31 audit 
reports and has two ongoing efforts pertaining to the Global 
War on Terror.
    Further, our office also regularly participates in 
scheduled meetings with the Iraq Inspectors General Council, 
which has representatives from SIGIR, GAO, the Inspectors 
General of State, AID, Defense Contract Audit Agency, Army 
Audit Agency and the Army Corps of Engineers.
    With respect to investigative oversight, the DOD IG Defense 
Criminal Investigative Service, as a part of the Department of 
Justice Task Force, is involved in the review of allegations 
pertaining to matters that have occurred in Iraq.
    Also, beginning in May 2003, DCIS provided two special 
agents to conduct criminal investigations in support of the CPA 
in Baghdad. This effort was increased to three special agents 
in November 2003 due to the magnitude of the work and remained 
at that level until the operation terminated in November 2004.
    Investigative support to the CPA resulted in numerous 
recoveries and dismantling of criminal operations, to include a 
multimillion-dollar counterfeiting operation involving Iraqi 
dinar. It also included multiple seizures of weapons and 
explosive devices destined to be used against the Coalition 
forces.
    Prior to the establishment of SIGIR, at the request of 
Ambassador Paul Bremer, the DOD Deputy Inspector General for 
Intelligence served at First Interim Inspector General for the 
CPA. Further, as a result of a DOD recommendation, the 
Ambassador established an Inspector General system in the Iraq 
Government on the U.S. statutory Inspector General System. One 
of our senior staff members remains in Baghdad to advise the 
Minister of Defense and senior military officials and his IG 
staff on maintaining an effective Office of Inspector General.
    Also, from the beginning, we have worked with the 
Department of State and SIGIR to define how best the U.S. 
Government can support the IG element of the Iraqi 
anticorruption system. To this end, the DOD IG has proposed to 
the Iraq Reconstruction and Management Office the Principle 
Governance Initiative, a plan that includes the establishment 
of an IG academy, an assessment of the Iraqi IG system and 
deployment of advisers to each of the 31 Iraqi Inspectors 
General.
    In October 2004, the Inspector Generals of the Department 
of Defense and State initiated an interagency project to fully 
examine the processes and organizational relationships 
associated with training of the Iraqi police service. On July 
15, we issued a joint report of the results of that review.
    Our study of the training program is a snapshot in time 
taken between February and March 2005. The snapshot reveals 
systemic issues that should be addressed in order to create a 
viable and self-sustaining Iraqi police service. We have 
noticed significant progress in implementing many of the 30 
formal recommendations, and we intend to conduct a followup 
review of the Iraqi police training effort in the spring of 
2006.
    To go back to your question about, do we have people in 
country, we do not have auditors on the ground in Iraq. Most of 
the contracting offices and the work we are doing deals with 
the supplementals, and those contracting officers are back here 
in the United States, as are many of the plants that were doing 
it, and we have a number of audits ongoing covering those as 
well as other issues.
    That concludes my statement.
    Mr. Shays. Thank you.
    [The prepared statement of Mr. Gimble follows:]

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    Mr. Shays. Mr. Farinella.

                 STATEMENT OF JOSEPH FARINELLA

    Mr. Farinella. Mr. Chairman, subcommittee members, thank 
you for the opportunity to discuss my office's program to 
review USAID operations in Iraq. I will focus on IG oversight 
relating to reconstruction and governance since those are the 
areas you say it is involved in.
    Our Baghdad office performs audits and investigations of 
USAID activities in Iraq. We also use the Defense Contract 
Audit Agency to conduct financial audits of Iraq activities 
whose reports we then issue to USAID with recommendations for 
corrective action. We also provide fraud awareness training to 
USAID and its contractors.
    We have conducted 19 investigations involving Iraq 
activities. The two open cases currently ongoing involve 
allegations that USAID contractors either submitted fraudulent 
costs associated with their work in Iraq or solicited kickbacks 
in exchange for awarding subcontracts. The closed 
investigations included similar allegations, as well as 
employee integrity issues.
    On the audit side, we have issued 26 performance audits and 
65 financial audits. While security concerns have often 
prevented us from performing as many site visits as we would 
normally like to, we have been able to perform alternate tests 
to accomplish our audit objectives. I will now discuss some of 
the audits and recommendations we have made in the area of 
reconstruction.
    Our March 2004 education audit found that for eight 
reported results, six were actually underreported. For example, 
number of textbooks printed and primary teacher kits delivered 
were underreported. However, the number of schools 
rehabilitated was overreported. While USAID reported that 1,500 
schools had been rehabilitated, we were able to verify that 
only 1,356 were.
    Consequently, we recommended improvements in how USAID 
reports its results.
    Our May 2004, summary audit report on the contract award 
process found that USAID generally complied with Federal 
regulations in awarding contracts using other than full and 
open competition. However, we recommended improvements in 
documenting that process.
    Our June 2004, infrastructure audit found that 64 of 72 
projects were on schedule. For example, a bridge bypass, 
satellite and telecommunication projects and a sewage treatment 
plant. For the eight projects behind schedule, USAID was taking 
steps to resolve performance problems; and we also made 
recommendations to improve project management.
    Our June 2005, electrical power sector audit found that 15 
of 22 projects we selected for review were achieving intended 
outputs. However, the remaining projects were not. Reasons 
included open hostilities, deteriorating security and a lack of 
host government cooperation. We recommended steps to insure 
that newly furbished infrastructure is properly maintained and 
operated after being turned over to the Iraqis.
    Last, our June 2005, water and sanitation audit found that 
30 of 34 projects were achieving intended outputs. However, 
four projects were not achieving intended outputs primarily due 
to ownership issues and security concerns.
    We see two major challenges regarding future reconstruction 
efforts. The first, lack of security, is endemic and largely 
outside of USAID's control. The second challenge, and one that 
USAID can do something about, is to help insure sustainability. 
However, the problems involved in doing so are numerous and 
complex. Our power sector audit, for example, recommended that 
USAID needs to develop a multi-year strategy to strengthen the 
Iraqi Ministry of Electricity's capacity to insure the proper 
operation and maintenance of a rebuilt power sector. This 
strategy should address adhering to prescribed maintenance and 
operational systems, developing plant level accountability, 
maintaining inventory systems and developing a rational fuel 
strategy.
    To date, two of our audits have addressed, at least in 
part, USAID governance activities, which I will now briefly 
discuss.
    Our September 2004, audit of USAID's Economic Reform 
Program determined that only 10 of 38 planned activities had 
been completed, and another 6 had been canceled. Completed 
activities included drafting commercial laws and establishing a 
governmentwide information technology strategy, but the 
security situation was a major factor regarding activities not 
completed as it impacted on contractor implementation, USAID 
monitoring, and also increased security costs. To help USAID 
monitoring, we recommended improvements in records management 
and contractor reporting.
    Our January 2005, Community Action Program audit found that 
98 percent of intended outputs were achieved, including citizen 
participation in its own governance and the generation of local 
employment. We did, however, make one recommendation to improve 
USAID's data-gathering process.
    Future challenges in the areas of governance did not differ 
significantly from those in reconstruction. Continuing its work 
with local community organization and all levels of the Iraqi 
government will depend on the support USAID and its 
implementers receive from their Iraqi counterparts as well as 
the security situation on the ground. We will continue 
oversight of USAID Iraq activities with our staff in Iraq, 
including the areas of reconstruction and governance.
    Thank you for the opportunity to testify. I would be happy 
to respond to any questions you may have at the appropriate 
time.
    Mr. Shays. Thank you.
    [The prepared statement of Mr. Farinella follows:]

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    Mr. Shays. Ms. Morrow.

                   STATEMENT OF JOYCE MORROW

    Ms. Morrow. Mr. Chairman and distinguished members of the 
subcommittee----
    Mr. Shays. Move the mic a little closer. We are hearing you 
pretty well, but just move it a little closer. No, closer than 
that.
    Ms. Morrow. Closer.
    Mr. Shays. Yes.
    Ms. Morrow. Thank you for the opportunity to appear before 
you today to describe our work in support of the Army's role in 
reconstruction of Iraq.
    As the Army's Auditor General, I am responsible for the 
worldwide operations of the U.S. Army Audit Agency. We support 
the Army's total force of quality soldiers and civilians by 
providing objective and independent auditing services that help 
Army leaders make informed decisions, resolve issues, use 
resources effectively and efficiently and satisfy statutory and 
fiduciary responsibilities.
    Army Audit is a member of the Iraq Inspector General 
Council. We coordinate with other audit inspection 
organizations to share information and to avoid duplication of 
effort. We currently have 13 add auditors in Iraq and 5 in 
Kuwait.
    Our work supporting the Army's mission in Iraq has focused 
on the concerns of Army leadership and includes four areas 
which I will briefly summarize.
    The first area is program management and fund 
accountability in support of Iraq reconstruction. Working 
primarily through the Project and Contracting Office, which I 
will prefer to as the PCO, the Army provides acquisition 
program management and financial management support for most of 
the $18.4 billion Iraq Relief and Reconstruction Fund that 
Congress appropriated during fiscal year 2004.
    Several audit organizations reported high-risk areas 
related to program management and contracting in Iraq. In July 
2004, we started an audit to determine whether the PCO had 
controls and sound business processes in place to mitigate 
previously identified high-risk areas. We found that the PCO 
had put many controls in place to mitigate risk. However, 
additional actions were needed to strengthen controls and to 
increase assurance that the Army was executing the funds in the 
best possible manner.
    We issued our final report on this audit in May 2005. The 
PCO said it had taken or would take corrective actions based on 
our recommendations.
    Likewise, our ongoing work on fund accountability is 
focused on making sure the Army and PCO have effective controls 
and processes in place to properly account for the fiscal year 
2004 Iraq Relief and Reconstruction funds that DOD activities 
execute. We are currently staffing our tentative conclusions 
and recommendations with Army leadership.
    A second area I will discuss is audit work we have done for 
the Multi-National Security Transition Command--Iraq. We have 
completed two audits and have a third ongoing related to funds 
totaling about $280 million it received under the Commanders' 
Emergency Response Program and Quick Response Fund.
    Our first audit covered fiscal year 2004 transactions. We 
found that the Security Transition Command administered funds 
according to applicable guidance and program intent but needed 
to better document transactions and approvals.
    During our second audit, we looked at fiscal year 2005 
transactions processed from October 2004, through April 2005, 
and followed up on recommendations in our first report. We 
confirmed that command's corrective actions had fixed the 
conditions we had previously identified. We also identified 
several additional actions command needed to take to gain 
oversight over funded programs to better track the status of 
military interdepartmental purchase requests and to reconcile 
cash overage. Again, command was very responsive to our 
recommendations and said it had taken or would take corrective 
action.
    We are now reviewing fiscal year 2005 transactions 
processed from May through September 2005, and are following up 
on the recommendations in our last report.
    A third area we looked at was accountability over vested 
and seized assets. We found that the Army properly secured and 
accounted for seized assets and metal bars. However, the 
Coalition Provisional Authority and Coalition forces didn't 
adequately control and protect the majority of noncash, seized 
assets; and adequate audit trails didn't exist to support the 
on-hand balances in the vested and seized asset accounts. The 
Army took immediate action on our recommendations to improve 
controls.
    The fourth area we are working is the Logistics Civil 
Augmentation Program [LOGCAP]. Our work, which is ongoing in 
Iraq and Kuwait, is focusing on contractor logistics support 
services to Coalition forces in support of Operation Iraqi 
Freedom. Since 2003, Army estimated costs under this contract 
are about $22.7 billion.
    We are working with the affected commands and DOD agencies 
and the prime contractor to improve program management, 
contract administration and management of functional areas such 
as food service operations, supply distribution and vehicles 
used by the contractor. We will issue a series of reports on 
this program.
    I appreciate the opportunity to testify before you today, 
and will be glad to respond to your questions.
    Mr. Shays. Thank you.
    [The prepared statement of Ms. Morrow follows:]

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    Mr. Shays. Let me give you a sense of what the Chair's 
intent is. We have primarily Democratic Members, and I am going 
to go right down the list. We will have 10-minute times, not 5, 
even though we have a large number of members, because it's the 
belief of this subcommittee that you really start to learn more 
if you can pursue the question. In order, I have Mr. Waxman and 
Mr. Kucinich, Mr. Lynch, Mr. Higgins and Mr. Van Hollen.
    I am going to say to those of you responding to questions, 
Members will state fact, what they believe to be fact and 
opinion. I particularly would like to make sure, if a fact is 
stated that is incorrect, that you correct the record. If I say 
20 million was this and it was 18.5, then I want that record 
corrected. If it's not, we will make an assumption you agree 
with the statement.
    Obviously, if it's an opinion about money being misused or 
not, that is an opinion, you can decide to weigh in on that or 
not. But one fact we would like to particularly make sure our 
information is accurate. I would just say that in a number of 
cases you told us what you were working on, not necessarily 
your findings, and we appreciate that you were working on these 
issues, but we want to kind of get at your findings.
    I would say to all of you, bureaucracies work more 
efficiently when someone is looking over their shoulder, and we 
know you were working, looking over their shoulder. You will 
have found things that you didn't like, but I am assured that, 
had you not been looking, there would have been worse things 
taking place. So we thank you for what you prevented from 
happening, as well as those things that you have uncovered that 
need to be improved.
    So, with that, Mr. Waxman, you have the floor for 10 
minutes.
    Mr. Waxman. Thank you very much, Mr. Chairman.
    The idea of reconstructing Iraq was so that we could 
provide some stability in that country so that there could be 
some security and that people could move toward democracy and 
become a model for the Middle East. I just want to mention that 
context. So we have committed billions of dollars to this 
effort, billions of dollars from the taxpayers of the United 
States for this effort. I want to ask some questions to 
evaluate what we have achieved, especially in light of the 
goals that we are set out by the administration.
    The administration had an objective in the beginning, in 
one area that I want to first pursue, to restore the oil 
production in Iraq to prewar levels. There wasn't a lot of 
damage because of the war itself on the Iraqi oil fields, but 
there was a lot of damage because of looting after the 
overthrow of Saddam Hussein.
    Mr. Bowen, has the administration fulfilled its promise of 
restoring oil production to prewar levels in Iraq to what it 
was under Saddam Hussein?
    Mr. Bowen. We have not----
    Mr. Waxman. Your mic is not on.
    Mr. Bowen. We have not reached the goals that we originally 
set, but I think there are several reasons for that, if I may. 
First of all----
    Mr. Waxman. Well, before you go through the reasons, I want 
to know whether we have achieved the goal. The goal was to 
restore oil production to prewar levels. Has that been 
achieved?
    Mr. Bowen. We are not there yet.
    Mr. Waxman. OK. In fact, Iraq produced in March 2003, 2.6 
million barrels of oil per day. By August 1, 2005, production 
levels were below 2.4 million barrels of oil per day. Is that 
accurate?
    Mr. Bowen. I can't testify to the accuracy, but I have seen 
similar figures.
    Mr. Waxman. Mr. Christoff, GAO also looked at this issue. 
Did you also reach the same conclusion?
    Mr. Christoff. Yes, we have not reached the prewar levels 
for oil production.
    Mr. Waxman. In the electricity sector, the administration 
said it would increase peak electricity output to at least 
6,000 megawatts, and it spent over $4 billion in an attempt to 
meet this objective.
    Mr. Christoff, GAO looked at this sector, too. Has the 
electricity reconstruction achieved the objectives that 
Congress was promised in 2003?
    Mr. Christoff. Let me just use a statistic that I think is 
helpful. The goal was to achieve about 110,000 megawatt hours 
of additional capacity. We briefly achieved that for a couple 
of weeks over the past summer but only after we lowered the 
goal in May from 120,000. We haven't reached it yet.
    Mr. Waxman. Mr. Bowen, do you agree with that conclusion?
    Mr. Bowen. I have seen similar figures, but I can't testify 
to the accuracy of the numbers.
    Mr. Shays. Mr. Bowen, your mic is not working well. Just 
pull it closer to you. If you are not reading a statement, you 
can do that.
    Mr. Bowen. As I said, I can't testify to the accuracy of 
Mr. Christoff's numbers, but the general principle, yes, I 
agree with.
    Mr. Waxman. So, what we tried, there are reasons for it, 
but we tried to reach a level of electricity. Even when we 
reached that level of electricity for a while, weren't there 
interruptions in service, Mr. Christoff?
    Mr. Christoff. Well, there were standard interruptions of 
service because of insurgent attacks but also because there is 
certain maintenance downtimes that have to occur naturally with 
electrical power plants.
    Mr. Waxman. In the water sector, the administration said it 
would make sure that 90 percent of Iraqis had access to 
drinkable water, and to meet this objective it spent over $1 
billion. Mr. Bowen, has the administration achieved this 
objective?
    Mr. Bowen. Well, we have looked at more precise issues, for 
instance, several water treatment plants in the Baghdad 
vicinity as well as water transfer plants. Our focus has been 
on inspecting the efficacy of the construction at those plants, 
and it's been a mixed bag. In some cases, those construction 
efforts have been productive and effective and in others they 
have been subpar.
    Mr. Waxman. Embassy officials told our staff in August that 
only about 66 percent of Iraqis have access to potable water. 
That is hardly better than the 60 percent of Iraqis who had 
potable water before the war. Mr. Christoff, GAO tried to audit 
the water reconstruction. You asked the administration if it 
could document how many Iraqis were now receiving clean 
drinking water as a result of the reconstruction efforts. Can 
you tell us whether the administration was able to achieve its 
goal?
    Mr. Christoff. We had asked the State Department to try to 
give us a better accounting of the number of projects and where 
they were located within the water sector, and they were not 
able to provide that detail.
    Let me make a comment about water. I think one of the 
challenges in the water sector is that we don't really have 
good measures, outcome measurements to begin with. We can 
generate a lot of good, clean water at these facilities that we 
are rebuilding, but by the time it reaches the Iraqi household 
with enormous leakage, as well as the contamination, because 
sewage pipes are right next to the water pipes, we really don't 
have a good indication of how many people actually receive 
potable water.
    Mr. Waxman. Mr. Bowen, your team went out to a few of these 
water project sites. They found serious problems with three of 
the four projects that were examined. Can you describe some of 
the problems you found?
    Mr. Bowen. Yes. Let me begin with a global comment about 
the water sector as well. The water sector in the original 
allocation was assigned just over $4 billion in reconstruction 
funds. After several reprogramings, which began over a year 
ago, the transfer of money from water security amounted to 
about $3 billion. They were reduced to about $1.2 billion, so 
almost a three-quarters cut. So if you want to talk about a 
reconstruction gap, we probably should evidently look at water 
first, because it was substantially cut.
    One of the consequences of the lack of cost to complete, 
related to the reconstruction gap, is the tendency to descope 
projects. When funds begin to run short, then in order to reach 
completion the original outcome of the project is descoped, and 
that occurred with respect to the three water projects you are 
referring to that we went out and inspected.
    The water transfer facilities did not have completed 
pipelines, and they were inadequate water treatment container 
facilities as well. There were walls that were incomplete or 
failing; and so, fundamentally, there were engineering and 
structural deficiencies that led us to reach our negative 
conclusions about those particular projects.
    Mr. Waxman. Thank you. I want to go into some of the 
reasons for failure to meet these objectives. But does anybody 
on the panel disagree with the premise that we failed to meet 
the administration's stated objectives in the oil, the 
electricity and the water sectors? Does anybody disagree with 
the statements that have been made that we failed to achieve 
the objectives?
    Mr. Christoff. I would like to just put it in context 
somewhat. I think these output goals in terms of increasing 
electricity and oil, we haven't met them. That is true.
    Our reconstruction dollars were never intended to deal with 
all the problems within Iraq. They were intended as being the 
first important thrust to try to rebuild the infrastructure 
with the anticipation that the international community, donors 
would kick in, and Iraqis would have the capacity to also 
contribute to their reconstruction needs.
    Mr. Bowen. If I might followup----
    Mr. Waxman. The goals I took were from the documents that 
the administration set out and told Congress they were going to 
achieve.
    Mr. Christoff. Right.
    Mr. Waxman. Now, obviously, one of the reasons is security.
    Mr. Christoff. Absolutely.
    Mr. Waxman. Because of the insurgency, we have had to 
redirect money for security purposes.
    But I would like to ask whether there's another major 
factor that is often overlooked, and that is the 
administration's flawed contracting strategy. Instead of 
maximizing competition, the administration opted to award no-
bid cost-plus contracts. Halliburton's Restore Iraqi Oil 
contract is the prime example. Under this no-bid cost-plus 
contract, Halliburton was reimbursed for its costs and then 
received an additional fee which was a percentage of its costs. 
This created an incentive for Halliburton to run up its costs 
in order to increase its potential profit.
    Mr. Bowen, do you think it made sense to award no-bid cost-
plus contracts with literally billions of dollars to rebuild 
Iraq?
    Mr. Bowen. For the security reasons that were at stake in 
December 2002, January 2003, as the war was being planned, I 
think that there had to be contingency contracting undertaken 
in a classified environment.
    Because the companies worldwide that are capable of 
addressing the kinds of problems that were expected, namely 
those that we saw in the first Gulf war, I think that Kellogg, 
Brown & Root was an effective choice.
    Mr. Waxman. Well, they started to rely on big monopoly 
contracts over sectors of the economy in Iraq. Iraq was divided 
geographically and by economic sector into a handful of 
fiefdoms. Individual contractors were awarded these monopoly 
contracts, and for all of the work within that fiefdom--and 
these monopoly contracts were awarded before specific projects 
were identified--there was no actual price competition for more 
than 2,000 projects. Don't you believe the tipped use of these 
monopoly cost-plus contracts encouraged or hindered progress?
    Mr. Bowen. You are addressing two different phases of 
contracting. The contracting that was prewar contracting, that 
I think the sole source, classified situation was apropos. The 
second one is the contracting phase that followed 108, 106, the 
allocation of the $18.6 billion. I think you raise a valid 
question about whether the $500 million IDIQ cost-plus 
contracts to cover every conceivable project large and small 
was the right way to go, and that is something we are looking 
at. Indeed, we have a lessons learned initiative. We will be 
looking at this, bringing in everyone who is involved in that 
process in a December panel to analyze your exact question.
    Mr. Waxman. Just for those who don't know, will you say 
what IDIQ means?
    Mr. Bowen. Indefinite quantity, indefinite demand--
delivery, I am sorry, indefinite delivery. What it effectively 
means is you have an open checkbook to go out and pursue--
because there's a lack of information to be able to adequately 
calculate fixed-price costs--so to pursue a fixed-price 
contract. It's when you were working in an environment when 
it's impossible to ascertain real costs.
    Mr. Shays. I thank the gentleman.
    Mr. Kucinich, you have the floor for 10 minutes.
    Mr. Kucinich. Mr. Bowen, in the work that you do, where you 
identify what is to be reconstructed, I would just like to go 
over what is being constructed. I would just like to go back. 
Could you describe for this subcommittee the types--just 
generally, the types of facilities that are being rebuilt?
    Mr. Bowen. Sure. It's divided into four sectors now, 
electricity, water, oil and facilities and transportation, 
previously eight, now four. Just at what we have looked at, we 
have an extra report, inspections of electrical facilities, 
five substations in Basra. We are looking at the al Fatah 
bridge, a number of the pipe--the oil transfer facilities that 
are being reconstructed and sensitive pipeline transfers.
    In this report, we will point out that those substations in 
Basra were well done, that they are effective, but I think it 
is emblematic of the sustainability problem, while, as 
substations alone, they are well constructed and presumably for 
our money's worth, they are not yet tied into the electrical 
grid through needed wiring. That was because that is not part 
of the contract. So the issue of sustainability and overall 
coordination of how what we construct fits within the Iraqi 
infrastructure is the most pressing issue.
    Mr. Kucinich. OK. Thank you.
    When you look at infrastructure that is being rebuilt, do 
you also make notations as to how that infrastructure was 
damaged or destroyed and when it occurred?
    Mr. Bowen. We don't. Because when we go look at a project 
we are looking at a project that is near complete. For 
instance, the al Fatah Bridge, that is a good question. The al 
Fatah Bridge was destroyed in a famous video that people may 
recall. It also took with it the oil transfer pipeline that 
went underneath it. But that is not something that we 
necessarily use within our analysis as to whether the 
reconstruction of that pipeline has been effective.
    Mr. Shays. If the gentleman would yield and I not take off 
his time. It's clear to me so far the question is to Mr. 
Christoff and to Mr. Bowen. The others of you who are here, if 
you would take notes on any issue you want to elaborate, you 
have an expertise--not to interrupt the question--but I am 
going to ask you at the end, is there anything that you would 
have responded to any of the other questions. So I am just 
saying, I would like to make sure that you do take notes on any 
issue that you think is important to share.
    I have taken about 10 seconds off the gentleman's time, I 
will give more than that back.
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    I think it would be interesting for this subcommittee to 
know, since the American taxpayers are paying the bill for 
reconstruction, how it is that these facilities that we are 
reconstructing became damaged or destroyed.
    Mr. Bowen. You are pointing to the issue that is a 
significant one, what part of the infrastructure is being 
repaired because of war damage and what part is being repaired 
because it had fallen into decay through 25 years of neglect. I 
presume is what you are asking.
    Mr. Kucinich. Well, I am particularly interested in what 
was destroyed because of war damage. It would be particularly 
interesting for this subcommittee to know that, Mr. Chairman. 
Is that within your responsibility?
    Mr. Bowen. No, sir. My jurisdiction is to be sure that the 
$18.6 billion is properly spent.
    Mr. Kucinich. Is that within your responsibility, Mr. 
Gimble?
    Mr. Gimble. No, sir, it is not.
    Mr. Kucinich. Is that within your responsibility, Mr. 
Krongard?
    Mr. Krongard. No, sir.
    Mr. Kucinich. Mr. Christoff.
    Mr. Christoff. I think we can provide commentary, 
certainly, on it.
    Mr. Kucinich. Can you provide facts, as far as this was 
destroyed in the war?
    Mr. Christoff. I think the level of detail that you want to 
try to----
    Mr. Kucinich. Mr. Farinella.
    Mr. Farinella. No, sir.
    Mr. Kucinich. Ms. Morrow.
    Ms. Morrow. No, sir.
    Mr. Kucinich. OK. So we really don't have any declared 
responsibility on the part of anyone who has testified here 
today that they can provide us with certainty information as to 
the degree to which the facilities that have been damaged or 
destroyed in Iraq as a result of the war can be identified. We 
might assume that from news accounts, but we really don't know.
    I think it's an important question, because it relates to 
the responsibility of the administration for a tax on Iraq 
which has destroyed infrastructure. I think we need to know 
that.
    The fact that the Department of Defense Acting Inspector 
General, whose job it ought to be to do that, cannot in any way 
vouch for the responsibilities raises some serious questions. 
So I would like to go directly to Mr. Gimble. I would like to 
ask you about the Defense Department Inspector General's 
oversight work in Iraq. With the billions of dollars of 
taxpayers' moneys being spent in Iraq and reconstruction of 
military operations, DOD Inspector General presence is 
essential. I think most members of the subcommittee would 
agree. We have heard news reports about abdication. I am 
wondering, Mr. Gimble, for the record, how many Department of 
Defense Inspector General auditors and investigators are 
currently assigned to Iraq?
    Mr. Gimble. There are none in country. We are working on 
the supplementals back in the United States, back in the 
contract offices.
    I would like to make just a comment on your----
    Mr. Kucinich. Well, this is my time, so if you could answer 
the question, I would appreciate it. I will be respectful.
    Mr. Gimble. The answer to the question is we have none in 
country at the present. We have four ongoing audits doing the 
supplemental back in the States in the contracting offices.
    Mr. Kucinich. I have to say, Mr. Chairman, it is incredible 
that we have this major undertaking in Iraq, and the Department 
of Defense Acting Inspector General has just said that they 
don't have any auditors or investigators assigned to Iraq. I 
want to say again, you know, I would call that missing in 
action.
    Now, who has the primary oversight responsibility for 
Department of Defense funds in Iraq? Who has the primary 
responsibility?
    Mr. Gimble. For the supplemental, we would have the 
responsibility, the Congress on the aid, the Iraqi 
reconstruction, the DOD appropriations has been assigned to Mr. 
Bowen's unit, and he does oversight with that.
    Mr. Kucinich. But you do have the primary responsibilities 
for DOD funds in Iraq. Why has DOD IG abdicated its 
responsibility?
    Mr. Gimble. We have continued to work on contract 
operations, and also we have some stuff, some joint small arms 
work that we are doing. We are doing a number of audits that 
are affected or funded by the supplementals. However, we still 
do not have anybody in country at present.
    Mr. Kucinich. You know, you mentioned before about other 
people looking at some of these things. Now DCAA and other 
auditors can look at some of these issues but not all of them.
    For example--and this is something this subcommittee has 
talked about, Mr. Chairman. There has been a serious lack of 
body armor for our troops and a shortage of armored Humvees. 
This is about the protection of our troops. It's a huge 
problem. This isn't numbers crunching that the DCAA can handle. 
It's a management problem for the Inspector General. What are 
you doing about that?
    Mr. Gimble. We don't have a project ongoing with that. That 
would not be done in country, though. That would be done back 
here and through the procurement system, contracting system.
    Mr. Kucinich. Well, that says a lot to the parents of 
troops about what the government is not doing to make sure that 
our troops are protected.
    Mr. Gimble. Could I interject, unless your time----
    Mr. Kucinich. I am not going to debate you here. I am just 
asking you a question.
    Mr. Gimble. I am just happy to give the gentleman more 
information.
    Mr. Kucinich. I am not.
    Mr. Shays. I will be happy to give more than 10 minutes. We 
are going to go a second round. It is not like we have 5 
minutes. If the witness has something to say on the issue, I 
would like them to be able to respond to it. But if you feel 
you need more than 10 minutes because----
    Mr. Kucinich. Mr. Chairman, keep in mind now, he has just 
testified that they don't have anybody on the ground looking at 
these things. That is what most Inspector Generals are about.
    Mr. Shays. But why don't we find out what he wanted to say 
and that maybe will answer a part of your question, maybe it 
won't. If it won't, it will be self-evident.
    Mr. Kucinich. OK, Mr. Chairman. I am just not into 
filibusters here.
    Mr. Shays. No, but the gentleman will get more time if he 
needs it.
    Mr. Gimble.
    Mr. Gimble. I just wanted to make the additional comment we 
do have a number of investigations that we are assisting on 
through our criminal investigation that will deal with body 
armor issues.
    Mr. Kucinich. But do you have anyone on the ground asking 
troops whether they have what they need?
    Mr. Gimble. No, sir.
    Mr. Kucinich. Another key issue here, Mr. Chairman, is the 
treatment of detainees. There have been egregious examples of 
cases of abuse in Iraq, Afghanistan and Guantanamo Bay. This 
isn't oversight that can be done from Washington, DC. Does the 
DOD, Mr. Gimble, Inspector General, have investigators on the 
ground assessing the treatment of detainees?
    Mr. Gimble. We had people looking at the issue. We had two 
projects being done currently that are being finalized. The 
work is being done here. Our investigative policy group is 
reviewing some 50 cases.
    Mr. Kucinich. Are they on the ground?
    Mr. Gimble. They are not on the ground in Iraq.
    Mr. Kucinich. Mr. Chairman, this is a very important 
exchange here. Because if you would--can we ask the 
stenographer to play back his initial response? Because, you 
know, we are kind of equivocating here. I want to make sure 
that we are very precise. Because I asked the question about 
whether they had investigators on the ground, and his first 
response seemed to indicate they did. I pressed forward, and 
his second response seemed to indicate that they didn't. Could 
I have----
    Mr. Shays. Let me just say we won't do that here. I am more 
than happy to have you keep asking your questions. His comments 
were made just a few minutes ago.
    Mr. Kucinich. OK. He has now stated for the record that 
they don't have anyone on the ground assessing the treatment of 
detainees. It actually is hard to believe that the DOD IG isn't 
looking at the issues that I have just discussed. With the 
reconstruction effort failing and the insurgency continuing 
unabated, we need more oversight, not--instead of increasing 
its oversight efforts in Iraq, the DOD IG has abandoned its 
responsibilities. So I will say it again. They are missing in 
action. You can't tell me that you can check out events in Iraq 
from here in Washington.
    One of my colleagues, Mr. Lynch, just stated this. He was 
in Iraq, and he saw that the building materials weren't up to 
par. Now, you can't even do that. This is ridiculous, Mr. 
Chairman, that we can have an IG represented here, and you are 
not performing your responsibilities. You are not doing what 
you are supposed to do to protect the troops, and you are not 
doing what you are supposed to be doing to protect the U.S. 
taxpayers.
    Mr. Shays. Do you need more time?
    OK. Thank you.
    At this time, the Chair will recognize Mr. Lynch--excuse 
me, I am sorry. We have Mr. Dent. I apologize.
    Mr. Lynch. Absolutely, I yield.
    Mr. Dent. Thank you, Mr. Chairman.
    As I mentioned, I was in Iraq this summer, in August. I 
just want to clarify a point Mr. Kucinich made about up-arming 
the vehicles. Maybe somebody could correct me if I am wrong. I 
want to talk about the need for precision. The vehicles coming 
out of Kuwait are up-armored. Can anybody answer that question? 
That point was made--it is not the point of this. If not, I 
would like to get an answer to that. It is my understanding 
that all those vehicles are up-armored coming out of Kuwait. I 
witnessed that operation down there near Camp Arafjan in 
August.
    Mr. Shays. Can anybody speak to that issue? If you can't, 
that is fine.
    Mr. Christoff. I can speak to the issue that is one of the 
engagements that we are pursuing right now, the team that is 
going into Iraq in 2 weeks. One of the six areas that we are 
looking at is the up-armor situation. So we are definitely 
looking into that situation.
    Mr. Dent. It was my understanding that every vehicle going 
into convoy out of Kuwait into Iraq is up-armored.
    Mr. Christoff. It is not near that yet.
    Mr. Bowen. I cannot speak to that either, but I can tell 
you that we have an audit on up-armored vehicle purchase that 
will be out in our next vehicle report, and it finds it was 
substandard.
    Mr. Dent. Thank you.
    Mr. Bowen, it is my understanding that various agencies 
involved in auditing and reviewing Iraq reconstruction, 
including separate GAO, Army Audit Agency and the Defense 
Contract Agency agreed to coordinate their activities. 
Furthermore, those two oversight committees have been 
established to coordinate activities between these two 
agencies, the Iraq Inspectors General Council [IIGC], and U.S.-
Iraq Accountability Working Group [IAWG], in Iraq. That said, 
it is my understanding that the SIGIR auditors to 
reconstruction and reconstruction project managers is about 1 
to 1\1/2\, to about 1\1/2\. In your opinion, Mr. Bowen, is that 
too many auditors? What would be an appropriate number of 
auditors? One to five? One to 10? What is the number?
    Mr. Bowen. The appropriate number is the appropriate number 
that is currently there, which is 16 to 1. Thank you for 
raising that question, because it's a myth that's been floating 
around that is not true. PCO has about 73 managers; DRD, 518; 
IRMO, 80; JCCI has 44. That is 715 managers.
    We have, when we are fully staffed, 28 auditors. DCAA also 
has in country 15 auditors. That is about 44 auditors. 715 
managers to 44 auditors is about 16 to 1.
    What that doesn't address either is something that was 
alluded to earlier, and that is a substantial portion of the 
management within PCO has been contracted out. I am sure you 
saw that. There's a government lead in the sectors. But most of 
the managers are contractors.
    So I think that perhaps, first of all, it's a myth, that it 
perhaps surfaced by those who would rather not have oversight. 
Second, it's also fundamentally inaccurate on the raw numbers. 
Third, I think, circumvents a significant issue, and that is 
much of the management has been contracted out. That was the 
structure chosen 2 years ago to do this.
    Mr. Dent. Is the current structure effectively allowing for 
the avoidance of duplicative efforts among all the various 
Inspector Generals in Iraq?
    Mr. Bowen. Yes, it is.
    The IAGC meets quarterly. We specifically call everyone to 
the table to talk about what they are doing and what they are 
planning on doing. There have been specific instances in the 
course of those meetings where we discovered that agencies 
are--different agencies are aiming at the same target and we 
deconflicted on it. Either one or the other have stood down.
    Mr. Dent. Are there any questions that any of you may want 
to answer? There may have been some statements made or 
questions asked that some of you didn't have an opportunity to 
answer. Is there anything any of you might like to answer, Mr. 
Farinella or Ms. Morrow, comments or questions on anything that 
was previously stated here today?
    Mr. Bowen, if not--as you know, there are currently several 
agencies overseeing the reconstruction in Iraq, including the 
DOD IG, Department of State's IG, USAID's IG, and GAO, the Army 
Audit Agency. Can you help us with the justification for the 
proposed extension of the termination date of SIGIR of 2008 and 
possibly well beyond, given all this?
    Mr. Bowen. Sure. Actually, it wouldn't be 2008. It would be 
changing the statute from terminating SIGIR 10 months after 80 
percent of the IRRF is obligated up to 10 months after 80 
percent of the IRRF is extended, which, as what the Comptroller 
of the GAO said, is the way that should have been done in the 
beginning, and it makes sense. IG should look at how money is 
spent, not just at how it is contracted.
    DOD IG, as you know, is not looking at the reconstruction 
effort. The Congress has specifically tasked us to look at it. 
It's an extraordinary undertaking, and thus Congress deemed 
that it required special oversight. The issue is, when will--
where are we in the reconstruction process vis-a-vis 
expenditure of funds? And it certainly looks like that we are 
going to need oversight on the use of those funds for the next 
2 years.
    Mr. Dent. Thank you.
    I yield back the balance of my time, Mr. Chairman.
    Mr. Shays. I would like to maintain that time and claim it 
for my own, if you don't mind. I want to be very clear that 
there's nothing that has been said or asked that no one wants 
to respond to. I am pretty surprised by that.
    Ms. Morrow, you have no comment to make based on any of the 
questions or answers.
    Mr. Farinella, no comment.
    Mr. Gimble, this is your chance to have made comments. You 
have the floor.
    Mr. Gimble. I do have one comment.
    Mr. Shays. Mr. Krongard, is there any comment that you wish 
to make? Any information you wish to correct? Otherwise, it 
stands on the record as stated in this hearing.
    Ms. Morrow, I would like to start with you. Is there 
anything?
    Ms. Morrow. No, I have no corrections to make. The Army is 
making progress. There are certainly challenges. We are working 
with them to try to make improvements, strengthen controls. So 
certainly there are a lot of challenges ahead, but I believe 
Army is making progress.
    Mr. Shays. I would like some specific information other 
than everybody is trying to do a better job. I don't mean to be 
disrespectful, but, I mean, you are in the trenches. If there 
is nothing that you want to add in specifics, I guess, that is 
OK, but you have been given the opportunity.
    Ms. Morrow. Well, certainly some of the things we had 
found, a lot of them deal with controls, but insuring there's 
adequate audit trails, documentation, approval level is 
written.
    Mr. Shays. And there have not been adequate audit trails?
    Ms. Morrow. In some cases, we found that they were not. 
Again, those areas, as we point those out, the Army is taking 
action to strengthen those, to provide the audit trails, to 
show that the funds are properly accounted for and the projects 
are meeting our intended purposes.
    Mr. Shays. Mr. Farinella.
    Mr. Farinella. Well, nothing to correct for the record.
    Regarding the work that we have done in Iraq and are 
finding, I guess a common theme could be--and I believe it was 
unavoidable--the rush to move into Iraq to get things set up on 
the ground, which I think, in the beginning, had a lot to do 
with the firm, total and complete control systems in place, 
that were some of the problems that were the cause of what we 
found when projects were behind schedule, when things were not 
getting done, other issues with coordination between the 
different parties, between USAID.
    Mr. Shays. Let me go to Mr. Gimble.
    Mr. Gimble.
    Mr. Gimble. I just had one clarification I would like to 
put on the record. That was the issue if we had people on the 
ground in the Iraqi detainee abuse issue.
    We did have people there, a person there, early in the 
investigations. That work has since rolled back in, and we are 
doing the final touches on that--actually, two projects. One is 
actually the review of the investigative, quantitative 
investigative reviews; and we also have another assessment that 
is due. It was 12 major reviews of issues dealing with detainee 
Iraqi abuse, and there were 400 recommendations for following 
on those recommendations. That is all being done here. We did 
have----
    Mr. Shays. You have become the Acting Director as of when?
    Mr. Gimble. September 9th.
    Mr. Shays. Of this year.
    Mr. Gimble. Correct.
    Mr. Shays. So the decision not to be in Iraq was not your 
decision; is that correct?
    Mr. Gimble. That's correct.
    Mr. Shays. I hope you are not just being a good soldier, 
though, in the sense that you are going to argue for a bad 
policy. I don't understand why you didn't have some people on 
the ground in Iraq. I will just say that to you.
    Let me just make another point. I understand that we have 
tremendous oversight in Iraq, and you don't want to duplicate 
the duplication of the duplication. But there, it seems to me, 
had to have been some areas where your folks had some expertise 
where they could have been helpful.
    Having said that, you know, when a colleague of mine 
berates someone for not being in Iraq, and they have never been 
in Iraq but berate what we are doing in Iraq, I have some 
challenges with that as well. I know that every time I have 
gone to Iraq, I have learned good things and bad things. I have 
learned things that have distressed me and things that have 
encouraged me. I wouldn't have learned them had I not been to 
Iraq.
    So I am--it goes both ways in this business, and I just 
want you to know that.
    Mr. Krongard, any comment?
    Mr. Krongard. Sir, as to the fact, I don't have any 
specific comment. Words, like failure, are subjective 
determination.
    Mr. Shays. A little closer to the mic, sir. Your mic--both 
of yours are not good. No, don't grab the other one. Just bring 
it closer.
    Mr. Krongard. Is this better?
    Mr. Shays. Yes.
    Mr. Krongard. I said, to the facts that were stated, I 
don't have anything to correct; and words such as failure are 
subjective determinations that I am not here to make judgments 
on.
    I would point out that in my testimony, with respect to 
what we found in the rule of law area as well as what we found 
in the joint assessment of the Iraqi police training programs, 
that in both of those cases--and first we said that the funds 
appeared to be well spent, and in the second we determined that 
it was a qualified success. So I have testified to those.
    As far as coordination, which Congressman Dent asked about, 
I also mentioned that our assessment was joint with DOD. That 
speaks well for the coordination amongst the IGs. I mentioned 
the joint program that Mr. Bowen's office and my office are 
planning with respect to I&L. So I think the coordination 
amongst this group is very good.
    Mr. Shays. I won't test the patience of my colleagues. I 
was using Mr. Dent's time, and I haven't used my own time yet.
    Mr. Lynch, thank you for your patience.
    Mr. Lynch. No, not at all. Thank you.
    Mr. Chairman, just to followup on Mr. Dent's remarks about 
the Humvees, when I was there several weeks ago in al Assad and 
in Baghdad, we actually had some up-armoring facilities that 
were moving along with the rearmoring and so-called up-armoring 
process with those vehicles. My understanding at this time is 
that all vehicles that are being used in circulation, that is 
off base, have been up-armored.
    We do have some problems with--maybe it is something we can 
address in a future report, Mr. Bowen, regarding transmissions 
now burning out because we have added 1,300 pounds or 3,800 
pounds to the troop carriers, 1,300 pounds to the Humvees, and 
now the transmissions can't handle that extra weight. So maybe 
we could look at that.
    I also heard from the troops that they were very happy to 
see the air conditioners added to the Humvees. 130 degrees heat 
over there. I guess the air conditioners lower that to about 80 
degrees, and they were quite pleased with that.
    I do want to talk about the whole auditing process. My 
understanding, in talking to folks on the ground over there, is 
that the managing of the contracts is more prospective, making 
sure that stuff gets built, that troops get the supplies they 
need, that we move forward. The auditing process is more 
looking back or trying to measure where we are at a certain 
point in time in terms of the goals that we have and the 
expenditures that we have made. So I don't necessarily include 
the number of managers, Mr. Bowen.
    By the way, thank you for your service to our country. All 
of you, you have difficult jobs, and we don't dismiss that in 
any respect or degree. We understand you are doing your best. 
That is a given. In our positions, experience agrees with 
reason in this case that we have seen a tremendous amount of 
waste and, in some places, corruption.
    We had the experience with the Iraqi Oil-for-Food program 
where $20 billion was available and $8 billion was stolen. So 
we know the possibilities there are on the ground for 
corruption and for misallocation, let's call it. But you are in 
a very real way our line of defense so that the American 
taxpayers money are spent wisely and effectively, so we have to 
ask these questions.
    I direct my question to Inspector General Gimble as well as 
Mr. Bowen; and, Ms. Morrow, you can jump in if you wish.
    On March 17th, the Justice Department announced that Jeff 
Mazon, a former Halliburton procurement manager, and Ali 
Hijazi, a general manager of La Nouvelle, a trading and 
contracting company, which is a Kuwaiti firm, and a Halliburton 
subcontractor had finally been indicted for a kickback scheme 
for which La Nouvelle overcharged the U.S. Government of about 
$3\1/2\ billion. I have been asking questions of every 
committee on this, and it took a long time to get the names of 
these individuals, and it's been like pulling teeth to get some 
information around these indictments.
    Specifically, the indictments allege that Mr. Mazon 
received a $1 million payment from La Nouvelle in exchange for 
helping the firm reap more than $5\1/2\ million from a LOGCAP 3 
subcontract that should have cost less than $2 million. Now, 
back in June, during this subcommittee's first hearing on the 
development fund for Iraq, I asked Bill Reed, the Director of 
Defense Contract Audit Agency, whether, in light of those 
indictments that have come down in this case, I asked him, are 
we going through the defense contracts that La Nouvelle was 
involved in and that these two individuals are involved in, to 
find out whether this is just a one-time event or whether there 
might be a pattern or practice of corruption involving 
contractors and subcontractors.
    Mr. Reed assured me that DCAA was in the process of 
auditing the La Nouvelle contracts. Now, Inspector Gimble, can 
you update the committee on the status of those La Nouvelle 
audits?
    Mr. Gimble. Those are still ongoing investigations, and I 
can't really get into any more detail, but they are ongoing.
    Mr. Lynch. That is it. They are just ongoing.
    Mr. Gimble. Yes, sir. The U.S. attorney has asked me not to 
make any comments on it.
    Mr. Lynch. Have you reviewed?
    Mr. Gimble. The contracts? We are in the process.
    Mr. Lynch. I do have to agree with the chairman and Mr. 
Kucinich that boots on the ground--you know, you can give me 
all the reasons why you don't have boots on the ground as far 
as auditors, but I have to tell you, how many defense contracts 
are we managing in Iraq right now? Thousands, right?
    Mr. Gimble. Yes. I don't have the number. I will say----
    Mr. Lynch. It's astounding. All I am saying is that, with 
that much going on, there's no reason why you can't have 
someone on the ground or you shouldn't have someone on the 
ground. If I could humbly suggest, you need to get some people 
on the ground in Iraq from the Defense department.
    Mr. Gimble. Sure.
    Mr. Lynch. Even just to save face. That is a tough position 
to defend, to hand off the responsibilities to Mr. Bowen or Ms. 
Morrow or anybody else. When DOD has such a huge exposure over 
there, to have no one on the ground is just inexcusable, sir.
    Mr. Gimble. Sir----
    Mr. Lynch. You may respond.
    Mr. Gimble. Our investigators are actively involved in that 
task force. That is our people doing that work. It is just that 
the work is not on the ground in Iraq. It is in other places, 
but those questions are being addressed by our people.
    Mr. Lynch. It's a tough environment over there. It's a 
tough environment. You can't manage it from Baghdad, never mind 
manage it from Arlington. You have to have people around there, 
whether in Mosul or al Assad or Balad, you know, Ramadi. You 
have to have people where the work is going on in audit to 
audit and--whether or not the work is--progress is being done, 
where we are.
    You know, I am a former iron worker, 18 years. You know, I 
have done enough construction to know that in order to 
guarantee the quality of the work and that the money is going 
in the right place and you don't have waste that you have to 
have people there, to hold people accountable. All I am saying 
is the Defense Department should be on the ground. That is just 
my recommendation.
    The other point I have is, according to Halliburton, it was 
the company's own internal rigorous system of checks and 
balances that led them to the irregularities and informed the 
Defense Department, Justice Department, assuming this was the 
case, of any additional financial controls that have been put 
in place to insure that we are the first to know in the event 
that such fraud is taking place. Have we made any changes in 
light of what is going on here?
    Mr. Gimble. We have active involvement in the ongoing 
criminal investigations of both of those.
    Mr. Lynch. OK. So there is nothing you can tell the 
Congress that we are doing differently in light of what we have 
seen here with these folks and the kickback scheme is going on 
there?
    Mr. Gimble. You mean--well, the U.S. attorneys have asked 
us not to be discussing the cases. That is I guess about where 
I have to be with it.
    Mr. Lynch. Well, certainly the facts are on the indictment, 
and the problem that exists there with kickbacks is you don't 
need to know the details of that case to take steps against 
other opportunities for corruption. You don't turn a blind eye 
to kickback schemes just because you have an active one going 
on. I mean, that is just----
    Mr. Gimble. In that regard, we do have some other audits 
ongoing that were looking at controls of contracting and so 
forth.
    Mr. Lynch. There you go. Can you tell us more about those?
    Mr. Gimble. As a matter of fact, I can. We have two audits 
ongoing, one on the Air Force, other appropriations, that is 
basically looking at the tracking of the funds, supplemental 
funds going to the global war on terrorism; and we have another 
one on Army appropriations, appropriations Army.
    We have two contract audits that are just about to be 
ending up. One is the contracts with the Corps of Engineers 
that were examining the requirements, determination and work 
procedures for selected contracts and contracts awarded by the 
Army Corps of Engineers for the global war on terrorism. That 
is in a draft audit, so they should be released here, probably 
final, sometime the first of the year.
    We have another audit ongoing that we are looking at trying 
to determine whether the government provides sufficient 
contract oversight for service contracts to ensure that the 
contract is performed in accordance with the contract 
specifications.
    We have also been looking to see whether they have 
appointed people to monitor contracts, if persons had been 
appointed to monitor contract performance and the work has been 
adequately monitored and being performed in accordance with the 
contractual obligations. That is also in the draft statement, 
and we will be issuing that out.
    Mr. Lynch. All right. Well, sir, all I can say is that it 
would help. I don't believe that, with the thousands of 
contracts we have on the ground in Iraq, that 45 people can 
handle it, with all due respect. All I would say is that I 
think that the Defense Department has a primary responsibility 
to be on the ground in Iraq to police that. I can say it from 
my own observations there, and I can say it also within the 
context of Mr. Bowen's earlier remarks about falling short of 
our goals and that there being a gap.
    If folks are going to come back to Congress and ask for an 
additional appropriation, the fact of whether we have or we 
don't have an accountability there and a reliable accounting 
system and auditing system will have definite consequences on 
how folks vote. I know it will have a consequence on how I vote 
on future appropriations, knowing that we have a reliable 
auditing system in place, so that the American taxpayer don't 
get--we don't get robbed.
    OK. Thank you. I appreciate your testimony.
    Mr. Shays. Mr. Van Hollen.
    Mr. Van Hollen. Thank you, Mr. Chairman. Thank you for 
holding these hearings. I want to thank all the witnesses for 
their testimony.
    Mr. Waxman, in his questioning, talked about the fact that 
we had not hit a number of the goals that we set out at the 
beginning with respect to the reconstruction effort. What I 
would like to focus on a little bit is being able to sustain 
operations in those areas where we have met our goals, whether 
it is water, infrastructure, electricity, the oil sector, 
because obviously if we are investing hundreds of millions, 
billions, of dollars of taxpayer money in this reconstruction 
effort, we want to make sure that when we complete the job and 
walk away, the Iraqis are in a position to maintain those 
efforts. Otherwise, I think we would all agree, that investment 
would have gone for naught.
    So if I could just start, Mr. Christoff, I know you have 
looked at this and GAO has looked at this, as have others. In 
your testimony, you talked about a number of sectors, the water 
sector, the electricity sector.
    With respect to the water and sanitation sector, you point 
out that more than a quarter of the projects, $52 million of 
the $200 million in completed, large-scale water and sanitation 
projects, were either not operating or were operating at lower 
capacity due to looting of the equipment and shortages of 
reliable power, trained Iraqi staff and lack of required 
chemicals and supplies.
    If you could talk about that specific case, but also more 
broadly about what we are doing or not doing with respect to 
sustaining the investments that have been made.
    Mr. Christoff. I think sustainability is definitely one of 
the key challenges that we face. It is one of the areas that we 
have to begin addressing.
    Let me just give you an example. In addition to the water 
and sanitation sector and the electricity sector, I had a 
chance to talk to, it must have been about 15 or so, power 
plant operators who really expressed their frustrations at not 
getting the kind of training that they needed to try to operate 
some of these gas turbine engines that we put in place at power 
plants.
    I think that just reiterated the importance of not just 
turning things over. You just don't turn over, but you have to 
provide a sustainment framework. You have to go beyond the 90-
day warranty and maybe provide an additional year of training 
for the Iraqis in how to operate the power plants, how to 
operate the water and sanitation facilities. It is really a 
critical issue.
    Mr. Van Hollen. Are U.S. resources being spent in this way 
now?
    Mr. Christoff. Moving in that direction, I think, is not 
only the attention that SIGIR has brought to this, but also the 
attention that we brought to it and the USAID Inspector 
General, where the State Department and others are trying to 
take moneys from some projects and try to focus more on 
sustainability.
    There is a discussion right now, I think, within the 
administration as to whether or not you go beyond this 90-day 
period of providing the Iraqis with additional knowledge and 
training and perhaps extending it to a full year.
    Mr. Van Hollen. Mr. Farinella, you also addressed this 
issue in your testimony, and you talked specifically about your 
audit and recommendations with respect to the electricity 
sector and that you recommended the USAID adopt a multiyear 
strategy.
    Can you tell me what progress, if any, USAID had made 
toward implementing that kind of strategy?
    Mr. Farinella. Well, since we have issued the report, they 
are addressing those issues of sustainability that are 
important. For example, one of the things they are addressing 
regarding the power sector is a power plant maintenance program 
whereby, as part of the project, the contractor, Bechtel, is 
providing something like 60,000 hours of technical and 
management training to Ministry of Electricity, Iraqi Ministry 
of Electricity staff, to bring them up to speed, to be able 
to--once these activities are fully within their power and area 
of responsibility, to be able to maintain these going forward.
    Mr. Van Hollen. What is your assessment now? Let us just 
take the electricity sector. What is your assessment now of the 
Ministry of Electricity's ability and competence to maintain 
the operations?
    Mr. Farinella. I would say that at this point it is a work 
in progress. I would say at this point it is a work in 
progress. It is not something that we could definitively state 
that, going forward, the sustainability of this is ensured.
    Mr. Van Hollen. All right.
    Mr. Bowen, you also addressed this issue and identified it 
as an issue in your testimony. What is your assessment of how 
prepared we were for the sustainability phase? It sounded like 
these contracts originally did not envision a sustainability 
component; it was more of a turnkey operation.
    What amount of additional resources are going to be 
necessary across all these different industries in order to 
meet the goal of sustainability in terms of training, 
equipment? What more are we going to have to put in in order to 
meet these challenges?
    Mr. Bowen. It is an excellent question.
    First, SIGIR has been raising sustainability issues since 
the spring. It was the foremost issue we highlighted in our 
July report, and we announced with that report a sustainability 
audit, which we will issue in this next report in 12 days.
    The pressure exerted on the sustainability issue has 
resulted in action, and the Director of IRMO, in response to 
our initial audit findings, created an Office of Sustainability 
to coordinate.
    So, first off, there needs to be within the Iraq 
reconstruction program a coordinated sustainability effort. 
Stovepiping or haphazard approaches don't work. It has been a 
burden throughout. But this, going forward, as you rightly 
point out, is perhaps the most significant issue. What we hand 
over has to endure for democracy to endure there.
    How much is it going to cost is your second question, and 
through the course of our audits, we were able to identify, 
IRMO identified--Iraq Reconstruction Management Office 
identified $350 million to $400 million that is available for 
allocation on sustainability issues.
    That is an important start. But the ultimate cost is 
unknown, because it was not budgeted for at the outset. It has 
been addressed gradually over the course of this year, but we 
are still playing catch-up in ensuring that both the planning 
and the funding are in place.
    It is not just United States; let me emphasize, it can't be 
U.S. funding that makes this work. There are two components. 
There is operations and maintenance sustainability and there is 
legacy sustainability. Legacy is how this thing is going to 
work in the long run, and they have to change the way--they, 
the Iraqi Government--has to change the way they budget, 
because they don't budget for sustainability.
    That is a message that has to be sent through IRMO to the 
senior consultants to the ministers and ultimately to the 
Minister of Finance to be sure there are adequate funds to run 
the system.
    Mr. Van Hollen. Thank you.
    Mr. Chairman, I have a really quick followup on one point. 
You say in your testimony that IRMO currently does not have the 
authority to address this issue. Could you speak to that point 
right now?
    Mr. Bowen. About----
    Mr. Van Hollen. With respect to, IRMO has responded by 
creating the office to lead coordinated efforts to address and 
sustain the issue. However, IRMO needs authority it does not 
currently have to accomplish this objective.
    Mr. Bowen. Well, essentially what I am asking for there is 
that the Ambassador--who is, according to the NSPD, in charge 
of the overall reconstruction program--empowers through 
delegation of authority to IRMO and, thus, to that office to 
coordinate sustainment across DOD, USAID, State Department, all 
other operating entities with IRRF dollars in the country.
    So there has been an issue of coordinating among 
departments in Iraq over time.
    Mr. Van Hollen. This isn't legislative authority. The 
Ambassador today could issue IRMO that authority, right, if he 
took your recommendation?
    Mr. Bowen. That is correct.
    Mr. Shays. The gentleman had time.
    Under most of my life, going back from Johnson to Nixon to 
Ford to Carter to Reagan to Bush to Clinton to Bush, the DOD 
budget has not been auditable. It blows me away. So I know you 
have more than enough work to do, Mr. Gimble.
    The number that we are hearing about not being auditable is 
this $8 billion stolen. Could someone provide a little bit more 
insight as to ``stolen'' versus the $8 billion?
    Mr. Bowen. Yes. I think you are referring to our January 
30th audit of the management of DFI.
    The Development Fund for Iraq was created in U.N. Security 
Council Resolution 1483. It essentially transferred the Oil-
for-Food account in the Southern District Federal Reserve Bank 
of New York into a DFI account which became the operating 
capital for CPA's management of the government.
    Mr. Shays. So this was Iraqi dollars?
    Mr. Bowen. That is correct. It is not appropriated dollars.
    Mr. Shays. Basically, Iraqi money to be spent by Iraqis?
    Mr. Bowen. Correct, for the management of the interim Iraqi 
Government.
    Mr. Shays. Not U.S. taxpayers' dollars?
    Mr. Bowen. Exactly right.
    Mr. Shays. But then, go on. Was it stolen?
    Mr. Bowen. It was not stolen. As our audit makes clear, we 
addressed the lack of effective accountability measures so as 
to provide information to the Administrator and to the CPA, 
which had charge of the money and charge of managing the Iraqi 
Government at that time, to know exactly where that money was 
going.
    It raises concerns. If you don't have feedback on how the 
billions you are transferring to a fledgling government that, 
as we discovered early on, was in a bit of a chaotic state, 
then you are not going to have assurances, which is our job, 
accountability assurances in IG, that money, which we had 
charge of, is properly used.
    Let me just make one other point. The Commissioner of 
Public Integrity in Iraq----
    Mr. Shays. That is the Iraqi Government?
    Mr. Bowen. Yes. He is the FBI counterpart, the Iraqi FBI, a 
good man whom I have met with on a number of occasions. Each 
time I go, I meet with him a couple of times; Judge Radi and, 
really, the point of the spear on the anticorruption effort has 
announced indictments of Ministry of Defense officials for 
embezzlement or fraudulent misappropriation of billions of 
dollars of DFI dollars that were transferred.
    So the point I am making is, we cannot conclude that money 
was stolen or fraudulently misappropriated in any way. What we 
did say is, we are not sure; there wasn't enough feedback. You 
remember in our audit that we went out and we looked at some 
security----
    Mr. Shays. The bottom line is, you can't trace the dollars 
because there is not a paper trail?
    Mr. Bowen. Correct. And now we have downstream significant 
indictments coming up on the Iraqi side of the ledger regarding 
this.
    Mr. Shays. So some of that money was clearly taken?
    Mr. Bowen. By Iraqis, correct.
    Mr. Shays. Mr. Lynch.
    Mr. Lynch. Mr. Chairman, I just want to jump in. We were 
the custodian, though, of that money----
    Mr. Bowen. That is right.
    Mr. Lynch [continuing]. To be spent on behalf of the Iraqi 
people, knowing full well that we were going to have a 
deficiency here where our money, our tax money, is basically 
filling in that gap that the Iraqis can't pay for themselves. 
The more money we use of Iraqi money that doesn't get stolen is 
money we don't have to draw down from the American taxpayer.
    So we were the custodians for that reservoir of funds, and 
we should have had the protections and the infrastructure there 
basically to make that transference without getting robbed. All 
I am saying is that we failed in that measure.
    Your report, if I read it correctly, doesn't say the money 
wasn't stolen, it is just we can't figure out what happened to 
it. There is $8 billion there that, OK, maybe it went here, 
maybe it went there, but--that is a hell of a way to run a 
system though.
    Mr. Bowen. Well, let me make clear, we didn't say it was 
stolen. It was misreported on many occasions in the press that 
we did. What we said was, there should have been better 
accountability measures in place regarding the stewardship of 
those dollars that were transferred by the CPA to the Interim 
Iraqi Government for their operations.
    Mr. Lynch. We are not talking about a couple of thousand 
dollars here; we are talking about $8 billion.
    Mr. Shays. We can agree that some of $8 billion was taken, 
and the question is how much.
    Mr. Bowen. Yes, eventually.
    Mr. Shays. I totally agree with your assessment that 
particularly before the transfer of power in June, we had an 
extra responsibility to make sure the money was well spent. So 
I don't want my colleague to think that I am in any way passing 
judgment on his concern about this issue.
    Mr. Lynch. Understood.
    Mr. Shays. And I thank him for his fairness in this whole 
process.
    One of the other interesting issues I wrestle with this: 
They have no checking system in Iraq. Soldiers get paid, they 
literally go home to provide it to their families. But the 
other part that is kind of amazing to me, and I would like 
someone to speak to this.
    In Iraq, the generals would say how many soldiers they had, 
and they were given envelopes of payment. If they said they had 
2,000 and they only had 1,800, there were 200 envelopes with 
cash in them that, who knows where it went?
    How is Iraq now trying to deal with that issue? Can someone 
speak to that? My understanding is the Iraqis themselves have 
impaneled this.
    Mr. Krongard, can you speak a little to that issue?
    Mr. Krongard. Well, some of us have mentioned the so-called 
``troika,'' the three parties that are engaged in 
anticorruption activities in Iraq. Each of the ministries and 
agencies, the 29 ministries and agencies, has an Inspector 
General that is an Iraqi Inspector General. That was instituted 
during the Coalition Provisional Authority. It was based on the 
American experience; Inspectors General were not traditionally 
or previously in Iraq.
    In addition, you have the CPI, which, as Mr. Bowen said, is 
the counterpart to the FBI. They are very actively engaged in 
anticorruption activities. Then you have the third, which is 
the Board of Supreme Audit, which has existed in Iraq for many 
years.
    So the Iraqis are proceeding in a manner that has the 
appearance of fighting corruption. The details and what the 
court cases will show, I mean, I couldn't possibly forecast 
that. But the structure is there. Whether it will work out, I 
couldn't say.
    Mr. Shays. Mr. Christoff, do you want to make a comment?
    Mr. Christoff. My comment relates a lot to just building up 
the capacity of the different Iraqi ministries, their 
accounting capacity, their ability to keep track of even their 
own employees.
    If you look at DOD's report from last Thursday, they talk 
about the Ministry of the Interior that is responsible for the 
police functions, and they are trying to figure out all the 
ghost employees, those employees that are still being paid, but 
they are not really doing policing work.
    So I think it is important to focus, as agencies are trying 
to do, on building up the accounting capacity, building up the 
ability of all the different Iraqi ministries to come into a 
21st century form of accounting.
    Mr. Bowen. In the latest 2207 report to Congress, the State 
Department noted that the Iraqis are pursuing a national ID 
measure and biometric data to address the ghost employee issue. 
We raised it in our January 30th report, and we found in the 
various samplings we made, almost half the employees didn't 
exist that were being paid.
    I am afraid that was epidemic--it was endemic to the 
system.
    Mr. Shays. Where was that?
    Mr. Bowen. That was in the January 30th----
    Mr. Shays. Half of the employees where?
    Mr. Bowen. It was in security details and in certain 
ministries. It was the Ministry of Transportation. We actually 
got a report from a CPA employee whom we asked to go out and 
document how many were actually there getting paid. There were 
roughly--I can't remember the number; there were 1,800 salaries 
being paid, 600 people showed up to collect the money.
    Mr. Shays. One of my observations in my 10 visits is that 
some Iraqis still don't know whether we are going to stick with 
them, so some haven't decided which side they want to be on. 
Because they watch CNN and others who are reporting what they 
are reporting, and they are saying, you know, we may leave 
them.
    There is an incentive when you have that kind of 
environment to try to get something in the short run. The more 
we can convince them that this is a long-term effort, the more 
we can convince them that there will be a legitimate government 
that they can become part of.
    I hope some of what we see changes, but obviously it is a 
culture that has allowed for a lot of this kind of stuff to go 
on.
    Mr. Bowen. Mr. Chairman, I have seen exactly the same 
thing. There was a question on their side about our commitment, 
particularly to anticorruption, which is why, when I met with 
Ambassador Khalilzad during my last trip, I urged him to be 
forthright and emphatic in his support of the anticorruption 
foundations in Iraq and, more specifically, to call an 
anticorruption summit; bring in the CPI Commissioner, bring in 
the chairman of the Board of Supreme Audit, bring in all the 
IGs, and endorse their efforts and do what we can to help fund 
the training academy that Mr. Krongard referred to and do what 
we can simply to bolster that. Because without integrity at its 
core, the democracy program could founder.
    Mr. Shays. Let me just cover this. We invited all of you 
here because I think it is rather impressive that we have this 
kind of oversight and because you have the knowledge to tell us 
what the facts are. If you leave now, I leave a bit confused 
about some issues.
    Mr. Christoff, you might have a more overall view; or maybe 
you, Mr. Bowen; or others as well. And that is, we are talking 
literally of hundreds of billions of dollars that have been 
spent in Iraq.
    Mr. Bowen, you folks own $18\1/2\ billion of it?
    Mr. Bowen. IRRF I and II, about $22 billion.
    Mr. Shays. Mr. Krongard, what do you focus on? Is it out of 
the 18 or just that related to State Department?
    Mr. Krongard. It is just the State Department, but Mr. 
Bowen really has the oversight of the IRRF funds. We have some 
responsibilities, but what we tend to look at is more of the 
management.
    The embassy over there has oversight responsibilities. We 
look at the efficiency, the management.
    Mr. Shays. It is a huge embassy, we have 600-plus, give or 
take.
    Mr. Krongard. Yes, and we have done a number of reports 
which is attached to my statement, which indicate what we have 
looked at in terms of trying to bring efficiency, trying to 
bring coordination.
    Mr. Shays. I am going to come back to you, Mr. Christoff.
    Mr. Gimble, as Inspector General, you basically have a huge 
amount. Is it your view that when you look at the hundreds of 
billions over which you have oversight that it is in salaries?
    Explain to me your mind-set that tells me you don't need to 
be in Iraq. There is an answer. I don't know if I will agree to 
it.
    Mr. Gimble. Let me clarify a couple of things.
    We have been in Iraq, just not very much. We have a team 
going over the first week in November with Mr. Krongard. We 
have had people over there doing the joint police assessment.
    Mr. Shays. I guess before you go there--and I will give you 
a chance--I want to make sure you are hearing at least what I 
am trying to ask you, that is, your job is to audit all of 
Defense, correct?
    Mr. Gimble. Correct.
    Mr. Shays. Are you auditing the troops and the allocation 
of moneys going to the National Guard, going to the Reservists, 
going to our active duty forces? You are continuing those 
audits. They may be in Iraq or may not be.
    Mr. Gimble. That is correct. Because we have things like 
payroll audits. We do those routinely as a part of our 
financial statement audits. Those would cover all of the Army, 
for example, on military pay appropriations.
    We just completed stuff like the DOD patient movement 
system. It is a little bigger than Iraq, but it definitely has 
impact.
    We have a number of----
    Mr. Shays. Let me just cut to the chase: How much DOD money 
is spent in Iraq?
    Mr. Gimble. The emergency supplementals right now show to 
be $65.2 billion and $76 billion. That is not all being spent 
in Iraq. That is supporting the Global War on Terrorism, which 
includes Afghanistan, and we are doing some work in Afghanistan 
also.
    I cannot make a good case of why we have not had a bigger 
presence in Iraq. I am not trying to make that case. I am just 
saying there is a lot of oversight there; we have tried to 
coordinate and not duplicate.
    Should we have been there in a little more presence? The 
answer is probably yes, we should have.
    Mr. Shays. Mr. Farinella, what do you audit?
    Mr. Farinella. We audit the USAID moneys.
    Mr. Shays. How much?
    Mr. Farinella. It is roughly about $5 billion that was 
awarded for contracts----
    Mr. Shays. In addition to, or in conjunction?
    Mr. Farinella. As part of those IRRF funds.
    Mr. Shays. In conjunction with. Mr. Bowen, it is the same 
dollars, correct?
    Mr. Bowen. Yes, that is right.
    Mr. Shays. In other words, in some cases we almost have 
duplication?
    Mr. Bowen. That is what the IIGC does.
    Mr. Shays. I know what it is, but I want you, for the 
record, to say what it is. Not the initials, sir. You audit----
    Mr. Bowen. I am sorry, the Iraqi Inspector General's 
Council.
    Mr. Shays. You have a council. You get all these folks 
together and then, what, you divide up the workload?
    Mr. Bowen. We coordinated actually with USAID. The week I 
was appointed, I went and met with Everett Mosley; then I said, 
look, we have oversight of your piece of the pie now. We need 
to coordinate. You are already providing oversight. Let's 
marshal our resources and ensure there is not duplication of 
effort.
    So we coordinate with USAID on how they are overseeing 
their portion of the IRRF and review their product.
    Mr. Shays. Because I want to give Mrs. Maloney time here, 
Ms. Morrow, the Army is only one part of our effort obviously 
in Iraq. What do you audit? The Reservists? The National Guard? 
Do you have a specific mandate?
    Ms. Morrow. As it relates to our work in Iraq, the Army is 
the executive agent for some of the funds, so we are----
    Mr. Shays. You mean, of all the military? So even money 
spent by other branches is funneled----
    Ms. Morrow. Not funneled, but in terms of having 
visibility, having some program oversight, the Army's Project 
and Contracting Office.
    Mr. Shays. And how many dollars are we talking about?
    Ms. Morrow. The DOD portion of that is about $13.1 billion 
of the $18.4 billion. It is part of----
    Mr. Shays. And not added to?
    Ms. Morrow. No, sir. It would be part of those funds; the 
IRRF funds, it is part of that. That is the work we are doing 
as it relates specifically to Iraq.
    There is a lot of other work we look at, all the functions 
that the Army has, to include the National Guard, the Reserves 
and a whole host of various areas.
    Mr. Shays. Let me go to you and end with you, Mr. 
Christoff. You may have more of an overview, given you are not 
an Inspector General with one area.
    Do you have confidence that we are covering the whole 
gambit of our expenditures in Iraq? Do we need an Inspector 
General to check out the Inspector Generals?
    Mr. Christoff. Oh, absolutely not. I think the one----
    Mr. Shays. Are we covering the bases here, sir?
    Mr. Christoff. I think we are covering the bases. And if I 
could continue, I think what GAO also offers is the fact that 
since we have the authority to look at all appropriations and 
all U.S. Government activities, to sit back and look at how the 
different agencies--USAID, PCO, State Department, the 
Department of Defense--are working together and collaborating 
together to deal not just with reconstruction issues, which 
seems to be the focus, but also the important security issues 
too, the training and equipping of Iraqi security forces.
    Mr. Shays. You were comfortable saying under oath, in this 
subcommittee, what about the overall effort to look at how 
money is spent?
    Mr. Christoff. I am never going to disagree that more 
oversight is not needed. More oversight is always needed, 
particularly given the billions we are spending in Iraq.
    I think Mr. Bowen is correct. We have been trying earnestly 
to coordinate all of the activities that the different 
Inspectors General are doing with the Special Inspector General 
and with the GAO as well.
    Clearly, you all have an important responsibility as well 
with the kinds of oversight hearings and continually asking the 
hard questions I think we are trying to ask as well.
    Mr. Shays. Thank you.
    Mrs. Maloney, you have the floor for 10 minutes plus.
    Mrs. Maloney. First of all, I would like to thank the 
chairman for his continued oversight and concentration and 
focus on Iraq. It has been very helpful to Congress and, I 
think, the Nation.
    I would like to get back to policing, since every time we 
have been to Iraq together, the chairman and I, the focus has 
always been if we can get the Army and the police up to snuff, 
strong enough, then we can have a strong, independent Iraq.
    What I find very troubling is that they keep reporting that 
the policing is getting better and stronger. Out of the police, 
they need 180,000, and we are roughly at 95,000, but many 
people are saying they are more like beat cops than real strong 
police officers. And out of the Army troops that were 
required--this is a July 25th report--they are saying we need 
100,000, and we have roughly 78,000. That is 20,000 short.
    What I find so troubling is no matter, how many resources 
we put in it, training in different countries--and I would like 
to ask Mr. Farinella and Mr. Gimble whether you think 8 weeks 
training is enough. But I would like to say that I am troubled 
by the fact that we are focusing so much on it, yet the 
incidence of brutality, of attacks on the police, of the 
ability to keep law and order, it seems to be getting worse, 
not better.
    I would like DOD, State and Mr. Bowen, anyone who would 
like to comment, Mr. Christoff, if you have done any studies on 
it with the GAO.
    But I find that troubling. They keep saying we are training 
more, we are training more, we are training more, yet the level 
of uncontrolled activity and violence appears to be getting 
worse.
    Mr. Gimble.
    Mr. Gimble. Our assessment of the training is, the 8 weeks 
is probably OK for part of it. However, there needs to be, in 
our view, more supervisory training to have the leadership that 
is necessary to have an effective police service.
    I guess that would be kind of where I would leave it at.
    Mrs. Maloney. Mr. Farinella.
    Mr. Farinella. AID is not involved in that area at all.
    Mrs. Maloney. Mr. Bowen, Mr. Christoff, Mr. Krongard of 
DOD.
    Mr. Krongard. DOS.
    The first thing is to distinguish between police and 
military. Some of the numbers you referred to I think included 
both those numbers. The police have a different function. They 
are just like the police here; they have an urban mandate which 
is a little bit different from the overall security mandate 
that the military forces have.
    The 8 weeks is a good starting point as a training. We have 
recommended that there be additional specialization to 
determine where they are going to go afterwards. We have 
recommended more involvement by the Iraqi Ministry of Interior 
both as to recruiting and vetting, as well as to where these 
people go afterwards.
    So there is a lot that needs to be done. It is a difficult 
environment for them.
    On the other hand, the reason we have called it a qualified 
success, as I referred to in my testimony, is there has been 
good performance; there was at the time of the election. It may 
be too soon to say what happened this past weekend, but the 
early indications are that the police activities were fairly 
good. The respect for the police seems to have grown.
    Police, unlike military, have, just like here, a more 
direct involvement with the people, so there has to be a better 
feeling of the people to the people in the police force, and 
that does seem to have improved.
    So it is a difficult situation. Over 1,600 police have been 
murdered in various events, and they keep turning up.
    Mrs. Maloney. During the election they had to shut down all 
the roads. They had to shut down basically the whole country.
    Mr. Krongard. Yes.
    Mrs. Maloney. What I find disturbing is that the incidence 
of violence seems to be increasing even though the level of 
trained troops and trained army is increasing and should be 
focusing on maintaining order in a more successful way.
    Could you comment on that? Why is that happening when you 
say we are having success with the training, yet the incidence 
of violence and uncontrolled activity, which police and the 
army and the military are supposed to control, it just seems to 
be getting worse in the number of incidents.
    Mr. Krongard. Well, I don't like not answering your 
question directly, but I was commenting on an interagency 
assessment of Iraqi police training that we did along with the 
DOD. That was not an assessment of the military forces. So I 
just don't feel qualified to answer your question with respect 
to the military forces, who have the overall responsibility for 
maintaining the countrywide security.
    The police have a different mandate and a different job, 
and my comments and my experience and expertise through this 
has been directed toward the police and not the military.
    Mrs. Maloney. Mr. Christoff, have you done any reports on 
the increased incidents or lack thereof?
    Mr. Christoff. Yes. In fact, my statement shows statistics 
that DIA declassified for us that indicates that the number of 
incidents, violent incidents, against the Coalition 
infrastructure and the Iraqis is going up. We did have a 
decrease in the violence shortly after the vote, but the 
violence is continuing to go up.
    I think one of the questions that we are trying to get at 
is that when you have reports of continuing progress in the 
training and the equipping of Iraqi security forces, 192,000 
trained and equipped, what does it really mean? What does it 
really mean in terms of the capabilities of those forces?
    We have looked at this number I don't know how many times, 
192,000. No. 1, we know that not all the Iraqi forces have all 
the equipment that they need. They have varying degrees of 
training. There is absenteeism in the Iraqi forces. There are 
ghost employees. So you have to peel back these statistics that 
are being presented as evidence of progress and get behind 
them.
    There is one Iraqi unit that has a capability level of No. 
1, that is, fully capable of operating independently of 
Coalition forces. Well, the question is, for how long? Do they 
have the logistics that will allow them to sustain themselves? 
Do they have the maintenance and the operations? Can the Iraqi 
Government afford the growing amount of security forces that it 
is now tasked to provide for?
    Mrs. Maloney. Well, this increased incidence of violence 
that you are tracking, you are tracking that the police and the 
army are getting stronger, yet the incidence of violence is 
increasing too. Have you looked at why that is happening? Is 
that more unrest among the people? Have you tried to understand 
why the increase in violence? Even though the amount of 
policing and military force is increasing, why is the violence 
getting more?
    Mr. Christoff. Because you still have a very capable and 
lethal insurgency in Iraq.
    Mrs. Maloney. I know, but we had a capable insurgency a 
year ago, and yet the violence was not as pronounced as it is 
now, according to your own study.
    I would like to move to another subject very quickly, and 
that is the women. The reports I read on the constitution, they 
are saying in certain areas of the country, sharia may be 
imposed, but in other areas of the country it will not be 
imposed. This is very troubling to me. I certainly have met 
with my colleagues on both the Democratic and Republican sides 
of the aisle with many Iraqi women leaders. One was a judge, 
and they will no longer let her sit as a judge. I find that 
very troubling. One was a doctor. They are no longer letting 
her sit as a doctor and perform her work.
    I would like to hear maybe, have you done any studies on 
that at GAO or do you have any information? Can anyone clarify 
the status of women? I know the status of the constitution is 
not clear, so therefore the status of women is not clear. But 
if you could, clarify that aspect.
    Mr. Christoff. We have not done specific studies on women's 
issues in Iraq, but I think you point out a good point in the 
sense of how is the constitution that is trying to balance the 
tenets of democracy and the tenets of Islamic law going to 
allow for previous rights that women had in Iraq and how is it 
going to be implemented in the different provinces within Iraq.
    Mrs. Maloney. I think that is an excellent question, and 
you stated it, and I don't think anyone has the answer right 
now. Anyway, I hope the State Department and DOD remain firm in 
supporting women and women's rights.
    I just left a committee hearing next door, actually with 
Mayor Nagin from Louisiana, and it was on Hurricane Katrina and 
the response there. I would say that you have a great deal of 
experience now in monitoring accountability in Iraq for 
government property and for, really, contracting and for other 
areas.
    I know there have been some mistakes, but looking forward 
if you could, give our government and the government of the 
city and State some insight and direction, some guidance, what 
steps should they be taking right now to ensure more 
accountability for Hurricane Katrina spending than spending in 
Iraq, where a lack of controls from the outset really allowed 
for waste and fraud.
    Can you give some direction to what we should be focusing 
on? And what advice would you give to the leaders responding to 
Hurricane Katrina, not only to help the people, but to have 
real accountability and oversight in real time?
    Mr. Gimble. What we have done is, we have five audits 
announced, that we are on the way to the various places in that 
sector. We are also a member of the DOJ task force on the 
investigative side. In fact, I am going down tomorrow for a 
press conference they are having down there in the city with a 
lot of the Inspectors General.
    I think one of the big things, the lessons learned, is when 
they started backing away from the noncompetitive contracts, I 
think that was a key lesson we learned, and I think it is good 
to see the folks are doing that.
    We will have a number of issues to deal with. I think a lot 
of the same issues that you say in Iraq are fairly similar. 
However, I think it is different from the standpoint that 
somebody pointed out earlier that we can actually go down there 
and move around in the area, where you can't really do that in 
Iraq.
    So I think you will see a big presence, at least in the DOD 
IG and the DOD community, where we have about 190 people lined 
up to go down and do some work in that area.
    Mrs. Maloney. Mr. Krongard, do you have a comment or any 
advice you would give to the leaders there?
    Mr. Krongard. My department, the Department of State, is 
not actively involved in Katrina because we don't have many 
procurement activities or contracting down there for 
reconstruction. So I am not participating.
    Mrs. Maloney. From your experiences.
    Mr. Krongard. I would say that I think this lesson is 
already being implemented, which is, it is important to look at 
the way in which money is obligated, not just the way it is 
spent. And I think that lesson is being learned very quickly, 
and the IGs are on the ground down there looking at the way 
contracts are let, the format, the selection of winners and so 
on. I think that is an important thing, rather than waiting 
until the money is spent.
    Audits are done, looking backward.
    Mrs. Maloney. Would you elaborate? You would suggest that 
they look more on what they want to accomplish or how they----
    Mr. Krongard. Well, both. Are the scopes identifiable? Are 
the deliverables identifiable? Do people understand what a 
contract objective is, not just how it is being let, what the 
competitive bidding is--all of those aspects.
    Mrs. Maloney. So you would focus on what you want to 
accomplish even more than the competitive bidding?
    Mr. Krongard. I am not sure I would prioritize them. I 
think they are both very important.
    Mr. Shays. If we could maybe come back to that, I want to 
do a second round with everybody. But I would like to make sure 
that someone explains to us what is the hang-up with 
competitive bidding? In other words, do we have in process that 
competitive bidding takes 9 months or 10 months? If it does, 
then that is the reason we don't have it.
    The gentleman has time.
    Mr. Lynch. Thank you, Mr. Chairman.
    Just in terms of where we are right now, I think we not 
only have a Reconstruction Gap, I think that you folks have 
perhaps a preexisting auditing gap or accountability gap that 
you have to deal with.
    I appreciate the fact, Mr. Bowen, that you have only been 
there a year in your current position and you have taken some 
steps in the right direction, I believe. But we are not there 
yet.
    I keep going back to the point of the end of the CPA, the 
Provisional Authority, massive amounts of cash coming out of 
New York, the Federal Reserve Bank of New York, where the 
committee has received documents as to the amount of cash on 
those planes, all going into Iraq at the 11th hour. We have 
accountability supported by hard documents as to where that 
money went, up until the point that it goes over to the interim 
government and then a lot of it disappears.
    So I just have a lack of confidence that we have the 
infrastructure in place, the accounting procedures and the 
auditing mechanisms in place. I just don't think they are there 
yet. But I think we are moving in that direction.
    We also have, and I was very happy to hear Mr. Gimble's 
remarks about not defending that, defending the fact that DOD 
has no one on the ground. I appreciate your honesty, sir.
    I have reports of about $34 million in U.S. assets that 
can't be traced on the ground; we sort of lost them. There are 
vehicles, there is equipment, but there is about $34 million 
that is missing. I suspect it is more than that, but this is 
what we know is missing.
    All this boils down to, really, metrics, and that is what 
we are looking to you for. After Saturday, with this election 
and assuming that the constitution is ratified and that the 
elections go forward in December, our withdrawal from Iraq, 
getting our sons and daughters home, really depends on metrics, 
on measuring the things that you are responsible for, the 
ability of the Iraqi security forces to handle their own 
security, the ability of the Iraqi police department, the 
construction efforts in terms of water and electricity and 
infrastructure there in Iraq. That is all critical to our 
withdrawal and to the success of the future Iraqi Government. 
So--it is very, very, very important and we are relying on you, 
so this system needs to be tight. It needs to be as accurate as 
possible, because we are betting everything on this.
    There are a lot of us here from both parties that want to 
get our sons and daughters home as quickly as possible and to 
be there not a day longer than they have to be. That date is 
determined by those metrics that you supply us with. So it is 
critically important, not just with the construction effort, 
not just with the security effort, but our whole involvement 
here in this country.
    We just need to have DOD on the ground, and if it takes 45 
more inspectors, if you need to double the number of auditors 
to get us there, then, you know, given the fact of the 
sacrifices that we are making right now, that would seem to be 
a very modest and reasonable request. It is just one that I 
offer to you.
    Again, I appreciate the good work that you are all doing 
and your service to this country. I appreciate the chairman 
continually working on this issue. I just think there is a way 
we can all do our job a little better here.
    Thank you.
    Mr. Shays. We will be closing up just with a few 
clarifications.
    Mr. Christoff, you make me nervous when you give a 
statistic that says, or in general--and let me say, you are a 
very credible witness, so I have nothing but admiration for the 
job you do and your responses. I think you are trying to be 
extraordinarily fair and very accurate.
    So I just want you to tell me, when you say the violence 
has gone up, I look at August and your own statistics--November 
and January of last year--and they are higher than the highest 
point since February. So we are not as high as we were in 
August last year, as high as we were in November, as high as we 
were in January of last year.
    Where we are is at a low point in March, which was 
significantly lower than any part up to April last year.
    There has been a slow creeping up again; is that accurate?
    Mr. Christoff. Mr. Chairman, I stand corrected. I think 
those statistics were characterized to us--and I agree with 
them--by DIA is, if you look at them going back to 2003, you 
see lows, you see a peak, it is followed by more lows, and then 
a slightly higher peak. So there have been ebbs and flows in 
terms of the violence.
    Mr. Shays. But there were three high peaks last year that 
we haven't come close to?
    Mr. Christoff. Right. The November one with Fallujah was 
one of the high peaks.
    Mr. Shays. I tend to also want to say that, having been 
there--and I say ``having been there,'' because I get a 
different feeling than if I wasn't. I happen to agree with Mr. 
Kucinich, you need to be there; and I would love for him to 
come with us, because you see different things.
    I could walk in 14 provinces and feel relatively safe 
except for organized crime. I can't be in four provinces. But I 
hear people saying, Iraq is a mess, and they think that what 
they see in Baghdad is what is everywhere. So I get a little 
sensitive to that.
    But with the police issue, I want to be clear that the 
State Department is involved with the traffic cop part of 
police work, right? You are not with the paramilitary----
    Mr. Krongard. That is correct. I am not sure I would call 
them traffic cops, but you are correct.
    Mr. Shays. That is not fair. That is not fair. Non-
paramilitary. They are on the firing line.
    That is a real mistake for me to say that. Thank you for 
correcting me.
    My understanding is you are in charge of that incredible 
facility in Jordan?
    Mr. Krongard. When you say in charge, yes, the State 
Department is, INL is, that is right.
    Mr. Shays. And you are overseeing it in the State 
Department?
    Mr. Krongard. That is correct.
    Mr. Shays. Is there anything any of you want to put on the 
record before we get to the next panel? Any issue?
    Mr. Krongard. The only thing I would say, sir, both 
yourself and Mr. Lynch emphasized the question of whether we 
all thought that the oversight was adequate, and we all kind of 
nodded.
    I would like to qualify it in the sense--and I did say this 
before. I don't want to overly say it, but the fact is, for 
2005, I feel I was able to provide oversight, do these 
assessments of Iraqi police training, evaluate the rule of law 
programs and do a bunch of audits and other things.
    We have zero funding for 2006 in respect of either Iraq or 
Afghanistan, so I do not feel that we are able to provide the 
oversight for this current year.
    Mr. Shays. If you didn't say that, it would be a 
dereliction of your duty.
    Mr. Krongard. I think so.
    Mr. Shays. So it is our job to get you those dollars.
    Mr. Krongard. Yes, sir.
    Mr. Shays. Mr. Gimble.
    Mr. Gimble. I would like to just agree with that. We have 
not been plussed up to do any work over there. We can redirect 
and we will do some of that. However, what that does is take 
away from mission areas in other parts of our responsibilities, 
of the other $400 billion of the Defense budget. So we have 
basically been flatlined as an organization for the last 
several years.
    The cost per man-year, or FTE, has gone up. Consequently, 
on the performance side of our house, on the investigative 
side, we have actually lost people over the last several years. 
So we are resource constrained. I am not saying we don't have 
flexibility.
    Mr. Shays. I understand. You may not look at the A-22 or 
whatever. There will be other things that won't be looked at in 
the process that we as a committee want to make sure you look 
at. So that is helpful information as well.
    Anything else?
    What are we doing, Mr. Bowen, in terms of refunding you for 
the next 2 years?
    Mr. Bowen. Yes, the proposal in the Senate bill would 
transfer $30 million in IRRF dollars to fund the SIGIR. There 
is some resistance to that, I think, within IRMO and perhaps 
OMB. They don't see using IRRF dollars to fund our operations 
as a proper use of that.
    Mr. Shays. Then it is up to OMB to tell us where we are 
going to get the dollars. It is, because the work needs to 
continue.
    Mr. Bowen. Yes.
    Mr. Shays. We had mismanagement and corruption in the Civil 
War, we had it in World War I, World War II. Truman was clearly 
on top of those issues. It is just a requirement. The fact that 
people know you are looking means that money will be better 
spent.
    I did make a misstatement, though. I said sometimes when 
you watch the bureaucracy more, they become more efficient. 
Sometimes what happens with the bureaucracy is, they tend to 
cross their T's and dot their I's more and become almost more 
bureaucratic, when sometimes you need efficiency action. Which 
gets me to this very last point, and that is the whole issue 
of--you started to smile when I asked the question earlier 
about the auditing of dollars. Do you remember what the issue 
was, both of you?
    Mr. Bowen. The auditing of IRRF dollars?
    Mr. Shays. No. Give me a second here.
    Mr. Bowen. There is one issue maybe I could address that I 
didn't get to speak to on the insurgency issue, that you were 
addressing with Mr. Christoff.
    Like you, I have spent a fair amount of time over there, 9 
of the last 18 months in Iraq. And you were right; you made the 
point I wanted to make that this year, that this year it is not 
a predictable pattern. What it is tied to is January 30th, we 
had a very successful election, and that had a stabilizing 
effect because there was a perception of stability at the top.
    I see a direct correlation between perceptions of stability 
within the Iraqi Government and the level of insurgency, 
because then February and March were the two most peaceful 
months we have had since the war began.
    But the government, you remember, was not able to form. 
They couldn't build the parliamentary numbers necessary to 
appoint a president. We were into April without a government, 
and we were starting to get close to a deadline that we would 
have lost and had to go through another election. What happened 
was, the insurgency boomed.
    Then, as we moved toward the August deadline for the vote 
to send the constitution for referendum, we didn't meet it. We 
had to delay 7 days, and then we had to delay 3 more days, and 
the insurgency went up.
    So the last point is, we have to wait and see how the 
October 15th election is going to affect it. If it was a 
success like the January 30th one. The pattern may prove true 
this will be a stabilizing effect on the country.
    Mr. Shays. I will just make a quick point though. They 
missed their deadline, the constitution, by a week, and the 
press called it a failure. I was struck by the fact that we had 
our Articles of Confederation, which were an abysmal failure, 
and a Constitution of the United States that said if you were 
Black you were three-fifths of a person and a slave, and in 
order to get Virginia to agree to be part of the Union, 
fortunately, we adopted 10 amendments.
    I am hearing people now being critical that there is 
negotiation between Sunni, Shi'a and Kurd, as if somehow they 
failed in their constitution. I am learning from my experience 
that the Iraqis are taking to politics better in some cases 
than we ever imagined. They love the bartering and the dialog. 
Maybe they like the dialog too much.
    You gave me the chance to ask my question, so I love you 
for that, and we will close with this: The bidding. It relates 
to bureaucracy.
    How long does the bidding process take? Can we do a bidding 
process that takes 2 weeks or a month; or by its very nature 
you have to announce what you are bidding for, you have to 
leave so much time, and are we then talking 6 months, and then 
does that, in a sense, make bidding not practical in some 
instances?
    Mr. Bowen. Well, there are expedited measures that you can 
use in bidding contracts.
    Mr. Shays. All right. Expedited, how long would it take 
from start to finish?
    Mr. Bowen. I don't know the details of this. Perhaps Mr. 
Gimble, who knows these very well, can address it.
    But I would say in Iraq, we did that, we did 7-day 
competitions on many contracts, put them up on Federal Business 
Opportunities; and they were posted and a week later they were 
competitively awarded.
    Mr. Shays. Do you all agree we can allow for notice? Can 
anyone speak to this, or do I need another panel?
    Mr. Krongard. Sir, are you talking about domestic or 
foreign?
    Mr. Shays. Just tell me either way.
    Mr. Krongard. Because the representative was talking about 
Katrina, and of course, we are all talking about Iraq.
    Mr. Shays. I am talking foreign, but I mean--I thought--
meant domestic-military here. No, I am talking foreign. I am 
just trying to understand.
    And I don't want to give an excuse to the administration. 
The excuse to the administration is decisions had to be made, 
people had to be put in place, we needed cooks, we needed 
security guards, and we weren't going to take 6 months in order 
to find them. So we just did it and it was cost-plus.
    Now, is there a point where cost-plus gets replaced by 
bidding? That is all I am trying to understand. If you can't 
speak to it, that is fine, but I would think Inspectors General 
could speak to this.
    No one can?
    Mr. Gimble. I think there are some reasonable 
accommodations that can be made to the contracting procedures. 
One of the things that came up a little earlier was the IDIQ 
contracts, indefinite delivery, indefinite quantity. 
Essentially those are competed, and then you just do task 
orders on them as you come up, complete the task orders. That 
would cut down, a lot, the time.
    I think you see a lot of these contracts when they are 
pulling back and competing them, they are becoming a basic 
contract competed. And then you have your task orders, I think.
    Is it cumbersome? Yes, it probably is. Can it be worked? It 
is probably not a good practice, what we would take the 
position on sole-sourcing without competition ever. There would 
be certain times in emergency situations that might be the only 
vehicle available.
    I think you will see some of that in Katrina, that there 
are going to be some sole-source contracts that will stand.
    Mr. Shays. Well, my colleague and I need to wrestle with 
this one.
    Mr. Bowen. Mr. Chairman, one other point.
    Mr. Shays. Then we are going to go to our next panel. If 
there is any point anyone wants to make before we close, this 
is your chance.
    Mr. Bowen. On that subject, two issues. One, when I met 
with General Casey during my last visit, we talked about this 
issue, how can we provide for a more effective, competitive 
contracting process in an overseas wartime situation? And I 
suggested that perhaps the FAR, Federal Acquisition Regulation, 
should be amended to provide a supplement of sorts, a wartime 
contracting supplement that promotes competition but does so 
with more reasonable guidelines, so that when you are trying to 
build a school in Fallujah and being shot at, you don't want to 
post on Fed Bus. Opps and wait a month, because that is not 
possible. So you are forcing the contracting officer to find 
the quickest way to get it done, and sometimes that leaves him 
open to criticism.
    So I think it is an appropriate subject for the Congress to 
look at and amend the FAR and provide a supplement that takes 
accounts in contracting in hazardous wartime environments.
    Second, we will be looking at this in our December Lessons 
Learned Panel on contracting in Iraq. We bring in all the 
experts who did the contracting, learn the lessons and the 
problems we encountered in executing it, and in providing 
solutions like this going forward.
    Mr. Shays. OK, thank you. Any comments, Mr. Christoff?
    Mr. Christoff. A different topic to put a plug in, I think, 
for an important report that we want you to read and all 
members of the subcommittee should read. It's our classified 
report that will be forthcoming shortly looking at the security 
conditions in Iraq. It is going to discuss the conditions that 
are in the campaign plan, and also looking at that strength of 
the insurgency and the capabilities of the Iraqi security 
forces.
    Mr. Shays. Thank you. He loses his job if I don't read the 
report.
    Mr. Christoff. OK.
    Mr. Shays. Mr. Gimble.
    Mr. Gimble. I have nothing else.
    Mr. Farinella. One point, Mr. Chairman, on the discussion 
earlier on coordination among the various IGs, because I think 
it is a very important point, and I think the coordination, 
from my personal experience sitting on the committee chaired by 
Mr. Bowen, it's excellent. Not only is the coordination 
excellent among the various IGs, but during these quarterly 
meetings, we get down to a level of detail where each 
individual IG is discussing exactly what they are doing, what 
they are planing. And there is a conscious effort to avoid any 
type of duplication in what the various IGs are doing.
    I think we have been very successful to date in avoiding 
duplication. Not only are we discussing what we are doing and 
what we are planning on a quarterly basis, but we are also 
exchanging information among each other on a continuing basis. 
I think it goes a long way to providing the broadest level of 
coverage that we all can possibly provide without duplicating 
each other's efforts.
    Mr. Shays. Anything else?
    Ms. Morrow. I would just say that the Army Audit Agency 
does have 18 auditors currently in Iraq and Kuwait. Our primary 
focus with those folks is with the LOGCAP contract. There are a 
number of challenges with that we are looking at. We are 
finding that, you know, soldiers are receiving quality goods 
and service.
    But we are concerned about, you know, some of the contract 
administration issues, so we are working those and we will 
continue to work those. We have been able to respond to all of 
the requests that we received from Army leadership to support 
them from an audit perspective in Iraq. We also have three 
audits that are currently ongoing related to Katrina. So, 
again, our focus is to try to help the Army in those efforts to 
give good stewardship to the dollars it's entrusted to.
    Mr. Shays. Thank you. Mr. Christoff, you made mention of 
the report on security. I have read a report a few months ago. 
That is not the report.
    Mr. Christoff. You read the draft. We are still waiting on 
the final security review on the part of the DOD.
    Mr. Shays. Yes. What I read was pretty incredible.
    Mr. Christoff. Yes, sir. Absolutely.
    Mr. Lynch. Thank you, Mr. Chairman. I just want to point 
out there was a great paper that came out of the Army War 
College--I know we have a few graduates here--and it discussed 
the Iraq contracting/auditing-related issues, stuff that you 
are centrally involved in. There was a quote in there where it 
said--it warned that contractor loyalty to the almighty dollar, 
as opposed to support for the frontline soldier, remains a 
serious issue in Iraq.
    That's the point of interdiction for all of your offices. 
So we are relying heavily on you for that protection for our 
frontline troops, as well as for the American taxpayer, but we 
appreciate the job that you are doing.
    Thank you, Mr. Chairman.
    Mr. Shays. I would like to add my words. Thank you for your 
patience. It's been a while, a long panel discussion, and thank 
you. Thank you for allowing us to put so many of you in one 
panel. It helped us out a lot. Thank you.
    We go to our second panel and our last panel. I am really 
looking forward to the dialog we will very having.
    Dr. Mary Habeck, the Paul H. Nitze School of Advanced 
International Studies, Johns Hopkins University; Ms. Judy Van 
Rest, executive viCe President, International Republican 
Institute; Mr. Les Campbell, senior associate and regional 
director, Middle East and North Africa, National Democratic 
Institute.
    Given this is an investigative committee, we do swear in 
our witnesses. I would ask you to rise and we will swear you 
in.
    [Witnesses Sworn.]
    Mr. Shays. I would note for the record our witnesses have 
responded in the affirmative. It is great to have all three of 
you here. We have an opportunity to have any discussion that 
you would like on the issue of Iraq and how we are doing and 
what you have seen happen. You are all experts on this issue. 
You all work for three outstanding institutions. We are very 
fortunate to have you here.
    Do I pronounce it Habeck?
    Dr. Habeck. Habeck.
    Mr. Shays. Dr. Habeck, right. No, it is not on. You have to 
clip it down below.
    Dr. Habeck. OK.
    Mr. Shays. Again, how do I pronounce your name?
    Dr. Habeck. Habeck.
    Mr. Shays. Habeck.
    Mr. Shays. Habeck. Doctor, Welcome. We will allow you 5 
minutes, so you can trip over the next 5 and go right down the 
road here.

STATEMENTS OF MARY HABECK, THE PAUL H. NITZE SCHOOL OF ADVANCED 
INTERNATIONAL STUDIES; JUDY VAN REST, EXECUTIVE VICE PRESIDENT, 
 INTERNATIONAL REPUBLICAN INSTITUTE; AND LES CAMPBELL, SENIOR 
ASSOCIATE AND REGIONAL DIRECTOR, MIDDLE EAST AND NORTH AFRICA, 
                 NATIONAL DEMOCRATIC INSTITUTE

                    STATEMENT OF MARY HABECK

    Dr. Habeck. Thank you very much, Chairman Shays, for this 
opportunity to talk about this very important matter. I will be 
very brief. I was in Iraq for 2 weeks in August and had an 
opportunity to observe up close how the Corps is fighting their 
part of the war. I did not have an opportunity to really 
observe the political process or what is happening economically 
in the country, so I can't really talk about those parts of it.
    But as far as the purely military side of this war goes, it 
is my expert opinion that the Corps is winning their part of 
the war. I would like to talk about how precisely we define 
winning.
    This is one of those instances where talking about issues 
like territory or numbers of attacks really do not get at the 
heart of the problem. Instead, we have to think about what was 
the main objective of this war, and that is to create a free, 
independent, stable Iraq that will not act as a haven for 
terrorists that could possibly attack us.
    That was the main objective of the war, and put in those 
terms, one can say that there has been tremendous progress made 
toward winning this part of the war. And, in fact, progress is 
precisely what is overwhelmingly obvious, no matter what terms 
of their success are used to look at them. I would like to talk 
in three different areas.
    First of all, there has been progress on the political 
process. There has been now two successful elections with a 
tremendous buy-in on the part of the Iraqi population, and it 
is progress that has been assisted entirely by the fact that 
the U.S. military has been on the ground assisting that 
process. Without their presence, none of this would have 
happened. The military understands that political process is, 
in fact, how this war will be won and how success will be 
determined. They are not committed to attrition as the way to 
win this war, just simply killing off terrorists; they are 
really committed to the political process.
    Second, there has been progress in the creation of the 
Iraqi armed forces. Many people have commented on the fact that 
there is only 1 unit, that is put at Level I, and 37, I 
believe, that are put at Level II, and all the rest at Level 
III. What this does not take into consideration is the fact 
that a year ago none of these units even existed, and that over 
the past year we have seen the creation of these units and 
their training successfully bringing one of those units up to 
American readiness standards.
    After conversations with people within the Corps, I can 
also say that bringing them up to American standards is, in 
fact, not the standard that they wish to use. And they are 
perfectly comfortable with Level II that can be used as the 
standard for measuring success within these units. They will be 
able to provide, that is, security within their own borders and 
prevent invasion from--you know, take care of border security.
    Third, there's been progress in fighting the insurgencies, 
although that is not always obvious. I think one thing that 
should be very clear is that we are not fighting one insurgency 
here. We are fighting, in fact, four separate insurgencies. 
That is not four separate insurgency groups, but four separate 
insurgencies with different goals, objectives, and people they 
appeal to.
    Mr. Shays. The four are?
    Dr. Habeck. The four that are generally used by the mill to 
talk about this is, first, the Shi'a, which are sort of 
represented by militia, such as Sadr's Mokhtiar army. The 
second one would be the former Baathists or the Saddamists, as 
they are now called. The third one would be Sunnis, who simply 
reject the idea of Shi'a being in charge of their country, but 
were not formerly Baathist.
    Finally, there are the foreign fighters or the jihadis, or 
fighters coming in from abroad with a very different ideology 
about what they are doing in the country.
    If you take a look at all four of those and kind of break 
down what is happening with each of those, you can say that the 
political process has managed to disarm three of the four and 
only one of them is at full strength still. This explains why 
there was such a huge drop in the number of attacks immediately 
after the elections in January.
    Mr. Shays. Why is that?
    Dr. Habeck. The fact that three of the four have bought 
into the political process. Not entirely. There are still 
Baathists around who believe that they need to take part in an 
armed insurgency, and there are still a few of the Sunni 
rejectionists who still believe that they need to do this.
    But allow me to give an example. In the town of Ramadi, 
that was basically a Sunni town, three of the four sheiks there 
after the elections realized that they were no longer--by the 
way, this was a place that was full of violence and had all 
sorts of attacks on Americans and also on Iraqi security forces 
before the elections. After the elections, three of the four 
sheiks who control the territory within the town announced 
publicly that they wanted to participate in the political 
process and that they were renouncing violence. This explains 
why in Ramadi, in particular, there was such a huge drop in 
violence after the elections in January, end of January 2005.
    What about that fourth? Well, this explains what I just 
said, that there are some of the Sunni rejectionists and some 
of the Baathists who have not bought into the political 
process. And it's about 25 percent that have decided to 
continue to fight.
    If you take a look at this upswing in violence that people 
were talking about over the last couple of months, it can be 
explained almost entirely by the jihadis increasing the number 
of their attacks on areas all over the country. But even here, 
there have been measures, there are ways to measure success 
against these jihadis. They are not growing in strength nor are 
they growing in effectiveness. If you take a look at numbers of 
the attacks and then ask the questions about numbers of 
effectiveness, you can say that effectiveness has not, in fact, 
increased over time. That is, none of these insurgents are 
getting better at what they are doing. They are not able to 
draw in more people into the insurgency.
    So, you know, the number of attacks goes up but the 
effectiveness is still about 10 to 15 percent. Effectiveness 
means they actually cause injury to someone or actually cause 
death or some sort of destruction to the property. That has not 
changed at all and still remains 10 to 15 percent. They are not 
becoming more effective. They are not drawing more people into 
this violence over time. So you can say that even by that sort 
of measure, there has been success on the part of our military. 
Thank you.
    Mr. Shays. Thank you very much.
    [The prepared statement of Dr. Habeck follows:]

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    Mr. Shays. Ms. Van Rest.

                   STATEMENT OF JUDY VAN REST

    Ms. Van Rest. Thank you, Mr. Chairman, and members of the 
subcommittee. I am pleased to have this opportunity to appear 
before you today to discuss recent developments in Iraq and 
progress in Iraq's struggle for sustainable democracy. 
Immediately following the fall of Saddam Hussein's regime, I 
spent more than a year in Iraq working for the Coalition 
Provisional Authority, and, for the past year, have been 
involved in the work of the International Republican Institute 
in Iraq.
    Over this period of time, I learned to never be surprised 
by the resiliency of Iraq's people or by the depth and strength 
of their desire to live in peace without fear, and by a rule of 
law that is just and fair. I come before the subcommittee today 
with a continued optimism and a strong belief that the people 
of Iraq, with the help and support of the United States and its 
allies, will succeed in accomplishing the democratic 
transformation of their country.
    Saturday's constitutional referendum is proof of Iraqis' 
desire and dedication to democracy, as was the January 30th 
election this year, which brought millions of Iraqis to the 
polls, despite incredible danger to their lives. Whatever the 
final outcome of the constitutional referendum, I believe we 
will continue to see the majority of Iraqi citizens 
participating in the political process of their country.
    Unfortunately, events over the past several months have 
provided no shortage of material to sustain pessimistic views 
that many have expressed regarding Iraq's future: terrorist 
attacks that claim a tragic human toll and have hindered Iraq's 
efforts to rebuild its infrastructure, energize its economy, 
and improve living standards. These are the matters of the 
gravest concern. But these issues do not represent the whole 
story and should not be allowed to overshadow or diminish the 
magnitude of what the Iraqi people have accomplished in this 
historic year.
    The story of the past year has been one of extraordinary, 
frequently heroic public and private perseverance in the face 
of a ruthless enemy. Much has been accomplished. Prior to 
January 30th, hundreds of Iraqis participated in the political 
process, either running as candidates for the Iraqi National 
Assembly or conducting a wide range of voter education 
activities.
    On January 30th, nearly 60 percent of Iraq's eligible 
voters came to the polls despite the violence leading up to 
election day. The Iraqi independent election commission 
conducted an election that produced a National Assembly that 
Iraqis feel legitimately represent their interests. And while 
it took several frustrating months of negotiations, by April 
2005 Iraqi leaders established a sovereign government that 
turned its attention to the drafting of a constitution.
    Iraqi civil society organizations across the country 
provide an input into the constitutional process by conducting 
hundreds of workshops on the constitution and communicating the 
results of these workshops to the constitutional drafting 
committee and members of the National Assembly. The 
constitutional committee and leaders of the National Assembly 
grappled with politically difficult problems and realities.
    And while they continued to negotiate, almost to the day of 
the referendum itself, to resolve differences on issues, the 
fact that they arrived at a final document that gained support 
of some major Sunni leaders should be seen as an 
accomplishment.
    Iraq's second electoral event was successfully held on 
October 15th with an estimated 60 percent turnout. And the 
process remains flexible. While the compromises contained in 
the draft constitution were hardly satisfactory to everyone, 
and many Iraqi citizens were not fully informed of the last-
minute changes, there will be opportunity for issues to be 
addressed in the near future. If adopted, the new constitution 
will allow amendments to be presented to the Iraqi voters in a 
referendum within 6 months after a new National Assembly is 
seated.
    One of the most notable developments in these past months 
has been the beginning of political maturation of Iraqis by 
their participation and political dialog, negotiation, 
compromise and voting. The emergence of an organized and vocal 
Iraqi civil society has been one of the truly great but largely 
unheralded stories.
    The International Republican Institute has supported the 
development of four major Iraq civil society organizations. 
Between them, they have reached every corner of Iraq and 
thousands of Iraqi homes with educational materials, print, TV 
and radio, that have given Iraqis the chance to be part of the 
national political debate surrounding the January 30th 
elections and October 15th referendum. IRI partners, with the 
financial support of American taxpayers, have aired more than 
300 hours of political process-related television programming. 
These partners have printed and distributed more than 2 million 
booklets, fliers, and posters to inform the public about voting 
procedures and constitutionalism.
    Prior to the referendum, they conducted 1,400 
constitutional workshops throughout the country, reaching more 
than 57,000 Iraqis. They have risked their lives in public 
rallies to advocate for human rights and gender equality. To 
illustrate, in the province of Salahaddin, one community leader 
held a series of public workshops in schools and mosques to 
explain the basic principles of Iraq's new constitutional 
structure. His efforts did not come without tremendous personal 
cost. He was threatened repeatedly, but he was not deterred. 
Because of his courage and efforts, more Iraqis have a better 
understanding of the distribution of powers and 
responsibilities in the proposed political system.
    A few weeks ago, a group of women advocating gender 
equality decided to hold a rally in a downtown Baghdad square. 
They were confronted by another more conservative women's group 
that strongly disagreed with their agenda. After spending the 
day rallying against each other, the two groups sat down and 
discussed the issue. While they didn't reach consensus, they 
did gain greater understanding and appreciation of differing 
perspectives.
    In a television ad, a Sunni cleric urged viewers to 
participate in the constitutional referendum. The spot taped in 
the cleric's mosque aired both nationwide and on satellite 
channels. Given the cleric's religious affiliation, his 
willingness to support the referendum process in a high-profile 
manner constituted an act of remarkable courage.
    These extraordinary individuals and organizations, which 
have benefited from partnerships with international 
nongovernmental organizations such as IRI and the National 
Democratic Institute, will continue to grow in strength and 
influence and become powerful in sustaining voices for 
democracy and rule of law in Iraq. They will, however, need 
continued support.
    IRI intends to be fully engaged in helping Iraqis prepare 
for the next milestone, the December National Assembly 
elections. In the weeks leading up to that date, IRI will 
engage in a broad range of activities designed to encourage 
political party outreach, as well as to continue to support the 
election-related activities of Iraqi's emerging civil society 
groups. The group will place special emphasis on programs 
intended to draw greater numbers of women and youth into Iraqi 
politics.
    Likewise, it will be imperative that we remain engaged with 
the new National Assembly and the ministries of the next 
government. Though some institutional development has taken 
place, it will take years, and not months, for Iraqis to repair 
the damage to their governing institutions that resulted from 
30 years of Baathist dictatorship and corruption.
    American taxpayer-supported programs are making and will 
continue to make a critical difference. IRI, for example, is 
working with Iraqi partners to create an arm of the Iraqi 
National Assembly, similar in concept to our own Congressional 
Research Service. This and many other initiatives aimed at 
strengthening Iraqi governing institutions in the capacity of 
its new bureaucracy are critical investments in Iraq's 
democratic future, but it will take time.
    The story behind the past year's headlines in Iraq has been 
a story of building an accomplishment and determination in the 
face of a deadly enemy. This past Saturday's national 
referendum and likely adoption of a new constitution by the 
people of Iraq represents another chapter in that story.
    I am optimistic that others will follow, and that with 
continued help and support of the United States and the broader 
international community, Iraq will successfully transition into 
a democracy that will serve as an inspiration for the rest of 
the Middle East.
    Thank you.
    Mr. Shays. Thank you very much.
    [The prepared statement of Ms. Van Rest follows:]

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    Mr. Shays. Mr. Campbell.

                   STATEMENT OF LES CAMPBELL

    Mr. Campbell. Thank you, Chairman Shays, Representative 
Lynch, it's a pleasure to be here again.
    I will dispense with a description of NDI's activities in 
Iraq. I know you know them well, and they are contained in my 
written statement. I am afraid I will come across, I think, as 
slightly less optimistic than my fellow panelists, both about 
the referendum and also about the general situation.
    The trends that NDI observed in mid-2004 and I include in 
the written part of this statement--part of an excerpt from an 
assessment that I personally and others from NDI did of the 
political situation in March 2004--the trends we saw then, the 
fragmentation of political space, the growth of sectarianism 
and tribalism, the search for safety and security and safety 
within one's own ethnic group, the increasing pull of the 
religious extremists, continues to pace through 2004 and much 
of 2005.
    In the October 15th referendum that took place in this 
atmosphere, fragmented atmosphere--and the question on the 
referendum quickly, several months ago, became not whether the 
draft constitution would help heal ethnic and sectarian 
divisions, and not even whether the constitution would lead to 
the--pardon me. The question became whether or not the 
constitution would help heal sectarian and ethnic divisions, 
not whether the constitution would lead to the establishment of 
the important institutions of democracy and to good governance.
    Some commentators took to describing a draft constitution 
as a compact among competing ethnic and sectarian groups, 
rather than a blueprint for a new political system. That was, I 
think, an important change through the summer. Indeed, the way 
that the constitution was drafted, at least 50 laws will have 
to be passed to define major sections of the constitution, 
including major questions on revenue sharing, the functioning 
of the supreme court, which has a big impact on the status of 
women in Iraq, and the jurisdiction of the various regions.
    For Iraqis themselves, according to focus groups conducted 
recently by NDI, the majority of Iraqis cared less about what 
was in the constitutional document than they cared about 
getting this milestone behind them to get a chance to ``move 
on.'' In the words of one Sunni focus group, a participant from 
Ramadi, ``The constitution is the most important thing because 
it can pave the way for the achievement of other things.''
    So I would argue that the draft constitution and the 
referendum should be viewed neither as a detailed road map for 
governance, because it is not nor should it be viewed as a 
compact between potentially warring parties because it didn't 
even quite work that way because, in fact, some of the big 
decisions were put off; but it should be viewed as a benchmark 
or a milestone on the long road to democracy, as something that 
needed to happen, was important to happen, to get behind us, 
and the Iraqis to move on.
    In that context, the referendum and the process leading to 
the referendum was a success. Voter turnout, as Ms. Van Rest 
said, was about 60 percent, maybe slightly higher than the 
January election. But voter turnout in the majority Sunni areas 
was dramatically higher, going in many cases from 5 percent to 
as much as 80 percent turnout in Sunni areas. In Al Anbar and 
Salahaddin, the early returns show 80 percent turnout.
    Well, one could take the cynical view that the Sunni 
population mobilized only to defeat the draft constitution. NDI 
staff in Baghdad have heard from a number of Sunni political 
party leaders that a fundamental decision has been made to use 
the political system to pursue policy goals. While the decision 
to participate in electoral events may have little immediate 
impact on the insurgency, Sunni participation in future 
elections and future governments could have an enormous 
influence on the development of a truly representative 
political system.
    While the argument can be made that the negotiation process 
for the constitution was hurried and flawed, the fact is that 
the majority of Iraqi citizens are happy with the contents of 
the constitution, or at least they acquiesce to the contents. 
Certainly the Kurds and many of the Shi'a population of Iraq 
think it's fine.
    And the overall passage--or, I should say, the overall 
majority in the country for the constitution was never in 
doubt. What was, though, and still is in doubt, is whether or 
not the population opposed to the draft, mostly residing in 
majority Sunni areas of Iraq, could muster the two-thirds 
majority required in three provinces to veto passage of the 
document. As of this speaking and writing, the two-thirds 
threshold has been reached in two provinces, Al Anbar and Salah 
Eddin, and there is a simple majority against the draft in at 
least one more province, Ninevah.
    The latest information this morning that we have been 
gathering, and I have had the advantage of receiving a few e-
mails during this meeting, says that the ``no'' vote in Ninevah 
Province is as high as 54 percent now. That could actually 
increase.
    Part of the bad news of this, I think, is that if the area 
of Mosul, which I think you know, which has been hotly 
disputed, full of conflict and so on--if the vote starts adding 
up near the 60 percent range, and there are a number of 
irregularities--which there have been, according to the 
observers in Iraq, and there certainly were in the January 
election--the outcome of the referendum may, in fact, be 
disputed. I think it will be disputed. And if that vote in the 
Ninevah Province does creep up in the mid-60 to high-50 range, 
I think that dispute will be a legitimate dispute.
    In other words, it's possible that the threshold for veto--
if not met, could easily be--the threshold could come within 
10,000 to 20,000 votes. So the story is not over and I think we 
will see in the next few days it will continue.
    Having said that, the referendum was characterized by the 
Kurds, shown by the average Iraqi again defying violence to 
vote--Iraqis have proven that democracy is essential to their 
view of the future. There is no doubt about that. The 
referendum was remarkably well run under the circumstances. It 
is interesting that the election commission itself is the one 
that is auditing the results. They have taken action right away 
to audit the results to make sure that people perceive the 
counting is fair.
    So I think the lessons learned are fairly clear. Democracy 
is a goal shared and embraced by Iraqis. Political processes 
work best in Iraq when the citizens feel ownership of those 
processes and when Iraqis are empowered to organize and 
implement. U.S. assistance is best when delivered discretely 
and in a manner designed to bolster and support Iraqi processes 
and actors. And the political and democratic process in Iraq is 
not a panacea or a silver bullet, but it is a necessary step on 
the road to security, economic prosperity, and stability. As 
such, U.S. support for a democratic Iraq must be clear, steady, 
and backed by sufficient funding and diplomatic support.
    The next steps, to conclude, for democracy in Iraq, despite 
what happens in the referendum--because it is not a disaster if 
it is vetoed--we go into an election in December in any case. 
And Sunni participation will have been cemented, which is good 
in my opinion for the next step, including the development of 
the national and local governing institutions, national and 
local government coordination and communication, the better 
engagement of youth and women in political processes, and, of 
course, the operationalizing of the constitution through over 
50 pieces of implementing legislation.
    Thank you very much.
    [The prepared statement of Mr. Campbell follows:]

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    Mr. Shays. Thank you very much as well.
    We will go with you, Mr. Lynch. We have 10 minutes. Since 
there are two of us, we can go back and forth.
    Mr. Lynch. Thank you, Mr. Chairman. First of all, I want to 
thank you each for offering your testimony. It was very 
helpful. I think it gets to the underlying substantive issue. 
While the first panel focused on our military objectives and 
focused more on security, I think your views and your analysis 
is more targeted toward the ongoing situation, hopefully after 
withdrawal of U.S. troops from Iraq, and whether or not Iraqis 
are embracing change as opposed to embracing democracy, as Mr. 
Campbell has pointed out.
    I just want to take a couple of points, because my own 
observations are just a little bit at odds, not significantly. 
But, Dr. Habeck, the assessment that the insurgency is becoming 
less effective--my own observations--just in terms of what we 
are trying to do to provide better protection for our troops, 
they have gone, the insurgency, all four--if you accept that 
view, all four insurgencies have adopted a more effective way, 
through technology, of killing our soldiers.
    About 47 percent, almost half of our casualties now in 
Iraq, are from IEDs, improvised explosive device, most of them 
roadside cases in which our soldiers are killed. And yet there 
is no--because it is done through remote control, we don't 
necessarily get the insurgent in those cases. In those cases 
where there's a frontal attack, and it's actually an assault on 
our folks, generally those insurgents do not attack again. They 
are basically eliminated. But this dimension of it, this 
dimension of it where previously we had jammers on all of our 
vehicles that were able to reduce the effectiveness of these 
IEDs, again which are responsible for half of our deaths of 
American men and women in uniform, they have gone to a new 
technology that is more powerful in terms of its effectiveness. 
These roadside bombs now can precisely target U.S. convoys as 
opposed to having something laying in the road and, whoever 
rides over it, detonates it.
    Now they are specifically targeting our folks. And the 
level of the charges as well as the technology that delivers 
that blast has been greatly improved. And I understand we are 
scrambling right now to develop a new generation of jammers 
that will stop these IEDs, as the previous technology had. But 
right now we have a gap between development and deployment of 
these new jammers on our vehicles.
    So I would say over the next 3 or 4 months they have an 
advantage right now that they did not have before. So I would 
say, based on my visits to Iraq and to Walter Reed Medical 
Center, that they are indeed at least as effective, if not more 
effective, than they had been in the past.
    I do get a sense of your analysis as well, Ms. Van Rest and 
Mr. Campbell, that this embracing by the Iraqi population of 
democracy itself will be the ultimate question here. I always 
think of--Samuel Adams had a great quote about the American 
Revolution. He said the revolution was in the hearts and minds 
of the people. I think it can be said for Iraq as well, whether 
or not in the hearts and minds of the Iraqi people, democracy 
is for them. We seem to be going about a process of building 
democratic institutions in Iraq, trying to establish a 
constitution, a legislature, a judiciary that flows from that, 
law enforcement, all of those systems that are necessary for an 
operating democracy. But I question whether or not there's 
viability behind it.
    It needs to be the hearts and minds of the Iraqi people 
that support those institutions, and it can't just be a 
Hollywood set of a court system or a police system, a 
parliament. It needs to have behind it people willing to die 
for it, just as our fathers and mothers and grandparents and 
other generations of Americans died for our democracy. There is 
a great sacrifice here. It remains to be seen, at least in my 
mind, whether or not the Iraqi people have bought in whole hog.
    The chairman in his initial remarks talked about some of 
the Iraqis, a significant amount of the Iraqis sort of sitting 
on the sidelines waiting to see who wins this so they can 
decide who they will be with. I think the jury is still out on 
that.
    But I would like you to talk about that a little bit and 
whether or not there is evidence there, apart from the 
elections, because the elections are as much a reflection of a 
desire for change, the desire for change. They have seen what 
Saddam Hussein and dictatorship brings them. They have seen 
what terrorists, Islamic extremism, and al Qaeda brings them. I 
think they are voting for something else. But I am not so sure 
that if in a matter of months or years that democracy is 
established there. But failures of democracy will also leave a 
bad taste in their mouth, and they will wonder whether or not, 
given this whole struggle that they are going through as well, 
whether it was worth it.
    I know there is no definitive answer, but I do respect the 
fact that you have been on the ground there, and your 
institutions have focused on this problem specifically. Do you 
just--would you each just take a turn and address that 
underlying issue? Thank you.
    Dr. Habeck. I just would like to address the effectiveness 
issue first. I am not saying there's been a lessening of 
effectiveness, just that it hasn't changed over time in a way 
that is worse for us.
    Mr. Shays. Talk about--effectiveness of whom?
    Dr. Habeck. Effectiveness of the insurgency. I am really 
not saying there has been a lessening of their effectiveness. 
It has basically stayed steady for the last year. By 
effectiveness, military measures, by attacks that do actually 
kill somebody, injure somebody, or damage infrastructure in 
some way. And that effectiveness level has been 10 to 15 
percent for the last year basically, and hasn't changed.
    What this means over time, basically, is that the 
insurgency is really not getting better at carrying out 
attacks. I think this can be made almost entirely on the fact 
they have been pretty effective--the military, that is--of 
killing off the middle management of the insurgency. That is, 
they haven't gotten off the very top people. They have gotten a 
lot of the lower people as well, but that middle management 
that would convey lessons from above to below has been killed 
off, so they are not learning anything over time.
    It also speaks to the issue of whether they are growing in 
strength over time, are they attracting more people in? Are 
they--you know, is the insurgency a growing threat over time? 
And it is not.
    So by effectiveness, another measure is how many people are 
killed per attack, which is what you are addressing. You are 
right, they have become more sophisticated with their IEDs. But 
the issue of the fact has to do with there are a very small 
number, less than 100 explosives makers, who are very difficult 
to find. They have become more adept over time at making 
explosives. But that is a very small number of people who are 
causing an awful lot of trouble throughout the country.
    Actually, this is another issue which I am sure many people 
have brought up and talked about. But the basis of this, of the 
remaining jihadi insurgency, and also parts of the Saddamist 
insurgency and of the Sunni rejectionist insurgency, are the 
Sunnis. They only represent 15 to 20 percent of the population. 
That means 80 to 85 percent of the population has bought into 
something other than violence as a way of changing things.
    Thanks.
    Mr. Lynch. But, if I may, 15 percent of the population 
trying to kill you is a serious threat. That is all I am 
saying.
    In terms of the quality of the attacks, Balad Air Force 
Base, the busiest Air Force base in the world for the U.S. Air 
Force, probably gets attacked every 2 days, every 3 days, as I 
was there several months ago. The quality of the attacks, it's 
basically very amateur. I don't think they have actually caused 
a casualty in probably 8 months, even though they attack every 
other day. It is just lobbing something over the perimeter 
fencing, and it's not very effective.
    On the other hand, we have situations in Mosul and the 
areas around Tikrit where those 100 or so are very active--and 
the bombmakers--and it appears that technology has advanced 
somewhat, and their effectiveness, so that small group to cause 
so much loss among other own troops is very, very troubling.
    Dr. Habeck. Absolutely. The one other way of sort of 
measuring effectiveness is you can take a look at how much 
territory can they actually control. The fact is, they are not 
able to take over and run more than one medium-sized city at a 
time. So they are not spreading. They are not like able to 
control both Fallujah and Mosul or both Fallujah and Samara or 
Tal Afar and Samara and Fallujah. And they can only do one or 
the other.
    What happens is, this has been the typical sort of way 
things have gone, at least up to now, is that the military will 
go into Fallujah and clean it out. And then they go to Mosul. 
They clean out Mosul and they go Tal Afar. So there's been this 
sort of a chasing around of the insurgency.
    Mr. Lynch. They call it ``clear and hold,'' I believe. 
Clear and hold is the military----
    Dr. Habeck. They have switched to that in the last year, 
and that has proven--actually about 8 months--and that has 
proven to be far more effective. But in my written statement I 
argued, and I have argued with other people, it would basically 
be possible for the U.S. military at the size they are now in 
Iraq to clear and hold the entire country.
    This is why the second part of this is so incredibly 
important. That is, training up the security Iraqi forces so 
they can do the holding. We help to clear out, and then you 
bring in the Iraqi security forces and ask them to hold it for 
you. In places like Tal Afar, they have actually now gotten the 
Iraqis to the point where they don't just hold; they can 
actually go in there and help with the clearing out process. 
Once you get to there, then you can turn the war over to them.
    Mr. Lynch. Ms. Van Rest.
    Ms. Van Rest. With regard to your questions about whether 
Iraqis have in their hearts and souls a dedication to 
democracy, from our experience, we certainly believe that they 
do. We work with hundreds of Iraqis, multiple civil society 
groups, political parties. And every day we see them risking 
their lives to either conduct workshops or to come to 
trainings. And some folks who have been leaders of the civil 
society groups have indeed lost their lives.
    So we see a dedication to the idea of democracy. As both 
institutes know, democracy building takes a very long period of 
time. And so it's one thing to want democracy. It is another 
thing to put it into place. And that is where our programs are 
assisting many of these folks to understand the technical sides 
of building transparent institutions and setting up transparent 
processes and those types of things.
    But there's no question in my mind that the Iraqis we work 
with--and again, there are hundreds of them--very much want 
democracy. It's not just change away from Saddam Hussein, it's 
definitely a democracy of their own making.
    Mr. Lynch. Thank you.
    Mr. Campbell. Excuse me. One of the advantages that I have 
had in looking at Iraq, for more than a decade I have been the 
director for Middle East programs at NDI for programs across 
the Arab world, from Morocco through to Iran. I have traveled 
to Iraq 13 times since the end of the war and have been 
involved a lot in Iraq.
    What I have seen, in my judgment, in Iraq is more profound 
and more important than anything I have seen in any other Arab 
country in the sense that, after the war, almost 300 political 
parties spontaneously formed. We saw them form on any number of 
different bases, basically affinity groups of various sorts. 
Countless civil society organizations, citizens organizations. 
Iraq has now seen twice the mobilization of more than 10,000 
Iraqi domestic election monitors. These two mobilizations of 
domestic election monitors have dwarfed anything that has ever 
happened in any Arab country. NDI and IRI, in our programs in 
other countries, have drawn Iraqis in. And Iraqis as 
individuals are consistently outstanding people who demonstrate 
incredible leadership.
    For example, NDI just organized a campaign school, 4 or 5 
days in Kuwait, for potential women political candidates from 
across the Arab world. The Iraqi women that came were stars. Of 
course, these are people who are elite people, who are very 
good at what they do. But all the other people from the Arab 
world were from the same sort of elite class. And the Iraqi 
women were very dominant in their performance and their skills.
    So I actually believe very, very deeply, there is something 
important going on in Iraq, and there is something important to 
build from. My belief doesn't come from--even remotely come 
from agreeing with the aims of the war itself or the decision 
to invade, which I personally never thought was the right thing 
to do. And as an organization we have struggled with being so 
involved in Iraq in a project that I would say most of our 
members of our board of directors, to put it mildly, 
questioned. So I feel there is something very strongly there we 
can build on.
    I think your point about a desire for change is an 
important one, though. As I was mentioning--and I probably 
didn't articulate it that well--about focus groups that NDI 
conducted throughout the summer. The ``yes'' vote on the 
constitution, according to our research, was much more about 
just getting something behind us. It was more a vote--wanting 
to move on, to have change, something different, thinking that 
this would, again, lead to some sort of path where things would 
get better. So it really wasn't about--you know, I think people 
who argue I think this was a vote for some more lofty goal are 
probably wrong.
    I read an e-mail this morning from one of the Kurdish party 
activists who said of course he voted yes, and it was a 
historic moment. But then he went on in paragraphs to describe 
his disappointment in many, many things. Again I think it was 
important that people thought it was important to get out and 
vote. But I still think that is something we can build on.
    My last comment, though, not my area of security--just to 
enter into this debate for a second--what NDI is finding in 
protecting many dozens of expatriate staff and many, many 
hundreds of NDI, local Iraq employees, we have found that we 
can protect ourselves against the insurgents basically. I won't 
get too much into that. But we have ways, we have the funding, 
the security posture, to do that.
    What we find to be increasingly difficult in Iraq is the 
chaos, is the general insecurity; not the sort of organized 
attacks which we even can protect ourselves against. When we 
have lost people--and we have lost people--it has been to, for 
example, militias in Basra, the people masquerading as 
policemen who have killed people associated with our 
organization; people in and around Kirkuk who have been killed 
in local disputes. The country is fragmenting into warring 
factions, tribal warlords and so on, and it is that genuine 
security that I think is, frankly, a far bigger problem in the 
long run than the insurgency.
    Mr. Lynch. Thank you. I yield back.
    Mr. Shays. You yield back the 20 minutes of your time.
    I find, Dr. Habeck, that you are more optimistic than I am, 
and it is kind of fun to meet someone more optimistic than me. 
But I just kind of want to assure myself it is not based on 
naive thinking. I don't mean to imply that you are naive. You 
have a tremendous background. Your background is knowing the 
military and knowing Iraq. But what you did is spend most of 
your time with the military, correct?
    Dr. Habeck. Absolutely.
    Mr. Shays. So you weren't with Iraqis, you weren't with 
Sunnis, you weren't with Shi'as, you weren't with Kurds as a 
general rule.
    Dr. Habeck. I did actually meet with a minister in Irbil, 
and I went up to Ramadi as well.
    Mr. Shays. But you weren't in family homes listening to the 
conversation, so--and the reason I ask is that, you talk about 
the four, you know, basic groups: the Shi'as, al Sadr, the 
Baathists, which I would assume you would put into that, the 
Saddamists. Do the Saddamists go with the Baathist or the 
Sunnis?
    Dr. Habeck. With the Baathists.
    Mr. Shays. Then you have the Sunnis, and you have the 
foreigners. Now, you said basically they were dealing with one 
group now.
    Dr. Habeck. One and parts of these other two, but they are 
not at the full strength they were a year ago.
    Mr. Shays. But let me understand what you mean. We still 
have the foreigners in full force, right?
    Dr. Habeck. Absolutely. In fact, they are stronger than 
they were a year ago.
    Mr. Shays. So the Sunnis, I think, are split now. They are 
not a unified force.
    Dr. Habeck. That's right.
    Mr. Shays. The Baathists are split.
    Dr. Habeck. Right. In fact, I have heard some military 
people speculate that there is one, possibly two, kind of 
master-minds that are taking care--that are overseeing that 
entire part of the insurgency left, and the rest have bought 
in.
    Mr. Shays. But even among the Shi'as, the Shi'as that are 
fooling around with the Iranians, it's not--they are not 
insignificant, particularly in the Basra area and down below; 
correct?
    Dr. Habeck. As he mentioned, I actually agreed with what he 
had to say--in fact at the end----
    Mr. Shays. He being? Mr. Campbell?
    Dr. Habeck. I am sorry, Mr. Campbell. I do agree with him, 
that is a serious challenge, this kind of interim splintering 
of the country.
    Mr. Shays. What I come up with is a strong foreign 
opposition, a split among Sunnis, a split among Baathists, and 
a split among the Shi'as, maybe a smaller split. But if I add 
up the split, three splits and one full, I get to, you know, 
potentially 2, 2\1/2\. So are you uncomfortable, based upon 
what you are telling me now, or even then--so it is really not 
one group, right?
    Dr. Habeck. No. These are all groups that also have 
competing--let's take the Shi'a, for instance. As part of the 
Shi'a insurgency, I think you would have to, of course, count 
Sadr and his Mokhtiar Army and a couple of other key groups. 
But how large are they as part of the overall Shi'a. Well, he 
actually bought into the political process in January and ran 
and got somewhere between 2 and 5 percent.
    Mr. Shays. Where he had 19 seats out of 240; is that right, 
Mr. Campbell?
    Mr. Campbell. Something along that line. I think somewhere 
in terms of the 2 to 5 percent of votes gathered.
    Dr. Habeck. Yes. So that suggests there's a very, very 
small percent of the Shi'a, and that is why I almost don't 
count them.
    Mr. Shays. Hold on a second. I would love to believe your 
optimism. I would. I want to be optimistic. I am. I am hopeful. 
Optimistic is not where I am at. I am hopeful to optimistic. 
Let's put it that way. It's 5 percent of the total vote, so 2 
to 5 percent of the total vote, so he is maybe 10 percent of 
the Shi'as.
    Dr. Habeck. Maybe. But you know, that is 65 percent.
    Mr. Shays. OK. I basically viewed the election as a pretty 
strong success, and I am being a little facetious, but there's 
a lot of truth to my point that I knew it was a success when 
the press stopped talking about it. I mean, really, because 
it's--of all the--of anything you can say about the Iraqis, the 
one thing you can say is the election in January was a success. 
I was there. I know it was a success. It was a huge success. 
The transfer of power last June was a huge success. People said 
it wouldn't--I had a press conference with the Iraqi Foreign 
Minister. It was my press conference. I had no questions.
    The Iraqis, who were the press, asked their new leader, as 
I was now a part of a relationship through the State 
Department, not part of the ruling party. The election in 
January was successful, and I think that we will find the 
election here was a success.
    What I am interested in knowing, Mr. Campbell, because you 
spoke most of this, and Ms. Van Rest and Dr. Habeck, you can 
respond as well--I want to interpret the challenges of votes. 
Is it in a few places or within the whole province? I mean, is 
it within some towns within a province, or is it within the 
whole province? And is it based upon the fact that there were 
more--in other words, more voters than registration?
    Maybe you could start, Mr. Campbell.
    Mr. Campbell. Sure. Well, I think the early information 
characterized the potential problems in three ways. In 
predominantly Shi'a areas, the Iraqi--the independent election 
commission has noted that there are unnaturally high numbers of 
``yes'' votes, as many as 90-95 percent yes. So their 
assumption----
    Mr. Shays. In areas where you wouldn't have that?
    Mr. Campbell. Well, even in areas where the population is 
Shi'a, but where 90 or 95 percent just sort of tests reality; 
where we have said this is basically a threshold that would 
invite them to audit. So they are actually going to take 
selected ballot boxes and take X numbers of ballots out of the 
boxes and see if it tallies up. So the same thing is 
happening----
    Mr. Shays. I don't understand it. Do they have a paper 
trail that enables them to do this? In other words, if you 
stuff a ballot, how do you know that it's----
    Mr. Lynch. We are not talking about butterfly ballots here, 
are we?
    Mr. Campbell. Well, something along that line. There have 
been a few--some people are alleging that sort of vote fraud, 
although our experience from January is that the elections are 
quite well run. The notion of someone substituting a ballot box 
with all yeses or----
    Mr. Shays. What is the potential of abuse?
    Mr. Campbell. Not likely, highly unlikely. So what they are 
trying to determine, they are looking at, actually, 
international experience. They are saying that because the U.N. 
and IFES and other American organizations are helping, they are 
saying that in an international experience, the 90 or 95 
percent vote for any option is abnormal. Even if you accept 
that Iraq is polarized, it's abnormal.
    So they will audit. What they will try to do is they will 
try to determine what a normal result might be. You know, you 
assume that not everyone will vote one way. There are also 
instances in the North among the Kurdish vote where the voting 
was abnormally polarized.
    And it's interesting that the irregularities on the January 
30th election, were really in the Kurdish area, primarily where 
the Kurds, even the Kurdish leaders themselves acknowledged 
overzealous behavior on the part of the PeshMarga and the 
Kurdish police and so on to sort of enforce or police a 
standard vote.
    So I think we may see that there was sort of zealotry in 
the predominantly Shi'a areas and predominantly Kurdish areas. 
That is important, and I think they will discover if there is 
some of that going on. However, when we get sort of hard-nosed 
about it, that probably had no impact on the outcome. This was 
a straight yes, no, up, down vote. Everyone understood going in 
that the majority of the Kurds would vote ``yes,'' the majority 
of the Shi'a population would vote ``yes.'' The fact that they 
have a bigger Shi'a majority voting ``yes'' doesn't matter very 
much.
    Where this will come down to really is in places like 
Mosul, where you have a mixed population, where you clearly had 
a strong ``no'' vote, and where actual sort of chicanery and 
fraud and intimidation--for example, there have been some 
reports of ballot boxes being stolen at gun point. Where are 
those ballot boxes, what was in those ballot boxes, were they 
replaced with other boxes? This is going to probably take weeks 
to figure out.
    I don't think this is a huge, huge issue. I mean, I think I 
share your feeling, Mr. Chairman, that overall the referendum 
process was successful in this incident. It went off in a way 
that Iraqis got a chance to express what they wanted. However, 
if I am in the shoes of the Sunni opposition to this vote, and 
I start to get wind that credible objective of local observers 
and the U.N. and IFES and the Iraqi election officials, who 
have been very good, are starting to investigate fraud, for 
example, in Mosul, and I think I am within 20,000 votes, I 
think, you know, as a political matter, I would probably make 
the most of this. I would stretch it out for months on end. So 
I think we are in for a protracted kind of period of them 
complaining.
    Having said that, as I said in my earlier statement, I 
think what is really interesting and extremely important is 
that the Sunni population, I think in my opinion, has bought 
heavily into the political process as a way of making change 
and policy change. I hope I am right because that would herald, 
in my opinion, the most important change in the last year or 
two.
    Mr. Shays. If you are right on that, Mr. Campbell, and even 
if it is rejected, if you get Sunni buy-in into a political 
process----
    Mr. Campbell. Or even if as long as these allegations, if 
they come up, are investigated in a credible, thorough way and 
people don't rush to judgment, I think that is key.
    Mr. Shays. Ms. Van Rest, you can jump in.
    Ms. Van Rest. I think Les covered it pretty much. But I 
think the one thing I would like to add is that it's important 
that the election commission has stepped up to the plate 
immediately and started auditing rather than just kind of 
waited for things other than kind of become a larger problem. I 
have observed elections all over the world, and there have been 
instances where an election commission just won't either look 
at something, denies that there's a problem, and then there's 
this assumption there's a lot of fraud that occurred, though it 
might not have.
    So that is another reason why I share your optimism about 
this election is I think that they conducted--the election 
commission certainly conducted the best election that it could 
under the circumstances, and they are turning their attention 
immediately to figuring out if there is fraud in any of these 
areas.
    Mr. Shays. Did you want to say something, Dr. Habeck?
    Dr. Habeck. Yes, just briefly. I want to emphasize that I 
am talking right now about the progress that is made. I am not 
saying they have won the war. I am not saying that anywhere. 
But they are making good progress toward that goal.
    Mr. Shays. That part comes across. I was having a hard time 
sorting out four numbers to one. We straightened it, out and I 
think we are clear.
    Dr. Palarino, who goes with me to Iraq, he wrote down, here 
is another example of not understanding Islam. If the mullah 
says to his congregation, vote ``yes,'' just about everyone 
will vote ``yes.'' Consequently, you will get an unnaturally 
high ``yes'' vote in Shi'a areas.
    I think I happen to agree with that basic point. Maybe I 
could be persuaded differently. Doesn't a cleric have sometimes 
a pretty, you know, significant impact on the vote?
    Dr. Habeck. I would say in the Shi'a areas in particular; 
not so much in the Sunni areas where an Iman can be just kind 
of somebody who is elected from amongst the congregation 
itself, but in the Shi'a areas where it is very hierarchical 
and they are held in a lot more esteem and have more education 
and so on. So I would say yes.
    Mr. Shays. One of the most impressive things when I have 
been to Iraq was the work of NDI and IRI. What amazes me about 
what you do is you bring in--at least it appeared that way, and 
tell me if I am wrong--you are not bringing in Americans to 
sell them democracy. I encountered folks from former Yugoslavia 
who were there and so on.
    Tell me a little about--you go in and you don't try to 
Americanize--what do you try to do. And then tell me who you 
brought into Iraq to help Iraqis understand democracy. Why 
don't we start with you, Ms. Van Rest?
    Ms. Van Rest. Yes, we have an expat staff that is a mix of 
Americans and Eastern Europeans.
    Mr. Shays. Eastern Europeans are folks that basically kind 
of experienced democracy as fledgling----
    Ms. Van Rest. That is correct. They have gone through a 
transition period of their own. They were part of the early 
youth movements in Serbia, for example. These are staff who are 
there on the ground every day.
    In addition to that, we bring in trainers. We have had 
American trainers who come in and talk about the basics of 
communications and constituent outreach, that type of thing. 
But we have also had legislators from Eastern Europe to come in 
and talk to the Iraqis about what they went through in running 
for office, and how it worked for them, and how they are 
struggling with their own transitions and their country's. We 
find that it really transfers, the information does certainly 
transfer a little better to Iraqis.
    But we have always, when we have done programs around the 
world, understood that our American system is sometimes even 
difficult to explain to people, it is very unique, but there 
are basic tenets of democracy. So we have had people who are 
able to come in and talk about just the basic ways of doing 
things and then helping, say, in the case of Iraqis, figure out 
how they are going to apply these types of programs.
    For example, town hall meetings. As I mentioned in my 
testimony, we have worked with a variety of civil society 
groups who held workshops in the runup to this referendum, and 
they held about 1,400 meetings, town hall meetings. These are 
not town hall meetings in the way we understand them.
    Mr. Shays. You are bringing community leaders together, but 
you didn't do this in the Green Zone.
    Ms. Van Rest. This is out. Yes, this is out.
    Mr. Shays. It would amaze most of my constituents that 
there were meetings like this that happened, that happened 
without everyone getting killed all the time, because their 
impression would be that if you did that, you were a dead man 
walking.
    Ms. Van Rest. Well, one of the important things to note is 
that, for obvious reasons, for security reasons, our expat 
staff cannot be out and about all the time, so what we have is 
the trainer----
    Mr. Shays. You have Iraqis training Iraqis.
    Ms. Van Rest. We train Iraqis, and then they go out. It is 
a multiplier effect.
    Mr. Shays. As a former Peace Corps volunteer, that is the 
Peace Corps way, and I love it. I love it.
    Mr. Campbell. I will just jump in and amplify what Judy 
said. Just since you mentioned this, I was writing down here 
the nationalities of our staff. Just off the top of my head, 
and I am probably missing people, but we have people from 
Serbia, Croatia, from France, Romania, Bulgaria, Canada, 
Ecuador and Sweden, and I am sure I am missing a few, permanent 
over there for a year or more in Iraq.
    As Judy said, I think that the hallmark of what we do in 
any country but Iraq are two things: One, as I mentioned in my 
testimony, we stand behind people, not in front. We are not 
there to wave flags and sort of drive some kind of agenda. We 
are there to back up what they are trying to do.
    As I mentioned in Iraq, there was a spontaneous outgrowth. 
People want to take part in the system, and we are there to 
support that and be behind that.
    No. 2, we are not there to impose some kind of system. The 
criticism often comes that there is a sense that somehow these 
American organizations are coming in to impose something. We 
are not. We bring a variety of experiences, and part of that is 
through the staff that we put forward.
    I think both of us, both organizations, are highly 
committed, and it actually follows on the last panel to how 
this continues after we leave, because we will leave 1 day. And 
both organizations employ hundreds of Iraqis, but not just 
employ hundreds of Iraqis; we rely on thousands of Iraqis to 
reach in turn hundreds of thousands of people.
    Judy has mentioned statistics for IRI. NDI reached more 
than 100,000 individuals through its programs through August 
and September. That maybe was the work of five expatriates or 
foreigners, but that was probably the work of 2,000 or 3,000 
Iraqis reaching those people.
    Mr. Shays. I remember when I was in Iraq for the vote, and 
Dr. Palarino and I were there, in this case it was IRI, but I 
was triggered to comment, because I was so impressed with the 
staff at the NDI, and so I asked this young woman, she had an 
accent, and I wanted to know where in the United States she was 
from. She was younger than 30, and she was in charge of 28 
people. I think she was younger than 30.
    I said, where are you from? She gave me a town in the 
former Yugoslavia. And then I said, why are you here? And she 
said, almost in tears, that our country had shared with her and 
her country, fellow countrymen, democracy, and it had made all 
the difference in her life, and she wanted to share it with 
someone else. It was a very memorable moment in my life.
    When I think of, and I make it with very real respect to 
you, Mr. Campbell, this is not a justification of our being 
there and so on, but I respect that you recognize that we are 
there, and your organization does, and it is powerful, the work 
that you are doing. It is absolutely powerful. I would like 
more people to know about it, but maybe in some ways it is good 
that you just do your work and let the results show for 
themselves.
    I am impressed that 160,000 Iraqis, with the training they 
receive from you and other organizations, were able to pull off 
two elections, where the U.N. basically told me that these are 
as good elections as you will find anywhere in the world, and 
they told me that when I was in Iraq a week and a half ago, 
better than any almost anywhere else, and I made an assumption 
even the United States. It just is the very good part of a 
story that has mixed parts to it.
    Is there anything that we need to put on the record before 
we adjourn, anything you would like to say before we adjourn?
    Mr. Campbell. On behalf of maybe Judy and myself, we really 
appreciate the work you have done on this and your visits. 
Every time you have visited, I know you met with both the staff 
of NDI and IRI, and a lot of this work is below the radar. So 
we also appreciate the support that you have shown through your 
efforts and being able to go and meet with people and get these 
kinds of on-the-ground briefings, which we highly appreciate.
    Ms. Van Rest. I would just like to add to that, thanks for 
the support that you are giving to our two organizations. It is 
obviously very important.
    Mr. Shays. You are hitting a sensitive chord now, because I 
am a born again here, because in my youth I was wondering what 
are we doing funding these institutions, and I was leading the 
charge to save money. I found myself listening to debate over 
time and losing the debate, and over time thinking, you know, 
they are right, and I am wrong. It makes me question other 
things I do, if I could have been so wrong in that one issue, 
because you do a great job.
    Dr. Habeck, I am really happy you were able to go to Iraq. 
I appreciate your insights as well.
    Dr. Habeck. Thank you. Thank you for giving me the 
opportunity to express my views.
    Mr. Shays. With that, this hearing is adjourned.
    [Whereupon, at 2:15 p.m., the subcommittee was adjourned.]

                                 
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