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



 
 PRIVATE SECURITY FIRMS STANDARDS, COOPERATION AND COORDINATION ON THE 
                              BATTLEFIELD

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

                                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

                             SECOND SESSION

                               __________

                             JUNE 13, 2006

                               __________

                           Serial No. 109-214

                               __________

       Printed for the use of the Committee on Government Reform


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



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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)
------ ------

                      David Marin, Staff Director
                Lawrence Halloran, Deputy Staff Director
                       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
                  R. Nicholas Palarino, Staff Director
             Kristine Fiorentino, Professional Staff Member
                        Robert A. Briggs, Clerk
             Andrew Su, Minority Professional Staff Member


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 13, 2006....................................     1
Statement of:
    Solis, William M., Director, Defense Capabilities and 
      Management, Government Accountability Office; Shay Assad, 
      Director, Defense Procurement and Acquisition Policy, 
      Department of Defense; Greg Starr, Deputy Assistant 
      Secretary, Bureau of Diplomatic Security, Department of 
      State; and James Kunder, Assistant Administrator for the 
      Near East and Africa, U.S. Agency for International 
      Development................................................    14
        Assad, Shay..............................................    35
        Kunder, James............................................    51
        Solis, William M.........................................    14
        Starr, Greg..............................................    44
    Taylor, Chris, vice president, Blackwater USA; Major General 
      Robert Rosenkranz, U.S. Army, retired, president, 
      International Technical Service, Dyncorp International; 
      Ignacio Balderas, former CEO and current Board of Directors 
      member, Triple Canopy; Doug Brooks, president International 
      Peace Operations Association; and Alan Chvotkin, senior 
      vice president and counsel, Professional Services Council..    83
        Balderas, Ignacio........................................   135
        Brooks, Doug.............................................   142
        Chvotkin, Alan...........................................   156
        Rosenkranz, Robert.......................................    94
        Taylor, Chris............................................    83
Letters, statements, etc., submitted for the record by:
    Assad, Shay, Director, Defense Procurement and Acquisition 
      Policy, Department of Defense, prepared statement of.......    38
    Balderas, Ignacio, former CEO and current Board of Directors 
      member, Triple Canopy, prepared statement of...............   137
    Brooks, Doug, president International Peace Operations 
      Association, prepared statement of.........................   145
    Chvotkin, Alan, senior vice president and counsel, 
      Professional Services Council, prepared statement of.......   159
    Kunder, James, Assistant Administrator for the Near East and 
      Africa, U.S. Agency for International Development, prepared 
      statement of...............................................    53
    Rosenkranz, Major General Robert, U.S. Army, retired, 
      president, International Technical Service, Dyncorp 
      International, prepared statement of.......................    97
    Shays, Hon. Christopher, a Representative in Congress from 
      the State of Connecticut, prepared statement of............     3
    Solis, William M., Director, Defense Capabilities and 
      Management, Government Accountability Office, prepared 
      statement of...............................................    17
    Starr, Greg, Deputy Assistant Secretary, Bureau of Diplomatic 
      Security, Department of State, prepared statement of.......    47
    Taylor, Chris, vice president, Blackwater USA, prepared 
      statement of...............................................    85


 PRIVATE SECURITY FIRMS STANDARDS, COOPERATION AND COORDINATION ON THE 
                              BATTLEFIELD

                              ----------                              


                         TUESDAY, JUNE 13, 2006

                  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 2:13 p.m., in 
room 2247, Rayburn House Office Building, Hon. Christopher 
Shays (chairman of the subcommittee) presiding.
    Present: Representatives Shays, Marchant, Platts, Duncan, 
Kucinich, Maloney, Van Hollen, and Lynch.
    Also present: Representatives Waxman and Schakowsky.
    Staff present: R. Nicholas Palarino, staff director; 
Kristine Fiorentino, professional staff member; Robert A. 
Briggs, analyst; Robert Kelley, chief counsel; Phil Hamilton, 
intern; Jeff Baron, minority counsel; David Rapallo, minority 
chief investigative counsel; Andrew Su, minority professional 
staff member; and Earley Green, minority chief clerk.
    Mr. Shays. A quorum being present, this Subcommittee on 
National Security, Emerging Threats, and International 
Relations hearing entitled, ``Private Security Firms: 
Standards, Cooperation, and Coordination on the Battlefield,'' 
is called to order.
    Last week, the leader of al-Qaeda in Iraq, Abu Musab al-
Zarqawi, was killed in an air strike. His death is significant. 
This man beheaded people, he had thousands murdered, he blew up 
both churches and mosques. His goal was to prevent Iraqi 
democracy. We congratulate the Iraqi people, and especially our 
military forces and all others who participated in bringing an 
end to his reign on terror. Although Zarqawi is eliminated, the 
difficult and necessary mission in Iraq continues.
    Even with the appointments of the ministers of the defense 
and interior, and increasing role of Iraqi security forces, we 
can expect terrorists and insurgents to continue their efforts 
to prevent establishment of a democratic government.
    Iraq is a complex operational space. Military forces, 
civilian U.S. Government agencies, international organizations, 
contractors, nongovernmental organizations, and a diverse local 
population all share a common geographical area amidst those 
who would do them great harm. It is difficult to distinguish 
friend from foe. Included in this complex arena are private 
security firms.
    The Government Accountability Office [GAO], estimates there 
are over 60 private security firms operating in Iraq employing 
approximately 25,000 personnel. Other estimates indicate there 
may be as many as 180 firms employing close to 50,000 people. 
These firms provide security for convoys, personnel, both 
government and civilian, including visiting dignitaries, bases, 
housing compounds, and reconstruction projects. The nature of 
their job puts them in harm's way. The most publicized private 
security firm casualties in Iraq came when four Blackwater 
employees were killed in Fallujah and their bodies hung from a 
bridge. But there are others. General Peter Pace, chairman of 
the Joint Chiefs of Staff, said private security firms, ``are 
doing a great job for what they have been hired to do.'' But if 
they choose right now to not report, to not let people know 
where they are going and they get into trouble, it is very 
difficult to be able to respond to them.
    Today we ask: What are the evolving roles and missions of 
the private security firms operating in Iraq? What standards 
and capabilities are private security firms required to have 
before being hired by our government? And, to what extent do 
private security firms coordinate with the U.S. military and 
other government agencies operating in Iraq?
    The mission in Iraq is far from complete. Only time will 
tell the impact of al-Zarqawi's death. Iraqi ministers are in 
place and Iraqi security forces are becoming more and more 
effective. As these forces take control, private security firms 
are presented with a new dimension, the coordination with not 
only coalition forces, but with Iraqi forces as well.
    We sincerely thank all the witnesses for taking the time to 
appear before us today, and we thank them all for their efforts 
to bring peace and stability to Iraq. At this time the Chair 
would recognize the ranking member, my friend, Mr. Kucinich.
    [The prepared statement of Hon. Christopher Shays follows:]
    [GRAPHIC] [TIFF OMITTED] 33252.001
    
    [GRAPHIC] [TIFF OMITTED] 33252.002
    
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    Hussein is in jail, Zarqawi is dead. Now we should leave 
Iraq. Zarqawi represented a small portion of the large and 
growing anti-American insurgency in Iraq, a sliver of the non-
Ba'athist insurgency while Ba'athists make up a majority of 
armed insurgents. So his killing is unlikely to end the 
violence in Iraq. However, the administration is intending to 
stay in Iraq for the long haul, which is why this hearing has 
some relevancy.
    The committee will get an opportunity to take a closer look 
at the rapidly growing industry that hasn't gotten much 
attention. The use of private security firms has grown 
exponentially in recent years, and it is due to one reason: The 
U.S. invasion, occupation, and reconstruction of Iraq. Rising 
security costs is the primary excuse for delays in 
reconstruction projects in the oil, water, electricity and 
sanitation sectors, and why the administration continues to ask 
Congress for tens of billions of dollars in additional funds 
for Iraq.
    There is a great need to protect key personnel and 
contractors, to guard military bases, supply convoys, and 
critical infrastructure, and to train the Iraqi security 
forces. This is truly a gold rush era for the private security 
firms. It is estimated that more than 25,000 personnel working 
for some 150 private military firms in Iraq have essentially 
become the second largest armed force there after the U.S. 
military. But, of course, there are so many opportunities, so 
much money at stake, and so few controls one inevitably finds 
corruption, mismanagement, and war profiteering in this wild 
west atmosphere. Millions of dollars worth of security-related 
contracts are awarded overnight, many of them without 
competition or cost controls. There simply needs to be greater 
transparency and accountability over private military 
contractors.
    We all know about the tens of billions of dollars in 
contract overruns that Halliburton's Kellogg Brown and Root 
unit has deferred to the American taxpayer in Iraq, but few 
know about the fly by-night startup firm Custer Battles that 
somehow managed to win a $13 million contract to provide 
security at Baghdad Airport despite having no security industry 
experience at all.
    This firm was so corrupt that, when contracted to buy 
trucks for the military, Custer Battles scrounged up any and 
every truck they could, even if most of them weren't operable. 
One Army general called it the worst case of fraud he had seen 
in 30 years. So it is little surprise to anyone here that 
neither the Coalition Provisional Authority nor the Pentagon 
nor the State Department nor the USAID, which all relied 
heavily on these firms have any idea what these security firms 
are actually doing in Iraq.
    It seems that nobody in the administration has been keeping 
track of who is in Iraq. There are few, if any, international 
or Federal laws which regulate their actions, and few standards 
for hiring and vetting these contract personnel. Almost anyone 
could startup a security company in Iraq and start carrying 
around weapons. And, unlike enlisted military personnel, 
private security firms aren't held accountable for any crimes 
they commit. There isn't any military chain of command, any 
military justice, nor does there even have to be training and/
or respect for the Geneva Conventions. We all know about 
Private Lynndie England and Specialist Charles Graner's role in 
the abuse of detainees at Abu Ghraib prison, but many of the 
interpreters and interrogators present during the abuses were 
private contractors hired by the firms Titan and CACI. Many of 
them have yet to be prosecuted or jailed like their military 
counterparts. Instead, a few may have their security clearances 
stripped away. That is it.
    Finally, I would like to draw attention to a problem that 
greatly concerns me, the detection and treatment of 
psychological industries of private-military contractor 
employees. Psychological injuries caused by the stresses of war 
take many forms, including alcohol abuse, drug abuse, anxiety 
disorders, social phobias, PTSD, and commission of violent 
acts. The gold standard study on this question was mandated by 
Congress a decade after the end of the Vietnam War. It was 
called the National Vietnam Veterans Readjustment Study. One of 
the most important findings of the study was the likelihood of 
violent criminal behavior by veterans with a PTSD diagnosis and 
who experienced wartime high stress. This study's investigator 
surveyed veterans for a number of violent acts committed in the 
last year. Nearly one fifth of the individuals with PTSD 
suffered self-reported committing 13 or more violent acts in 
the last year. The studies also found a very high incidence of 
criminal behavior among veterans whose war experience was high 
stress. The implication is that the diagnosis of PTSD does not 
capture all the psychological injuries that can result in the 
commission of violent acts. Violence on such a scale implies 
criminal activity such as armed robbery, gang activity, and 
assaults. It is not confined to domestic violence.
    So, finally, the detection and treatment of psychological 
injuries in both our uniformed personnel as well as the private 
military contractor employees is an important public health 
measure. We should care deeply about the health of the 
employees of private military contractors, about the people of 
Iraq that they work among, and the American society they return 
to. Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentleman.
    I would like to just take care of business and make a 
motion of unanimous consent that Ms. Jan Schakowsky, a former 
member of this subcommittee, a very active member of this 
subcommittee who frankly has followed this issue, I think 
particularly, closely be allowed to participate. She has made 
the mistake of going on to Energy and Commerce, and wants to 
come back to this committee at least for this hearing. We 
welcome you. And, without objection, you are more than welcome 
to participate.
    At this time the Chair would recognize the vice chairman of 
the committee, Mr. Marchant.
    Mr. Marchant. Thank you, Mr. Chairman. I appreciate your 
leadership and foresight in holding this hearing. The testimony 
today will enable us to more thoroughly understand the critical 
and constantly evolving nature of private security firms and 
their role in the war on terror and, more specifically, in 
Iraq, and how they coordinate with the U.S. Government and 
nongovernmental organizations in providing security, security 
planning, and intelligence.
    I was very fortunate last July to participate in a trip to 
Iraq and witnessed first-hand the private security firms action 
on the ground.
    To each of the witnesses today, I want to thank you for 
being here and providing us with your respective testimony on 
roles of the private security firms, their standards, their 
capabilities, coordination, recommendations, and codes of 
conduct as it relates to PSFs. I appreciate your being here to 
shed light on all the private security firms and their 
capability of accomplishment. I also appreciate your 
determination to work in concert with our forces and 
contractors on the ground. I believe each of us here today 
wants to see the security intelligence concerns on the ground 
in Iraq addressed in the most efficient, logical, and effective 
way. Most importantly, I hope this hearing today will address 
how to improve our capabilities and coordination on the ground.
    Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentleman. I think the committee may 
be aware, we are going to have three votes. If we can hear from 
Mr. Waxman, the ranking member of the full committee, and then 
we will come back and finish statements. And we will try to 
give you all an idea of how long it will be. I apologize that 
you have to go through this process.
    Mr. Waxman, you have the floor.
    Mr. Waxman. Thank you, Mr. Chairman. I appreciate your 
calling this hearing on private security contractors in Iraq. 
Most Americans would be amazed if they knew the role that 
private security forces are playing in Iraq. Earlier this year, 
the director of the Private Security Company Association of 
Iraq estimated that approximately 181 private security 
companies are working in Iraq with over 48,000 employees. That 
is more than three Army divisions. These private security 
guards protect Federal officials like former head of Coalition 
Provisional Authority Paul Bremer, and our current Ambassador 
to Iraq, Zalmay Khalilzad, and they guard U.S. companies doing 
reconstruction work. They have become, in essence, an Army for 
hire. They regularly engage in combat with insurgent forces. 
And, like our brave troops, they, too, have lost their lives to 
hostile forces.
    There are many important questions Congress needs to ask 
about these security contractors. One fundamental issue is 
whether outsourcing what is essentially a military function, 
protecting U.S. officials and citizens from hostile attacks, is 
in our national interest.
    Another question is what rules apply to these private 
forces. When our troops commit crimes or atrocities as happened 
in Abu Ghraib and appears to have happened at Haditha, there is 
a well established body of law that governs their conduct and 
provides for military tribunals, but nothing like this exists 
when private contractors are hired as subcontractors to provide 
security services. They appear to be immune from Iraqi law, and 
they aren't subject to the Uniform Code of Military Justice.
    And a third key issue is, what are the costs to the 
taxpayers? In my remarks today and in my questioning, I will 
focus on this last issue, the burdens being placed on the 
taxpayers.
    The cost of paying for an army of private security forces 
operating in Iraq is enormous, and it is one reason the 
reconstruction effort is failing. Rough estimates are that a 
quarter to a third of all reconstruction funding now goes to 
pay for security. When an Army sergeant provides a security 
detail, the taxpayers pay about $104 per day to cover his 
salary, housing, and subsistence. But when a private contractor 
is hired to provide the same services, he can be paid up to 
$1,000 a day, 10 times more. And due to tiering of security 
contracts, the final cost to the taxpayers may be far higher 
than $1,000 per day.
    I wrote to General Jerome Johnson of the Army Field Support 
Command about this issue on November 30, 2004. We are here on 
June 2006. I raised the concern that, under some contracts, 
there appeared to be as many as four layers of subcontractors 
between the taxpayer and the individual actually providing the 
security services. As I explained in my letter, it appears that 
each contractor takes a cut of the profits, magnifying the cost 
to the taxpayer, but not offering anything of value. According 
to one account I cited, the final cost to the taxpayer could be 
inflated by 150 percent or more.
    I asked specifically for a cost accounting that showed how 
much tier each tier of subcontractor was charging, but I also 
asked for copies of all the contractor subcontracted documents 
to find out why this was happening, but the Department would 
not provide the information.
    This is an intolerable situation. The Bush administration 
is spending literally billions of dollars on private security 
contracts in Iraq. Yet, when I ask a basic question about how 
much these services cost and whether the taxpayer is getting 
ripped off, I get stonewalled.
    Because this hearing is about this issue, as a member of 
the committee I am entitled to ask for a subpoena motion to get 
this information, because I think we are entitled to get the 
information. I have had a discussion with the chairman of the 
subcommittee; he feels as I do, that the subcommittee and our 
committee is entitled to this information. I could offer that 
motion, but that is not my purpose. I want to engage the 
chairman in a colloquy.
    As I understand it, you agree that we should get this 
information. You will join me in a request for the information, 
and we will use the full powers of this committee should that 
request not be granted in a reasonable period of time to insist 
upon the information.
    Mr. Shays. Well, my view is very clearly that, when a 
committee requests information, even when the minority requests 
it, there should be a response; there should be a clear 
indication of what can be provided and what won't be. My view 
is that this needs to be taken on by the full subcommittee. I 
will gladly help you get this information and join with you to 
get this information. And if we fail to get this information 
through the proper requests in a very short period of time, 
then we would have to use the powers that are available to us 
to demand that information.
    Mr. Waxman. And that you would support that, if necessary?
    Mr. Shays. Absolutely.
    Mr. Waxman. Well, I think that is an appropriate response, 
and one that I very much welcome.
    Mr. Shays. And I also want to express my disappointment 
that it has taken so long for this information to be provided.
    Mr. Waxman. Thank you. Well, we have learned that we need 
to insist on accountability. And for that reason, I am very 
pleased that you are calling this hearing today. I have other 
points I was going to make in my opening statement, but I will 
bring it in in the questions, because I think there is a better 
path than the one we have been following.
    Mr. Shays. I am very sorry, but probably not until about 10 
of, at least 15 of or 10 of. So you have 15 minutes clearly to 
be away from this committee and maybe a little more. Thank you. 
We stand in recess.
    [Recess.]
    Mr. Shays. The subcommittee will come to order. I, again, 
thank our witnesses and do apologize for the delay. This is 
part of the process.
    I think this is an extraordinarily important hearing, and I 
think we are going to learn a lot of important information, so 
we do look forward to hearing from our witnesses. I think it is 
also important, though, that Members state where they are 
coming from, and I hope the witnesses are listening so they can 
incorporate comments they hear whether in their statement or in 
answers to questions. So I do think it is an important process 
both ways.
    At this time, the Chair would recognize my very good 
friend, Congressman Duncan.
    Mr. Duncan. Thank you very much, Mr. Chairman, and thank 
you once again for calling, as you said, what is a very 
important hearing. I have people waiting in my office and I am 
supposed to preside over the floor of the House shortly, so I 
don't know how much I am going to be able to be here. But I did 
want to at least make a brief statement. And I am having a 
pollen or allergy attack, so I think it will be brief.
    But I remember a year and a half or so ago when David 
Walker, who was then the Inspector General of the Defense 
Department, testified in front of this committee and said that 
the Defense Department had misspent or had lost to waste, 
fraud, and abuse $35 billion in Iraq, and that there was 
another $9 billion on top of that that had just been totally 
lost and couldn't be accounted for at all. And I think the 
reason that more people weren't horrified by that is that $44 
billion is almost a figure so large that people just almost 
can't comprehend it.
    Now what we have, it may shock some people, but there is 
waste even in the Defense Department. And yet some 
conservatives seem to think at this point that we can't 
criticize that and that we have to give the Defense Department 
every single thing that they ask for and we shouldn't ever 
question any of the expenditures that they do. But some 
conservatives are getting to the point where we are wondering 
if this misadventure in Iraq is not more about money for 
defense contractors and others than it is about security.
    And I probably respect Chairman Shays more than anybody or 
as much as anybody in this Congress, so I will state real 
quickly I know he does not agree with me on this. But William 
F. Buckley, the godfather of conservatism, he wrote in 2004 
that if he had known in 2002 what he knew then in 2004, he 
would have opposed the war. And then last year, he wrote this. 
He said, a respect for the power of the United States is 
engendered by our success in engagements in which we take part. 
He said a point is reached when tenacity conveys not steadfast 
and purpose, but misapplication of pride. And I think we have 
reached that point. And when I read, as I read in the briefing 
by the staff on this hearing today, currently according to the 
Department of Defense there are 60 private security companies 
operating in Iraq with approximately 25,000 personnel. However, 
the Baghdad-based association believes there may be more than 
150 security firms with as many as 50,000 personnel.
    Well, I know that people down my way, and I come from a 
very conservative, very patriotic, very pro-military district, 
but they don't want to see money just wasted continuously. We 
are getting to the point with an $8.3 trillion national debt 
which is headed up very highly, we are not going to be able to 
pay all of our military pensions and civil service pensions and 
our Social Security and Medicare and so forth in not too many 
years from now if we don't stop spending hundreds of billions 
of dollars in other countries for things like this.
    I heard a general at the Pentagon say that al-Qaeda was now 
down to less than 3,000 troops and had no money; yet, we keep 
spending just ungodly sums over there. And then we find out 
that we don't even know exactly how many private security firms 
are operating in Iraq. And then I think people down my way 
would think that is kind of ridiculous that we don't know that. 
I think they would find it ridiculous that we are having to 
hire private firms to provide security for our troops, because 
they are in the business--that is what their business is, is 
security.
    And then also, what they would find the most ridiculous of 
all is that we hire a foreign firm, a British firm to provide 
security for our own military. And in one of these briefings, 
it says a British-owned security firm provides security for the 
Army Corps of Engineers. And then this article that was in the 
Washington Post 2 days ago, that they got $293 million, the 
largest contract over there. But I am told also by staff that 
we don't know exactly how much money we have spent on private 
security contracts.
    And I don't know if that is the case or not, but somebody 
should be finding out. And so I am glad you called this 
hearing, but there is a lot of frustration out there about this 
whole deal. And yet, on our side, it seems that we can't say 
anything about it. And the other side has constituency like, if 
we said we were going to spend 10 times on public education 
what we are, the other side would immediately attack us and say 
that wasn't enough.
    We need to get past these constituencies and do what is 
right for the American taxpayers. Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentleman very much. And I would 
just point out, when Members had left, Mr. Waxman had made a 
request. And as I read this letter, it is not a credit to DOD 
that they received the letter November 30, 2004 asking for 
basically the same kind of information, Mr. Duncan, you would 
want. And they received a letter back from Jerome Johnson who 
it was sent to, the Commander of U.S. Army Field Support 
Command, basically saying he has referred the letter--and this 
is dated December 21, 2004. He had referred the letter to the 
Office of Congressional Legislative Liaison.
    I just think it is very important for this committee to 
support that letter and that request for information, and so 
this will be made part of the record, without objection, and 
the Department will be very aware of what we are asking for. It 
was in your letter, Mr. Waxman.
    Mr. Waxman. Thank you, Mr. Chairman. I think you will get 
more attention from them than obviously we did. And if we act 
together, we will get the information the Congress is entitled 
to.
    Mr. Shays. Well, it is a matter of legislative 
responsibility, and we do need to work together on that.
    At this time, the Chair would recognize Mr. Van Hollen, who 
has had the opportunity to visit my district and knows what a 
wonderful place it is.
    Mr. Van Hollen. Thank you, Mr. Chairman. And you have a 
wonderful district, Mr. Chairman.
    Let me just say, I think this is a very important hearing 
for us to have. If you remember the lead-up to the Iraq war, 
Lawrence Lindsey, who was then the President's chief economic 
policy adviser, predicted that the war would cost between $100 
billion and $200 billion. At that time, he was laughed at by 
other members of the administration, including people at OMB. 
They said that is way too high. We can recall also then Deputy 
Secretary of Defense Paul Wolfowitz saying, well, Iraqi oil 
revenues will easily be able to pay for the reconstruction 
phase and quickly.
    Well, we now know that both the Wolfowitz prediction was 
wrong, that the Lawrence Lindsey prediction, for from being was 
too low was too low, and the efforts in Iraq are costing 
hundreds of billions of dollars to the taxpayer. So it is 
important that we hold the people spending those moneys 
accountable.
    As we have heard from others, we have already heard of 
millions of dollars that are wasted as a result of fraud, 
abuse, and other forms of waste. And so it is important that we 
have an opportunity now to look at one sector of spending, 
which is on the private security contractors.
    Now, in and of itself, there is nothing I don't think that 
is intrinsically good or bad about having a private entity 
involved. It depends on what they are involved in and the rules 
under which they are operating. But it is clear that in Iraq 
there have been failures and breakdowns in both those areas.
    I just want to draw attention to one example that was 
highlighted by GAO, the Government Accountability Office, 
independent nonpartisan agency back in April 2005. They talked 
about how the Army was looking for interrogators, people to 
conduct interrogations. And rather than do that within the Army 
or within the existing military force, they decided to contract 
it out. Where did they go? To the Department of Interior. And 
through some complicated contracting procedures they 
essentially contracted out to a private vendor interrogation. 
And the GAO found, and I am just quoting from their report 
there, that: Because the officials in Interior and Army 
responsible for the orders did not fully carry out their roles 
and responsibilities, the contractor was allowed to play a role 
in the procurement process normally performed by the 
government. In other words, the Federal Government essentially 
turned over the responsibilities, governmental responsibilities 
to a private contractor.
    That is wrong. That is an abuse of the responsibility of 
the Federal Government. It leads to bad results. We need to 
make sure we have procedures in place for proper oversight. If 
you are contracting out to any private entity, you need to have 
oversight so that the final decisionmaking authority is 
somebody who is essentially responsible ultimately to the 
public. That is one issue.
    The other issue. There are some things in my view that are 
intrinsically governmental functions, like interrogations, and 
just should not be contracted out. We don't want to contract 
out all our military operations. So there are a number of very 
important issues on the table I hope we will get to the bottom 
of. Mr. Waxman raised some issues about what rules apply to 
contractors. There are two sides of that coin. For the 
contractors' own protection, in some cases, you want to know 
whether there are rules that make sure that, if something 
happens to them, that they have recourse to a judicial process.
    At the same time, if they do something wrong in Iraq, it is 
important that the same rules apply so that the people who have 
been wronged by them have recourse to judicial process. Two 
sides to the coin. And right now, I think this is an area that 
has been out of control, improper oversight. We have seen waste 
of billions of dollars, I think hundreds of millions of dollars 
in Iraq. And the lack of oversight over private contractors has 
been a big part of the problem, and I think it is 
characteristic of the overall lack of competence with which the 
war in Iraq has been conducted. Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentleman. At this time, the Chair 
would recognize Ms. Schakowsky. Welcome, and nice to have your 
participation.
    Ms. Schakowsky. Thank you, Mr. Chairman. I really do 
appreciate your allowing me to participate, not just sit in but 
participate in this hearing. I thank Ranking Member Kucinich 
and the ranking member on the full committee, Mr. Waxman, as 
well.
    Over the past decade, private military contractors [PMCs] 
have become a key factor in U.S. military operations. U.S. 
military logistics, combat assistance, and security services 
are increasingly outsourced to private entities. Civilians have 
taken on many of the responsibilities and duties once performed 
exclusively by uniformed personnel. As a result, today 
advancement of key U.S. foreign policy goals relies far more on 
private non-state actors than at any time in American history.
    Regulating the responsibilities and accountability of 
taxpayer-funded private actors on the international stage is 
one of the most important policy challenges that the Congress 
needs to address in regards to our foreign policy. Yet, while 
the PMC trend is having a profound impact on the planning and 
conduct of modern warfare, there has been almost no scrutiny 
and less oversight in regulating the U.S. PMC relationship. In 
fact, when I offered an amendment to the fiscal year 2007 
defense authorization bill that would help provide better 
congressional oversight on military contractors in Iraq and 
Afghanistan, the Republican majority refused to allow me to 
include language asking for: The number of contracts in 
existence; the total cost of these contracts; the total number 
of contractors in Iraq and Afghanistan; the number of dead and 
wounded contractors; a report on the laws that might have been 
broken by contractors; a list of disciplinary actions taken 
against contractors; copy of contracts issued in excess of $100 
million. None of those became part of the law.
    That Chairman Shays and ranking member on the committee, 
Mr. Waxman, have to estimate the number of contractors there 
are serving right now in Iraq is absurd. These are taxpayer 
dollars. We are funding those. And that we don't know how many 
even that there is, I think, a dereliction of our duty.
    The Bush administration support for the privatization of 
government functions coupled with the wars in Afghanistan and 
Iraq has accelerated the demands for private security services. 
Contractors we know compose the second largest force in Iraq 
after the U.S. military. And, to date, more military 
contractors have been killed in Iraq than non-U.S. coalition 
soldiers, we think. We can all acknowledge that military 
contractors require the same stringent accountability and 
oversight standards as the U.S. military. After all, private 
contractors often serve side by side with our brave troops, and 
these same U.S. troops are often tasked to protect our 
contractors who are paid with billions of U.S. taxpayer 
dollars.
    Several high profile scandals have exposed the challenges 
we face with PMCs. Contractors have been implicated in 
financial, legal, and human rights abuses, including illicit 
trade, drugs, prostitution rings, allegations of fraud, human 
rights abuses, and, worst of all, unprovoked civilian deaths. 
These events have highlighted the challenges that arise when 
nonstate actors are employed in active war zones and are not 
sufficiently regulated, or when enforcement of existing laws 
remains weak. The private military contractor business is the 
war business, and for-profit companies may not share the same 
mission-based goals as the U.S. military. They are in business 
for profit.
    As the Iraq experience makes clear, a more transparent 
framework for monitoring and regulation of contractors is 
urgently needed.
    I want to thank the Government Accountability Office for 
the scrutiny that it has given. But you have asked more 
questions than we have gotten answers for, and I hope this 
hearing today will shed more light on the questions that you 
have raised and the questions that I have been persistently 
asking. So I thank you very much.
    Mr. Shays. I thank the gentlelady very much, and we 
appreciate having her expertise. That will help our committee 
get the work done that we need to.
    I am just going to make this point that what we asked the 
witnesses to do today is to talk about PSF, private security 
firms, basically body guard type work, what I would call Secret 
Service type work. So we have not made the request from these 
groups to focus on private military contractors which can be 
beyond that. But Members are free to ask any question they 
want, but in terms of the expertise that we have asked to be 
presented today. And it is possible that we would broaden it to 
go beyond the private security firms in our work.
    Let me welcome our witnesses. First let me take care of 
some business that we need to do. I ask unanimous consent that 
all members of the subcommittee be permitted to place an 
opening statement in the record, and that the record remain 
open for 3 days for that purpose. And, without objection, so 
ordered. I ask further unanimous consent that all witnesses be 
permitted to include their written statements in the record. 
And, without objection, so ordered.
    At this time, the Chair would recognize our four panelists. 
If there is anyone else that you may turn to to respond to a 
question, we will ask you to ask them to stand up and be sworn 
in so we don't have to do it more than once.
    We have Mr. William M. Solis, director, Defense 
Capabilities and Management, Government Accountability Office 
[GAO].
    We have Mr. Shay, without an s, Assad, director, Defense 
Procurement and Acquisition Policy Department of Defense.
    We have Mr. Greg Starr, Deputy Assistant Secretary, Bureau 
of Diplomatic Security, Department of State.
    We have Mr. James Kunder, Assistant Administrator for the 
Near Far East and Africa, U.S. Agency for International 
Development.
    As you know, we do swear our witnesses in, and we would ask 
you to stand at this time. Is there anyone that you would 
suggest be sworn in as well?
    [Witnesses sworn.]
    Mr. Shays. Note for the record our witnesses have responded 
in the affirmative.
    What we do in this committee is we request that you be 5 
minutes, but we let you roll over beyond that. So we would 
prefer that your statement be what you want it to be, but 
obviously not to be more than 10, but preferred closer to 5. 
But whatever, we appreciate you being here, Mr. Solis.

STATEMENTS OF WILLIAM M. SOLIS, DIRECTOR, DEFENSE CAPABILITIES 
 AND MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE; SHAY ASSAD, 
     DIRECTOR, DEFENSE PROCUREMENT AND ACQUISITION POLICY, 
DEPARTMENT OF DEFENSE; GREG STARR, DEPUTY ASSISTANT SECRETARY, 
 BUREAU OF DIPLOMATIC SECURITY, DEPARTMENT OF STATE; AND JAMES 
 KUNDER, ASSISTANT ADMINISTRATOR FOR THE NEAR EAST AND AFRICA, 
           U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

                   STATEMENT OF WILLIAM SOLIS

    Mr. Solis. Chairman Shays, Ranking Member Kucinich, and 
members of the subcommittee, I am pleased to be here to discuss 
the use of private security providers by U.S. Government 
agencies and contractors that are helping to rebuild Iraq. It 
is the first time that the United States has depended on 
contractors to provide such extensive security in a hostile 
environment, although it has previously contracted for more 
limited security services in Afghanistan, Bosnia and elsewhere.
    Today my testimony will followup on some of the issues we 
raised in our 2005 report on private security providers as well 
as our preliminary observations from an ongoing engagement on 
the processes used to screen their employees. Specifically, I 
will address three main points: The extent to which 
coordination between the U.S. military and private security 
providers has improved since our 2005 report; the ability of 
private security providers and DOD to conduct comprehensive 
background screenings of their employees; and the extent to 
which United States or international standards exist for 
establishing security provider and employee qualifications.
    With regard to my first point, we reported in July 2005 
that coordination between the U.S. military and private 
security providers had improved since the establishment of the 
Reconstruction Operation Center in October 2004. However, 
military officials we recently met with in Iraq and those that 
have recently returned from Iraq indicate that coordination is 
still a problem. For example, private security providers are 
still entering the battle space without coordinating with the 
U.S. military, putting both the military and security providers 
at a greater risk for injury. And, U.S. military units are 
still not being trained on operating procedures of private 
security providers in Iraq and the role of Reconstruction 
Operation Center. In our 2005 report, we recommended that a 
predeployment training program would help address the 
coordination issue. DOD agreed with our recommendation but has 
not issued any guidance or conducted any training with regard 
to working with or coordinating with private security providers 
on the battlefield.
    Regarding my second point, our preliminary observation 
suggest that private security providers and DOD have difficulty 
conducting comprehensive background screening when data are 
missing or unaccessible. When doing background checks of those 
living in the United States, private security providers use 
public information available at the county, State, or Federal 
level.
    They also search criminal information repositories and 
commercial data bases, such as those that collect information 
on incarcerations. None of these types of searches, however, 
guarantees a comprehensive background check. Additionally, 
screening host nation third country national employees can be 
difficult because of inaccurate or unavailable records in some 
of these countries. In addition, officials from some background 
screening firms told us that foreign laws restrict access to 
some criminal records.
    Finally, DOD's biometric screening of most non-U.S. 
contractors including employees of private security providers 
accessing U.S. installation in Iraq is not as effective as it 
could be, because the data bases used to screen contractor 
employees include only limited international data.
    My third and last point is that no U.S. or international 
standards exist for establishing private security provider or 
employee qualifications. As we reported in our 2005 report, 
reconstruction contractors had difficulty hiring suitable 
security providers. For example, we found that contractors 
replaced their security providers on five of the eight 
reconstruction contracts awarded in 2003 that we reviewed. 
Contractor officials attributed this turnover to various 
factors, including their lack of knowledge of the security 
market and potential security providers, and the absence of 
useful agency guidance.
    Consequently, we recommended that agencies explore options 
that would enable contractors to obtain such services quickly 
and efficiently. Such options could include identifying minimum 
standards for private security personnel qualifications, 
identifying training requirements in the key performance 
characteristics that these personnel should possess, 
establishing qualified vendor lists, or establishing 
contracting vehicles which contractors could be authorized to 
use.
    State Department disagreed with our recommendations, citing 
concerns that government could be held liable for performance 
failures. State determined that they could best assist 
contractors by providing information on industry best practices 
and other security related material. As we stated in our 2005 
report, given the significance of contractors in achieving 
reconstruction objectives and the mixed results they 
encountered when selecting their security providers thoroughly, 
exploring potential options to assist contractors in obtaining 
these services quickly and efficiently would be prudent.
    Mr. Chairman, this concludes my oral statement. I will be 
happy to answer any questions you or the members of the 
subcommittee may have.
    Mr. Shays. Thank you, Mr. Solis.
    [The prepared statement of Mr. Solis follows:]
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    Mr. Shays. Mr. Assad.

                    STATEMENT OF SHAY ASSAD

    Mr. Assad. Thank you, Mr. Chairman. Chairman Shays, members 
of the committee, Madam Congresswoman, I am Shay Assad, and I 
serve as the Director of Defense Procurement and Acquisition 
Policy in the Office of the Undersecretary of Defense For 
Acquisition Technology and Logistics. Prior to taking this 
position in April, I was the Assistant Deputy Commandant for 
Installation and Logistics in Contracting. I was the senior 
contracting official in the U.S. Marine Corps.
    To give you a little background, I spent 25 years in 
industry serving in a number of operational and staff 
capacities primarily with Raytheon Co. My experience includes 
serving as a senior vice president of contracts. I was 
president and chief operating officer of a major operating 
division, and I was last an executive vice president, chairman, 
and CEO of one of their major operating companies. I am a 
graduate of the Naval Academy, and I started my career off as a 
naval officer in serving two tours on Navy destroyers, and 
last, as a Navy procurement officer at the Naval Sea Systems 
Command.
    Thank you for the opportunity to appear before you today to 
participate in today's discussion on private security firms. I 
would like to take a moment to thank the committee for its 
support of our troops and all you have done to help with their 
mission. I would also like to thank the men and women who serve 
our great country. When I say men and women, I mean our 
military, our government civilian, our coalition, and industry 
partners. None of us could get the job done without the other.
    I am continuously impressed with the cooperation among all 
those contributing to the mission under very adverse conditions 
in Iraq and Afghanistan as well as other operating locations 
around the world, and I am committing to doing what I can to 
assist them.
    Mr. Chairman, our industry partners provide essential 
support to the deployed military forces that enables our forces 
to focus on their core mission. The Department of Defense 
acquisition team strives to provide our war fighters the 
support they need, consistent with responsible management and 
stewardship to our taxpayers. We strive to effect timely 
acquisition planning, contract execution, and responsible 
contract management oversight in order to provide our war 
fighters the contract support they need to accomplish their 
mission. We are doing everything it takes to make our soldiers, 
marines, airmen, and sailors and ensure that they are provided 
with the safest, most dependable, and highest performing 
equipment available within fiscal constraints together with the 
logistics and material support necessary to ensure performance 
whenever and wherever it is needed. We will continue to work 
every day to improve the service that we provide our men and 
women in the Armed Services.
    I know your invitation letter had asked General Webster to 
respond to specific questions based on his personal experience. 
I cannot speak for General Webster, but I can tell you from an 
acquisition and contracting point of view, my focus with regard 
to activities in Iraq primarily rests with supporting Major 
General Darrell Scott, U.S. Air Force, the commander of the 
joint contracting command.
    In addition, I support a number of other contracting 
agencies, such as the Defense Contract Management Agency, the 
U.S. Army Corps of Engineers, and the gulf region division. 
These men and women are doing great work under some very trying 
conditions.
    You had asked about the roles and missions of private 
security firms operating in Iraq. The activities of private 
security firms include but are not limited to protective 
security details for government employees and dignitaries, site 
protection of buildings and other facilities, and operational 
staff work that directly support reconstruction and relief 
operations in a complex contingency.
    You asked what policy directives apply to provide security 
firms on the battlefield. The governing DOD policy is found in 
DOD Instruction 3020.41 entitled Contractor Personnel 
Authorized to Accompany the U.S. Armed Forces. This instruction 
establishes and implements policy and guidance, assigns 
responsibilities, and serves as a comprehensive road map of 
policies and procedures concerning DOD contractor personnel 
authorized to accompany our forces. Chapter 6 in particular 
addresses armed contractors. There are also various other 
service regulations that cover the use of armed contractors. 
The Army has prepared a CONUS guide for supporting 
contingencies within the United States and supporting overseas 
contingencies from CONUS locations as well as a guide book for 
all CONUS contingency contracting.
    The committee has also asked what standards private 
security firms are to meet before being employed by the 
Department of Defense. First are the general standards of 
responsibility that apply to all firms entering into a contract 
with DOD. These are specified in the Federal and defense 
acquisition regulations as well as specific agency regulations.
    More specific to armed contractors, DOD instruction 3020.41 
prescribes standards that apply to contractor employees to 
include medical standards, background checks, contractor 
direction and discipline, as well as country entry 
requirements.
    The committee has also asked what types of training 
security firms provide their employees before being assigned to 
the battlefield environment. I cannot speak for any particular 
company with regard to the types of training that particular 
company would provide. That would have to be answered by that 
company. I believe, however, that specific training required of 
such firms would depend upon the nature of the security 
provided and upon the individual contract statement of work.
    For example, training for a company that is hired to 
provide protective security details to senior leaders would be 
very different from a company hired to provide static security 
such as gate guards.
    Some standard training for all armed contractors is 
described in chapter 6 of DOD 3020.41. Other standards for 
training can be found in DOD handbook 2000.12, the protection 
of DOD personnel and activities against acts of terrorism and 
political turbulence. However, any requirement to train 
according to these standards as well as any other mission 
specific training should normally be included in the statement 
of work for a particular contract.
    In closing, Mr. Chairman, I thank you and the members of 
the committee for your interest in our efforts, and I will be 
happy to answer any questions that I can that you may have for 
me. Thank you, sir.
    Mr. Shays. Thank you Mr. Assad.
    [The prepared statement of Mr. Assad follows:]
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    Mr. Shays. Mr. Starr.

                    STATEMENT OF GREGG STARR

    Mr. Starr. Thank you, Mr. Chairman, committee members. 
Thank you for giving me the opportunity to present a short 
opening statement on the subject of private security firms and 
our ongoing operations in Iraq. Your letter to the Secretary 
requesting our appearance also included six specific questions. 
I will address the questions briefly in this presentation, and 
we will provide you with a more complete written response for 
the record by the end of this week.
    The Department of State diplomatic mission in Iraq was 
reestablished in July 2004. Diplomatic security crafted a 
comprehensive set of security programs to meet the high level 
of threat in this theater of operation. The programs were a 
combination of physical and technical security upgrades at our 
facilities, procedural security regulations, and close personal 
protection operations for off compound requirements. Staffing 
for security programs in Iraq includes nearly 50 diplomatic 
security special agents, marine security guards, approximately 
1,500 third country national local guards, hundreds of U.S. 
coalition troops protecting the international zone and regional 
embassy offices, and nearly 1,500 highly trained contract 
personal security specialists.
    The security specialists in this latter category referred 
to in the GAO report as private security providers have been 
critical to our efforts to create a safe environment for our 
U.S. mission personnel. This effort has not been without great 
cost and personal tragedy. We are all aware of the number of 
U.S. military personnel who have lost their lives or who have 
been seriously injured in this effort, and we honor their 
memory.
    In connection with programs conducted by U.S. agencies 
under chief of mission operations, we have lost 119 civilians 
including direct hire employees and contractors. Diplomatic 
security has lost two special agents and 23 contract personnel 
security specialists killed in action in Iraq since July 2004. 
Six other contract personnel security specialists have lost 
their lives in our service in Afghanistan and Gaza. These men 
and women and their family have paid the highest price in 
support of our efforts, so it is with the utmost respect that I 
am here to brief you and answer your questions relating to 
these companies who provide us with these fine Americans.
    The Department of State primarily utilizes private security 
firms in Iraq for two major functions. The first is static 
guard services at our facilities. These contract security 
operations are similar to local guard contract programs we 
utilize at our embassies, consulates----
    Mr. Shays. If you could suspend for 1 second. We are going 
to have two recorded votes. If we only had one, I would send 
one Member out now so we could just keep rolling, but we will 
go for another 10 minutes and we will hear your statements. 
Thank you, Mr. Starr. Keep going.
    Mr. Starr. As I said, we used the private security firms 
for two primary functions. One is the local guard programs, and 
we utilized these typically at our embassies and consulates and 
residences around the world. The second contracted functions 
are private security companies providing personnel security 
details and security escorts.
    When the U.S. embassy was activated in July 2004, we found 
a number of CPA contracts for personal security services in 
place. As the GAO report pointed out, they varied in 
capabilities, costs, and level of training. We worked to 
immediately reduce the number of different contractors and 
imposed uniform standards for operations. Individual contracts 
were superceded by using our worldwide personal protective 
security contract. This is a competitively bid contract for 
personal security services with multiple awardees. These 
contractors operate in very dangerous environments, and their 
actions, equipment, and methods of operation are specified in 
our contract requirements. Rules of engagement developed by the 
embassy and approved by the chief of mission and diplomatic 
security govern their use of deadly force. The companies also 
operate under our contract guidelines, but since the 
establishment of Iraqi sovereignty have also complied with 
Iraqi legal requirements to register their companies with the 
appropriate ministry.
    Diplomatic security has carefully crafted the very high 
standard these companies must meet in order to effectively 
compete and win awards. The personnel of these companies must 
provide, must also meet high standards and be capable of 
obtaining a security clearance. Fitness, previous experience, 
integrity, and the ability to meet security criteria add up to 
a very selective personnel screening process.
    High training standards are another important factor 
demanded by our contract. We prescribe the course criteria, vet 
the training facilities as well as the instructors, and monitor 
our contractors to ensure that these security specialists are 
trained to counter the dangers that they will face in these 
high threat environments. Feedback from on-the-ground 
operations is incorporated into training regiments and to 
provide replacements with the most up-to-date information on 
tactics and techniques.
    Overall, because of the high standards we set, insistence 
on high caliber training and close oversight and management of 
the contract both on the ground in Iraq and in headquarters, we 
have achieved a very high degree of capability in a short 
period of time with few problems.
    The services we provide are primarily for the protection of 
U.S. Government employees and staff. We do not provide security 
services for private companies, nongovernmental organizations, 
or implementation partners. However, we are willing to share 
our contract requirements with those organizations supporting 
our effort through the Overseas Security Advisory Council 
[OSAC], either domestically or in Iraq.
    In closing, I would like to say that our ability to provide 
protective operations on the scale required in this environment 
would not have been possible without using private security 
contractors. The number of personnel security specialists we 
utilize in Iraq alone is more than all the diplomatic security 
agents we have globally. We could not have trained and hired 
new agents to meet this requirement as rapidly as the 
contractors met the requirement even if we had the funding and 
FTE available. Meeting this relatively short duration 
requirement using competitively bid contractors along with 
establishing high standards and requirements is the best 
possible solution for these circumstances. Thank you.
    Mr. Shays. Thank you very, Mr. Starr.
    [The prepared statement of Mr. Starr follows:]
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    Mr. Shays. We are going to finish with you, Mr. Kunder, and 
then we are going to start with Mr. Marchant and ask questions 
when we get back. But you will finish up before we adjourn.

                   STATEMENT OF JAMES KUNDER

    Mr. Kunder. I will be very brief, Mr. Chairman.
    Mr. Shays. Make your statement as you need to. Don't worry 
about what I just said.
    Mr. Kunder. Essentially, I'll summarize briefly what I said 
in my statement. I will take this opportunity to provide a 
little context on why we're using security personnel and the 
various arrangements that actually take place in the field when 
we're doing a reconstruction effort. If you would take a 
situation where the U.S. foreign aid program is taking U.S. 
taxpayer dollars to, say, build a health clinic somewhere where 
we would immunize children, what we would normally expect to do 
is send our personnel out ahead of time, make sure it's not a 
swamp, talk to the local villagers, make sure it's a place 
where they would want the health center, would it be useful to 
them and to make sure the construction takes place 
appropriately, any medical supplies are used appropriately, not 
stolen effort so all that requires a lot of trips by U.S. 
Government personnel or our partners, contractors or NGO 
contractors to get out to the site. What I find in those 
circumstances is that while we're talking about personal 
security firms here, what we've tried to do is adapt a number 
of techniques to make sure the U.S. taxpayer dollars are spent 
wisely. In some cases, that means using our local employees. 
For example, in Iraq, we have more than 100 Iraqi professionals 
who often are able to blend in more effectively and get out and 
take a look at these project sites. In the West Bank, in Gaza, 
we're using television cameras to make sure construction is 
done effectively and efficiently. In areas where we can't move, 
we are sometimes using armored vehicles. We're trying to use a 
range of cost-effective techniques. Hiring of security 
personnel is not always the first option that we would take to 
make sure taxpayer dollars are spent effectively. The second 
point I try to make in my testimony has to do with a range of 
relationships, a range of security relationships that take 
place in the field because if you're going to get into 
discussions of regulation and so forth, I think it's important 
to understand the range--of the range of relationships that 
we're dealing with.
    While Iraq and Afghanistan are coalition environments, most 
of the operations we've been engaged in reconstruction in over 
the last several decades have tended to be peacekeeping 
operations, whether it's Haiti, Bosnia, Somalia and so forth. 
In those situations, we tend to rely more extensively on 
military forces, peacekeeping forces. On the far extreme, some 
of our NGO partners, even those operating in Iraq, do not use 
foreign personnel at all. They hire either local security or 
attempt to operate below the radar screen essentially so 
they're not visible. They use either Iraqi-Americans or 
Jordanians or other employees so there are a range of 
relationships between service providers and--and security firms 
that take place in the field. Very briefly since several 
members have talked about cost, we are spending probably about 
on average 22 percent of the money that we're spending on 
programs for security purposes--am I breaking up?
    Chairman Shays. No.
    Mr. Kunder. And that money--frankly, we're not at all 
apologetic at USAID about the expenditure of those moneys. If 
I'm trying to immunize 4,000 children against measles at a 
health center, and if medieval sadists are willing to blow up 
the people immunizing the children and the children who are 
lined up, I essentially have two choices. Either I can immunize 
3,000 children and spend the other 25 percent for security 
purposes, or I can give up and not immunize any children. 
Clearly, I would prefer--and I'm sure the committee would 
prefer and I think every U.S. taxpayer would prefer--that I 
spend 100 percent of the money and immunize all 4,000 children, 
but the reality of the circumstances in which we're dealing is 
that we have to pay these security costs in order to deliver 
the services that we're asked by the Congress to deliver under 
the Foreign Assistance Act.
    These are the kinds of contextual issues I tried to 
summarize in my hearing--in my statement. I'm more than glad to 
answer any questions the committee has. Thank you, sir.
    [The prepared statement of Mr. Kunder follows:]
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    Mr. Shays. I thank all four of you gentlemen. I think you 
have put into play a good opportunity for the committee to ask 
questions. I think we have a range of expertise at our panel, 
and I thank you for that. And as someone who has been to Iraq 
12 times, I just want to say I'm deeply impressed with the work 
of so many of the folks who provide security. So I will be 
interested in your responses to questions. I will first be 
interested in the questions my colleagues ask and your response 
to them.
    Regretfully, we have two votes. I didn't estimate its time 
very well last time, but we have two votes, not three. We'll be 
here probably a little after 3 to 4 p.m. Sorry. Is that right? 
Thank you. So we stand at recess, and we'll get right back 
here. I hope all the Members can come back and participate.
    [Recess.]
    Mr. Shays. This hearing is called to order. Again, 
apologies for having to recess for a little bit for votes. 
We'll start with Mr. Waxman. And I'll have questions. I prefer 
to ask mine toward the end. So Mr. Waxman, you have the floor. 
I think we will do a 10-minute round. So you have the floor.
    Mr. Waxman. Thank you, Mr. Chairman. Mr. Assad, as you 
know, last year, GAO issued a report concluding that the 
Defense Department could not adequately determine how much it 
was spending on contractor security services. To address this 
deficiency, GAO recommended that the Defense Department track 
contractor security costs, and the Pentagon agreed to do this. 
In order to gage the Pentagon's progress over the past year, I 
want to focus today on just a single contract. The biggest 
contract in Iraq, which is the LOGCAP, the Army's contract for 
meals, housing and other logistical support for the troops. 
Halliburton currently has this contract, which is now worth 
about $15 billion in Iraq alone. I'd like to know--what I'd 
like to know is this, how much of this $15 billion in LOGCAP 
funding went to pay for private security contractors?
    Mr. Assad. Mr. Congressman, unfortunately----
    Mr. Waxman. I don't think your mic is on.
    Mr. Assad. Mr. Congressman, unfortunately, I don't have 
those details, but I would be happy to get that information for 
you and take it as a question for the record, sir.
    Mr. Waxman. The Pentagon letter concurring with the GAO 
recommendations was signed by your office on July 19, 2005. And 
your letter says, ``the Department of Defense will collect 
readily available data on incurred security costs under 
existing contracts.'' Those are the Department's words. This is 
a year later. Is it--you don't know how much U.S. taxpayers are 
spending for security under the biggest contract in Iraq? Or 
you just don't have it with you today?
    Mr. Assad. I just don't have that information with me 
today, Mr. Congressman.
    Mr. Waxman. And didn't you think this might be asked?
    Mr. Assad. On the LOGCAP contract? No, I didn't, sir.
    Mr. Waxman. I'd like to put up a chart if I might. 
According to the investigative reports, security costs under 
Halliburton's LOGCAP contract have spawned multiple players of 
subcontractors all taking their cuts in successive rounds of 
mark-up. Let me walk through this.
    According to the contract documents cited, the individual 
employee performing security services under this contract 
earned $600 a day or $180,000 a year. Blackwater, U.S.A., the 
company that employed this person then tacked on a 36 percent 
mark-up.
    In addition to this amount, Blackwater also separately 
billed for all of its overhead and costs including insurance, 
room, board, travel, weapons, vehicles, office space, 
administrative support and taxes. But it didn't end here. 
Blackwater was a subcontractor to a Kuwaiti company called 
Regency Hotel, reportedly run by a retired U.S. Army officer. 
Regency was apparently billing up to $1,500 a day for that same 
single employee, but Regency was still not the top level. 
Regency was a subcontractor to a German company named ESS. We 
don't know how much ESS charged, but we do know ESS was a 
subcontractor to Halliburton. And we also know that 
Halliburton's contract with the Army guarantees that its costs 
will be fully reimbursed. So they contract. As we can see, this 
layering of contracts here guarantees Halliburton a fee of 1 
percent of those costs along with an opportunity for an 
additional 2 percent in award fees. So if this information is 
correct, the bottom line is that the U.S. taxpayers are paying 
hugely inflated prices for these services.
    Mr. Assad, do you know whether this report is true? Are 
there really five tiers of contractors?
    Mr. Assad. I do not, sir. But I will find out.
    Mr. Waxman. If we can cut to the bottom line, the biggest 
unknown here is the total amount of mark-up. How much does 
Halliburton charge the American people for this $600 a day 
employee?
    Mr. Assad. Mr. Congressman, I don't have that answer, but I 
definitely will look into it.
    Mr. Waxman. Well, I'm asking not for--not a new question. I 
raise these in a letter to General Jerome Johnson of the Army 
Field Support Command on November 30, 2004. He wrote back 
saying that the Office of the Secretary of Defense would 
provide a formal response. The Defense Department has now had 
over a year and a half to answer these basic questions, and the 
only conclusion I can draw is that there is a concerted effort 
to keep Congress and the American public in the dark, and since 
we're the people who pay the bills, that's simply not 
acceptable. This goes to the questions that the chairman of the 
subcommittee is joining with me in asking, and we would like 
that information to be provided for us.
    Mr. Shays. Would the gentleman just yield a second?
    Mr. Waxman. Certainly.
    Mr. Shays. Mr. Assad, in terms of looking into it, what we 
would want is a response----
    Mr. Assad. Yes, sir.
    Mr. Shays [continuing]. In writing to these questions that 
the chairman has asked.
    Mr. Assad. Yes, sir, Mr. Chairman.
    Mr. Shays. And that can be provided in the next 2 weeks?
    Mr. Assad. I will make every attempt to do that, sir.
    Mr. Shays. Thank you.
    Mr. Assad. Yes, sir.
    Mr. Waxman. Mr. Assad, I would like to ask why the Defense 
Department has not provided private security contractors with 
greater assistance and guidance. In testimony later this 
afternoon, the subcommittee will hear from an official from the 
Professional Services Council. This is the leading national 
trade association for companies that provide professional and 
technical services to the Federal Government, including 
securities services.
    In its testimony, the Professional Services Council says 
that they recommended back in March 2003 that the Defense 
Department take one of three actions. One, set standards for 
private security firms operating in Iraq. Two, establish a 
qualified list of firms. Or three, directly contract for 
securities services and have reconstruction contractors 
reimburse the government. But the Defense Department failed to 
take action on any of these recommendations. Why was that the 
case?
    Mr. Assad. Sir, I can't answer to what you may have heard 
from the Professional Services Council, but I can tell you that 
in a number of our contracts now that are being issued joint 
contracting command, there are several provisions which we're 
including in those contracts that address the matters that 
you're talking about. All our contracts include DOD instruction 
3020.41, which lays out requirements for medical, lays out 
training requirements, lays out firearm requirements, we 
include DOD instruction 5525.11.
    We now require DD Form 2760, which is an arms 
qualifications form and training form that we require. We 
require each employee to sign in writing that he or she is 
complying with those training responsibilities and conditions 
with regard to firearms. And while I know we can improve, and 
there certainly is room for improvement, sir. I won't deny 
that. We are making an attempt to make it clearer for our 
contractors to understand what their requirements are, what 
their qualification requirements are, what the training 
requirements are, and we will continue to do that, sir.
    Mr. Waxman. Let me ask, Mr. Solis, is this adequate? GAO 
made the same recommendations in your report, and GAO 
recommended that the Defense Department explore minimum 
standards for private security companies, a qualified vendor 
list, a bigger government contract for securities services that 
could be reimbursed by construction contractors. I assume 
that's right, and do you feel this is adequate enough to meet 
the request?
    Mr. Solis. It may. It may, but it's not clear to me when we 
talk about the instruction that Mr. Assad's talking about, 
that, I think refers to contractors that are accompanying the 
force. I'm not sure that directive would necessarily apply or 
be applicable to private security contractors. It does lay out 
some aspects of the role of the military in respect to 
contractors that deploy with the force, for example, like 
contractors who repair vehicles and things of that nature, but 
it's not clear to me whether that will satisfy the requirement 
for private security.
    Mr. Waxman. For private security. Couldn't the Pentagon's 
lawyers have placed qualifications on the list to make clear 
that they were not endorsing any specific company, and in that 
way at least let the contractor who was looking for security 
protection to hire one of the authorized private security 
contractors?
    Mr. Solis. Well, actually what we said in our 
recommendation I believe was that they need to not only just 
DOD, but the State and aid explore different options in terms 
of setting these kinds of standards, and we laid out different 
qualified vendor lists, different contracted vehicles, I 
believe, and so that they could explore different options 
without necessarily being prescriptive about what they should 
do because of the environment that was out there.
    Mr. Waxman. Mr. Solis, let me just conclude by asking, what 
impact did the Department's lack of action on these 
recommendations that you, at GAO, had made. In your report, you 
discussed conversations you had with the contractors 
themselves, and you find that the contractors believed that 
they could have used the additional information, and the 
additional guidance that you were recommending. How could the 
Defense Department have helped private security contractors to 
do their jobs better? And how would that, in turn, have helped 
the government do its job better?
    Mr. Solis. Well, I think there's some potential--and again, 
we haven't looked at what they were currently doing, but until 
that's corrected, there could still be some potential 
vulnerabilities with the type of contractor and the 
qualifications of those contractors, and until that's squared 
away, there may be some issues there.
    Mr. Waxman. Thank you. Thank you, Mr. Chairman.
    Mr. Shays. At this time, the Chair would recognize Mr. 
Duncan.
    Mr. Duncan. Well, Mr. Chairman, I'll be brief, and I wasn't 
able to be here because of other meetings for most of the 
testimony, but I did refer earlier to this staff memo which 
says that there are 60 private security companies operating in 
Iraq with 25,000 employees, but that a Baghdad-based 
association says there may be more than 150 private security 
firms with as many as 50,000 personnel. Did we clear that up? 
Can anybody help me on that? Do we know how many firms there 
are and how many personnel we're talking about?
    Mr. Starr. No, sir.
    Mr. Shays. I'm sorry. We need nice loud answers just so the 
recorder can record them. The question is, again----
    Mr. Duncan. Well, the question was--it comes from the staff 
briefing. I think everybody understood the question. And that 
is, as I just would like to know if we know whether this is 
right or wrong, the staff memo that says that some people say 
there's 50 private firms with 25,000 employees and others say 
there's 100, maybe more than 150 private security firms with as 
many as 50,000 personnel. And I'm just asking, did anybody 
clear that up in their testimony while I was away in my other 
meetings? But apparently not because everybody's--I'll just 
note for the record.
    Mr. Kunder. Sir, Mr. Duncan, we did not answer that 
question specifically. I just would like to make one 
observation. One of the issues is not just a data collection 
issue, but it's a definition issue because as the GAO report 
says, security in Iraq means a whole bunch of things. It means 
security for static positions. It means security for convoys. 
It means private security details for individual senior 
officials and so on and so forth. And that means that some of 
our firms hire Iraqi subcontractors. Subcontractors from other 
countries, and what you end up with is a broad array of 
security firms across the country, some of whom are Iraqis 
providing local security, some of whom are Nepalese or 
Colombian firms, and so what you've got is a broad array of 
firms, and my answer would be part of the definitional issue or 
the reason some people are using different numbers is they're 
defining the pool differently.
    Mr. Shays. Could the gentleman yield?
    Mr. Duncan. Yes, sure.
    Mr. Shays. I think this is kind of like when I was doing my 
statement and I said between this number and this number, I was 
kind of embarrassed to have to make that statement, and so I 
would like, on the gentleman's time, and I'll be happy to give 
him my time too, I would like each of you to tell me, do you 
know how many security guards we have in Iraq? From you, you, 
Mr. Solis, to you, Mr. Assad, to you, Mr. Starr, and to you, 
Mr. Kunder.
    Mr. Kunder. I cannot give you an exact answer. There is 
none that--there's only estimates from what we've been able to 
get.
    Mr. Assad. Sir, I can't give you an answer. I can tell you 
that approximately through contracts we've awarded joint 
contracting command 3,400 private security contractors that 
we've contracted for through the joint contracting command. I 
can't speak for the Department of State, and I can't speak 
obviously for AID, and that does not include for contracts for 
other work where contractors themselves would go off and 
subcontract for private security contractors. That's just the 
contractors that we would award to.
    Mr. Kunder. Mr. Starr, would you just----
    Mr. Starr. Mr. Chairman, I can tell you how many 
contractors the Department of State has. I can tell you what 
the companies are. And we can tell you how much it is and how 
many there are, but like my colleague, Mr. Jim Kunder, has 
said, I don't think we could give you an accurate number of how 
many other contracts are out there in support of 
nongovernmental organizations.
    Mr. Shays. Mr. Kunder, is that your answer?
    Mr. Kunder. Sir, if you want to define the term--I'm not 
playing games. I'm quite serious. If we can say on a given date 
because we're constantly changing what we're doing in Iraq in 
response to the situation on the ground. But if we can specify 
the date and a definition of what you mean by, you know, 
international or local, I can tell you exactly how many firms 
we had at any given time. Yes, sir.
    Mr. Shays. I'm just going to thank the gentleman for 
yielding to me. I happen to be a big supporter of private 
security forces, but I am pretty surprised that we can't do it, 
give the number because they're basically all paid by the 
government, and it's just surprising to me that we can't have--
that there's not one person who says, this is what we're 
spending. I thank the gentleman for yielding.
    Mr. Duncan. Well, thank you, Mr. Chairman. Let me ask this. 
This Washington Post story that came out 2 days ago said that 
this British firm, Aegis Defense Services, got a $293 million 
security contract. Is that the only contract that company got? 
Can anybody tell me the answer to that? Does anybody know the 
answer to that?
    Mr. Assad. Sir, I don't know if that's the only contract 
they got. No, sir.
    Mr. Duncan. Does anyone know how much total--we've 
determined we can't tell the number of employees, but can 
anybody tell me or give me a rough guess as to if one contract 
was for almost $300 million, can anybody tell me a rough guess 
of if--how many billions I assume that we've spent on private 
security contracts total from all the departments and agencies 
of the government total in Iraq? Just out of curiosity.
    Mr. Kunder. I can say, sir, we divide the way, we spend the 
money appropriated by the Congress into operating expenses, 
that is to say our own staff, putting them on the ground, 
feeding them and so forth. We've spent approximately $309 
million since the beginning of operations. This is staff 
salary, staff housing and so forth. And about $105 million has 
gone to security costs or about one-third of the total. If you 
go to the other way we account for taxpayers' dollars which is 
the program, that is to say building schools, building clinics, 
building roads, building sewage treatment plants, we've spent 
about 5.1 obligating about $5.1 billion of the earth funds, and 
we estimate that 22 percent, or, say, a little bit under $1 
billion has gone for security costs. I could get you the 
precise numbers if you want.
    Mr. Duncan. But you are speaking now just for the Agency 
for National Development. Is that correct?
    Mr. Kunder. Yes, sir.
    Mr. Solis. Congressman, if I can just add one of the 
recommendations we did make is, you know, for the agency to 
track these costs better down to the subcontractor level, and I 
think therein lies the problem in trying to get an answer to 
your question. I think the State aid committed future contracts 
to begin tracking those kinds of costs, and we had some initial 
estimates when we did our report based on some of the contracts 
that we had, but I think the problem that we ran into is that 
you could not track these costs, particularly down to the 
subcontractor level. But I believe State and aid are making 
some adjustments and detract those costs from new contracts.
    Mr. Duncan. Well, let me just say this. You know, one of 
the most famous quotes of all time was in the President 
Eisenhower's farewell speech when he said, when he warned us 
against the military industrial complex, and I'm convinced he 
would be shocked at how far we've gone down that path. And the 
International Herald Tribune had an article back a couple of 
years ago and they called it the revolving door at the 
Pentagon. All the defense contractors hire all the admirals and 
generals, and then they come back and they get from their 
friends and their buddies these sweetheart deals, and you know, 
and then we see things like this chart that Mr. Waxman came up 
with, saying some former military officer, who I guess had a 
friend in high places, $1,200 to $1,500 a day for a hotel.
    These things would shock my constituents, and I don't know 
how anybody can call themselves, legitimately call themselves a 
fiscal conservative or a conservative Republican if they're not 
just horrified by things like that are on this chart. It's just 
getting ridiculous. Thank you, Mr. Chairman.
    Mr. Shays. Thank you. I was wondering if the gentleman 
would yield me the balance of his time.
    Mr. Duncan. Yes.
    Mr. Shays. Mr. Solis, tell me how we would sort this 
equation out. I mean, each has their own responsibility. DOD is 
funding its folks, and you have State Department funding its 
folks. But walk me through, and you have the USAID funding its 
folks. But walk me through what would be involved and why we 
wouldn't want to be able to get this information fairly 
quickly.
    Mr. Solis. Well, again, I think when we went back and 
started looking at----
    Mr. Shays. Excuse me. Let me just interrupt. I'm just 
taking the balance of his time, correct?
    Mr. Solis. When we went back and started looking at 
individual contracts, we could only go so far in looking at 
what those contracts in terms of where the money was being 
spent for security contracts.
    Mr. Shays. Are most of these contracts cost plus?
    Mr. Solis. I think it's cost plus and fixed from what I 
understand.
    Mr. Shays. I mean, in other words, when the private 
contractor--and I have no problem with them making sure that 
their folks are protected and making sure that they hire 
security people to protect them, but what I'm asking is, it 
seems a logical thing for us to know how much we're spending on 
security and how much people are being paid, and so what I am 
asking is, help us sort out how we would go about doing that or 
how DOD, or is it the fact that we have two basic departments 
involved in this that makes it more difficult? I mean, tell me.
    Mr. Solis. I don't know that it's because--you've got two, 
three or four whatever number of departments that are involved 
here. Again, when we started looking at where security--what 
the totality of the security costs were, for example, when 
subcontractor might have a bill for whatever services they had, 
there only might be an invoice for whatever they were doing say 
for, you know, reconstruction, but it also had buried in there 
somewhere security costs.
    Mr. Shays. I don't like the word ``buried.''
    Mr. Solis. It was part of the invoice, but we could not 
determine or break down how much of that was for security 
versus for other services. So what we're saying in working for 
was a delineation of what those costs were when an invoice came 
in.
    Mr. Shays. Do we need legislation to make that happen? Or 
can we request that it be done by the departments and that they 
would then do it? Mr. Starr, can you answer that?
    Mr. Starr. Sir, I believe it was Congressman Waxman that 
sent in a separate question, but concurrent with the GAO report 
or following the GAO report, State Department did meet with 
USAID, and we have, in fact, issued something called a 
procurement information bulletin which is specifically giving 
guidance that the costs for security within contracts that are 
awarded must be tracked. I have a copy of the procurement 
bulletin that was issued. This is on the recommendation of----
    Mr. Shays. When was that done?
    Mr. Starr. This was very recently, sir.
    Mr. Shays. Very recently is not helpful.
    Mr. Starr. No. I understand that, sir.
    Mr. Shays. Very recently could be 6 months ago.
    Mr. Starr. I don't have--June 1, 2006, sir.
    Mr. Shays. We should put that in the record. Tell me about 
that DOD. Wouldn't it make sense for them to make the same 
directive?
    Mr. Assad. Yes, sir. And when I started looking into this, 
frankly getting prepared for this hearing, I issued some 
direction within my office. And I'm working with the Army as we 
speak to develop some guidance for the joint contracting 
command to ensure that takes place.
    Mr. Shays. Well, maybe when you respond to the other 
question Mr. Waxman has requested, you would tell us how you've 
progressed. Hopefully you'll be ready to make that an agency-
wide directive. That's one of the reasons frankly why we have a 
hearing like this, that gets us to focus on things, and I 
realize there are a lot of things to focus on. So thank you for 
doing that. At this time, the Chair would recognize the ranking 
member of the committee, Mr. Kucinich.
    Mr. Kucinich. Mr. Assad, when were the first private 
contractors put into Iraq?
    Mr. Assad. I don't know the answer to that, sir. I could 
find out for you in terms of the first contractors that we 
contracted for, but I don't know that.
    Mr. Kucinich. When the Department began its contracting 
process--in connection--did the Department ever issue any 
guidelines or rules of conduct for the contracting companies?
    Mr. Assad. Subsequent to the GAO report, Mr. Congressman--
--
    Mr. Kucinich. No from the time that you started to----
    Mr. Assad. No, sir. I think that it was the first--there 
was individual contracting clauses that were included in some 
of our contracts, but 3020.41, which was the true guidance that 
we gave our folks was issued in November 2005.
    Mr. Shays. Just for the record, could you let us know when 
you began to take on this task?
    Mr. Assad. Yes, sir. I took this position on April 3 of 
this year.
    Mr. Shays. OK.
    Mr. Assad. 2006.
    Mr. Shays. Thank you. That's helpful. Thank you.
    Mr. Assad. You are welcome.
    Mr. Kucinich. My colleague, Ms. Schakowsky, points out that 
contractors started to come in before the war. Is that--and so 
the men and women who serve our country in the uniformed armed 
services, when they go into a foreign operation, are they given 
rules of engagement?
    Mr. Assad. Yes, sir. They have rules of engagement.
    Mr. Kucinich. I wonder why it is if our troops would be 
given rules of engagement in a hostile--under hostile 
conditions, why the Department didn't have rules of engagement 
for the conduct of private security people. Can you explain why 
that wouldn't happen? Why it didn't happen?
    Mr. Assad. I can't explain why it didn't. I can tell you 
that the guidance that we've provided to the joint contracting 
command now is that they include rules of engagement, rules 
utilizing force, law of armed conflict and it has to be signed 
by each employee of the company that we're doing business with, 
that they've read the rules and that they understand them. I 
can't answer, sir, why----
    Mr. Kucinich. Do you know what the statute of limitation 
for murder is in the United States?
    Mr. Assad. No, I don't.
    Mr. Kucinich. There isn't one. Now, if someone connected 
with a private contracting company was involved in the murder 
of a civilian, would the Department be ready to recommend their 
prosecution?
    Mr. Assad. Sir, I'm just not qualified to answer that 
question.
    Mr. Kucinich. Anybody here qualified to answer that? And if 
they're not, why are you here? With all due respect. I mean, 
this is, Mr. Chairman, as late as June 11th, 2 days ago, the 
Washington Post filed a story that said that no security 
contractor has been prosecuted for killing--indiscriminate 
killing of civilians. It says, in part, because an agreement 
forged soon after the U.S. invasion of 2003 that made it 
impossible for the Iraqi government to prosecute contract 
workers. I mean, I'd like to submit for the record the story 
from the Washington Post, contractors cleared in videotape 
attacks. It says the Army's criminal investigation division 
cleared these individuals. The investigation's not being 
released or publicly discussed. It said lack of probable cause 
or belief that a crime was committed in what was an attack that 
was allegedly videotaped. Further discussion of this story was 
in this article on November 27, 2005.
    Mr. Solis. Congressman, if I may try to answer your 
question and I'm not an attorney to get into the particular 
details of the process, my understanding is that individuals 
could be prosecuted under War Crimes Act. There is also another 
act, and I know the acronym, I don't know the exact words under 
MEJA. But I don't believe at this point anybody's been brought 
forward under those particular laws, but it is my understanding 
that those would be applicable for private security 
contractors, but I can't----
    Mr. Kucinich. Back to the Department of Defense. Would the 
Department of Defense be prepared to see prosecution preferred 
against any private contractor who was demonstrated to have 
unlawfully killed a civilian?
    Mr. Assad. Sir, I can't answer that question. I would have 
to take it back, and we will answer it for the record.
    Mr. Kucinich. Wow. Think about what that means. If private 
contractors can get away with murder, and in some cases, they 
may have. It's not an adequate response really. And you know, 
this is one of the problems here that these contractors do not 
appear to be subject to any laws at all. And so therefore, they 
have more of a license to be able to take the law into their 
own hands. We've had a great discussion occur in this country 
and around the world in the conduct of U.S. troops in certain 
incidents but those troops will have to be accountable. There 
doesn't seem to be any accountability with respect to private 
contractors and it's--it really--since the administration is 
more and more preferring in certain instances private 
contractors, it would seem that notwithstanding your 
protestations that subsequent to these reports you are trying 
to get into a new level of standards, the basic question of 
accountability is accountability before the law. And 
accountability of someone is unlawfully taking another person's 
life that has to be the ultimate accountability, and you know 
we don't hear that it is unless you can enlighten me as to some 
new development that I may not be aware of. Any of you.
    Mr. Starr. Mr. Congressman, I believe that in our contract, 
we're very specific about rules of engagement, use of deadly 
force. I've also checked with our legal people and unlike the 
Department of Defense, we do not have the legal recourse should 
our contractors commit a crime that would be prosecutable back 
in the United States. However, I would like to make it a matter 
of the record that every shooting incident, every incident 
that's gone on in Iraq in a very, very volatile and very 
dangerous situation, essentially a war situation where we are 
putting civilian contractors, we have looked at the situations 
where they have, in fact, employed deadly force, and found that 
there was----
    Mr. Kucinich. How many of those incidents have there been? 
How many shooting incidents have there been by private 
contractors that you've had to look into?
    Mr. Starr. The Department, sir, I can't comment on the 
Department of Defense. The Department of State has--the 
Department of State I can get you the number for, I don't have 
it off hand.
    Mr. Kucinich. Ten?
    Mr. Starr. I think about a dozen, sir.
    Mr. Kucinich. And Department of Defense, how many shooting 
incidents do you investigate with respect to private 
contractors killing innocent civilians?
    Mr. Assad. Sir, I don't have it for you, but I will get it 
for you and answer the question for the record.
    Mr. Kucinich. So you don't have any idea at all?
    Mr. Assad. No, I don't sir.
    Mr. Kucinich. Have you ever canceled anyone's contract 
because their workers engaged in indiscriminate killing of 
civilians?
    Mr. Assad. I have never had that situation occur to me but 
I can tell you, Mr. Congressman, as Mr. Solis mentioned the 
MEJA Act, that's the Military Extraterritorial Jurisdiction 
Act, that is another law that we are including in our contracts 
now as we place them through our joint contracting command. So 
we're trying to address the issue that you are addressing, sir.
    Mr. Shays. The gentleman's time has run out, but I would be 
happy to just allow him and I to just pursue this issue just 
for clarity, if we could. It's my understanding that if you are 
a DOD contractor, you come under Defense Department rules. The 
bottom line is, legal companies fulfilling contracts with DOD 
are subject to the military chain of command, but not the 
uniform code of military justice absent a congressional 
declaration of war, and their personnel can be prosecuted by 
the Department of Justice under the Federal law as a result of 
Military Extra Territorial Jurisdiction. My understanding, 
though, is State Department is not. Is that accurate?
    Mr. Starr. That is my understanding, sir.
    Mr. Shays. OK, so, if you would just clarify for Mr. 
Kucinich and me both, what do your employees--your contractors 
come under?
    Mr. Starr. Sir, I do not believe that we have the 
capability of prosecuting them back in the United States. This 
is something that I would have to more closely check with our 
legal section, but in discussion with our legal section prior 
to this hearing, it was a question that was raised prior to the 
hearing. It is something that we need to look at. But our 
efforts are controlled by specific rules of engagement, 
approved by the chief mission as they are at all U.S. Embassies 
and missions around the world.
    Mr. Kucinich. Refer back to the Chair, but I guess what it 
amounts to defer is whether either the Department of Defense or 
the State Department, when they hire these private contractors, 
if any of them guided when it comes to civilians by the fourth 
commandment thou shalt not kill. I mean it just seems there's 
no rules here. It just seems that people can get away with 
murder.
    Mr. Starr. I don't agree with that, sir. My people do not 
get away with murder. That's not why they're over there. I 
think they're tightly controlled. I think it's a well-written 
contract. I think that we have special agents on the ground 
that look very closely at all the activities. Every shooting 
incident is investigated and looked at. This is not a case of 
getting away with murder, sir.
    Mr. Kucinich. You know----
    Mr. Starr. This is a case where we have a very difficult 
situation in a war zone where people's lives are at risk.
    Mr. Kucinich. When innocent civilians are killed, we have 
to ask the question--you just told me both of you said that you 
have incidents that you're going to forward information to this 
committee about. I think it would be important for us to go 
over each and every incident to see if anybody got away with 
murder. Then we can go back to your testimony.
    Mr. Shays. Mr. Starr, I think you've made a point that's 
important to make, and I think it's been made. Thank you. At 
this time, the Chair would recognize my colleague from 
Maryland.
    Mr. Van Hollen. Thank you, Mr. Chairman. And I want to 
thank all the witnesses for their testimony here today. In my 
opening statement, I pointed to the gross wrong predictions 
early on with respect to estimates of the cost of the war, 
again, when, Lindsay Lewis, the chief economic advisor to the 
President, said it may cost $100 to $200 billion, he was sort 
of dismissed by others. In fact, Mitch Daniels, who was then 
the CEO director, put the number between $50 and $60 billion. 
We now know it would be well over in the hundreds and hundreds 
of billions of dollars, the cost, and the question is, how did 
we get that so wrong? We know we got the weapons of mass 
destruction issue wrong. We now know we got the costs wrong. We 
apparently didn't listen to the advice of many military people 
in the field with respect to the number of troops that would be 
needed to maintain stability in a post-invasion environment. We 
got that wrong. So I just want to go back a little bit with 
respect to the cost issue because we're now focused on the 
question of the cost to the taxpayer, of the contracts that 
were led and the war effort in general. And I would like to ask 
you, Mr. Solis, because I found in your report you concluded 
that agency officials expected that the post-conflict 
environment in Iraq would be relatively benign and would allow 
for the almost immediate beginning of reconstruction efforts. 
We now know that those predictions, those feelings were not 
accurate, were not true. You go on to say during a discussion 
with DOD, we were told that this expectation was based on 
determinations made at the most senior levels of the executive 
branch, and the contracting officials were bound to reflect 
that expectation in their requests for proposals. How is it 
that the administration bound the contracting officials to 
exclude the costs of providing security in that post-invasion 
environment?
    Mr. Solis. As we were vetting our draft report for final 
comment, we got many comments from many different people. And 
as we were running it through the acquisition community, this 
is something that they wanted to put in context in terms of an 
understanding as to why things were done the way they were. 
That's why we indicated that and wrote that in our report.
    Mr. Van Hollen. So let me just make sure I understand. You 
are saying the administration officials instructed people 
putting together their cost estimates to assume that there 
would be very few security needs. Is that correct?
    Mr. Solis. No, I think what I am saying is in terms of the 
context of the environment, the benign environment or 
permissive environment, that's the context that they were going 
to be operating under or assumed they would be operating in, 
and in terms of when they did the different contracts, whether 
it was private security contracts or for others, that's the 
environment that they assumed we would be working in.
    Mr. Van Hollen. Are you, or is any of the gentlemen here 
aware of the fact--I mean, State Department officials had been 
studying the post-war, potential post-war environment in Iraq 
for many years. In fact, they put together quite an exhaustive 
study, which was essentially thrown out the window by the 
Defense Department when making its analysis. Did your review 
come across that, did you ask questions to the administration 
officials about that particular issue?
    Mr. Solis. I don't believe we came across that particular 
report.
    Mr. Van Hollen. All right. I mean, I want to give you a 
quotation, because I think it's instructive with respect to the 
total failure of the administration to anticipate what should 
have been something that anyone could anticipate. ``It is not 
clear what kind of government you would put in. Is it going to 
be a Shia regime, a Sunni regime or a Kurdish regime? Or is it 
one that tilts toward the Ba'athists or one that tilts toward 
the Islamic fundamentalists? How much credibility is that 
government going to have if it is set up by the U.S. military? 
How long does the U.S. military have to stay to protect people 
that sign onto that government? And what happens to it when we 
leave?''
    That's a quote from Dick Cheney when he was Secretary of 
Defense, explaining back in early 1991 why the Bush 
administration decided not to go into Baghdad after the 
invasion of Kuwait. It was an explanation that I think made 
sense to lots of people, and it's one that came back to haunt 
this administration and this government now because the 
predictions he made in 1991--anyone who followed Iraq knew very 
well that this is exactly the type of situation that could 
develop in Iraq, and so I guess my question to you as someone 
who went in as an independent individual talking to people in 
the administration, how did they get it so wrong? You had an 
opportunity to interview people. You have Dick Cheney, you 
know, many years earlier predicting this kind of chaos 
following an invasion of Iraq. How did they get it so wrong 
with respect to the security costs and the real possibility of 
an insurgency?
    Mr. Solis. I can't tell you the specifics. I can only tell 
you that the environment did change, assumptions going in did 
not always pan out. And I think that then there shows the 
increase or the reasons for the escalation particularly for 
private security costs. It was assumed that it was going to go 
into a particular environment. That environment did not occur, 
and hence the need for security forces.
    Mr. Van Hollen. I guess the key word--I mean, I'm not--you 
weren't there obviously, you just had an opportunity to talk to 
folks, but the fact that they assumed that is extraordinary, 
given the fact that people who are experts in this area at the 
State Department and others had looked at it and had come to 
option conclusions, people at the CIA had come to option 
conclusions with respect to the challenges we would face in a 
post-invasion Iraq, and anybody who had followed Iraq, 
including now, Vice President Cheney, when he was remarking on 
this back in 1991, should have known full well the potential of 
what would happen when you took the lid off of Pandora's box 
and unleashed forces that have existed in Iraq for a long time 
between the Shia, the Sunni and the Kurds. And I just find it 
amazing, amazing case of gross negligence that people did not 
take that into account in planning.
    Let me just switch gears a little bit, if I could, and ask 
Mr. Kunder a question with respect to Afghanistan. And getting 
back to Afghanistan gets us back to where the original threat 
to the United States came from. Of course, Osama bin Laden 
planned the attacks of September 11th. They were executed by 
him and al-Qaeda with the cooperation of the Taliban government 
in place. We have now taken the appropriate action to go after 
the al Qaeda and the Taliban, but we face a serious challenge 
in Afghanistan in reconstruction. I know you testified back in 
January, I believe, before the House International Relations 
Committee, with respect to problems in southern Afghanistan 
where you have a resurgence of Taliban, and since activity--and 
since your testimony back then as, you know, it's gotten even 
worse.
    Can you just talk about the challenges we face with respect 
to our reconstruction efforts in southern Afghanistan? Because 
I think if we're not successful at reconstruction and 
rebuilding and democracy efforts in Afghanistan, we do run the 
danger of another failed state. We do run the danger of a 
resurgence of the Taliban, and with that, the possibility that 
al-Qaeda can, once again, feel free to operate in there. We 
know Osama bin Laden's probably across the border in Pakistan, 
but I think it's a very real worry. If you could just talk 
about the challenges and what it's meant for our reconstruction 
efforts and your efforts there.
    Mr. Kunder. In general, sir, not specifically in terms of 
private security firms.
    Mr. Van Hollen. Well, in general, but I know I believe you 
also have some private contractors operating in terms of 
development.
    Mr. Kunder. Yes, sir. Yes, sir. Sir, there's no question 
that the number of security incidents has gone up in southern 
Afghanistan since I testified earlier this year and 
increasingly over the last year. I think the big question for 
everyone working there is what combinations of factors has been 
driving it. While in the media, it's generally been 
characterized as a Taliban resurgence. My frank assessment is 
it's a much more complex series of events.
    I mean, there are very, very isolated areas in Kandahar, 
Oruzgan Province. Some of the most isolated places on the face 
of the earth. I don't want to slap a smiley face on everything, 
but to some extent, what we're seeing is a push back because 
some of the road construction projects and education projects 
and so forth have actually taken place in very isolated areas. 
We've had a spate of burning of school buildings where girls 
have been asked to go to school. Well, if there weren't girls 
schools built, there wouldn't have been any girls schools 
burnt, so part of this is just a reaction by very xenophobic, 
isolated people.
    Part of it is clearly related to the increased pressure on 
the drug trade. The eradication efforts. While the eradication 
efforts have not been as successful as we had hoped, there are 
aggressive eradication efforts. So you get some kind of 
criminal element working with in this as well. And then you do 
have some Taliban elements that are trying to reorganize in the 
south as has been widely reported. So you've got a whole range 
of effects going on in the south and the sum total, or the 
bottom line, is that the working environment has become more 
dangerous for reconstruction efforts in southern Afghanistan. 
The U.S. Government's trying to respond to that both in terms 
of more aggressive patrolling and use of private security firms 
and all the other techniques that I referred to earlier, but 
the bottom line is that it has become an increasingly dangerous 
place to work in recent months.
    Mr. Van Hollen. Well, let me just followup, if I could, Mr. 
Chairman, General Maples, the head of Defense Intelligence 
Agency, did testify in front of the Senate a few months ago 
about the resurgence of Taliban activity, and I think if you 
look at recent reports, it is a combination of factors but 
clearly there is an upsurge in Taliban activity.
    And I think that we should look at whether or not we really 
want to reduce the total U.S. force presence in the southern 
Afghanistan area, which is currently what we are planning to 
do, but I guess my specific question is, what impact has it had 
on our reconstruction development efforts there? Have we had to 
withdraw--I mean, I thought your testimony a few months ago 
suggested that we'd have to reduce our efforts there because of 
a lack of security. I'm just curious as to whether or not we 
have been able to get back in there or whether the situation 
security's still too dangerous.
    Mr. Kunder. Yes, that a very fair question. And it's very 
relevant to the topic of this hearing because what we do in 
these circumstances is both on an area basis and a time 
specific basis, we will withdraw relief workers or 
reconstruction workers, or put additional security in so for 
individual areas, specific areas for specific periods of time 
we have had to pull people out. But the honest answer overall 
is that we've managed to maintain most of our efforts. The road 
construction efforts that are going on in southern Afghanistan 
have continued. We have lost a lot of local Afghan guards and 
local Afghan construction workers along the way, in excess of 
200 people working for USAID.
    So there is a price that's paid by--I would say by brave 
Afghans themselves who are trying to rebuild their country. The 
alternative livelihood programs the alternative to poppy 
production have been shut down in individual areas for certain 
periods of time, but those folks have always gone back in. So 
that what you are seeing is a slowing of the reconstruction 
effort, but it is a continuation of the effort throughout 
southern Afghanistan.
    Mr. Van Hollen. Thank you. Thank you, Mr. Chairman.
    Mr. Shays. I thank the gentleman and at this time the chair 
would recognize Ms. Schakowsky.
    Ms. Schakowsky. Again, thank you so much, Mr. Chairman, 
because I have been trying to drill down on this issue of 
private military contractors, security contractors for a long 
time and have been stymied at every turn. I want to associate 
myself with Mr. Duncan's remarks about how shocked the 
constituents in his district would be. I represent a very 
different district, and they would be and are shocked as well 
by the astonishing lack of accountability for literally 
billions of dollars that are being spent on private security 
contractors about which we know so very little, even when 
inquiries are made. Let me just say that right now--in the 3 
hours of this hearing, about $33 million, has been spent in 
Iraq.
    It's about $11 million an hour, 24/7, day after day after 
day in Iraq, and we need to--in Afghanistan, we need to get 
some questions answered. And I don't know what you may have 
thought that this hearing was going to be about. If we can't 
answer questions about what are the number of security 
contracts in existence, total cost of these security contracts, 
maybe you can and maybe you will, the total number of 
contractors in Iraq and Afghanistan. I'd like to know the 
number of dead and wounded contractors because that's not part 
of the calculation right now in deciding whether or not this 
war is worth it, whether it's successful, we ought to not just 
be counting the 2,500 or so of our Armed Forces, but also know 
what is the loss of life for civilians, for Americans who are 
working in this mission?
    I want to know a list of the disciplinary actions taken 
against contractors, if there have been laws that are broken, 
it's hard to imagine with the numbers, whatever they may be, of 
contractors that there haven't been any laws broken because I'm 
unaware of any legal action that has been taken, and if there 
are disciplinary actions, I would like to know as a Member of 
Congress what those are, and in asking whether or not 
Congress--Congress should be told at least of contracts over 
$100 million. I'd like to know. Can I get, Mr. Assad, a copy of 
the contracts with Blackwater? Can I see them?
    Mr. Assad. Ma'am, Madame Congressman, we didn't do the 
contracting with Blackwater. I think that was either the State 
Department----
    Mr. Starr. I don't believe there is a problem with that, 
but I would check with our procurement people. I will get an 
answer for you on that. It is a publicly bid contract, 
competitively bid contract.
    Ms. Schakowsky. I have had very little luck. Do you know 
anything about that, Mr. Solis? I have had very little luck 
being able to see the contracts. I was told that if the agency 
doesn't release them, then the committee of jurisdiction has to 
subpoena that information and that it is all--I can't take any 
notes on it. I can go into a secret room and look at those 
contracts. And it would seem to me, if these are taxpayer 
dollars, I want to see those; I would like to see a contract.
    Mr. Starr. I can tell you that our worldwide protective 
services contract was a competitively bid open contract.
    Ms. Schakowsky. No, I want to see it, though. Can I see it?
    Mr. Starr. I would have to ask our procurement executive. I 
personally wouldn't have any problem with that, but I really do 
need to check with the procurement person to give you an 
accurate answer on that.
    Mr. Shays. If the gentlelady would suspend a second?
    That is obviously an honest answer, and you will check it 
out. You can't promise something until you know, and you have 
people above you. But let's make sure that you communicate with 
the committee with either, yes, of course you can, or, no, you 
can't. And then please give us the reasons. Because I believe 
my colleague is right in saying, you know, we need to do our 
job, and we should be able to look at these documents.
    Ms. Schakowsky. Has the GAO seen those contracts?
    Mr. Solis. We have seen some, and we've had some access to 
some of those contracts through our work.
    Ms. Schakowsky. Have you been refused to be shown any of 
the contracts?
    Mr. Solis. I don't believe so.
    Ms. Schakowsky. You know, I was looking at this, and also 
then if you could provide me either now or later an answer to 
those questions: the number of security contracts in existence, 
the total cost of those contracts, the number--and 
subcontracts--and the number of dead or wounded of the 
contractors, laws broken, disciplinary actions and contracts in 
excess of $100 million. Can I get those from each of you? Can 
you answer me affirmatively?
    Mr. Kunder. Yes.
    Mr. Starr. Yes. In fact, I just didn't copy down all the 
questions quite that fast.
    Ms. Schakowsky. I will get that to you.
    Mr. Assad. Yes, ma'am. We will respond. I will take the 
question for the record.
    Mr. Schakowsky. Also, Mr. Assad, I am looking at----
    Mr. Shays. If the gentlelady will suspend, and she will 
have time. I realize I am jumping in here. Just be clear as to 
the questions you've asked again, if you would just ask it 
again, because they were writing it down. I am sure staff 
behind them was as well. What are the questions?
    Ms. Schakowsky. I'll tell you what. Why don't I provide it 
in writing?
    Mr. Shays. But in the record, just read it one more time.
    Ms. Schakowsky. The questions are: the number of security 
contracts, the total cost of these security contracts; the 
total number of security contractors and subcontractors in Iraq 
and Afghanistan under those contracts; the number of dead and, 
separately, the number of wounded contractors; a report on any 
legal actions that have been taken against contractors or their 
employees; a list of disciplinary actions that have been taken 
against the contractors; and a breakout of the contracts issued 
in excess of $100 million.
    Mr. Shays. And how we will proceed? I realize again that it 
was many questions. Provide us with that request in writing; we 
will put a cover letter over so it is the committee's request, 
and we will make sure that you get the answers to it.
    Ms. Schakowsky. I appreciate that so much.
    Mr. Kunder. May I ask one clarifying question? As we were 
discussing earlier, there are contracts for the protection of 
U.S. Government personnel, and then there are security 
contracts that are part of--for example, we have a fully 
competed contract with Bechtel to build power stations. As part 
of that work, they hire their own security personnel to guard 
their workers. I assume your question refers to the class of 
direct U.S. Government contracts that have to do with the 
protection of U.S. Government personnel. Because if you are 
asking the latter, it's much more complex.
    Ms. Schakowsky. Let me ask, Mr. Solis, you have a 
definition here, static security personnel. You defined in your 
GAO report what you meant by security. I am wondering if we can 
just use that definition that was on page 5 of the GAO report?
    Mr. Solis. It may be a starting point. That's what our 
understanding is in terms of defining the types of security out 
there. But it could be something that could be used by these 
folks to try to delineate the kinds of security services that 
are provided.
    Ms. Schakowsky. So if that can be a working definition, 
which would include static security, security for housing areas 
and work sites, for example.
    I wanted to ask, Mr. Starr, Mr. Solis' testimony talks 
about how the State Department disagreed with our 
recommendations. This was on exploring options that would 
enable contractors to obtain services quickly and efficiently 
and the various options for contractors. And it says that: The 
State Department disagreed, citing concerns that the government 
could be held liable for performance failures.
    Now, if we are using our own military, clearly the 
government is liable for performance failures. Are you saying 
that with the billions of taxpayer dollars that are being spent 
on these private security forces, that the United States of 
America is not responsible? We want to put them at arm's 
distance here and are not going to take responsibility for 
performance failures? This is not our problem? Who's 
responsible for performance failures if contractors with our 
taxpayer dollars make mistakes? Shouldn't some liability fall 
on the State Department if you contract with people who aren't 
doing what they should be doing, aren't trained appropriately, 
etc?
    Mr. Starr. I think the answer--the formal question to the 
answer--the formal question or the answer that the State 
Department gave you was because we believe that there are so 
many different types of operations in Iraq that for the State 
Department to write one set of standards that could possibly 
cover all of those things wouldn't be----
    Ms. Schakowsky. I understand that part. But I want to tell 
you that I am very concerned that we have operations going on 
in Iraq, sensitive operations, and that, in fact, the U.S. 
Government doesn't want to take responsibility for those, wants 
to push them off on someone else. And I think this notion of 
accountability and liability and responsibility falls directly 
on government agencies, particularly given my suspicion that 
not a single contractor has ever been prosecuted under any law. 
I just want to raise that concern.
    Mr. Kunder. Ma'am, I understand your question. But the 
logic in general--when I sign something on behalf of the U.S. 
Government, our contracting guidelines--and we are listening to 
the Federal Acquisition Regulations which follow law passed by 
the Congress--instructs me not to engage in selecting 
subcontractors or getting too much into the relationship with 
subcontractors for the very reason that I do want to protect 
the taxpayers' interests.
    If I contract with your firm to build a road, you are 
responsible to the taxpayers, to me as a Federal officer, for 
every element of that road, getting the right kind of concrete, 
making sure the concrete is not cheap, making the sure the 
foundation is right, etc., getting security for the road. If I 
start getting into your business and telling you as the prime 
contractor to the U.S. Government, now, I want you to get this 
kind of concrete subcontractor and I want you to get this kind 
of security firm and I want you to get this kind of matting for 
the concrete, what I am doing is setting up the taxpayers for a 
suit from you which says, well, I could have built the road 
just fine----
    Ms. Schakowsky. I hear you.
    Mr. Shays. Hold on a second. The gentlelady's time had 
ended, but I want her to be able to respond. So it is not like 
we are just going to click here.
    Ms. Schakowsky. And I understand what you are saying. But 
one of the recommendations that they had was identifying 
minimum standards for private security personnel 
qualifications, training requirements and other key performance 
characteristics.
    Myself and, I believe, my constituents don't think it is 
too much to ask for the Federal Government to say, we are going 
to set some criteria for people who are carrying out sensitive 
missions in Iraq and that for the response to be, well, we 
don't want to do that because it may create some--the 
government could be held liable for performance failures, to 
me, is completely unsatisfactory.
    I have a lot--as you can see, I have a lot of questions. 
This is a whole area where the Congress has been completely 
separated from oversight over thousands, tens of thousands of 
people conducting important activities in Iraq. We just need to 
open that up and shed light. And I am looking forward to your 
answers.
    And I thank you again, Mr. Chairman.
    Mr. Shays. You are welcome. And you add value to this 
hearing, and so we are grateful you are here.
    Mr. Solis, I would want you to kind of maybe respond to 
some of her points.
    Mr. Solis. If I could. In our recommendation, we said to 
thoroughly explore. We weren't necessarily trying to be 
prescriptive. But, for example, when we said to come up with 
vendor lists, there are some examples where, for example, I 
believe it is TSA has developed vendor lists of what they 
consider qualified baggage screeners for airports. It is a 
list. It is not a list that says you absolutely have to use any 
of the particular ones, but it is a list from which have been 
screened and gone through. That is an example.
    But I think the operative word was, we are in a new 
environment. You need to explore some different alternatives 
and different ways of potentially doing business----
    Ms. Schakowsky. But the State Department said they didn't 
want to explore that, is my understanding.
    Mr. Solis. That's our understanding. But, again, we still 
think our recommendation----
    Mr. Shays. Let me, before having Mr. Marchant respond, I 
just want to say--and I want to have this clarified if it is 
not true--that, basically, those who work directly for DOD, 
those who work directly for State, directly for AID, there are 
standards. Where we kind of get into this question about 
standards is when the private contractors that AID hires, when 
they go out into the field and bring in their own security 
folks. And I would like to know first, Mr. Solis, is that 
accurate from your standpoint?
    Mr. Solis. I believe State has fairly high standards, and I 
believe--I have to think about AID a little bit. But it is not 
clear to me that DOD has a set of standards, clear standards, 
that would go across the board in terms of the types of 
contractors in terms of qualifications and things of that 
nature.
    Mr. Shays. And Mr. Assad, I want to just make sure that I 
am not giving you a pass here, but I want to be fair. You have 
taken on this assignment as of April. Were you the No. 2 person 
in this area and so you have great familiarity, or were you 
brought in from a bit outside?
    Mr. Assad. No, sir. I was with the Marine Corps prior to 
this position.
    Mr. Shays. So what I would hope you would gain from this is 
that, if DOD has a little catching up to do, you are going to 
be paying some keen attention to this.
    Mr. Assad. Yes, sir. I can tell you, Mr. Chairman, that 
with regard to our contracts that we are letting now out of our 
Joint Contracting Command, we are flowing down these clauses to 
their subcontractors. We are requiring our primes to flow these 
clauses that I have talked to their subs. Now, unfortunately, 
that may not have been the case a year ago or 18 months ago, 
but as we speak, we are taking the actions to flow these 
clauses down in our private security contractors contracts.
    Mr. Shays. Not only will this committee be watching, but so 
will GAO be watching as well, and we will be asking them to 
monitor this. And you can be assured Ms. Schakowsky is going to 
be watching as well.
    I would like to just clarify as well before we get to Mr. 
Marchant, in the area where you have the privates hiring, is it 
being funded--are these folks that are working for DOD, State 
and AID, for just one of you or all of you? Do you know what I 
am asking, the question?
    Mr. Starr. Sir, the WPPS contract that we have in place 
covers all direct hire personnel under chief of mission 
authority in Iraq. That includes USAID personnel and personnel 
from the other Federal agencies that are in Iraq.
    Mr. Shays. That's an important question to answer. I didn't 
ask it well, so I am happy you answered that question. What I 
am trying to ask is, when we hire directly by DOD, directly by 
State, that is one issue. When we engage a contractor through 
AID, who then hires? Is this problem going to be mostly seen in 
AID? Is that where we are going to see a lot of the contractors 
who are hiring on their own?
    Mr. Kunder. In that case, sir, the way you asked the 
question first is correct. We would each be contracting for 
each of those sets of services. DOD would do some. State would 
do some. USAID would do some.
    Mr. Shays. But now you hire a company to build an electric 
generating plant. They are the ones who go out and hire 
somebody. That, we would not see in DOD. Right? We don't have 
this same issue with DOD, or do we?
    Mr. Assad. Yes, sir. Any prime contract that we have where 
a contractor is performing in theater, if he is going out and 
getting his own security force----
    Mr. Shays. So in all departments. OK. I am asking a 
question that basically--I am going to answer it myself. What I 
am hearing you say is, with all our Departments, State and 
Defense, we are hiring contractors who then are engaging in 
their own hiring of security folks.
    And I am seeing and the record would show that all are 
responding affirmatively.
    Mr. Marchant.
    Mr. Marchant. Thank you, Mr. Chairman.
    One of the most encouraging things that back in my district 
we see is the fact that we are training more and more Iraqi 
security forces. I don't think that our people in the United 
States understand exactly the differences between the State 
police, the city police, the regional police, and what would be 
the highway patrol or whatever, all of the nuances of that. But 
we see the increased number of people that are being trained. 
And our eventual goal is to have enough soldiers trained, 
enough security trained so that our withdrawal begins to take 
place and the Iraqis step forward.
    I am very interested in how, as this is happening--and it 
is happening today, the private security firms who have been 
interfacing with our military and our diplomats, how now you 
are going to have Iraqi security forces there and how the 
transition, how this interface is going to take place, how that 
transition is taking place. How do you foresee it? Even when 
our troop presence is significantly less, I see the 
reconstruction will continue to take place. USAID will still be 
there; we will still have a large private security force 
presence. Has there been some kind of a transition plan put 
together to see how these forces are going to deal with each 
other? And I think, Mr. Assad and Mr. Starr, a question for 
you.
    Mr. Assad. Mr. Congressman, I am not aware of a transition 
plan, but I will take that question for the record and respond, 
sir.
    Mr. Starr. Mr. Congressman, we don't have a formal 
transition plan, but it has been something that we have been 
discussing. As Iraqi sovereignty continues, as the military and 
police forces are trained and continue to take over, we will do 
as we do in many countries; where we see a return to a more 
stable environment, we will slowly draw down on our security 
efforts. We may lower the profile first, we may cut the 
numbers. We may ultimately decide, and hopefully, that instead 
of having either American forces on the ground or third country 
national forces protecting us, that we could rely on the Iraqi 
forces to protect us.
    So as we see the situation improving, we will take stock of 
the situation and make decisions in terms of lowering our 
profile and lowering our presence.
    Mr. Marchant. And do you find that the Iraqi security 
forces--what level of respect do they have for the private 
security firms? Is it at the same level that they have for our 
Armed Forces? Have our Armed Forces and our military been able 
to say with authority to them, these people have authority, 
too, you need to respect them?
    Mr. Starr. The authorities that the private security firms 
have are the authorities that the U.S. Government and the Iraqi 
government give them at the moment. Should the Iraqi government 
decide that they are going to start withdrawing authorities, we 
will of course be respectful of those things.
    I think, to answer your question, the best example I can 
give you is that one of our major contractors, Blackwater USA, 
brought in a series of Iraqi speakers to speak with all of our 
personnel security specialists and give them training in how to 
deal with Iraqis and how to work closely with them. And some of 
our forces have Iraqi translators with them; some of them are 
relying on other Iraqi specialists as well. And I think the 
level of respect that you earn is essentially what you get. I 
think we take a great deal of time in trying to train our 
security providers that they must be respectful of the Iraqis, 
and I think that they get the encouragement and the cooperation 
in return for what they give.
    Mr. Solis. Congressman Marchant, if I could only add, and 
again asking about the transition plan, and I am not aware of a 
particular transition plan, but I think in terms of the things 
that we have stated in terms of coordination and the training 
that Iraqi forces would have to have in terms of interfacing 
with private security contractors as U.S. forces draw down 
would be similar, because I think those things are going to be 
needed in terms of making sure that the issues that we have 
raised with the U.S. military and private security contractors 
don't occur with the Iraqi army and private security 
contractors as that transition begins.
    Mr. Marchant. On June 11th, there was a Washington Post 
story on a military investigation of a shooting by a private 
security firm in Iraq. It talked about several crimes that had 
been reported. In the case of the Washington Post article, what 
criminal laws were considered as applicable in the 
investigation? And that would be for either Mr. Starr or Mr. 
Assad.
    Mr. Starr. I am sorry, sir, I am not familiar with exactly 
what incident that is. I would have to know exactly which 
incident, and then go back and pull the files for it.
    Mr. Marchant. OK.
    Mr. Shays. He's making reference to the Washington Post 
story.
    Mr. Starr. There were two incidents in that story, sir. One 
was, I believe, in February or March of this year, and one was 
in April of last year.
    Mr. Marchant. This was talking about a DOD private security 
contractor that was shooting at civilian vehicles driving on 
the highway.
    Mr. Starr. I can't answer that one, sir.
    Mr. Assad. Sir, I don't have an answer for you, but again, 
I will take it for the record, and we will respond.
    Mr. Marchant. Thank you.
    Mr. Shays. That makes me a little uncomfortable given that 
it was something just very recently disclosed. It would have 
been nice, frankly, if you had anticipated that question. And 
maybe we should have let you know. I want to be clear, you do 
not have any knowledge of this issue?
    Mr. Assad. No, sir. The specifics of the investigation, I 
do not. I don't have any knowledge of it, but I will find out.
    Mr. Shays. Is the investigation ongoing?
    Mr. Assad. I don't know the answer to that, sir. I don't 
know whether CENTCOM or the combatant commander did the 
investigation or whether it was done here in the States.
    Mr. Shays. Thank you.
    Mr. Marchant. Thank you, Mr. Chairman.
    Mr. Shays. Thank you. I would like to--I first want to say, 
I am one person on this committee who believes that our 
involvement in Iraq is a noble effort, and every time I've been 
there, I have been in awe of our troops. I've been in awe of 
the security people that protect us and protect others. I've 
been in awe of the Iraqis. I have met political figures there 
that know they are a target every moment of their day, and they 
go out of the green zone into the red zone. I've met a man like 
Mr. Alalusi who went to Israel, and afterwards, the Iraqis 
punished him by kicking him out of the government and taking 
away his security guard, some in the former government--I don't 
mean Saddam Hussein's government. I mean in this past 
government. He lost his two sons. They tried to protect him and 
died in front of him. And when he met with me here, I said, 
``You can't go back.'' And he looked at me in amazement and he 
said, ``I have to go back. My country needs me.'' And to learn 
that he has been elected to their general assembly, it is 
amazing to me, considering that we disbanded their army, their 
police and their border patrol, left them with no security, 
that we would hear people say that we need to get out and get 
out right away and the Iraqis had better get their act 
together.
    These are folks that didn't attack us; we attacked them. 
And in my judgment, until they have the ability to protect 
themselves, we had better be there. And I am in awe of free 
elections in just 11 months, absolutely in awe of that.
    So, for me, I view that I am looking at a country that, not 
unlike the United States years ago, got to have this 
opportunity for freedom and liberty. So I have no problem 
whatsoever with the fact that we have security guards. That is 
not my issue. I want the Army to be the tip of the spear, and I 
don't want them to be cooks when they don't have to be. I don't 
want them to have to be standing guard at the front of bases. I 
don't want them to have to be taking Members of Congress to 
this place or that place.
    But the security people who do that and the contractors who 
do that are risking their lives. And I think the gentlelady 
from Illinois is right; when they risk their lives, they should 
be saluted and recognized. And when they lose their lives, we 
should take note of that. And that is part of the cost of this 
war. But when I ask these folks about why they are there, they 
are there to be of service to our country and the cause.
    Where I take issue with is the fact that we don't seem to 
be able to have a handle on how many we have there. We don't 
yet have a sense of the coordination between--in terms of the 
private companies that then hire private security. They have a 
choice on whether or not to register with the reconstruction 
center.
    And so I am going to ask you, does it not make sense for 
the private security forces to coordinate with the 
Reconstruction Operations Center? Should that not be mandatory? 
And I would like to ask each of you that question.
    Mr. Solis.
    Mr. Solis. In our report last year, we had considered 
making that recommendation. We held off because, at the time, 
we reported that coordination appeared to be getting better, 
but as I made note in our testimony, it appeared that the 
coordination had not improved to the degree that we thought it 
should. And so we believe it is worth considering making a 
requirement that companies that are U.S. security firms that 
are doing business in Iraq, that they be required to work with 
Iraq or coordinate with Iraq.
    Mr. Shays. And let me just set the stage here. Those that 
work directly for State, Defense, AID, they do have to 
register, and they do have to coordinate. Correct?
    Mr. Solis. They have to--it is not--it is completely 
voluntary. It is not a requirement. Unless it is potentially in 
the contract, that's voluntary.
    Mr. Shays. Well, let me put it differently. In most of the 
contracts, when it is directly connected to DOD and State, is 
it not mandatory, Mr. Starr?
    Mr. Starr. Sir, per our contracts, we do not coordinate 
directly with Iraq. Our contracts coordinate directly with the 
TOC, the Technical Operations Center, which is our operations 
center which coordinates directly with the military. All of our 
moves are fully coordinated.
    Mr. Shays. So they would be coordinated with the national 
reconstruction center?
    Mr. Starr. Yes.
    Mr. Assad. Yes, sir. Our contractors, direct contractors we 
have, they do coordinate with Iraq.
    Mr. Shays. So we are going to call them direct and indirect 
contractors, OK. Mr. Kunder, correct? The same policy, as Mr. 
Starr is obviously under State?
    Mr. Kunder. I'm sorry, sir?
    Mr. Shays. The same policy that AID has----
    Mr. Kunder. We follow the same. We have the same contractor 
at this point. Yes, sir.
    Mr. Shays. AID doesn't like to think of themselves as being 
under State, so I try to be respectful here.
    Mr. Kunder. We take full policy guidance from the Secretary 
of State, sir.
    Mr. Shays. Well said. Well said. OK. The question then is, 
should the indirect contractors have to follow those same 
rules? And Mr. Solis said they didn't make that recommendation, 
but it seems that it is logical given what has happened. That 
is what I am hearing you say.
    Mr. Assad.
    Mr. Assad. Sir, personally, my personal response is, yes, I 
believe that they should be required. And I will take it back 
to the Department in terms of the operational commanders and 
give them my personal opinion. I do believe that should happen.
    Mr. Shays. Mr. Starr.
    Mr. Starr. Sir, I would qualify it by saying that I think 
certain operations over a certain size should have to be 
required to do that. But I think the size and scope of the 
contracts that are out there, many of these may be very tiny; 
many of them may be very remote and may not have the capability 
to do that. So I think there is a bit of balancing on some of 
these indirect contractors.
    Mr. Shays. OK. Mr. Kunder.
    Mr. Kunder. Sir, I've had the honor to testify before the 
Congress many times. I know better than to make administration 
policy while sitting here. As an individual, it makes sense for 
me to get better coordination. The issue I would raise, sir, is 
that, given the fact that in most of these post-conflict 
situations--I was reading, in preparation for the hearing, the 
European Community Humanitarian Office Security Guidance--you 
have U.N. agencies involved. You have the international NGO's 
involved. You've got the international community, the Red 
Cross. The question would be whether you want national law or 
some sort of international treaty or guidance like that. And 
one of their quick answers, sir--I worked in Somalia. We had a 
major problem. When you create some sort of humanitarian 
operations center, then you get an awful lot of people walking 
around with guns in there, and you wonder who some of the 
organizations are. So I just think it is an area in which we 
need to move very thoughtfully.
    Mr. Shays. I hear what you are saying, and I appreciate 
your thoughtful response. I would just say it strikes me, 
though, that if we think it's logical for the people we 
directly hire, it is probably even more logical for the people 
that are indirectly hired, especially given that now 42 percent 
of the Iraqi populous is under now, thank God, the control of 
the Iraqi government and its own security forces.
    Let me ask, is there anything that you would like to put on 
the record that we haven't put on the record? Anything that you 
stayed up last night thinking about and prepared to answer and 
thought you might be eloquent enough to impress us that we 
didn't give you that opportunity? I am being a little 
facetious, but let me say, sometimes the best point of the 
whole hearing is the point that we didn't make that you need to 
put on the record. So let me just say, you don't have to be 
eloquent. Is there anything that we need to put on the record 
that is not on the record? We will start with you, Mr. Kunder.
    Mr. Kunder. Sir, the point I was making with Ms. 
Schakowsky, just that there is a balance between the 
indisputable notion of guidelines on how to coordinate with an 
ROC, for example, on the one hand, and these contractual 
relationships under the Federal Acquisition Regulations. There 
is a tradeoff there in terms of making law for subcontractors 
of government primary contractors. It is just something that I 
would respectfully request that we look at closely.
    Mr. Shays. I hear you. I am going to respectfully say that 
the bottom line is, though, I think we have gotten ourselves in 
pretty much a feeling of suspicion and so on, because we don't 
have enough information. And Ms. Schakowsky is right that we 
need more information, and that all of us, and you in 
particular, would have more credibility.
    Mr. Starr.
    Mr. Starr. Simply, sir, that contract security, which is 
essentially what this is, is subject to the same vagaries of 
every kind of contract. If it is a well written contract, a 
well managed contract, a competitively bid contract managed on 
the ground effectively with effective oversight, I think you 
get the services that you want. And I think that is a critical 
point of what we have to say when we are looking at private 
security providers overseas. We have to be very specific and 
very careful.
    Mr. Shays. Thank you.
    Mr. Assad.
    Mr. Assad. Mr. Chairman, I would like to say that we 
recognize within the Department of Defense that we need 
improvement with regard to many of the things that we have 
talked about today. But we are focused on this, and I 
personally am focused on ensuring that we take the actions to 
get the coordination that is necessary, get the insight that is 
necessary and be able to be more responsive to you and your 
staff.
    Mr. Shays. I am just going to say, whether you end up with 
a Republican Congress or a Democratic Congress next year, we 
are going to have this same kind of oversight. And so it would 
be wonderful to be able to have you come in and say, you know, 
this is what I have done since I took office in April, and we 
can all pat you on the back. So that is kind of what we would 
like to do.
    Mr. Solis.
    Mr. Solis. The only thing I would offer, we still made 
several recommendations which are still in various phases of 
implementation or are still open with some of the agencies. And 
we believe they still have merit and are worth considering as 
they go along in developing policy.
    Mr. Shays. I would request that you continue to engage all 
the Departments in these recommendations and give us a sense of 
whether you are getting pushback or whether you are getting a 
sense that there is buy-in. That would be helpful. We would 
like to empower you to do that, or encourage you to do that.
    Gentlemen, this has been a very interesting hearing. We 
appreciate you coming here today, we appreciate your patience 
with our votes. And we do believe that you all recognize that 
you are doing important work and want to do it well, and we 
thank you for that very much. Thank you.
    We are going to enjoy inviting our next panel up. Our panel 
comprises five individuals: Mr. Chris Taylor, VP for Strategic 
Initiatives, Blackwater, USA; Major General Robert Rosenkranz, 
U.S. Army, retired, president, International Technical Service, 
DynCorp International; and my colleague to my left says I 
should say Mr. Iggy Balderas, but it is Ignacio, I think, 
former CEO and current member of the board of directors, Triple 
Canopy; Mr. Doug Brooks, president, International Peace 
Operations Association; and, Mr. Alan Chvotkin, senior vice 
president and Counsel, Professional Services Council, and also, 
I believe, a constituent of Mr. Van Hollen. So you will 
probably get the best introduction you have ever gotten.
    We swear our witnesses in. This is an investigative 
hearing. Obviously, we would expect you to tell the truth no 
matter what, but this makes it a little more official.
    [Witnesses sworn.]
    Mr. Shays. Note for the record, all of our witnesses have 
responded in the affirmative. They are all sworn in. And I am 
going to welcome you here, and Mr. Van Hollen will welcome all 
of you but one in particular.
    Mr. Van Hollen. Thank you, Mr. Chairman. I would just like 
to introduce as well again a constituent of mine, Alan 
Chvotkin, who is the senior vice president and counsel of 
Professional Services Council and has worked on the issues that 
we have been discussing for many, many years. He has a long 
history with respect to private contracting as well as the 
government. He worked back in the 1980's for the U.S. Senate as 
a staff member. We will forgive you on the House side for that.
    But I want to welcome you here, welcome everybody, but it 
is great to have you here. And thank you for your advice and 
input to members of this committee on these issues over many 
years.
    Mr. Shays. I thank the gentleman.
    The bottom line is we are grateful you are here. We all 
know that you bring tremendous credibility and knowledge to 
this issue. And if the questions seem somewhat aggressive, it 
is only that we want to know what the heck is going on. But I 
think we all admire what you folks do.
    So we will start with you, Mr. Taylor. With five of you, we 
would prefer that you be closer to 5 minutes than longer. And 
we will make sure that everything you need is on the record. I 
will stay as long as we have to make sure that is true. So 
don't feel that you have to get everything in your opening 
statement. Your opening statement will be there for the record. 
So I am going to not hold you to 5 minutes but encourage you to 
be as close to that as possible.
    Mr. Taylor.

  STATEMENTS OF CHRIS TAYLOR, VICE PRESIDENT, BLACKWATER USA; 
MAJOR GENERAL ROBERT ROSENKRANZ, U.S. ARMY, RETIRED, PRESIDENT, 
INTERNATIONAL TECHNICAL SERVICE, DYNCORP INTERNATIONAL; IGNACIO 
  BALDERAS, FORMER CEO AND CURRENT BOARD OF DIRECTORS MEMBER, 
   TRIPLE CANOPY; DOUG BROOKS, PRESIDENT INTERNATIONAL PEACE 
    OPERATIONS ASSOCIATION; AND ALAN CHVOTKIN, SENIOR VICE 
      PRESIDENT AND COUNSEL, PROFESSIONAL SERVICES COUNCIL

                   STATEMENT OF CHRIS TAYLOR

    Mr. Taylor. Thank you, Chairman Shays, Congressman 
Kucinich, and other committee members, for this opportunity to 
discuss private security firms, our role and how we perform our 
duties each day.
    Since the American Revolution, private security firms have 
played an integral role in the successful development and 
defense of our Nation. The role of the private security firm 
has not changed that much over time. Providing specialized 
capabilities and search capacity to the U.S. Government in 
flexible, cost-effective packages and building capacity for 
friendly foreign governments continue to be core competencies 
of our industry.
    National and global security challenges demand innovative 
and flexible solutions to be successful in the global war on 
terror. As stated in the 2006 Quadrennial Defense Review, 
private security firms are members of the total force. 
Contractors benefit the government by augmenting existing 
capabilities, improving response times, and freeing scarce 
military logistical resources.
    Blackwater is fortunate to have many who have already spent 
a career in public service, some in the military, some in law 
enforcement, and some in other government service, but all of 
whom are committed to the same objectives that guided them 
during their public service. Many of these professionals in 
previous careers earned Bronze Stars, Silver Stars, Purple 
Hearts and even a Navy Cross. These honorable men and women, 
though no longer serving in an Active Duty uniform, are as 
dedicated and committed to the mission today as when they 
served on Active Duty. In fact, they reaffirm their commitment 
to the oath they took to support and defend the Constitution of 
the United States. These same professionals now daily put 
themselves in harm's way in support of U.S. and coalition 
missions and fully support national security and U.S. foreign 
policy.
    Today private security firms perform a number of roles from 
executive protection and static security to training partner 
nations to providing both ground and aviation logistics 
support, all in dangerous environments. In the future, private 
security firms will likely be called upon to support stability 
operations and peacekeeping efforts.
    The majority of international legal controls are embodied 
in the Hague and Geneva Conventions, the applicable additional 
protocols and the Universal Declaration of Human Rights. This 
also includes SOFAs, Status of Forces Agreements, that may be 
in place.
    Blackwater has consulted human rights groups to assist in 
program development for human rights training and policy 
development. Each Blackwater professional receives blocks of 
instruction in leadership, ethics and international 
humanitarian law.
    Because of the Federal nature of the battlefield, our 
services support primarily Federal entities. Private security 
firms, therefore, are accountable to many domestic Federal 
statutes, regulations and common law, which include the 
Military Extraterritorial Jurisdiction Act, the War Crimes Act 
of 1996, the Victims of Trafficking and Violence Protection Act 
of 2000, the Anti-Torture Statute, the Defense Trade Controls 
Act, the Gun Control Act, Arms Export Control Act, Export 
Administration Regulations, International Traffic and Arms 
Regulations, the Defense Base Act, Federal Aviation 
Regulations, the Defense Federal Acquisition Regulations, the 
Foreign Corrupt Practices Act, and the general orders of 
Central Command, the Multi-National Corps of Iraqi forces, and 
the Combined Joint Task Force 76.
    We seek to exceed the expectations of our clients. I am 
pleased that Doug Brooks and the IPOA are here today. 
Blackwater is a member of the International Peace Operations 
Association, and I currently serve as its chairman. The IPOA 
standards committee is working diligently to develop industry 
standards. We are committed to defining the standards by which 
our independent contractors are credentialed as qualified to 
work in the industry, improving the Federal contracting and 
oversight process, providing increased transparency in business 
operations, and encouraging discussion of our industry so that 
it can become more fully integrated into the process of finding 
solutions to difficult challenges.
    At Blackwater, recruiting and vetting begins with the self-
selection application process and a thorough criminal 
background and credit check. For those with private government 
service, discharge and release documents are reviewed and 
verified. When a contract requires private security 
professionals to have a security clearance, the government then 
conducts an even more thorough background check. Third country 
nationals and host nationals also have background checks 
performed.
    Blackwater USA provides both contractually mandated and 
additional training to all of our security professionals. 
Again, the additional training includes leadership, core 
values, ethics and human rights courses. In any case, we ensure 
that each of our professionals conducts and passes all required 
training commensurate with the environment in which they will 
be working.
    Private security firms provide efficient, flexible and 
innovative solutions to complex challenges and can positively 
effect a strategic balance in favor of peace and security and 
freedom and democracy everywhere. We should look together for 
ways to leverage the experience and commitment of these 
professional men and women toward that end.
    I hope my brief comments have helped to provide the 
committee some increased understanding of private security 
firms, and I look forward to answering any questions that you 
may have. Thank you.
    [The prepared statement of Mr. Taylor follows:]
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    Mr. Shays. Thank you very much, Mr. Taylor.
    General Rosenkranz, thank you, sir.

          STATEMENT OF MAJOR GENERAL ROBERT ROSENKRANZ

    General Rosenkranz. Mr. Chairman, distinguished members of 
the committee, my name is Bob Rosenkranz.
    I am a vice president of DynCorp International, and the 
president of DynCorp International's Technical Services 
Division. In that capacity, I am responsible for managing the 
company's law enforcement services, counternarcotics support, 
contingency and logistics support, facility operations, 
infrastructure development, and security services, including 
related DynCorp International operations in Iraq and 
Afghanistan. In addition to my experience with the private 
sector, I served with the U.S. Army for 34 years, and I retired 
at the rank of major general.
    DynCorp International is pleased to provide this committee 
with respect to standards--cooperation and coordination of 
information with respect to standards, cooperation and 
coordination of contractors working with the U.S. Government in 
battlefield environments.
    Before I respond to the specific issues that the committee 
addressed, permit me to clarify the role DynCorp International 
plays in Iraq and Afghanistan, because I think it is important 
to this discussion.
    Providing security services is one of our areas of 
expertise. Indeed, we have extensive international security 
experience. We believe we are among the best of the companies 
who provide such services anywhere in the world. However, 
DynCorp International while providing comprehensive security 
services in battlefield environments is also involved in many 
other government services. In Iraq and Afghanistan, we serve as 
peacekeepers and provide advisers. We train and deploy civilian 
police forces after the cessation of conflict. We secure State 
Department personnel and assets. We provide logistics and give 
industry support, and we assist in recovery and rebuilding 
efforts. In Afghanistan, we provide services to eradicate 
illicit narcotic crops; we are engaged in the removal and 
destruction of land mines and like weapons.
    We have a long history of supporting the U.S. Government in 
battlefield environments. We supported every major U.S. 
military campaign since Korea. We support State Department 
initiatives, produce stabilization and the rule of law in post-
conflict societies.
    Ensuring basic security in society is the fundamental 
element in establishing an environment where conflict is 
minimized and trust and confidence are restored. Providing 
security in high-threat environments is a critically important 
activity in support of the successful completion of the 
missions of the State Department, Defense Department and U.S. 
Government. And with that understanding, I will briefly address 
the issues raised in the letter of invitation.
    Roles and responsibilities of DynCorp International and 
security work are largely mandated by specific contract 
requirements. Generally, those responsibilities are dictated by 
the individual customer with whom we are doing business. In all 
cases, the security we provide is fundamentally protective or 
defensive in nature.
    The international legal controls that govern private 
security services are varied and fact-dependent. DynCorp 
International engages its corporate legal resources and human 
resource managers to clearly identify applicable regulations 
and maintains compliance with these requirements throughout the 
life of the contract. U.S. regulations and statutes are 
generally included as contract clause requirements but may also 
be promulgated by U.S. military commanders and the designated 
chief of mission in the area of operations. Due to the nature 
of the security business, these are generally related to the 
use of force and standards of conduct.
    In addition to U.S. and international regulations and 
statutes, DynCorp International adheres to strict performance 
standards and imposes established professional standards of 
conduct which govern employees in all assignments.
    As a result of DynCorp International's and other security 
related services since 1994, we have a mature vetting procedure 
for evaluating and selecting candidates for the provision of 
these security services. Our process includes extensive 
investigations, medical screening, psychological assessments 
and a variety of other screenings described in detail in our 
formal submission. As with our vetting procedures, we have the 
benefit of 12 years of active experience developing and 
refining our training procedures for security assignments. 
Programs of instruction and course curricula are designed and 
developed to apply to the specific field assignment, taking 
into consideration the prevailing security environment.
    Our experience with the U.S. military, the Department of 
State and USAID organizations has been very productive. Almost 
without exception, coordination with these agencies has been 
very productive.
    Despite the struggles we all face with respect to startup 
activities, we have developed effective working relationships 
with government counterparts that produce favorable results and 
a truly collaborative work environment.
    In conclusion, providing security services in any 
environment presents a degree of risk to the individual 
employee and his employer. These risks increase dramatically in 
battlefield areas like Iraq and Afghanistan. As indicated in 
our submission, DynCorp International has lost over two dozen 
employees to hostile activity in the fight for freedom in Iraq 
and Afghanistan. Each death on the battlefield represents a 
loss to family, friends and society.
    Private contractors provide the Federal Government and 
other agencies and organizations a critically important service 
that may otherwise not be available in support of 
reconstruction, stability and the establishment of the rule of 
law. We are confident that continued partnership between the 
U.S. Government and private companies will further refine the 
expertise and infrastructure that permit us to effectively 
operate as a team in this environment. As these relationships 
evolve and mature, greater success and enhanced capacity to 
respond to critical requirements on current and future 
battlefields will be the result.
    Thank you, Mr. Chairman. I appreciate each member of the 
committee for providing us the opportunity to share our 
experiences and to participate in this important process.
    [The prepared statement of General Rosenkranz follows:]
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    Mr. Shays. Let me ask you very quickly, General. Were your 
folks the individuals that were killed in Gaza in that bomb 
incident a few years ago?
    General Rosenkranz. In where, sir?
    Mr. Shays. In Gaza.
    General Rosenkranz. I don't know. I just joined the 
company.
    Mr. Shays. Well, they were protecting me. Those were the 
same folks that just previously when I went into Gaza protected 
me, and they were just top notch. And it just is instructive to 
me and others. You were part of that?
    Mr. Balderas. We took over the contract from DynCorp. It 
was actually Triple Canopy people, Mr. Shays.
    Mr. Shays. OK. Thank you. You are on. How did you get the 
name Iggy?
    Mr. Balderas. That goes way back when I first joined the 
unit over 18 years ago, that they have a tradition of giving 
you a call sign and that was the one that was given to me. I 
think it was a little easier for them to say my name that way.
    Mr. Shays. Well, you are well known in the industry. And 
welcome to this committee. And I think we are probably screwing 
you up a bit, because I think you are not making the plane you 
hoped you would make.

                 STATEMENT OF IGNACIO BALDERAS

    Mr. Balderas. Well, thank you anyway, Mr. Chairman and 
members, for the opportunity to testify before the 
subcommittee. I was Triple Canopy's CEO until December 2005 and 
now serve on the company's board of directors.
    Before joining Triple Canopy, I was a command major of the 
U.S. Army First Operational Detachment Delta.
    I will tell you a little bit about Triple Canopy, our 
culture and our experience in providing protective services in 
Iraq. Finally I will share my perspective on government 
regulation of private security contractors who serve on the 
battlefield.
    Triple Canopy, was founded in 2003 by U.S. Army Special 
Forces veterans to provide integrated security solutions to the 
U.S. Government and private corporations. Our services include 
personal security details, fixed site security, threat 
assessments and counterterrorism training. We provide 
protective services in extremely hostile environments 
throughout Iraq. We also provide security services worldwide 
and have employees in Africa, Asia, the Middle East and the 
United States.
    Triple Canopy has the ``Do the Right Thing'' culture. We 
are dedicated to legal, moral and ethical behavior and business 
practices. We firmly believe that honesty and integrity in all 
we do serves our clients, employees and society. We are 
committed to setting the standard for ethical conduct within 
the industry and strive to be a good neighbor to the United 
States and abroad.
    In all of our contracts, Triple Canopy works hard to 
provide the best possible service at a fair and reasonable 
price. While placing emphasis on the quality of service, we 
still continually strive for cost reductions that can be passed 
on to our customer as the form of a lower price.
    It is important to note that all of Triple Canopy's U.S. 
Government contracts are and all have been firm fixed price 
agreements that were all competitively awarded. Under firm 
fixed price contracts, Triple Canopy assumes all risk for 
unforecasted increases and company costs and wartime losses.
    Triple Canopy's record of success stems from our commitment 
to safety, recruiting, training and retention. Since the 
commencement of our operations, Triple Canopy has achieved the 
fewest reported incidents, injuries and casualties of any 
security company that provides protective services on a 
comparable scale in Iraq. We firmly believe that hiring only 
highly experienced and professional personnel, providing them 
with thorough and relevant training prior to deployment, and 
holding them accountable to high standards once deployed is 
critical not only to operational success but also to employee 
satisfaction and retention.
    Triple Canopy's recruiting and screening standards are 
among the industry's most stringent and are explained in detail 
in my written testimony. Our training produces highly capable 
operators who are prepared to perform demanding tasks in 
challenging high-risk environments. We fully realize the grave 
responsibility incurred when filling protective details and 
will not compromise the safety of our clients by fielding 
anything but the most qualified personnel. Maintaining rigorous 
hiring and training standards is the only way to reduce 
performance problems in the field.
    Triple Canopy strongly endorses the establishment of U.S. 
regulations, setting standards for the hiring and training of 
protective security specialists who support critical government 
missions on the battlefield. We are all for establishing 
standards and holding people to them. Substandard recruitment 
and training creates an environment of poor quality security 
and potentially increases the threat level on the battlefield. 
Regulations need to be strong enough to readily identify 
substandard performers.
    And, finally, private contractors should never provide 
offensive combat operations. Triple Canopy supports the FAR 
regulations which prohibit the government from contracting with 
organizations that offer quasi-military armed forces for hire.
    Thank you for your time and the opportunity to testify this 
afternoon. I look forward to answering your questions.
    [The prepared statement of Mr. Balderas follows:]
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    Mr. Shays. Thank you for your time.
    Mr. Brooks.

                    STATEMENT OF DOUG BROOKS

    Mr. Brooks. Thank you very much. Mr. Chairman, members of 
the subcommittee, I would like to thank you for inviting IPOA's 
testimony. It is an honor to appear before you today.
    As president of the International Peace Operations 
Association [IPOA], I represent firms from all over the world 
that provide essential services, including logistics, training 
and security in support of international peace and stability 
operations in conflict and post-conflict regions. IPOA predates 
September 11th, and our focus has always been to ensure that 
the private sectors' enormous capabilities are utilized to 
support peace operations with professionalism and high ethical 
standards. IPOA member companies are operating in every peace 
and stability operation in the world, including Afghanistan, 
the Democratic Republic of Congo, Haiti, Iraq and Sudan.
    Indeed, international peace operations simply would not 
happen without the critical services of the private sector 
which brings enormous efficiencies, capabilities and cost 
savings. Ultimately, the more effective our support of 
international peace and stability operations, the more lives 
that will be saved in the long run.
    Our IPOA code of conduct was originally written by human 
rights lawyers and nongovernmental organizations, and has 
subsequently been embraced by all IPOA member companies. IPOA 
and its members work continuously to improve upon the code and 
to enhance IPOA's enforcement mechanisms.
    Coincidentally, at the same time as this hearing, or 
actually previously when the hearing first started, our 
standards committee was meeting at George Mason University 
working with humanitarian experts and academics to test our 
accountability mechanisms related to our code of conduct.
    We believe that the IPOA code of conduct is a valuable tool 
for ensuring ethical behavior. Clients, be they states, NGO's 
or international organizations, would be well advised to 
include adherence to the standards set by the IPOA code in 
their request for proposals.
    I also want to recognize two partner industry organizations 
that have been instrumental in advancing industry standards, 
codes and accountability: The British Association of Private 
Security Companies in the United Kingdom, and especially the 
Private Security Company Association of Iraq that works closely 
with Iraqi authorities to ensure proper laws, regulations and 
accountability.
    I should note that IPOA represents a broader industry, not 
just private security companies. The vast majority of private 
sector employees providing valuable services in complex 
contingency operations are actually involved in logistics, 
support and training operations. Some 90 percent of the 
personnel and contract value is actually in logistics and 
support and training.
    In general, companies in complex contingency operations can 
be divided into three general categories: Logistics and support 
companies, the private security companies and the sector 
company reform companies.
    The first category, the logistic and support companies, 
that is 90 percent of the industry in value, personnel and 
everything. That is where the big money is.
    The second category, the professional security companies, 
are the ones that protect nouns, as we say, people, places or 
things, during a complex contingency operation. They defend 
things, either armed or unarmed, but they provide the security 
for them.
    And the third category of the security sector reform 
companies are the ones that create a more stable environment in 
the long run so that you can end the peace or stability 
operation in the long run.
    Outsourcing services to the private sector has been hugely 
successful in terms of efficiencies, quality, speed and 
results. It is safe to say that the U.S. military in Iraq is 
the best supported, best supplied military force in history. 
However, it also makes sense to ensure that the government 
oversight capabilities are available and capable of ensuring 
the best results. This can be accomplished through an expansion 
of contract officer numbers and resources.
    From a contractor perspective, we strongly support 
professional and effective oversight that is also standardized 
between government departments, which has been a problem in the 
past. Effective oversight simplifies our jobs enormously and 
allows better competition, reduction in cost and improvements 
in quality.
    Another concern that the industry has faced has been the 
blue on white issue, the so-called friendly fire incidents 
where PSCs are accidentally fired upon by military units. This 
has been brought up in previous reports. The nature of complex 
contingency operations means that mistaken identity will always 
be a hazard, but there are ways to minimize a problem. This can 
be done through awareness training in the military, 
standardized recognition signals and better coordination of 
civilian and military movements in the field, all of which are 
being done to much greater extent since 2003. At IPOA, we 
worked with our partners to develop wallet cards that can be 
distributed to deploying GIs that will give them an idea of 
what PSCs are doing and what they look like in the field. A 
draft version of those cards is available here today on the 
table.
    One recurring issue that we face is licensing. Member 
services, training operations and equipment exports require 
licenses from the Department of Defense and the Department of 
State, which is entirely appropriate. However, despite special 
efforts, the scale of operations in Afghanistan and Iraq have 
made this requirement a real bottleneck. We believe these 
offices could be better resourced and the process safely 
streamlined without compromising appropriate controls over 
exports of services and equipment.
    One of the more critical issues that we face or the complex 
issues in Iraq is regarding the access badges that contractors 
use. Contractors require these badges to be able to fulfill 
their contracts. International personnel used to be able to 
obtain the badges in 2 to 3 days; now the process can take 10 
to 90 days. This dangerous and frustrating bureaucratic 
bottleneck has been enormously wasteful in time and resources, 
and is having a seriously adverse impact on the larger mission. 
This is a problem that could be largely solved by allowing 
electronic applications or giving international sites outside 
of Iraq necessary authority.
    Mr. Shays. Let me ask you, how much longer do you have?
    General Rosenkranz. One short paragraph.
    This industry is highly responsive. My own field research 
in Iraq and elsewhere has amply revealed that companies in this 
highly competitive market are eager to ensure that their 
clients are satisfied with the quality of work. IPOA includes 
the most professional forward-thinking and ethical companies in 
the industry, and our members are all publicly committed to our 
code of conduct. While operations and chaotic conflict in post-
conflict regions necessarily require a high degree of 
flexibility, we should not resign ourselves to compromise on 
quality. Thanks very much. I look forward to the questions.
    [The prepared statement of Mr. Brooks follows:]
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    Mr. Shays. Now, I have to get advice from a Croatian.
    It's Chvotkin?
    Mr. Chvotkin. Yes, sir.
    Mr. Shays. OK.

                   STATEMENT OF ALAN CHVOTKIN

    Mr. Chvotkin. Mr. Chairman, Congressman Van Hollen, members 
of the subcommittee, thank you for the invitation to testify 
today.
    Professional Services Council is the leading trade 
association representing hundreds of companies. Several of our 
member companies provide security services, including two who 
are on the panel today. Some also have contracts directly with 
the U.S. Government, and as such, we know their concerns as 
service providers and have been working with them on a myriad 
of issues. In addition, many of our member companies are 
operating in Iraq pursuant to contracts awarded by the U.S. 
Government. These terms are consumers of these security 
services. We have worked with them to highlight and address 
their concerns as well.
    Over the past several years, the Professional Services 
Council has had extensive interactions with the Department of 
Defense. In 2004, we conducted an extensive lessons learned 
project with the Army Materiel Command. We've worked closely 
with the Department of State, USAID and other agencies on their 
Iraq initiatives and their policies and practices affecting our 
member companies.
    Finally, we have partnered with the Special Inspector 
General for Iraq Reconstruction on his comprehensive activities 
including his three-part lessons learned project. In Iraq, 
there were three types of operations taking place concurrently, 
often in the same geographic space: The military action, the 
reconstruction activities across the 10 critical sectors, and 
developmental assistance.
    Hiring private security support is common for many of our 
member companies who are routinely engaged in reconstruction 
and developmental assistance overseas. So Iraq is not new in 
that regard. However, it is obvious that Iraq has been and 
continues to be a very dangerous place to live and work, 
particularly for those individuals and organizations in any way 
associated with the U.S. Government. Thus, work in Iraq 
continues to present special challenges and issues. Because of 
the number of projects the U.S. Government has contracted for 
and that are underway simultaneously, the number of 
contractors, contractor employees and facilities that 
simultaneously require private security support and the 
evolving and often deteriorating security situation where the 
work is to be performed, private contractors are playing a 
critical role in each of these concurrent operations. In fact, 
it would be impossible for the U.S. Government to execute the 
number and scope of projects without the contractor support, 
and as such, private security firms are an essential adjunct to 
the U.S. companies executing contracts.
    The private security firms provide personal security firm 
employees, housing locations and work sites. They coordinate 
and provide security for the transportation of key company 
personnel and resources and coordinate with government 
officials when their clients require interaction for official 
government business. To the extent possible, these private 
security firms also routinely seek to coordinate with the U.S. 
military in Iraq on the overall security threat environment.
    Only recently has the U.S. Government established the 
reconstruction operation centers in various regions in Iraq to 
provide a formal channel for such coordination, even on a 
voluntary basis. In fact, one of the key lessons learned from 
our Army Materiel Command effort was the fact that contractor 
force protection requirements were not integrated into the 
military planning process. We found too many examples where 
even the planning required by the Defense Department for 
contractors accompanying the force were not followed and that 
the rules, numbers and life support needs of those contractors 
were not fully addressed.
    In light of these experiences, the Professional Services 
Council worked with members of the House Armed Services 
Committee last year on what became known as the Contractors on 
the Battlefield Regulatory Act, Title XVI of the House passed 
fiscal year 2006 National Defense Authorization bill. While 
that title did not become law, the conference report 
accompanying the law directs the Defense Department to review 
all policies and guidance and instructions to address security 
issues raised by both contractors accompanying the force, those 
directly supporting the military, and those contractors not 
accompanying the force, and specifically addressed five 
enumerated issues in that report. I mention those in my 
statement, my lengthy statement.
    And today, we are not aware of any formal steps the Defense 
Department has taken to address those matters. The number, 
scope of the projects in Iraq, the need to retract, retain and 
employ personnel who are essentially on their own for force 
protection and the highly variable security environment force 
contractors to put a premium on hiring skilled, trained and 
well-managed security services. Thus, almost from the outset of 
the Iraq conflict, PSC has strongly recommended that the U.S. 
Government generally and particularly the Defense Department 
adopt a nontraditional role with respect to private security 
firms.
    As Mr. Waxman noted in his opening questions in March 2003, 
the Professional Services Council recommended to DOD that it 
consider taking at least one of three initiatives: first, set 
standards for private security firms; or better yet, establish 
a qualified list of firms from which the private sector could 
contract directly for security services that were needed; or 
even better still, that DOD directly contract for and supervise 
those firms that the contracting firms would reimburse. The 
essence of these requirements was included in the GAO report 
from July 2005. In fact, the most vocal supporters for these 
standards are the industry leaders themselves, as you have 
heard at this table this afternoon. The U.S. Government has 
valid reasons why they did not concur. I think there was a 
missed opportunity for the government to address what we feared 
would become a significant growing challenge.
    Our lessons-learned efforts with both the Army Materiel 
Command and the Special Inspector General for Iraq 
Reconstruction highlighted the lack of advanced planning for 
the security needs of those government organizations. The most 
significant portion of the State Department's December 2004 
revision to their acquisition regulations proposed new coverage 
requiring State Department contracting officers to address the 
administrative logistics and security support for contractors 
performing overseas in high-risk activities. The rule was 
explicit that, unless stated otherwise, the contractor's 
responsible for all of their support.
    In-country coordination and communications is essential. It 
must be a two-way effort, and there's every reason for the 
government to take advantage of the information that the 
companies have about the security situation in various parts of 
the country. Over time, despite the lack of formal methodology 
or doctrine, many firms have nonetheless created those informal 
mechanisms.
    Mr. Shays. Would you give me a sense of how much longer you 
have?
    Mr. Chvotkin. Thirty seconds. In conclusion, hiring private 
security is common in overseas operations. Iraq is not new in 
that regard. However, the magnitude and the work and the 
concurrent operations taking place in the almost unprecedented 
security environment create unique challenges, but solutions 
must be approached carefully and with full consultation to 
address real issues without creating new problems. We would 
love for the opportunity to work with the subcommittee and 
others on these important policy matters. Thank you for the 
opportunity to appear.
    [The prepared statement of Mr. Chvotkin follows:]
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    Mr. Shays. Thank you.
    I think what we'll do is do 5-minute rounds the first time 
so we can get through and come back for a second round.
    Mr. Marchant.
    Mr. Marchant. Thank you, Mr. Chairman.
    As we heard in the first panel's testimony, coordination 
with reconstruction operation centers is voluntary. I would 
like to know each of your opinions as to whether that ought to 
be mandatory or if you think it ought to be voluntary, and I'd 
like to know whether your company is coordinating with the 
regional operation centers.
    Mr. Shays. Excuse me. We're going to do 10-minute rounds if 
this is the Members we have. So you have 10 minutes.
    Mr. Taylor. Blackwater does indeed participate in the 
regional operation centers. We do coordinate through them.
    Mr. Marchant. Do you think it ought to be mandatory?
    Mr. Taylor. I think that to the extent that it can be--that 
it affects area commanders, visibility of the battle space, 
absolutely.
    Mr. Marchant. Thank you.
    Mr. Rosenkranz. Mr. Congressman, we are participants in the 
ROC. The type of work we do with the State Department already 
has the operation centers, so for us it's sort of a redundancy. 
I think it's useful, and it's certainly very important for 
those who do not have direct contracts with the government.
    Mr. Marchant. Thank you.
    Mr. Balderas. Yes, we do. Triple Canopy does. I think we 
were talking a little earlier about when Aegis, which runs that 
contract, came in, came and helped us set it up, they asked us 
to help them set it up, the issue of everyone reporting; it's 
just commonsense. You have to do that in order to get support 
from the military. If you have an accident or incident on the 
road, they're the ones they call, and ROC is the one that 
coordinates that. So definitely, in my opinion, everyone needs 
to do that. It should be mandatory.
    Mr. Marchant. Thank you.
    Mr. Brooks.
    Mr. Brooks. Well, of course, we're a trade association, but 
I think, during my visit in December, January, I was quite 
impressed with the system. I think it's quite useful. Both for 
the contractors and for the military. So I would say it would 
probably be a good idea to put it in contracts if it's a 
requirement.
    Mr. Chvotkin. I would generally agree. I would just echo 
Mr. Kunder's earlier comments. Many of the companies are 
providing support to the U.S. Government agencies well outside 
of those areas, and so the nature of the coordination is such 
that they may not need as much. So there has to be some 
tempering, but by and large, I agree that coordination at least 
from the contractor end not to be mandatory. We've suggested 
that two-way communication because the military knows a lot 
that could help in the planning on our side, and there are some 
concerns about how much information can actually be shared out, 
but by and large, I think that communication is an important 
one.
    Mr. Marchant. Is the risk of a clash with the military 
decreased the more coordination you have with the regional 
operation centers? And do you know of any instances where 
specifically there was no coordination and it resulted in a 
very tragic consequence?
    Mr. Taylor. Mr. Marchant, I can't offhand recall a specific 
incident, but obviously, more coordination should result in 
decreased incidence.
    Mr. Marchant. Each of you, would you mind saying--General 
Rosenkranz stated how many casualties, deaths you've 
experienced in your operations in Iraq.
    Mr. Taylor. Blackwater has experienced--we have had 22 
deaths in Iraq.
    Mr. Marchant. And this is mostly stateside civilians?
    Mr. Taylor. In that 22, I believe 4 were third-country 
nationals.
    Mr. Marchant. Thank you.
    Thank you.
    Mr. Rosenkranz. As I mentioned, we had 26 killed in Iraq. 
There were a few TCNs in that number. I didn't bring with me 
the exact number of wounded, but it's a fairly large number.
    Mr. Shays. Would the gentleman just yield a second?
    Mr. Marchant. Yes.
    Mr. Shays. When they're wounded, do they go right to the 
military complex or do they go through the private sector?
    Mr. Rosenkranz. They're given the same kind of medical 
support as the soldiers are.
    Mr. Shays. Good.
    Mr. Rosenkranz. They get very good support. Even on the 
KIA, the evacuation procedures, it's really quite good.
    Mr. Shays. Thank the gentleman for yielding.
    Mr. Marchant. Mr. Balderas.
    Mr. Balderas. Yes. Triple Canopy suffered four casualties 
since September 2005, and the military does a great job in 
assisting private contractors. What the military does, they 
move them to Ramstein, Germany, where if they're wounded, then 
the private company picks up and moves them to wherever they 
need to in the United States, so all four of Triple Canopy's 
personnel were expats.
    Mr. Marchant. Thank you.
    Mr. Brooks, I know your chair association.
    Mr. Chvotkin. I don't have anything from the association, 
but I would call your attention to a report that the Defense 
Department submitted to the Congress last year in response to 
Section 1206 of the National Defense Authorization Act, and in 
that, for the period May 2001 through October 28, 2004--I'm 
sorry--May 2003 through October 28, 2004: Total casualties, 
1,171; total fatalities, 166; of which, 175 casualties were 
United States, and 64 fatalities were United States. That's a 
period May 2003 through October 2004. Have not looked at the 
Defense Base Act or Department of Labor report for any more 
current information.
    Mr. Marchant. I can say as a Congressman that went to Iraq 
and Afghanistan in the same trip, I was very thankful for the 
Blackwater people that were there with me. I was not as aware 
of the danger, I don't think, as they were, and on the trip, I 
was, it was--the security was so integrated with the military 
that it was very difficult for a civilian to know in whose 
hands you were at any given time. And to me, that seems to be 
the best possible situation.
    I just have a couple of more questions. What would you say 
the biggest threat today to your forces that are there, your 
security forces that are there? Is it the new IEDs? Is it 
ambushes? Is it people that are communicating to the insurgent 
forces? What would you identify as the biggest threat?
    Mr. Rosenkranz. I don't think there's any doubt that the 
IED and DBIEDs are lethal, and they're getting better, and 
they're more prevalent, particularly in Afghanistan. We've 
noticed an uptick, considerable uptick in the last few months. 
I would say IEDs and variations on IEDs.
    Mr. Taylor. I would agree. IEDs, DBIEDs are the most 
dangerous threat we face right now.
    Mr. Marchant. Have you experienced that in other places in 
the world if you have personnel? Or is it just, just Iraq and 
Afghanistan that----
    Mr. Taylor. I can't say that it's just Iraq, but it's 
certainly most intense in Iraq.
    Mr. Marchant. Mr. Balderas.
    Mr. Balderas. Yes. I agree with Chris on that. Afghanistan, 
Iraq and to some extent also Israel, because it seems that area 
there has a preponderance for the items that were mentioned, 
IEDs and the DBIEDs.
    Mr. Marchant. OK.
    Mr. Chairman, thank you for allowing my questions.
    Mr. Shays. Thank the gentleman.
    Mr. Kucinich.
    Mr. Kucinich. To Mr. Taylor from Blackwater, what's the 
approximate annual gross revenue from your company's security 
work in Iraq?
    Mr. Taylor. I don't have that figure with me, Mr. Kucinich. 
I just don't from--I don't have it.
    Mr. Kucinich. Would you make it available to the committee?
    Mr. Taylor. I can certainly--yes, I will go back with that 
request to make it available.
    Mr. Kucinich. Do you know what the trend in your revenue is 
over the past 3 years?
    Mr. Taylor. In revenue, with regard to--are we talking 
about Federal contracts?
    Mr. Kucinich. In your revenue generally.
    Mr. Taylor. Well, clearly, there's been growth in our 
industry, and we have experienced growth in the industry.
    Mr. Kucinich. What about Iraq?
    Mr. Taylor. We have experienced growth in Iraq as well. The 
demand for our services has been--is much--is greater.
    Mr. Kucinich. And could I ask, Mr. Chairman, if the chair 
would request--if the committee would request the approximate 
annual gross revenue from all the companies represented here 
today?
    Mr. Shays. I would be happy to request their gross 
revenues, yes.
    Mr. Kucinich. I'd like to ask the gentleman from Blackwater 
some questions about contracting. Has Blackwater participated 
in contracts with Regency Hotel and Hospital Company at all?
    Mr. Taylor. We were contract--as your exhibit--or I'm 
sorry, Mr. Waxman's exhibit denotes, we did participate in that 
contract.
    Mr. Kucinich. And Environmental Support Services [ESS]----
    Mr. Taylor. That's correct.
    Mr. Kucinich. And in those contracts, is it true that you 
were paying your men $600 a day but billing Regency $815 a day?
    Mr. Taylor. Per the presentation, Mr. Kucinich, $815 a day 
is the right figure, but it's a fully burdened figure. That 
includes travel, training, gear, housing, food, the works. That 
is a fully burdened number. So $815 is the correct number, but 
it includes everything.
    Mr. Kucinich. Were you involved personally in any of those 
discussions at all between Blackwater and Regency?
    Mr. Taylor. I was not.
    Mr. Kucinich. Are you familiar with a person who works for 
Blackwater by the name of John Potter?
    Mr. Taylor. I know who John Potter is.
    Mr. Kucinich. OK. John Potter is currently in your employ. 
Is that correct?
    Mr. Taylor. I don't believe John Potter is in our employ 
right now, Mr. Kucinich. But I will have to go back and check, 
but I don't believe he is right now.
    Mr. Kucinich. Would you be willing to provide for this 
committee correspondence or internal memoranda relative to the 
hiring, departure and rehiring of Mr. Potter by Blackwater in 
connection with his work under this contract with the 
government?
    Mr. Taylor. Mr. Kucinich, I can certainly take that request 
back to legal counsel for Blackwater.
    Mr. Kucinich. Mr. Taylor, is it your understanding that 
Blackwater cannot be sued for workers' debts or injuries and 
that all liability lies with the government?
    Mr. Taylor. Mr. Kucinich, I am not an attorney. I'm 
certainly not an expert at all in that area. However, again, I 
could certainly take that question back to our legal counsel.
    Mr. Kucinich. And does Blackwater urge the families who 
have lost loved ones who have been in your employ to apply for 
benefits under the Defense Base Act?
    Mr. Taylor. Under numerous--under different contracts, the 
Defense Base Act benefits are provided. They are actually 
mandated by the programs--the program insurance for contracting 
entities. So that is at the family's--we don't urge anybody, 
but the benefit is made available to our independent 
contractors.
    Mr. Kucinich. Do you advertise the Defense Base Act as a 
way for Blackwater to service the war, to avoid being sued?
    Mr. Taylor. Again, Mr. Kucinich, it is a--the Defense Base 
Act insurance is provided as a passthrough cost to the 
government and is generally mandated to us.
    Mr. Kucinich. Does Blackwater currently provide security 
for Ambassador Khalilzad in Baghdad?
    Mr. Taylor. Yes, we do.
    Mr. Kucinich. How much does the government pay Blackwater 
for these services?
    Mr. Taylor. Mr. Kucinich, I don't have those numbers in 
front of me.
    Mr. Kucinich. Could you provide that information?
    Mr. Taylor. Mr. Starr mentioned in the earlier panel that 
was an open and competitively bid contract, and I'm sure that 
it can be made available to the committee.
    Mr. Kucinich. Can you provide the information to the 
committee?
    Mr. Taylor. If I cannot, sir, I'm sure the Department of 
State can.
    Mr. Kucinich. What other government contracts does 
Blackwater have in Iraq? How many contracts do you have in 
Iraq?
    Mr. Taylor. Government contracts?
    Mr. Kucinich. Right.
    Mr. Taylor. The majority of our work is with the Department 
of State. We have other contracts in Iraq that are not--that 
don't fall under USG.
    Mr. Kucinich. Can you provide this committee with 
information about how much the government pays Blackwater for 
their services?
    Mr. Taylor. Again, our contracts are open and competitively 
bid. And one--I'm sure that they can be made available to the 
committee. They are public knowledge.
    Mr. Kucinich. Can you provide us with that information?
    Mr. Taylor. I would have to go back and talk to legal 
counsel about our specifically providing it, Mr. Kucinich, but 
I'm sure that the committee can get the information.
    Mr. Kucinich. In Iraq, what is Blackwater's policy for the 
type of armor vehicle, weapons and personnel required for 
security escort missions?
    Mr. Taylor. That is actually mandated to us by our--by our 
client, the Department of State.
    Mr. Kucinich. And does the Department of State set the 
terms of your contracts?
    Mr. Taylor. Yes, they do.
    Mr. Kucinich. And does the Department of State in some 
cases require that you provide armor?
    Mr. Taylor. We have actually a contract through the 
Department of State for armored vehicles that is mandated by 
the Department of State to us.
    Mr. Kucinich. Have you ever had an instance where you were 
required by the Department of State to provide armor and you 
did not?
    Mr. Taylor. I cannot--I don't believe so. I don't believe 
so.
    Mr. Kucinich. Does the Department of State require you to 
have a certain number of personnel on carriers?
    Mr. Taylor. The Department of State has very strict 
procedures for--for movements, personal security detail 
movements, and we follow those to the T.
    Mr. Kucinich. And has there ever been a time where you 
didn't follow these requirements of the Department of State and 
in order to save money?
    Mr. Taylor. Again, Mr. Kucinich, these are mandated 
movements and processes by the Department of State.
    Mr. Kucinich. I know they're mandated. I'm asking you if 
you can recall a time.
    Mr. Taylor. I cannot, sir.
    Mr. Kucinich. You have no knowledge of any time----
    Mr. Taylor. I have no knowledge of any time that we did not 
fulfill our Department of State mandate.
    Mr. Kucinich. All right. Could you talk about Blackwater's 
expansion into the Philippines?
    Mr. Taylor. It is a proposed--we have great demand for our 
training services, and one of the places that we have been 
looking into, into offering those training services was in the 
Philippines.
    Mr. Kucinich. And are you building a training center in the 
Philippines?
    Mr. Taylor. We are in negotiations, in exploration in 
trying to find out if that's possible.
    Mr. Kucinich. And who are you negotiating with, the State 
Department or the Philippine Government?
    Mr. Taylor. This would be the--this would be Metropolitan 
Authority, who I believe has control over--control over that, 
but I would have to go back and check particularly because I am 
not working that particular project, Mr. Kucinich.
    Mr. Kucinich. Are you planning to go into Darfur for work?
    Mr. Taylor. We're not planning--of course, we have had 
discussions on how the resources that Blackwater has could be 
useful in situations such as the Darfur genocide.
    Mr. Kucinich. And have you hired Chilean troops that have 
been trained under Mr. Pinochet? Is that true?
    Mr. Taylor. I don't know. We have indeed used Chilean 
third-country nationals before. I have no knowledge of whether 
or not they served under Pinochet or not.
    Mr. Kucinich. Are you putting together new training 
facilities in California?
    Mr. Taylor. Again, we're exploring opportunities to expand 
our training operations in many places.
    Mr. Kucinich. Does Blackwater engage in offensive 
operations?
    Mr. Taylor. Absolutely not, Mr. Kucinich.
    Mr. Kucinich. On behalf of the U.S. Government?
    Mr. Taylor. Absolutely not.
    Mr. Kucinich. On behalf of foreign governments?
    Mr. Taylor. Absolutely not.
    Mr. Kucinich. Or private entities in Iraq?
    Mr. Taylor. Absolutely not.
    Mr. Kucinich. In Afghanistan, anywhere in the world?
    Mr. Taylor. We do not engage in offensive operations, Mr. 
Kucinich.
    Mr. Shays. I just want to say that you answered quickly. I 
just want to make sure you were comfortable with all those 
answers because he hadn't even finished his questions. I'm not 
trying to change the answer. I just want to make sure that 
you've thought about his questions because you are under oath, 
and I just want to make sure.
    Mr. Taylor. Chairman Shays, it is a common question for the 
industry, and we do not execute offensive operations.
    Mr. Shays. OK. Thank you.
    Mr. Kucinich. I thank the Chair.
    Mr. Shays. I thank the gentleman.
    We'll go to my colleague from Maryland. He has the floor.
    Mr. Van Hollen. Well, thank you. Thank you, Mr. Chairman, 
and thank all of you gentlemen for your testimony as well.
    As I said in my opening statement, I think clearly there's 
an appropriate role for private security contractors in places 
like Iraq and elsewhere. The issue is exactly what functions 
and roles are being played and what kind of oversight there is. 
And it's my view that the U.S. Government, the Federal 
Government has a responsibility in making sure that the 
taxpayer is getting a fair treatment. It is the responsibility 
of the contractor to make sure you provide the quality services 
under the contract, that you don't gouge the taxpayer. But the 
oversight from the Federal Government is important, and the 
Federal Government, seems to me, should have a system set up to 
assure that the taxpayer gets the best deal. And in that 
context, I would like to ask you, Mr. Taylor, just a couple of 
questions because I think the chart we've got here today 
actually illustrates some of the problems with the overall 
system, from my perspective in the cost-plus with a percentage 
at the top.
    Let me ask you first, are you familiar with the article 
that appeared in the News Observer several years ago that 
talked about the pricing structure for your company, for 
Blackwater U.S.A.? It was a couple years ago. It was after the 
four individuals who were members of your company had been 
killed in Fallujah, and the newspaper wrote a story about that. 
They also obtained information about the payments you received 
from those four individuals. Are you familiar with that?
    Mr. Taylor. I am not, actually. If there was an article--
understand, I read many things that are printed about our 
industry.
    Mr. Van Hollen. I understand. That's the basis for a number 
of the charts--the numbers on the charts Mr. Waxman presented. 
My understanding is a number of the family members of the 
people who got killed were upset about the fact that despite 
the amount of money being charged to the Federal Government and 
the taxpayers for these services, not enough was provided for 
security, and that's the basis of the information.
    So the information drawn on these charts is based on 
documents that were obtained by this newspaper about those 
particular individuals. I just want to make sure I understood 
your response to a question by Mr. Kucinich regarding the $815 
a day charge. As I understand, you said that was fully loaded; 
is that correct?
    Mr. Taylor. That's correct, sir.
    Mr. Van Hollen. Because that article--and this is an 
opportunity to correct the article if you want--it said that 
the Blackwater charges to Regency for Zovko's work, he was one 
of the individual contractors involved in that terrible 
incident, were $815 a day. A mark-up of $215 then goes on to--
say, in addition, Blackwater billed Regency separately for all 
its overhead and costs in Iraq insurance, room and board, 
travel, weapons, ammunition, vehicles, office space. In other 
words, they say that you billed separately for that overhead, 
and you're saying--I just want to make it clear, you are saying 
that overhead was part of the $815 a day charge.
    Mr. Taylor. I am told that the $815 was a fully burdened 
charge, sir.
    Mr. Van Hollen. OK. If you could--I don't know if you have 
documents, just because the article was based on documents that 
were obtained through some people who worked for Blackwater, 
and they reached a different conclusion. If you could provide 
the committee with those documents, it would be helpful.
    Mr. Taylor. Again, I can certainly take that request back 
to legal counsel.
    Mr. Shays. Let me just tell you this part though, because 
you are on record, and I feel like I'm a friendly participant 
in this dialog. You are on record as saying that basically 
constitutes the full force. So you do need to document that. 
This $800 is the full cost of all the things that involve the 
training, the housing and so on. It's not--and so we just want 
documentation that shows that to be correct.
    Mr. Taylor. Again, Congressman Shays, I will certainly go 
back to legal counsel.
    Mr. Shays. I'm trying to say it differently. I know you are 
going to go back. I need to make sure that you provide us that 
information. Now, whether it's you that provides it or someone 
else, I just want to say this, it is not an issue of, you know, 
you have the option to not provide that information. Please 
tell your superiors that you have testified--and I believe you, 
so you don't have a problem with me--that you testified that 
this constitutes the full cost. If it, in fact, doesn't, you 
need to set the record straight that it doesn't with 
documentation, and if it does, you need to just provide us the 
documentation that shows it's true. It's a common request, and 
one to which I know you would--you can't commit what your 
company does, I understand it. You're not the man in charge, 
but you're close to it. So that's all.
    Mr. Taylor. I understand the request. Yes, sir.
    Mr. Shays. OK, good. And we understand what you're saying 
to us. Just as long as that gets conveyed to them.
    Mr. Taylor. Absolutely.
    Mr. Van Hollen. Thank you, Mr. Chairman.
    Now, under the contract structure you had, as I understand, 
if you could look at that chart, Halliburton had the umbrella 
contract; is that correct?
    Mr. Taylor. I am not personally aware of that, sir.
    Mr. Van Hollen. OK. You did not know that at the top of the 
subcontracting pyramid was Halliburton?
    Mr. Taylor. I'm not personally aware of that, sir.
    Mr. Van Hollen. OK. Let me just ask you and maybe some of 
the others just a general question. There's a quote from a 
fellow by the name of Henry Bunting. He is a former Halliburton 
purchasing officer, and he said a common refrain in 2003 in 
Kuwait for managers of KBR--that's Kellogg Brown & Root, a 
division of Halliburton--was, don't worry about price. It's a 
cost-plus. And he goes on to say, there's no question the 
taxpayers are getting screwed. This is a fellow who was an Army 
staff sergeant in Vietnam. There's no incentive for KBR or 
their subs to try to reduce costs; no matter what it costs, KBR 
gets 100 percent back plus overhead plus profit. That is right. 
Right? In other words, that is the structure. It's a cost-plus 
structure, and assuming you have a number of subs, from 
Halliburton's perspective or whoever's at the top of the 
pyramid, the more subs and the more costs, the better off in 
terms of the return for the person at the top. Is that right?
    Mr. Taylor. Mr. Van Hollen, for Blackwater, we only engage 
in firm fixed-price contracts. We don't have cost-plus 
contracts. We don't propose cost-plus contracts. We have only 
firm fixed-price.
    Mr. Van Hollen. OK. But at least in this particular 
instance, you're at the--you know, near the bottom. The 
individual employee who is your employee is the only other 
person you are paying out. So now my question to you--and this 
is maybe a general question. If we could keep our answers as 
short as possible because we have limited time. But under this 
design, the design for a cost-plus contract, is it not true 
that there's no incentive for the person at the top of the 
pyramid if they're getting cost plus a percentage fee to keep 
their costs at a minimum? Is there any incentive? Can you tell 
me how--if there's any incentive there for the person at the 
top of the pyramid to keep their overall costs low?
    Mr. Chvotkin. The incentive is in the award fee because 
the--in your hypothetical, and I don't know enough about the 
specific contract, but in the hypothetical, if the award fee is 
tied to cost, then the lower the cost, the higher the award 
fee. And so there is an incentive through the award fee. And 
that's what the 2 percent was explained earlier with respect 
to--if I understand this portion of the contract, how it would 
apply.
    Mr. Van Hollen. My understanding is this was a cost-plus. I 
don't know if there was any award fee for coming under cost. I 
mean, if anyone knows about this, I'm talking about this 
particular----
    Mr. Brooks. I'm going to stick my neck out a little bit. 
KBR is not a member company. When there is a task that has been 
given to KBR or another company on a cost-plus basis, the 
company sits down with the contract officers or with the 
procurement people, and they decide on how much the maximum 
cost will be, and then the company has to go and stay under 
that cost. So there is a process that comes up with a cap of 
how much it's going to cost, say $10 million for a base in the 
desert or something like that. So that's where you get the 
controls.
    Now, the value of the cost-plus is that it gives you the 
flexibility you need in a complex contingency operation where 
you don't know what the final cost will be, and you can come up 
with a--some sort of accurate estimate.
    Mr. Van Hollen. My understanding is, in the LOGCAP 
contracts, that did not happen, what you were just talking 
about. We can go back and take a look at that. But let me ask 
you, because we talk about the fact that private contracting 
for security services can provide a return to the taxpayer. 
Now, I think under certain circumstances, that's true. I just 
want to pursue this idea a little bit with respect to Iraq 
because in the particular case that we're talking about here 
with respect to the $600 a day for the security officer which 
comes out to, as I understand it, it's approximately $180,000 a 
year; if you were to take somebody of Mr. Zovko's experience 
and rank--he'd been a sergeant--and you took that sergeant in 
the active duty military, the equivalent in terms of the salary 
would be about $38,000 a year. So my question to you is, this, 
I mean, isn't it the case that the administration is 
essentially relying on private contractors in many cases not to 
provide cost savings but because to add 48,000 additional 
troops--and 48,000, according to the GAO report, is the number 
of private security people in Iraq right now--would not be 
politically palatable because at least in this case, maybe, Mr. 
Taylor, you can correct the figures if I'm wrong, $180,000 a 
year for the employee you are paying versus $38,000 a year plus 
maybe health benefits and others for a sergeant in the regular 
Army, that does not seem to be a benefit to the taxpayer. If 
you could explain.
    Mr. Shays. And I'm going to just say that the gentleman's 
time has concluded, but this is--this is a very important 
question that I'd like all of you to answer. And this is, 
frankly, an opportunity. Make your case. Why you guys instead 
of the military? And I'll be happy to let the gentleman 
followup.
    Mr. Van Hollen. Thank you, Mr. Chairman.
    Mr. Shays. So just make your case.
    Why don't you start? We've had Mr. Taylor ask and answer a 
lot of questions. Let's give him a rest.
    Mr. Rosenkranz. First of all, we have to compete for the 
contracts. Even the ones----
    Mr. Shays. Can you make sure your mic is on?
    Mr. Rosenkranz. Perhaps I'm not close enough. You have to 
compete for your contracts. They're not indefinite. And so if 
you're not competitive, if you don't deliver the value, then 
you won't return, and certainly all of us have had that 
experience.
    Mr. Shays. Let me just interrupt by saying, you've lost 
contracts; someone else got the contract instead of you?
    Mr. Rosenkranz. Absolutely, yes. And you lose because of a 
variety of reasons. It's up to the customer, but certainly one 
of the facets of that is the cost you have to the customer. I 
think that we tried to bring people into Iraq at the most 
competitive price that we can get to, and as it gets--and 
certain conditions in Iraq, depending on the scarcity of the 
population, of, say, police, to recruit police, that changes 
the amount of money you have to pay to get them to go.
    But the number that you end up with does not necessarily 
reflect what you normally would call salary because of the 
uplifts, because of the tax break and other factors that are 
entered into that total number. And that's why people choose to 
go there, but they go there for 1 year, and they make enough 
money, and they go back to wherever they came from, and they go 
back to $40,000 a year. I think we're competitive; our company 
is competitive. I think you won't find a large variation on 
what we have to pay to get certain skills and particularly if 
it's a management skill.
    But the number that you're using there I think is a little 
bit deceptive in the fact of what that actual salary is, and 
that's not including the other pieces that get added to it.
    Mr. Shays. Let's keep going.
    Mr. Balderas. Yes, one of the things on the--that was 
already talked about is salary, is that we don't set the salary 
rates. The contracting office does. It's market rates. We 
propose labor rates, and whether the bid is successful or not 
is dependent on the contracting officer and the entire 
proposal, and they usually go with the lowest cost. So that's 
how you lose a competitive bid. So, again, we don't set the 
rates. We just suggest what they could be and what labor we 
could get.
    Now, as far as the total costs, again, you have to look at 
the total picture, what it buys, what the individual contractor 
has to do. There is no retirement plan for him. He has to get 
his own health insurance. His family, where an individual has 
always been mentioned, a military person already has that. 
We're not talking long-term costs either. Looking at the 
military, it is that an individual has a retirement plan, you 
know. I encourage people that--in the military, to stay there 
at least 20 years so you get the retirement benefit, you get 
healthcare. One of the issues under the TRICARE is that it's a 
great program, but only if you complete your 20 years. So I 
advise guys to stay there and get that, because out on the 
civilian market, health costs are climbing twice, twice, almost 
double every year. It's gone from 8 to 10 to 16 to 20 percent. 
So corporations have to deal with that as well for employees. 
An individual working contracts, spending the short time over 
there, trying to get a high paycheck, has to support his family 
off of that, as I said, before healthcare; there is no long-
term plan for a guy doing this type of work. It's high risk, 
and it's an individual choice to go over there.
    Anyway, in my opinion, it is cost effective because of the 
fact of long-term care. If you look at the military, you can 
see the military is not married. They have personnel that are 
married. When I came in the Army over 25 years ago, most of the 
military personnel in the service were not married. Now we have 
schools. We have additional building construction for housing 
units on posts. We have healthcare issues for the family their 
entire career service members' time, and after, when he 
retires, that support's still there for that service member. So 
that's a long-term care plan that military and DOD has to deal 
with where a contractor, DOD contractor, or any contracting 
officer can end that contract tomorrow, and that person's out 
of work.
    Mr. Brooks. I think this is a really great question and 
really gets to the heart of the whole issue of using 
contractors for services in a lot of areas of conflict. It 
really comes down to a case of capability versus cost 
effectiveness. When you have a soldier, a second lieutenant in 
Iraq, theoretically at least, they can call in a B-52 strike. 
They can call in tanks. They have all this sort of enormous 
capability behind them to do this sort of thing. You don't 
necessarily need that capability to guard a fence, you know, or 
to guard the gate. Maybe you need somebody with a different 
kind of capability or less capability. The way the military--
I've talked to people at the Pentagon about this, the way they 
calculated. It's costing them $15,000 per soldier per month in 
Iraq, which is pretty expensive. Now, obviously, that's not 
salary. That's all sorts of other things that have been 
mentioned already. That's just for the guys in Iraq. And of 
course, the other issue you have to remember is that the 
military rotates these people out. So you have a two or three 
to one ratio of people outside Iraq that are leaving Iraq, that 
are getting ready to come back to Iraq, that are training or 
whatever else. So there's all this other money that's sort of 
going on behind the scenes that's involved in keeping the 
military there.
    You need the military there. It has its own reasons for 
being there, its own capabilities. What our companies do is 
support that military option. I also want to point out that 
when they kick around these numbers of contractors in Iraq, we 
need to be clear whether we're talking about security 
contractors or nonsecurity contractors and whether they're 
Iraqi or not. Many of our member companies have ratios or have 
percentages of Iraqi employees of upwards of 70 or 80 percent. 
And this is normal. Most companies when they work in areas in 
Balkans or in Sierra Leone or in Liberia, they hire as many 
locals as they can, which is a good thing for the economy. It's 
a good thing from an ethical perspective. It's a good thing 
from a legal perspective. So when you get your open number of 
48,000, you're probably talking an awful lot of Iraqis, 50, 60 
percent at least, probably higher.
    I think the other thing I wanted to point out, even in the 
United States, we have three times as many private security as 
we do police. So it's not unusual that Iraq would have a large 
number of private security people.
    Mr. Chvotkin. I would just add to that, first of all, is 
the size of the available work force to meet the number of 
projects that are underway. Simply insufficient military. Even 
if all of the military, even if number of available was not the 
issue or the policy was not the issue, I don't think there's 
enough to provide the force protection that's necessary.
    Mr. Van Hollen, I think you are familiar with many of the 
developmental assistance programs around the globe and in some 
cases, even in Iraq and Afghanistan, where the companies prefer 
to have distance between themselves and the U.S. military in 
order to carry out their work, and so in many cases, there's a 
preference both on the government side as well as on the 
company's side to avoid that force protection.
    Finally, benefit, this is a sheddable work force. If the 
project ends, the work force goes away and not so on the 
military. You've got to task them. You've got to continue to 
train them. And so another benefit to having the--using 
contractors, the other panelists have said there's a cost 
effectiveness; there's a resource capability. There's a 
resource availability. All have to come into play.
    Mr. Van Hollen. If I could just very quickly----
    Mr. Shays. Sure. Sure. Just respond.
    Mr. Van Hollen. Thank you, Mr. Chairman.
    Mr. Shays. Just remember that the last gentleman who spoke 
was the individual that you introduced. He's first among equals 
in this group. You had to have been persuaded by his comments.
    Mr. Van Hollen. I understand.
    Mr. Shays. It's the quid pro quo.
    Mr. Van Hollen. He did a very good job. But let me just ask 
a couple questions here because, again, as I said in my opening 
statement, and again----
    Mr. Shays. Don't get carried away. Your time ended a long 
time ago. You want to make a comment; I want some time.
    Mr. Van Hollen. Let me make two comments, a couple 
comments. First of all, Mr. Taylor, just for the record, the 
contract with Regency and Blackwater specifically makes it 
clear that Regency is a subcontractor of Kellogg, Brown & Root. 
So it's in the contract that your company signed with Regency, 
at the top of the pyramid was KBR, and so just to--which is 
consistent with this chart that we're showing.
    Second, again, the question is not whether there are 
certain circumstances under which it's good to have private 
security contractors. I just want to go back to the cost 
because, you know, what was the figure you gave, Mr. Brooks, 
for the military?
    Mr. Brooks. $15,000 per month, and that's an average.
    Mr. Van Hollen. That includes the whole overhead.
    Mr. Brooks. Oh, absolutely.
    Mr. Van Hollen. OK. But we're talking in this case an 
individual employee with the rank of and the experience of a 
sergeant, $600 a day, which does calculate out to $180,000 a 
year, and--well, anyway, I'm just quoting from the Regency. 
They did the math. The newspaper did the math. And so the 
question is, what is the--is the taxpayer getting the best for 
the tax dollar that we're paying? I must say that we've been 
trying to get to the bottom of a lot of these questions. The 
subcommittee--and I will end with this, Mr. Chairman.
    Mr. Waxman long ago wrote to Brigadier General Jerome 
Johnson with the Army Field Support Command asking for 
questions, any Defense Department reports comparing the costs 
of paying contractors to provide security services or 
logistical support under the LOGCAP contract with the cost to 
the Army of providing the services or support itself. That's 
the question that we've been asking here.
    We've received no response back to this letter. It's dated 
November 30, 2004.
    Thank you, Mr. Chairman.
    Mr. Shays. Thank the gentleman.
    I want to thank all of you for being here. I think that the 
men and women who serve with you are true heroes, and they are 
risking their lives every day. Bottom line.
    I do want to clarify, because I may not have been as clear 
as I want, and I want to be clear about this, when my staff 
director and I went to the West Bank for a week, DynCorp was 
protecting us because that was 2003. We were there during the 
Easter recess, and when we went into Gaza City for the day, we 
went with three cars plus an additional car behind us, and that 
additional car, we didn't know who was in it. It was all black. 
They went in. They never got out of that car, but when we got 
out of the gate, they walked out. And they were covered from 
head to toe with everything you could imagine. And I said, what 
would happen if your services were required? And they 
explained, you wouldn't want to be anywhere around us. Now, 
those individuals, two of those individuals I think died a 
week--about a month later because they were blown up by an IED 
on the way in or out of Gaza City, and I'm forgetting which. 
And I just want to say, having looked in their eyes, knowing 
that they were there to protect us and to know they lost their 
lives, this is not child's play. I'm not suggesting anyone is 
suggesting that, but I want to put it on the record. They are 
doing extraordinarily dangerous work.
    And I do think the question that was asked about cost and 
benefit, I do buy in totally, completely, to the fact that the 
military has three shifts, and you have one--one training, you 
have one kind of in the back, and you have one in the action. 
And in this case, you are totally right. We only pay for when 
they're there. And when we want to dump them, we can just get 
rid of them. There is a cost effective aspect to this. And if 
there were earlier contracts that did cost-plus, even then the 
government has to be looking at this and saying, you know, we 
don't like your cost-plus. We're going to look at someone else 
to come in. But a cost-plus is not, in my judgment, the way we 
would want to design contracts as a general rule.
    I want to ask you all, and I'm going to say to you, Mr. 
Balderas, I notice that the colonel on my staff seemed to be 
more impressed with you as the Delta Force, and I said, what 
the heck's going on here? And he said, you know, he used to fly 
you guys into Laos and some other places when he was in 
Vietnam, manning the helicopter. And I said, so you mean 
they're as good as the SEALs? An he said, no, better. Now, that 
was his perspective. So as the top enlistee in the Delta Force, 
you just kind of won him over. So he made me very impressed 
with what you do, and I appreciate your expertise and your 
service to our country.
    But there is this definite conflict and bias that my staff 
director has.
    I'd like to ask all three companies. Do you all share the 
same armor, the same vehicles, the same IED jammers? Give me a 
sense, do you sometimes compare notes? I mean, you're 
competitors, but I would like to think you all want the best, 
and if you got the best, you're not just going to keep it to 
yourselves, and you all have training. Tell me where you 
interface and where you don't, and if you don't interface, tell 
me that, too.
    Mr. Taylor, have you had a rest from answering questions? 
Are you ready to go again?
    Mr. Taylor. I'm fine, Mr. Chairman.
    Mr. Shays. OK. At the operator level, at the level who are 
actually doing the heavy lifting, there is absolutely work 
between and among--even though we're competitors--among the 
companies. Because necessarily during our operations, we 
overlap, we could overlap, and in that case, we understand the 
value, particularly as former enlisted guys, of very direct 
communication to ensure that we're not getting in each other's 
way, that we're not getting in anybody else's way, and that 
we're able to fulfill whatever mission it is that we have. With 
regard to gear and everything else that is generally 
contractually mandated and is provided for in an RFP or request 
for proposal, that is identified in that request for proposal.
    Mr. Shays. Thank you.
    I'd like to just go down the line.
    Mr. Rosenkranz. Well, we certainly are close to each other. 
We share a camp in Baghdad. And sometimes you can be too close, 
I guess, but I think there's a lot of interaction among the 
companies. Government disperses us in different parts of the 
countries where we serve, but I think, not only do we interact, 
but we rate each other's populations, you know, for new hires, 
and so I think there's a lot of interaction among the 
companies.
    As far as equipment, in the State Department contract for 
the WPPS, there's a great commonality on the civilian police 
side. When we submit a proposal, we can suggest the type of 
equipment that we think's appropriate, and then the INL folks 
in the State Department decide, you know, whether they can 
afford it. That includes airplanes. That includes the types of 
vehicles and other types of equipment. And I was asked by 
counsel at one point, you know, what we knew about this core 
equipment for detecting IEDs or rather for preventing the 
detonation of IEDs, we did do some experimental work with that, 
at least we supported the experiment in Iraq. I don't know what 
the outcome was on that. They just gave us some copies. This is 
the type of jammer that--it will stop both the transmitted--
transmitted signal and jam it or it will do something to the 
signal that's already preset with the other kind of explosive 
device. So we get involved in that tangentially, really, but as 
far as equipment on the one program, I think it's a pretty 
common type of equipment on the police side. There's no 
experimentation. And we have changed over the last 2 years as 
to what kind of vehicles we use, what kind of equipment we use.
    Mr. Shays. Thank you.
    Mr. Balderas.
    Mr. Balderas. Yes, it depends on the contract, Congressman. 
For example, all three companies here are on the worldwide 
contract for the Department of State, and most of that 
equipment is GFE, government furnished equipment. So there is a 
commonality because sometimes we do interchange. So all that is 
the same.
    As far as working together, it is absolutely true. The guys 
on the ground do work together, and it's force common sense to 
do so. In fact, when we had our incident in September of last 
year, it was DynCorp Security that stopped and made it for our 
guys on the ground. So yes, the guys on the ground do work 
together and share and pass info. In fact, some of the guys 
actually have probably worked for all three companies at one 
time or another. So they all stay on the ground and stay in 
contact.
    Mr. Shays. Thank you. Let me ask the three of you, and I'm 
not trying to be cute here, but when you are competing, you're 
competing based on service and cost. Is there the possibility 
that the low bidder uses inferior protective gear?
    Mr. Balderas. Again, depending on the contract, some 
contracts, you are asked to provide your own, but for most of 
the DOD and DOS contracts, they're strictly requirements on the 
contract, what you have to meet the requirement. So again, 
the----
    Mr. Shays. Let me ask you a question that had been answered 
before I asked it. The bottom line is, most of the equipment is 
provided.
    Mr. Rosenkranz. Government furnished or in the contract, 
requires----
    Mr. Shays. Let me ask you, you each have your own training 
procedures. Which one of you is responsible for training Iraqi 
police in Jordan?
    Mr. Rosenkranz. That would be DynCorp.
    Mr. Shays. DynCorp, right. So you are basically training 
the police, at least those police that are trained in the 
Jordan training----
    Mr. Rosenkranz. We support the Jordan Training Center or we 
provide the logistic or we did up until----
    Mr. Shays. You are not doing the teaching. You are just 
trying to do the protective--I mean, are you training these 
police officers?
    Mr. Rosenkranz. Logistics on the school in Jordan or we 
did. We do our mentoring and advising onsite in the regions of 
the two countries. We have 1,000 police advisors in the two 
countries who conduct the training. For instance, in 
Afghanistan, there are regional training centers. We conduct 
the training there, CTC in Afghanistan. We do the training, and 
in Iraq, we do training for the police--with the police. It's a 
direct training with the Iraqis and Afghans.
    Mr. Shays. Before I ask you if there's anything anyone 
wants to put on the record, I would invite Mr. Kucinich to 
followup on a question with our colleague or vice chairman or--
--
    Mr. Kucinich. Just a couple questions.
    Mr. Shays. Yes, just a couple, and let's do it.
    Mr. Kucinich. Mr. Chairman, I'm concerned about the 
suffering caused by war-induced psychological injury for the 
individual and for his immediate family, society, working for 
the private security companies here. As you no doubt know, the 
gold standard study on this question was mandated by Congress a 
decade ago or actually a decade after the end of the Vietnam 
War. It was called the National Vietnam Veterans Readjustment 
Study, and one of the important findings of the study was the 
likelihood of violent criminal behavior by veterans with Post-
Traumatic Stress Disorder. The study investigators surveyed 
veterans for the number of violent acts they had committed in 
the last year. Nearly one-fifth of individuals in the study 
with PTSD self-reported committing 13 or more violent acts in 
that year. Violence on such a scale implies sometimes criminal 
activity, such as armed robbery, gang activity and assault, not 
confined to domestic violence, but the study also found a very 
high incidence of criminal behavior among veterans whose war 
experience was high stress, 14.4 percent. The implication of 
that is that the diagnosis of PTSD does not capture all the 
psychological injuries that can result in the commission of 
violent acts because we all know that the stress of theater, of 
war can cause psychological injuries, and we care deeply about 
the health of the employees and private military contractors, 
about the people of Iraq they work with and about the American 
society they return to.
    I just want to ask a couple questions about the measures 
that the owners and management of private military contractors 
are taking in this area. First I'd like to know----
    Mr. Shays. For the gentleman, I told Mr. Balderas he 
couldn't take an earlier flight so please make sure he's asked 
a question so I don't feel guilty.
    Mr. Kucinich. Well, Mr. Balderas, I would like to know--
thank you, Mr. Chairman--about the environment in which your 
employees work. Which percentage your employees in Iraq do you 
believe are in danger from roadside bombs kidnapping or ambush?
    Mr. Balderas. As far as all the employees who work in Iraq, 
unfortunately, they're all under that same risk.
    Mr. Kucinich. What happens to, attempts to monitor your 
employees in Iraq before, during and after their return, for 
key signs of psychological injury, such as alcohol abuse, drug 
abuse, anxiety disorders, PTSD, violent acts? You know, do you 
have any monitoring at all?
    Mr. Balderas. Yes, we do. We do a psychological profile as 
part of our assessment in recruiting and hiring practice. One 
of the things I did----
    Mr. Kucinich. Exit interviews?
    Mr. Balderas. Yes, and one of the things we actually did 
when we got heavily involved in 2004 was, I went ahead and 
started a program that was based on a casualty assistance 
program in the military, and we went in and contracted with a 
doctor that also works for Fort Bragg and as part of the mental 
health program, and he is on call. He served us well when we 
had our incident with the four personnel we lost. He was able 
to call mental health specialists in each of those areas, 
counsel the family, and he personally met the plane at Dover. 
And he recently just came back from Iraq to go over and talk to 
people that are over there right now just to give them a sense. 
Because one of the things I learned in the military that's true 
now, that an individual that is under a lot of stress sometimes 
doesn't want to let you know because it carries a stigmatism, 
and they are in fear of their jobs. So we have a program where 
they can call him, and we wanted to make sure they knew that 
they could call them offline.
    Mr. Kucinich. So you do have provisions or your employees 
in Iraq get treatment for any psychological injuries?
    Mr. Balderas. Yes, and that is also one of the programs of 
the companies. So it is--has some type of shielding for the 
employee.
    Mr. Kucinich. And is that true of Blackwater, Mr. Taylor?
    Mr. Taylor. Yes, Mr. Kucinich.
    Mr. Kucinich. That's true of DynCorp?
    Mr. Rosenkranz. Yes, it is. We take psychologists over 
there.
    Mr. Kucinich. And can you tell me, do you also pride 
yourself in situations where your employees file Workers Comp 
claims against the company because they feel that they were 
injured on the job and therefore deserve some kind of 
compensation?
    Mr. Balderas.
    Mr. Balderas. No. We have never had--part of the issue 
under the Defense Base Act, if someone is injured, they are 
covered under Workers Comp, but not as far as they not being 
dealt with fairly. The company does try to go above and beyond 
to treat everyone the same.
    Mr. Kucinich. So you don't have any Workers Comp issues; is 
that what you are saying?
    Mr. Balderas. No.
    Mr. Kucinich. Major General.
    Mr. Rosenkranz. No.
    Mr. Kucinich. Mr. Taylor, do you have any type of Workers 
Comp issues?
    Mr. Taylor. I don't know of any.
    Mr. Kucinich. You don't know of any?
    Mr. Taylor. I don't know of any.
    Mr. Kucinich. Will you check with your legal advisors and 
let them know?
    Mr. Taylor. Of course I will. Mr. Kucinich, if I could 
point out, one of the things we also do is we have a full-time 
chaplain who is a full-time chaplain of the Marine Corps in our 
employment at Blackwater.
    Mr. Kucinich. Is he a trained psychologist?
    Mr. Taylor. He has a career's worth of dealing with people 
who have served in combat and have come back.
    Mr. Kucinich. Clinical background?
    Mr. Taylor. I would be glad to forward to you Father 
Pittarelli's background.
    Mr. Kucinich. Just one last question to Mr. Balderas, how 
many of your employees in Iraq, who have returned from Iraq, 
are dealing with alcohol abuse? Do you have any idea of 
quantifying it?
    Mr. Balderas. No. I don't have that information. I know of 
no issues.
    Mr. Kucinich. Anxiety disorders?
    Mr. Balderas. I could check with Dr. Martin and find out in 
that manner, but----
    Mr. Kucinich. PTSD? I mean, do you----
    Mr. Balderas. As far as psychological issues, I'd have to 
talk to him offline.
    Mr. Kucinich. I thank you.
    Mr. Chairman, I mean, obviously, this is something that is 
important as a health issue for the employees of private 
contractors as well as for the American society when people 
come back, to make sure that if you're doing--if you're 
identifying people who have difficulties, you're providing them 
with assistance and treatment, you do have followup. Each of 
you said that. That's important for this committee to hear 
that. Thank you.
    I thank you, Mr. Chairman.
    Mr. Shays. Thank the gentleman.
    Chris, do you have a question that you want to----
    Mr. Van Hollen. Just one. Thank you, Mr. Chairman.
    I just have a question based on your testimony, Mr. 
Chvotkin, where you stated in the written testimony----
    Mr. Shays. Is this a coincidence you are finally going to 
your constituent?
    Mr. Van Hollen. No.
    Mr. Chvotkin. He's trying to protect me from rush hour over 
on 270.
    Mr. Van Hollen. Another 20 minutes, it will loosen up a 
little bit. He got it right.
    Way back in March 2003, at the very outset of hostilities 
in Iraq, your organization, PSC, Professional Services Council, 
recommended to senior acquisition leadership of the Department 
of Defense that DOD consider taking, as you say, one of three 
initiatives: One, setting standards for private security firms 
who wanted to operate in Iraq; or, two, better yet, establish a 
qualified list of firms from which the private sector would 
contract directly for services; or, even better still, that DOD 
directly contract for and supervise these private security 
firms and the contracting firms that they would reimburse.
    Those recommendations were picked up, Mr. Chairman, as you 
may recall, in a 2005 GAO report. My understanding is that, 
however, as of today, they have not been adopted by the Defense 
Department. And my question to you is why do you think these 
recommendations are important? And why have they not been 
adopted, to the best of your knowledge, by the Defense 
Department or other contracting agencies?
    Mr. Shays. And I would like to add, if the gentleman would 
allow me, I would like the others of you to say whether you 
think that these recommendations were important.
    Mr. Chvotkin. Mr. Van Hollen, we saw the situation in Iraq 
as it was just emerging. We had a concern of a long-term set of 
issues for the use of contractors accompanying the force as 
well as the reconstruction and USAID activities which were just 
beginning. Many of our companies, while they are familiar with 
buying security services, we saw the fear the magnitude would 
be such that knowledge would far outstrip both capability as 
well as availability. And that is why we went down the 
suggestion that the government at large and the Defense 
Department, which was in charge of the security operations in 
all of Iraq at the time, take those steps to facilitate those 
coordination and communications among the companies, the 
security forces, and to assist those companies that had to 
provide security on their own to find the most capable, most 
qualified, the most effective kind of security support.
    I think those recommendations remain valid. I have read 
through some of the commentary and the GAO report as to why the 
agencies didn't believe that they were appropriate. Some of 
them are fair, legal interpretations of the government's role 
and still remain valid today. I still hope that, as a result of 
this hearing, the Defense Department or the U.S. Government 
would adopt those recommendations.
    Mr. Van Hollen. So your view is those recommendations 
should still be adopted?
    Mr. Chvotkin. My recommendation is those recommendations 
are still valid today.
    Mr. Shays. I would like you to just quickly respond to 
whether you think these recommendations make sense.
    Mr. Brooks. I think largely they are OK. I think we have to 
remember we need to keep the flexibility in any sort of 
conflict, postconflict environment; you need to have some 
flexibility that allows you to adapt to the situation. As we 
say, you don't need James Bond to guard a gate, you need 
somebody who is capable and professional. So the standards have 
to be very carefully set so that it allows scaling depending on 
the level of threat and the need.
    Mr. Balderas. Yes, I support those recommendations.
    Mr. Rosenkranz. I think Department of State has set a good 
standard. In the two programs that we're a major player in, 
they set high standards, and they get good results. And it's 
sort of ironic. I mean, a lot of what our companies are doing 
as a result of the fact that Defense cannot do it, they are 
overcommitted, or they are underresourced. I think everyone 
agrees to that. So it is somewhat ironic that they are not 
engaged, because the buck stops over there, and they could take 
the lead from State on how to do it and should do it.
    Mr. Taylor. Yes, we would generally support those 
recommendations.
    Mr. Shays. Mr. Kucinich just has one.
    Mr. Kucinich. I thank the Chair for his indulgence.
    I have heard that one general or it may have been Mr. 
Brooks said that 60 percent of the people in Iraq who are 
employed by private security are Iraqis. Did you say that?
    Mr. Brooks. Roughly.
    Mr. Kucinich. Roughly.
    The costs that are on this sheet of $600 a day, that is not 
what the employees get, is it? It's just what you charge for 
the employees, for individual employees?
    Mr. Brooks. Is that this chart?
    Mr. Kucinich. That's this chart.
    Mr. Brooks. That would be, though, dependent on the quality 
of employee that you hire.
    Mr. Kucinich. That's with all the costs that are involved.
    Mr. Brooks. You would have to ask these guys what they 
charge.
    Mr. Kucinich. Here's my question. For people who are doing 
similar work, do you pay Iraqis the same that you pay non-
Iraqis? Does the industry? Do Iraqis get the same pay for the 
same work?
    Mr. Taylor. They don't do the same work, Mr. Kucinich.
    Mr. Kucinich. In no case?
    Mr. Taylor. From Blackwater's perspective, they are not 
doing high-threat protection.
    Mr. Kucinich. So Iraqis are the lowest-paid then?
    Mr. Taylor. I have no idea, Mr. Kucinich.
    Mr. Kucinich. Could you get the information from your legal 
counsel and provide it to us?
    Mr. Taylor. Absolutely.
    Mr. Shays. Just be clear about your testimony here. You are 
basically saying they are not doing that kind of work. You are 
not asking them to do that kind of work; therefore, they are 
not going to get paid those kind of dollars.
    Mr. Kucinich. But for similar work.
    Mr. Taylor. We would have to define similar. High-threat 
protection of a U.S. Ambassador is not performed by local 
Iraqis. That requires a different skill set.
    Mr. Brooks. If I could weigh in on that. I think what you 
are getting to is, yes, an American who goes to work in Iraq, 
whether driving a truck or mechanic, can expert to earn, say, 
double what they would in the United States. If they are from 
Nepal or if they are from the Philippines or something, then 
even driving a truck or something, it is 10 times what their 
salary would have been back at home. Is it as much as an 
American? Probably not. But it is still a lot more than they 
would get at home. So the employees of third country nationals 
and the Iraqis that I talk to when I was in Iraq were quite 
happy with their salaries.
    Mr. Kucinich. Mr. Chairman, I think it would be interesting 
for this committee to have the gentlemen who are here and the 
industry provide us with a chart which shows how much an 
American there gets paid, how much a Nepalese gets paid, how 
much an Iraqi gets paid for similar work. I mean, I think it 
would be very interesting for us to have that information.
    Mr. Shays. Let me just say, if the gentleman would like it, 
I would be happy to request it. From my own perspective, I 
would be outraged if someone who left their own country at a 
certain salary structure was ultimately getting what someone 
would get who came from a country where their reimbursement 
would have been much higher. So I am not on the same 
wavelength, but I would be happy if that could be provided to 
the committee what the different pay scale. I will just ask the 
two folks that do the association work to provide that for us. 
Just give us a sense of what folks would get. I mean, Mr. 
Brooks, it is your response really, but I think what you are 
saying is that in some cases they might get 10 times more than 
they would get in their own country. And then you could take 
that information and conclude with it as you like.
    Mr. Kucinich. I appreciate the gentleman's indulgence to 
let me ask that question, and I think that no matter what 
country we are in, there is always questions of equity that 
need to be looked at.
    Mr. Rosenkranz. But usually you hire the men required to do 
the job, and if it is the type of job where you can hire 
somebody and get them at a lower salary, that's the type of 
person----
    Mr. Kucinich. I understand. I am looking at this chart, 
just before we started this hearing. If the government is being 
charged $600 a day for an employee, and that employee happens 
to be Iraqi, he's getting, say, $10 a day, we'd be interested.
    Mr. Rosenkranz. It doesn't work that way. I mean, if you 
have a person who has to do a sharp-team or do a PSD that 
requires a clearance, you have no choice on who you are going 
to hire. And if it is somebody that is going to provide local 
security, and it can be an Iraqi, then you hire an Iraqi. You 
would never bring somebody over.
    Mr. Brooks. If I could back that up. I think one of the 
really interesting things for me, when you look at this 
industry, it is truly a global industry. And companies that 
work in the Balkans that are now working in Iraq have actually 
brought some of their employees who have been working their way 
up the corporate ladder to work in Iraq. And in Darfur you have 
companies that worked in Sierra Leone that have brought Sierra 
Leone and are now part of management structure. That is quite 
normal. And for the companies who are competitive, it's cheaper 
to use a Sierra Leonean and give them a very good wage by 
Sierra Leonean standards than it is to hire an American to do 
the same thing. So it is a global industry, and they try to be 
as cost-effective as possible.
    Mr. Shays. Let me say, I have found--this is your life's 
work right now, so for you this is old hat stuff. But for me, 
this was a very informative hearing. You have been an excellent 
panel. Mr. Balderas, if you had left to take your plane, it 
wouldn't have been as good a panel.
    Mr. Balderas. Thank you, Mr. Chairman.
    Mr. Shays. So if your wife wanted to leave earlier, I thank 
her for understanding that you were a valued part of this. All 
of you were.
    This was a very interesting hearing, both panels, and I 
thank you very much. Is there any closing comments that you 
would like to make that won't get Mr. Kucinich or Mr. Van 
Hollen to ask a followup question?
    Mr. Taylor. No, thank you, Mr. Chairman.
    Mr. Shays. But anything we need to put on the record?
    Mr. Rosenkranz. These folks, these women and men--and, by 
the way, we have a number of women in our police program. They 
are doing a magnificent job. Everything who gets protected by 
them, the people who watch our police program in action are so 
impressed. These are just marvelous people.
    Mr. Shays. Thank you.
    Mr. Balderas.
    Mr. Balderas. Mr. Chairman, just Triple Canopy would just 
like to thank you for having the opportunity to talk here 
today. And also, on behalf of all the veterans there at Triple 
Canopy, we would just like the opportunity to continue to serve 
our country. Thank you very much.
    Mr. Shays. Thank you very much.
    Mr. Brooks.
    Mr. Brooks. Very quick. We do have public companies, I just 
want to say, right off the bat that are publicly known. So 
their incomes and their contracts are quite open. Armor Group, 
MPRI are two member companies that are public companies. Good 
oversight makes for good companies, and if you look in our 
presentation, we are happy for good oversight. We look to 
support oversight from the government side.
    A code of conduct is useful for making good companies. I 
mean, we have a code of conduct. I think all companies should. 
I think they all have similar codes of conduct, but it is 
useful to have that public so everybody knows what the rule is.
    And finally, I would just like to say it has been an honor 
to be on the panel with these folks here. I mean, they are 
amazing.
    Mr. Shays. And, constituent of Mr. Van Hollen, would you 
like to get the last word?
    Mr. Chvotkin. These are complicated issues, Mr. Chairman. 
They require good thought. I appreciate the attention that the 
subcommittee has paid, and would look forward to a continued 
dialog with you on it.
    Mr. Shays. Well, again, a very interesting hearing. Thank 
you so much for your cooperation. Any question that you said 
you would followup on, it is important that there be that 
followup and communicate with our committee. And if there's not 
the ability to get exactly what we wanted, we will need just a 
reason why, and we will walk through it.
    But thank you, gentlemen, for your service to our country. 
We appreciate it a lot. With that, this hearing is adjourned.
    [Whereupon, at 7:23 p.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
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