[House Hearing, 110 Congress]
[From the U.S. Government Publishing Office]


                         [H.A.S.C. No. 110-5]
 
  APPROACHES TO AUDIT OF RECONSTRUCTION AND SUPPORT ACTIVITIES IN IRAQ 

                               __________

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                              HEARING HELD

                            JANUARY 18, 2007

                                     
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]

                               ----------
                         U.S. GOVERNMENT PRINTING OFFICE 

38-832 PDF                       WASHINGTON : 2008 

For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; 
DC area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, 
Washington, DC 20402-0001 


                                     

























                   HOUSE COMMITTEE ON ARMED SERVICES
                       One Hundred Tenth Congress

                         IKE SKELTON, Missouri
JOHN SPRATT, South Carolina          DUNCAN HUNTER, California
SOLOMON P. ORTIZ, Texas              JIM SAXTON, New Jersey
GENE TAYLOR, Mississippi             JOHN M. McHUGH, New York
NEIL ABERCROMBIE, Hawaii             TERRY EVERETT, Alabama
MARTY MEEHAN, Massachusetts          ROSCOE G. BARTLETT, Maryland
SILVESTRE REYES, Texas               HOWARD P. ``BUCK'' McKEON, 
VIC SNYDER, Arkansas                     California
ADAM SMITH, Washington               MAC THORNBERRY, Texas
LORETTA SANCHEZ, California          WALTER B. JONES, North Carolina
MIKE McINTYRE, North Carolina        ROBIN HAYES, North Carolina
ELLEN O. TAUSCHER, California        KEN CALVERT, California
ROBERT A. BRADY, Pennsylvania        JO ANN DAVIS, Virginia
ROBERT ANDREWS, New Jersey           W. TODD AKIN, Missouri
SUSAN A. DAVIS, California           J. RANDY FORBES, Virginia
RICK LARSEN, Washington              JEFF MILLER, Florida
JIM COOPER, Tennessee                JOE WILSON, South Carolina
JIM MARSHALL, Georgia                FRANK A. LoBIONDO, New Jersey
MADELEINE Z. BORDALLO, Guam          TOM COLE, Oklahoma
MARK UDALL, Colorado                 ROB BISHOP, Utah
DAN BOREN, Oklahoma                  MICHAEL TURNER, Ohio
BRAD ELLSWORTH, Indiana              JOHN KLINE, Minnesota
NANCY BOYDA, Kansas                  CANDICE S. MILLER, Michigan
PATRICK J. MURPHY, Pennsylvania      PHIL GINGREY, Georgia
HANK JOHNSON, Georgia                MIKE ROGERS, Alabama
CAROL SHEA-PORTER, New Hampshire     TRENT FRANKS, Arizona
JOE COURTNEY, Connecticut            THELMA DRAKE, Virginia
DAVID LOEBSACK, Iowa                 CATHY McMORRIS RODGERS, Washington
KIRSTEN GILLIBRAND, New York         K. MICHAEL CONAWAY, Texas
JOE SESTAK, Pennsylvania             GEOFF DAVIS, Kentucky
GABRIELLE GIFFORDS, Arizona
ELIJAH E. CUMMINGS, Maryland
KENDRICK B. MEEK, Florida
KATHY CASTOR, Florida
                    Erin C. Conaton, Staff Director
                Andrew Hunter, Professional Staff Member
               Stephanie Sanok, Professional Staff Member
                   Regina Burgess, Research Assistant

































                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2007

                                                                   Page

Hearing:

Thursday, January 18, 2007, Approaches to Audit of Reconstruction 
  and Support Activities in Iraq.................................     1

Appendix:

Thursday, January 18, 2007.......................................    45
                              ----------                              

                       THURSDAY, JANUARY 18, 2007
  APPROACHES TO AUDIT OF RECONSTRUCTION AND SUPPORT ACTIVITIES IN IRAQ
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hunter, Hon. Duncan, a Representative from California, Ranking 
  Member, Committee on Armed Services............................    34
Saxton, Hon. Jim, a Representative from New Jersey, Committee on 
  Armed Services.................................................     3
Skelton, Hon. Ike, a Representative from Missouri, Chairman, 
  Committee on Armed Services....................................     1

                               WITNESSES

Bowen, Stuart W., Jr., Special Inspector General for Iraq 
  Reconstruction.................................................     8
Gimble, Thomas F., Acting Inspector General of the Department of 
  Defense........................................................     5
Krongard, Howard J., Inspector General of the U.S. Department of 
  State and Broadcasting Board of Governors......................     6
Walker, Hon. David M., Comptroller General of the United States, 
  Government Accountability Office...............................     3

                                APPENDIX

Prepared Statements:

    Bowen, Stuart W., Jr.........................................    81
    Gimble, Thomas F.............................................    67
    Krongard, Howard J...........................................    77
    Walker, Hon. David M.........................................    49

Documents Submitted for the Record:
    [There were no Documents submitted.]

Questions and Answers Submitted for the Record:

    Ms. Bordallo.................................................    98
    Dr. Gingrey..................................................    98
    Mr. Marshall.................................................    98
    Mr. Skelton..................................................    97
  APPROACHES TO AUDIT OF RECONSTRUCTION AND SUPPORT ACTIVITIES IN IRAQ

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                        Washington, DC, Thursday, January 18, 2007.
    The committee met, pursuant to call, at 10:00 a.m., in room 
2118, Rayburn House Office Building, Hon. Ike Skelton (chairman 
of the committee) presiding.

 OPENING STATEMENT OF HON. IKE SKELTON, A REPRESENTATIVE FROM 
        MISSOURI, CHAIRMAN, COMMITTEE ON ARMED SERVICES

    The Chairman. Ladies and gentlemen, it is shortly past 10 
o'clock. We like to do our best to start on time. We have asked 
our witnesses to condense and summarize their testimony into 
four minutes if at all possible. They, of course, will make 
their full statements ready for the record. We have had two 
hearings thus far, and I have got to brag on you; you have done 
very well thus far staying within the five-minute rule, and we 
will continue to do that. I will remind those in the front row 
that when Secretary Gates once appears, we will begin with the 
front row because you did not have the opportunity to ask the 
Secretary questions then.
    But we will start with this. Today's witnesses will testify 
regarding honest reconstruction and support activities in Iraq. 
This will be the first of many oversight hearings from the full 
committee as well as the other committees, including but not 
limited to the Subcommittee on Oversight and Investigations. 
Our witnesses will give us their honest opinions on how things 
are going in Iraq. They are here today because being forthright 
is their job. They are honest and independent. That is their 
primary duty. In fact, it is written in law.
    The Inspector General Act of 1978 says inspectors general 
shall be chosen solely on the basis of integrity and no one 
shall prevent or prohibit the inspector general from 
initiating, carrying out, or completing any audit or 
investigation, or from issuing any subpoena.
    With that in mind, I welcome our witnesses. Today we have 
the Honorable David Walker, the Comptroller General of our 
country. He leads the Government Accountability Office, the 
GAO, which is doing tremendous work helping Congress provide 
oversight to the Department of Defense. He has served in this 
capacity since 1998.
    Thomas Gimble, Acting Inspector General of the Department 
of Defense, who spent a career in the field of audit and 
accountability in the Department of Defense. He also served in 
the Army, receiving the Purple Heart and Combat Infantry Badge 
and the Bronze Star.
    Howard Krongard, the Inspector General of the State 
Department. Like Mr. Walker, Mr. Krongard came to government 
from the accounting industry.
    We also have Mr. Stuart Bowen, the Special Inspector 
General for Iraq Reconstruction. Mr. Bowen came to his current 
job from the legal profession, which, I might point out, was 
also my field before I was fortunate to come to Congress.
    So, gentlemen, welcome to the Armed Services Committee. We 
have two missions to accomplish today. First, we must identify 
the critical lessons learned from the war in Iraq; for today, 
now, while we are still engaged in the fight. If we are to have 
any hope of improving our course, we cannot wait five years, or 
even one year. Gentlemen, we look forward to your helping this 
committee understand what has been done right and what has been 
done wrong in Iraq. We want to eliminate what has been done 
wrong and do what has been done right. Mr. Bowen told me he has 
already visited Iraq 15 times, and I know our other witnesses 
have been closely monitoring the situation. We value your 
insight this morning.
    Second, we must identify the lessons learned in Iraq for 
the future because, unfortunately, this government and our 
military are likely to be asked to engage in reconstruction and 
rebuilding activities again elsewhere. We don't know what the 
future holds. Iraq will not be a model that we will ever seek 
to repeat. Nevertheless, there are failed states and ungoverned 
areas elsewhere in the world and there will be a next time, I 
am convinced. But we must do better when that next time 
arrives.
    My own conclusion is that reconstruction in Iraq can best 
be described by paraphrasing General Pace's analysis of the war 
itself. He said: we are not winning but we are not losing.
    Well, the story in reconstruction is it is not a total 
failure, but it is not in any means a success. Unfortunately I 
don't think a middling outcome in a situation as complex and 
volatile as Iraq is good enough. I have been told that as much 
as 20 percent of the reconstruction funding spent in Iraq thus 
far has been wasted, largely as a result of the lack of 
security. And, gentlemen, if this is true, then somewhere 
between $4 billion and $6 billion of taxpayers' money has been 
wasted.
    Let me briefly point out the charts along the wall. Two of 
the major areas of reconstruction are displayed. Electricity 
production. The chart shows the supply of electricity has 
increased at times and fallen again. From start to finish the 
chart shows almost no change. That, of course, is not good 
enough.
    Oil production. That chart shows that oil production has 
consistently fallen short of our goals of prewar production 
levels. That is not good enough.
    The chart also shows attacks steadily increasing; 
casualties of Iraqi civilians are also increasing. That is not 
good enough. Gentlemen, we must do better.
    I yield to the gentleman from New Jersey, Mr. Saxton.

STATEMENT OF HON. JIM SAXTON, A REPRESENTATIVE FROM NEW JERSEY, 
                  COMMITTEE ON ARMED SERVICES

    Mr. Saxton. Thank you, Mr. Chairman. Let me thank you for 
holding this very important hearing. And I would also like to 
welcome our witnesses this morning. All four of you perform 
valuable services both for the American taxpayers and in 
keeping this Congress informed. You and your staffs ensure that 
U.S. funds are spent appropriately and as effectively as 
possible.
    This inspection and auditing task is especially difficult 
when we consider the amount of funds dedicated to Iraq 
reconstruction and the challenging security environment in 
which these duties must be carried out. So please accept our 
thanks and extend this expression of appreciation to your 
staffs.
    Iraqi reconstruction efforts constitute one element of what 
the chairman of the joint chiefs of staff recently called the 
three-legged stool for the government strategy for Iraq. This 
strategy's long-term success rests in part on the effective 
reconstruction of Iraqi society including projects addressing, 
as the chairman just pointed out, electricity democracy, roads, 
bridges, water sanitation, transport, and telecommunication 
needs.
    And, of course, there are others as well.
    To date, Congress has appropriated more than $25 billion 
for these efforts. Because the U.S. Government is accountable 
to the U.S. taxpayers for that money, we must have the right 
inspection and auditing mechanisms in place to provide 
sufficient oversight. We certainly look forward to your 
perspective on these issues this morning, and, again, I would 
like to thank all of you for being here with us this morning.
    And thank you, Mr. Chairman.
    The Chairman. We will begin with your four-minute summary. 
Mr. Walker.

 STATEMENT OF HON. DAVID M. WALKER, COMPTROLLER GENERAL OF THE 
        UNITED STATES, GOVERNMENT ACCOUNTABILITY OFFICE

    Mr. Walker. Thank you, Mr. Chairman. It is a pleasure to be 
here before you today to provide a strategic overview of GAO's 
work relating to securing, stabilizing, and rebuilding Iraq.
    My statement today is based upon the extensive work the GAO 
has done since 2003 in which we have issued some 67 Iraq-
related reports and testimonials, and most recently I sent up 
to the Congress, early in January, our report that includes a 
number of key issues that we believe Congress needs to 
seriously consider in connection with oversight activities 
dealing with Iraq.
    GAO and the inspector generals of individual departments 
and agencies have different clients, different roles and 
responsibilities, and different professional standards that 
govern their work in some circumstances. Our work at GAO 
includes very broad audit authority. The Congress is our sole 
client and we are able, through our multifaceted skills and 
knowledges and staff, to be able to cut across multiple federal 
agencies and to take a longer-range and broader view with 
regard to the work that we do on behalf of the Congress.
    Our work spans the security, political, and economic prongs 
of the U.S. strategy for Iraq. It is very broad-based and 
cross-cutting in nature. This by itself helps to minimize the 
possibility of overlap and duplication of individual 
engagements.
    However, we also participate in the periodic coordination 
meetings that take place, as well as have supplemental one-on-
one activities with the special inspector general of Iraq as 
well as the other inspector generals to minimize the 
possibility of duplication of effort.
    To give you a sense as to the scope of our work, our 
analysis of the national strategy for victory in Iraq 
recommended that the National Security Council improve the 
strategy by articulating clearer roles and responsibilities for 
the U.S. and others, specifying future contributions and 
identifying current costs and future resource needs. In our 
examination of the cost of the U.S. military operations abroad, 
we recommended that the Secretary of Defense improve the 
transparency of and reliability of DOD's global war on terror 
obligation data. We also recommended that DOD build more 
funding into the baseline budget once an operation reaches the 
level of known effort and more predictable cost.
    In assessing the capability of Iraqi security forces, a 
particularly important and timely topic, we found that the 
overall security conditions in Iraq have deteriorated despite 
increases in the numbers of trained and equipped security 
forces. A complete assessment of Iraqi security forces 
capabilities is dependent upon the GAO being provided access to 
individual unit transitional readiness assessments. We have 
been seeking this for months. It has not been forthcoming. I 
have an agreement in principle with Deputy Secretary of Defense 
Gordon England to provide it, but we need to get it and we need 
to get it soon. This is invaluable information for the Congress 
of the United States and is particularly important at this 
critical juncture given the status in Iraq.
    We have also done work with regard to the impact of 
extending U.S. presence overseas, on the stress of our forces, 
on the need to reset our equipment as well as a variety of 
other issues.
    On acquisitions. In assessing acquisition outcomes, we 
found that DOD often entered into contract arrangements with 
unclear requirements which posed additional risk to government 
and taxpayers. They also lacked adequate capacity to conduct 
effective oversight. We have extensive quality control 
procedures over our work which I am happy to answer questions 
on. I know that is one of the issues that the staff was 
interested in.
    In summary, GAO's work highlights the critical challenge 
that the United States and its allies face in the ongoing 
struggle to help the Iraqis stabilize, secure, and rebuild 
their country.
    Many forthright answers to the questions included in this 
document are essential in order for the Congress to be in a 
position to make informed and timely decisions with regard to 
its constitutional responsibilities. We look forward to 
continuing to work to support the Congress in these and other 
areas, and I am happy to answer questions after my co-panelists 
have had a chance to make their presentation. Thank you, Mr. 
Chairman.
    The Chairman. Mr. Walker, thank you very much. We will have 
some questions a bit later.
    [The prepared statement of Mr. Walker can be found in the 
Appendix on page 49.]
    The Chairman. Mr. Gimble.

STATEMENT OF THOMAS F. GIMBLE, ACTING INSPECTOR GENERAL OF THE 
                     DEPARTMENT OF DEFENSE

    Mr. Gimble. Mr. Chairman, members of the Committee on Armed 
Services, I would like to thank you for the opportunity to 
appear before this committee. I also want to publicly thank the 
men and women who serve in our armed forces. Each time I make a 
visit to Iraq and Qatar, it reminds me of the importance of my 
office in providing oversight necessary to ensure funds are 
being appropriately managed and properly used to warfight and 
achieve the DOD mission.
    As I stated in my last semiannual report to Congress, the 
global war on terror is at the forefront of our Nation's 
concerns and continues to be a priority for the DOD office of 
the inspector general (OIG). Currently we have about 140 OIG 
personnel working with the Department and the Congress in 
providing oversight in the $400 billion in DOD supplemental 
funds appropriated to support our fight against terrorism and 
to support the men and women of our armed forces in Southwest 
Asia.
    To accomplish our oversight mission, we recognized that we 
needed a combination of initiatives while simultaneously aiding 
in the reconstruction and support activities in Iraq. We 
recognize we needed a combination of initiatives. One is to 
establish an in-country oversight presence; two is to expand 
oversight coverage of funds that are predominantly being 
executed in the United States; and three, to improve 
interagency coordination and collaboration to minimize any 
duplication efforts within the oversight community.
    To briefly highlight our first initiative, it is important 
to know that we continue to move forward with expanding our 
presence in theater. We are currently working to increase our 
presence in Iraq and Afghanistan and Kuwait before the end of 
the year. We currently have an office in Qatar. We extended our 
oversight since my testimony in September of 2005, and we have 
currently 23 ongoing audits inspections. We also have 39 
criminal investigations that were completed through the audits. 
These audits involve critical readiness issues that directly 
impact the warfighter such as personnel and operational 
equipment readiness, and resetting ground vehicles and 
equipment with the combatant commands. Also, the Defense 
Criminal Investigative Services (DCIS) which is the criminal 
investigative arm of the DOD Inspector General, has been 
engaged in investigating DOD-related matters pertaining to the 
Iraqi theater, to include Kuwait, since the start of the war.
    The presence of DCIS in the region has led to numerous 
investigations of corrupt business practices, loss of U.S. 
funds through contract fraud, loss of Iraqi military equipment; 
and our investigations have been focused on matters such as 
bribery, theft, gratuities, bid-rigging, product substitution, 
and conflicts of interest.
    Our intelligence component continues to review and assess 
high-profile issues such as the DOD-directed investigations of 
detainee abuse. We are also evaluating the U.S. Government's 
relationship with the Iraqi National Congress, and we have a 
review ongoing of congressional concerns regarding the Rendon 
Group.
    Finally, our policy and oversight component continues to 
play a key role in promoting establishment of effective 
oversight operations in both Afghanistan and Iraq. We are 
continuing also to conduct joint critical assessment of police 
training and counternarcotics programs with the department of 
state inspector general. We are committed to remaining an 
active player in improving interagency coordination and 
collaboration to minimize the duplication of efforts.
    I am confident that my colleagues within the oversight 
community will attest that the continuous interagency 
collaboration is essential for our business. We participate in 
the inspector council that is hosted by Inspector General 
Bowen.
    We also recognize that the joint staff and combatant 
commands inspectors general are key players in helping us 
achieve our oversight responsibility. And we plan to host the 
next joint staff combatant commands and inspector generals 
conference. Further, we are hosting the Southwest Asia audit 
planning group which will coincide with the combatant commands 
inspector generals conference and the joint staff.
    Operational constraints, such as travel restrictions, 
impact oversight efforts, including those of my office. 
Operational tempo requirements and anticipated surge of war 
patterns may present operational challenges for us to enter 
Southwest Asia; specifically Iraq and Afghanistan. Nonetheless, 
our in-country presence to conduct adequate oversight is 
imperative.
    In closing, we recognize the men and women of the U.S. 
armed forces are facing enormous challenges ahead for the 
defense of our Nation's goals. We offer our commitment that the 
DOD resources that are appropriated and provided to those men 
and women of those armed forces are effectively used in the 
global war on terror.
    Again, thank you for the opportunity to appear before you.
    [The prepared statement of Mr. Gimble can be found in the 
Appendix on page 67.]
    The Chairman. Mr. Krongard.

STATEMENT OF HOWARD J. KRONGARD, INSPECTOR GENERAL OF THE U.S. 
    DEPARTMENT OF STATE AND BROADCASTING BOARD OF GOVERNORS

    Mr. Krongard. Congressmen, thank you for the opportunity to 
discuss the Department of State's Office of Inspector General's 
view of audit and oversight activities related to Iraq. OIG's 
approach to oversight in Iraq has been through audits, 
inspections, investigations, assessments, and surveys to 
identify and recommend ways in which State Department programs 
can operate more efficiently and economically. These are 
programs affecting the various operation of Embassy Baghdad, 
including the construction of the new embassy compound as well 
as Iraq reconstruction, governance and security, all of which 
are critical elements to ensuring stability in Iraq.
    With resources limited due to statutorily and mandated 
audit and inspection requirements and flat budgets in an 
increased cost environment, OIG has nevertheless constructed 
high-value projects that have included, in fiscal years 2005 
and 2006 and thus far into 2007, 10 program and management 
assessments, 15 audits with 4 more in progress, and supervision 
of 4 defense contract agency audits. Significant program 
assessments included an assessment of Iraq police training and 
inspection of rule of law programs in Iraq and a survey of 
anticorruption programs in Iraq. Significant audit work has 
included a survey of the Bureau of International Narcotics and 
Law Enforcement (INL) funding for Iraq and currently in 
progress is a review of a large contract for Iraq police 
training support.
    I should note that I have been a strong proponent of 
interagency inspector general undertakings as a way of 
leveraging my own way of limited resources and of enhancing 
cooperation among the three OIG offices before you today, as 
well as others. In that vein, the assessment of Iraq police 
training was done jointly with the DOD, OIG. The survey of 
anticorruption programs and the audits of INL funding and of 
the Iraq training support contract were all done in conjunction 
with SIGIR. And parenthetically, an assessment of the police 
training program in Afghanistan and an assessment of 
Afghanistan counternarcotics programs were done jointly with 
DOD and OIG.
    In addition to the foregoing reports, I have personally 
traveled to Iraq to accomplish specific objectives. For 
example, during my visit this past September, I met with all 29 
Iraqi inspectors general. I said to them, among other things, 
and I quote, ``Each of your prime ministers and deputy prime 
ministers have recently identified corruption as one of the two 
greatest threats, along with violence, to the stability and 
long-term success of Iraq as a free and democratic country. 
Indeed, violence and corruption go together. Corruption feeds 
and funds the insurgency and contributes to an environment 
where both can thrive. You are in the very front line of this 
great battle against corruption, and I look forward to seeing 
how we can assist and support you in this crucial fight for 
your country.''
    To assist them, for example, I undertook to identify 
someone experienced in the U.S. inspector general community to 
become a senior adviser to Iraqi IGs in Embassy Baghdad. I 
succinctly identified such an individual who is now being 
processed and should be in Baghdad shortly. I believe the 
foregoing is responsive to your question as to what is working 
with respect to oversight in Iraq.
    With respect to what is not working, I would point first to 
the limited resources available to my office. The work in Iraq 
I have described to you was funded by an allocation of 1.3 
million from the fiscal year 2005 supplemental and 1.7 million 
from the fiscal year 2006 supplemental. That $3 million over 2 
years was intended to provide for our work in both Iraq and 
Afghanistan. As for 2007, we have received no supplemental 
fundings for Iraq or Afghanistan.
    By way of contract, I believe SIGIR's initial and 
supplemental spending have approximated $100 million. So at a 
time when the costs and risks attributable to State Department 
programs in Iraq continue to increase, OIG's resources have 
remained flat and perhaps have decreased after considering 
mandatory wage increases, higher travel costs, and lower dollar 
exchange rates.
    In closing, Mr. Chairman, I would like to recognize the 
brave and the dedicated military and civilian personnel in Iraq 
who are making enormous efforts to bring about a safe, secure, 
and democratic environment where rights and liberties of 
individuals are protected. This is a difficult challenge, and 
we in OIG want to do our part in assuring that U.S. resources 
are used to the optimum possible efficiency and effectiveness 
in such trying circumstances.
    Thank you.
    The Chairman. Thank you, sir.
    [The prepared statement of Mr. Krongard can be found in the 
Appendix on page 77.]
    The Chairman. Mr. Bowen, we will call on you, but my 
recollection is we had a conversation--and I made reference to 
that in my opening statement--that you said as much as 20 
percent of the reconstruction funding spent in Iraq thus far 
has been wasted. During your comments, would you be kind enough 
to make reference to any details you might have in that regard?
    Mr. Bowen.

 STATEMENT OF STUART W. BOWEN, JR., SPECIAL INSPECTOR GENERAL 
                    FOR IRAQ RECONSTRUCTION

    Mr. Bowen. Yes. Thank you, Mr. Chairman, members of the 
committee, for this opportunity to address you on the work of 
my office, Special Inspector General for Iraq Reconstruction, 
in its mission to provide oversight of the expenditure of the 
Iraq relief and reconstruction fund.
    And let me address that issue of waste right off the bat. 
As I said when I met with you, it is an issue that we recognize 
that Congress has asked my office to explore, and we have 
looked at it from the start since we began our work 3 months 
ago in the conduct of 74 audits and over 90 audit products. The 
real number that we were able to derive regarding waste of that 
fund will come out as we do audits of each of the major 
contractors, and that is a program that I have initiated and we 
are ongoing, looking at what all the top six contractors 
provided the United States for the money that they were 
allocated.
    I was appointed, as I said, the Coalition Provisional 
Authority (CPA) IG three years ago this week and departed on my 
first trip for Iraq two weeks thereafter. I am going to leave 
for my 15th trip in 2 weeks, and I have spent just over a year 
in Iraq supervising our work.
    Today we have 55 auditors, inspectors, and investigators 
assigned on the ground in Iraq, and they travel across the 
country carrying out the mission that Congress has assigned us.
    To date, my office has produced 11 quarterly reports, the 
12th one will be out in 2 weeks. We have completed over 90 
audits, 90 onsite inspections across Iraq, opened 236 
investigations and have 87 ongoing. Five have been convicted, 
U.S. officials, of fraud; and four sentenced to date.
    We also are managing a robust lessons learned program 
looking at what has and has not worked in Iraq. We have issued 
two reports, one on human capital management, the other on 
contracting in Iraq. The third report on program and project 
management will be out this quarter and and we are looking at a 
capping report that will be out at the end of the year which 
will explore the complete picture of the story of Iraq 
reconstruction.
    SIGIR's audit work to date has resulted in direct savings 
of over $50 million in taxpayers' money and has pointed to 
potential savings and recoveries of over another 100 million.
    We will have eight new audits coming out in the next 
quarterly report, which will be issued at the end of this 
month, including a review of police training in Iraq and an 
update on our report on the primary health care clinics, 
specifically looking at how equipment was used in those 
clinics, a review of how Bechtel managed their property, a 
thorough review of that; a review of the improper obligations 
of the Iraqi Relief and Reconstruction Fund (IRRF), a follow-up 
to the report that we issued last quarter; and also a review of 
security costs, a question that continues to dog the entire 
program.
    Our inspection work continues apace, and we will have 
visited over 90 sites by the end of this month, resulting in 
tens of millions of dollars in direct savings from our advice 
and reporting.
    Most notably this quarter, we will have a follow-up on the 
Baghdad Police College. We issued a quick reaction report last 
quarter that resulted in remedial activity. We will identify 
the efficacy of that remedial activity in this newest report 
which will be out next week.
    Our investigative work continues to show progress. Most 
notably this quarter we--SIGIR established the Joint Task Force 
on International Contract and Corruption. And that is in 
conjunction with the FBI and the Department of State IG, 
Department of Defense IG, and we are maintaining a Joint 
Operation Center SIGIR headquarters here in Arlington to 
coordinate investigative efforts among those various agencies.
    Coordination is essential to efficient oversight in Iraq. 
And to that end, when I began this job, I created the Iraq 
Inspector General Council which brings together, every quarter, 
all entities that have oversight responsibility in attempts to 
deconflict our oversight efforts and to identify areas that 
need to be looked at. And we will continue to coordinate with 
GAO and the inspector generals of the Department of Defense and 
State as we look forward to carrying out the important mission 
that you have assigned my office.
    Thank you.
    The Chairman. Mr. Bowen, thank you very much.
    [The prepared statement of Mr. Bowen can be found in the 
Appendix on page 81.]
    The Chairman. Let me take this opportunity to welcome a 
brand-new member to this committee, the gentleman from 
Maryland, Mr. Elijah Cummings, seated in the first row, a 
veteran lawmaker. And we are very very pleased, Mr. Cummings to 
welcome you to your new position here. I know that you will 
enjoy it as we do. Thank you for being with us here.
    In asking questions today, I note we have four members of 
the panel, and five minutes is five minutes, and I would 
strongly suggest you to ask one or two members of the panel, 
unless it is a question that all of them can answer quickly.
    So we will start by one question of Mr. Walker and Mr. 
Gimble. What is the big problem?
    Mr. Walker. Well, I think security, obviously, is problem 
number one. The U.S. plan assumed that there would be a 
relatively stable and secure and permissive environment. That 
assumption obviously proved false and it has a pervasive effect 
on the ability to build capacity, on the ability to engage in 
reconstruction activities, and in the ability to be able to 
maintain and protect whatever reconstruction has been 
performed. And that is the number one problem is the lack of 
adequate security. And the lack of adequate security also 
impairs the ability to make progress with regard to oil, 
electricity, potable water, as well as employment, increasing 
employment opportunities for Iraqis.
    The Chairman. Mr. Gimble.
    Mr. Gimble. Mr. Chairman, I would just second what my 
colleague Mr. Walker has said, because that is, as he so 
eloquently put it, is exactly the issues. So I really don't 
have much to add to that.
    The Chairman. Mr. Saxton.
    Mr. Saxton. Mr. Walker, I have just one observation or 
question and that is with regard to your inquiry with the 
Department of Defense relative to the level of readiness of 
Iraqi forces. I guess my question is--you have some good 
reasons for asking that question. What do you anticipate you 
would see in answer to that question?
    Mr. Walker. Thank you for the question, Mr. Saxton. I 
believe this is critically important for the Congress of the 
United States, this information. I have an agreement in 
principle with Defense Deputy Secretary Gordon England that we 
would be provided this data. But it has been a number of months 
and we still don't have it. I am expecting to hear back from 
the deputy secretary, hopefully by the end of this week. That 
is tentatively what we agreed. If we gain access, then great. 
If we don't, I will be sure to let this committee and other 
committees of jurisdiction know.
    This is critically important because basically what it does 
is it moves beyond the numbers that have been trained and it 
provides a more thorough assessment of their leadership 
capabilities, whether they are adequately equipped, and a 
variety of other critical factors which, quite frankly, we do 
on our own troops, and we have reported to the Congress 
periodically, in fact, we will soon report again on the state 
of readiness of our own troops, which has frankly deteriorated 
in part because of the long duration of this conflict.
    Mr. Saxton. Thank you for that.
    And, Mr. Chairman, I would just add, I would want to say 
this for the benefit of it being part of the process. We know 
certain things about Iraqi troops. We know that in the 
beginning, they were totally untrained. We know that at a later 
stage, they were able to fight and carry out operations as kind 
of followers to U.S. troops. We know that at another stage they 
were able to carry out operations alongside U.S. troops. We 
know that at a later stage they have become able to lead some 
operations with U.S. troops as their supporters. And so I have 
asked for this information as well, and I haven't gotten it 
either. And I kind of understand that it is a difficult thing 
for the Department of Defense to provide because they don't 
know how it will be used. And I think that we need to be very 
careful of being expressly critical of Iraqi troops because of 
the difficulty of training them, the difficulty of getting the 
Iraqi government to pay them in spite of the fact that we have 
given them the money to do so. And so I think it is important 
that we know, but I think it is also important that we be 
careful how we use the information once we have it.
    Mr. Walker. I agree with that, Mr. Saxton. It is important 
to note that this transitional readiness assessment at the unit 
level will be classified. We will treat it accordingly. But it 
is critically important that you have the benefit of our 
professional, independent, objective analysis, given the 
situation in Iraq right now.
    Mr. Saxton. Thank you. I agree with you.
    The Chairman. Thank you very much. Let me follow through. 
Are there some recommendations, Mr. Walker, that, bottom line, 
probably should not be classified that are?
    Mr. Walker. Mr. Chairman, I think there is no question that 
we have seen that there is a tendency to overclassify 
throughout government. In some departments and agencies, it is 
more of a challenge than others. As you know, the way that our 
system works, the decision on whether or not to classify is 
made by the respective department and agency that has the 
information. And human nature being what it is, if there is 
information that is somewhat sensitive or potentially 
embarrassing, sometimes there can be a tendency to try to 
classify things that otherwise shouldn't be classified. I don't 
want to just point to any particular agency. I think that this 
is a broader challenge, and it is one that, quite frankly, I 
think that we may need to do some more work on on behalf of the 
Congress to give you a better sense as to the scope and 
magnitude of this challenge.
    The Chairman. Thank you. Mr. Ortiz.
    Mr. Ortiz. Thank you, Mr. Chairman. Let me say I appreciate 
the fine work that you do. I see that you have many restraints, 
especially not being budgeted to do your work. I hope that they 
are not intentional to keep you away from doing what you are 
supposed to do. You have a serious responsibility and I know it 
is hard to do the work that you are doing under the 
circumstances in Iraq.
    But Mr. Walker, you mentioned in your statement about the 
readiness of our troops. ``DOD faces significant changes in 
maintaining readiness for overseas and homeland missions and in 
sustaining rotational deployments of duty, especially if the 
duration and intensity of current operations continue at the 
present pace.''
    I know you have been there. We are about to send 21,000 
troops. We hope that we send them--if that is what the 
President decides to do--with the right equipment, what they 
need. And I don't know whether you have had a chance to talk to 
the troops. Do you think that they are going to have the 
equipment that they need to do their job? Do you think we are 
going to be able to begin to give them the proper body armor? I 
mean to move 21,000 troops, I know they are not going to be 
moving all at one time. I am concerned about putting our young 
men and women in harm's way especially if they don't have the 
equipment, if they don't have the Humvees, the armor, the 
tanks. And not only that, in fact I encourage my colleagues to 
go and look at their reserve units and go look at the national 
guard units. Some of them don't even have equipment because 
most of the equipment is in Iraq. I wonder if maybe you can 
touch a little bit on that, especially when we are about to 
send 21,000 soldiers to Iraq.
    Mr. Walker. Mr. Ortiz, let me note that we are at the 
present point in time taking a look at the state of readiness 
of U.S. forces. I just got briefed on our preliminary work 
within the last couple of days. One of the things that I want 
us to try to do is to place a special emphasis on those forces 
that are targeted to go to Iraq. Basically what is going on is 
there is a decline in overall readiness but there is an uneven 
distribution. What is happening is for those forces that are 
going overseas or staying overseas, you are taking equipment 
and other types of things for the forces that remain here, and 
that is one of the reasons that there has been such a 
significant problem associated with guard and reserve equipment 
because it has been given to active units, if you will, in 
order to make sure that they are adequately equipped.
    Let me mention one other thing. We have a serious funding 
problem. We are not being picked on. We are covered by 
continuing resolution (CR) like everybody but the Department of 
Defense and the Department of Homeland Security. I have been to 
Iraq twice. I have met with my counterpart four times. And we 
send teams into Iraq on a recurring basis. We want to establish 
a limited continuing presence in Iraq, but if we don't get the 
funding for it, we are not going to be able to do it. We save 
the American people $105 for every dollar invested in GAO. You 
would think that we would get credit for that; but the 
appropriations process is badly broken, and we don't.
    Mr. Ortiz. Mr. Bowen, you know, when I look at your 
statement, I see the amount of money that you have been able to 
save or recover, $50 million, have identified better use of 
$7.8 million. That is a lot of money. Now this money that you 
have been able to--or equipment--is that equipment, most of the 
stuff that you have been able--when you talk about the $50 
million that have been identified?
    Mr. Bowen. It has to do with audits of programs and 
projects in Iraq wherein, for instance, in the award fee 
process when we went in to look at how the large contractors 
were receiving award fees, we found that there were no--there 
was not adequate criteria in place to govern the process, and 
thus the award fees, in our view, were much higher than they 
should have been in some cases. Through our efforts, proper 
criteria were implemented and a proper governance system was 
put in place to ensure that the award fees are merited.
    But I think one of the lessons learned from Iraq 
reconstruction is that those kinds of issues need to be 
understood and implemented at the beginning of the process 
because our audit found that there was clearly some lost funds 
in that.
    Mr. Ortiz. My time is up now. Keep up doing all of the work 
that you are doing because this is very sacred money that we 
are spending. This is taxpayers' money.
    The Chairman. I thank the gentleman.
    Mr. Bartlett.
    Mr. Bartlett. Mr. Chairman, I came to this committee 14 
years ago. I sat in the corner seat down there beside 
Congresswoman Drake. Many times you never got to me. I never 
got to ask my question. So as is my custom, I yield my time to 
a low-ranking member.
    Mrs. Drake. Thank you. I am not sure that I like that 
description, but I will take the time.
    Mr. Abercrombie. Mr. Bartlett continues to have a way with 
words.
    Mrs. Drake. Thank you for being here with us today. This is 
extremely important for us to get your information. On my last 
trip to Iraq last April, one of the things that we did--and Mr. 
Saxton was with us on that trip--was go and visit your 
reconstruction team. And that was very enlightening to us to, 
number one, learn that the infrastructure in Iraq was in much 
poorer condition than we anticipated because of Saddam 
Hussein's actions. It was also impressive to me to hear of the 
countries that were partnering with us and breaking the country 
into provinces, and countries like Japan and South Korea and 
Canada and France, of the countries that were willing to take a 
province, even tiny Moldova that helped out with other nations, 
and to look at the current list of 42 countries who have given 
aid or money.
    So my question revolves around, first of all, Iraq and the 
$10 billion dollars that they are now saying that they will put 
into capital projects in the next year, to make sure, Mr. 
Bowen, that you think what you have put in place will have the 
proper oversight of that $10 billion. We know the Iraqis 
haven't done a very good job with their oil and even tracking 
the amount of oil that is going out of the country. So my 
question is, do we have that in place, particularly with the 
Iraqi money and certainly with the other 42 countries that are 
assisting us?
    Mr. Bowen. First of all, the biggest problem last year and 
with respect to the Iraqi side of the ledger was the failure of 
the Iraqi ministries to execute their capital budgets. Indeed, 
the 10 billion number comes from the amount that was left in 
the treasury at the end of 2006 because of lack of budget 
constitution. That is a capacity-building issue within the 
ministries, and we have an audit coming out in this next 
quarterly report that explores problems with capacity-building 
in Iraqi ministries. But nevertheless, the relief and 
reconstruction of Iraq ultimately is Iraq's burden, and they 
must sustain it over time; and as you pointed out, given the 
severity of the deterioration of that infrastructure, that is a 
long process and it is one that they are going to have to 
shoulder much more than they have to date.
    Indeed, the relief and reconstruction of Iraq has three 
phases. First was primarily U.S.-led, about 32 billion, 
including security expenditures put into it. The second will be 
an international compact-driven effort that will bring the 
efforts of these other countries into more coordinated relief 
and reconstruction efforts. The third will be the Iraqi 
Government itself, and that requires strategic planning but 
also requires the controls that you alluded to that are 
controls that are not in place yet.
    The corruption, as Deputy Prime Minister Barham Salih said 
just three days ago, it is a huge problem. And indeed he was 
referring to lost funds from the Bayji refinery in northern 
Iraq amounted last year to about a billion dollars and he 
believes that they went to the insurgents.
    Mrs. Drake. Could I also ask quickly about the banking 
system in Iraq? I know that has been a huge problem because 
there is no way to pay people. Are they making progress on 
that? Something as simple--in our country, we do everything 
automatically, if we want to, and they don't even have a system 
in place.
    Mr. Bowen. They do not have electronic funds transfer in 
place, and that is a huge hindrance, and you cannot have an 
electronic audit trail to track how funds move. So it is still 
primarily a cash economy and that includes payment of the armed 
forces.
    We looked at logistic support, the capacity of Iraq 
logistics to support their own forces, in our last quarterly 
and found that it is weak at best; and one of the chief areas 
of weakness is proper payment of troops. And when troops don't 
get paid, they disappear from the field.
    Mrs. Drake. I hope we are doing something to bring our 
bankers in to help us set up a system that will work.
    Mr. Walker. Ms. Drake, one of the primary problems in Iraq 
is the lack of adequate capacity to execute. They don't have 
enough people with the right kind of skills and knowledge to do 
it. There is a real problem in execution with regard to their 
authorities and resources. They have candidly--I don't think 
that we can expect that we are going to get a lot more 
international assistance with regard to military activities. I 
do believe, however, that we should try and take steps to try 
to engage the international community to try to do more through 
capacity building. In many cases we have military personnel 
engaging in capacity-building exercises. They may be very 
capable and dedicated individuals, but they may not be experts 
in what they are trying to advise on, and having somebody in a 
uniform serving as an adviser to civilian personnel is not 
necessarily a good idea.
    So more can, should in fact, must be done I think with 
regard to this capacity building.
    Mrs. Drake. Thank you.
    The Chairman. Mr. Meehan from Massachusetts.
    Mr. Meehan. Thank you for being here today. Mr. Bowen, let 
me also thank you for your work. You are doing a great service 
to your country, and I look forward to working with all four of 
you as I assume my new role as the chairman of Oversight and 
Investigation.
    I wish that we were meeting in better circumstances. 
Unfortunately, the situation in Iraq leaves much to be desired. 
Gentlemen, it has been nearly four years since we invaded Iraq, 
nearly four years since we started rebuilding the country. Four 
years, $25 billion, over 3,000 American lives. And you look at 
what we have to show for it, and as concerning oil production 
as this chart shows, oil production is less than two million 
barrels per day. That is 20 percent lower than before. Three 
million fewer people have access to potable water. Iraqis in 
Baghdad have access to electricity for about 4 hours per day on 
average so far this month now, if you compare that it was 16 
hours per day before the war.
    In 2003, the President promised a Marshall Plan, but the 
only thing that seems to me that that would seem as a failed 
plan. We don't seem to be getting very far.
    Now, Mr. Bowen, I am aware that your office is responsible 
for saving tens of millions in taxpayers' dollars. I have seen 
the reports. I have no doubt that you are uncovering evidence 
of waste, fraud, and abuse. I remember that you discovered 
thousands of weapons that were provided to Iraqis that were 
missing.
    Given the mistakes that you have been able to expose and 
the amount of money that your office has recovered with a staff 
of less than 100 people, how much do you think that you are 
overlooking? In other words, do you feel that you have enough 
resources, and how much do you think we don't know because of 
the lack of resources?
    Mr. Bowen. Well, there is a lot more that I would like to 
do, and I would if I had more resources. You are right. The 
expenditure of $32 billion in the environment that is Iraq 
today is an extremely challenging oversight mission. And I have 
got 55 people assigned to Iraq, about 30 auditors, 10 
investigators, 10 inspectors. But just traveling outside the 
Green Zone is such a difficult task that it requires 
significant advance planning, and frequently inspectors have 
their trips canceled. So simply executing the oversight mission 
because of the security issue is a significant problem.
    Nevertheless, I think we have had a good deterrent effect 
by being present on the ground there for almost three years. 
And I think that that has saved us a significant amount of 
taxpayer dollars. However, your core point is well taken. I 
would like to do more.
    Mr. Meehan. You mentioned you are going in two weeks. How 
long will you be there?
    Mr. Bowen. I usually spend every third month in Iraq now. 
That is my cycle, two months here to produce my quarterly 
reports and one month there to push it forward.
    Mr. Meehan. So far we have allotted $6 billion to the top 
10 U.S. contractors in Iraq alone. It has been reported that 
many of the projects that these companies were responsible for 
were found to have been seriously wanting. In the case of one 
company, I think 13 of the 14 projects that they worked on were 
found to be deficient. Yet it seems that time and time again we 
continue to pay, regardless of the quality of the product. How 
many of these cost-plus contracts have been awarded over the 
past four years?
    General Brogan. Well, the cost-plus contract system was the 
one adopted in 2003-2004 when the Iraq relief and 
reconstruction program was developed. And that meant that very 
large cost-plus contracts were awarded to 12 major contractors, 
many $500 million each. And what that means is that in exchange 
for those companies assuming the risk of working in Iraq, the 
government assumes pretty much to pay their costs. And----
    Mr. Meehan. Excuse me just one second, but I don't see how 
we can hold contractors accountable if they are assured a 
profit regardless of the quality of their product.
    Mr. Bowen. Well, we had an audit that came out last summer 
in our July report wherein SIGIR identified a core failing in 
the cost-plus system, and that is the failure to incentivize 
cost within those countries. There is a requirement to go in, 
you go in, you don't know what your costs are going to be, but 
within a certain amount of time a company needs to identify 
what those costs are. And that requirement was not enforced in 
Iraq.
    And indeed in my testimony before the Senate Homeland 
Security and Government Affairs Committee last August when we 
released our contracts and lessons learned report, I emphasized 
that the cost-plus mechanism needs careful review by Congress.
    The Chairman. Thank you, Mr. Meehan.
    Let me say I am going to continue the hearing as best I 
can. It is a motion to adjourn. I will continue and those of 
you who need to vote, go vote and please hurry back. And, Dr. 
Snyder.
    Dr. Snyder. Thank you, Mr. Chairman.
    Mr. Walker, on page 12 of your written statement you say 
many reconstruction projects are falling short of your 
expectations and DOD has yet to resolve longstanding challenges 
and mismanagement in oversight of contractors in deployed 
locations. These challenges often reflect shortcomings in DOD's 
capacity to manage contractor efforts, including having 
sufficiently focused leadership, guidance, between requirements 
and resources, sound acquisition approaches, and an adequate 
number of trained contracting and oversight personnel.
    I just want to ask about one specific phrase in there. I 
mean, we are well over 200 years as a country. We are several 
years into this war. Why do we not have, quote, sound 
acquisition approaches?
    Mr. Walker. Candidly, as you probably know, the issue of 
inadequate contracting and acquisition approaches is one of the 
items that has been on GAO's high-risk list for many years, and 
it will remain on GAO's high-risk list when the new list comes 
out on January 31st. There are longstanding fundamental 
acquisition and contracting problems within the defense 
department and many other departments and agencies. They are 
exacerbated when you deal with a conflict zone that is half a 
world away. One of the most fundamental problems is there is 
not an adequate definition of the requirements, and not having 
an adequate definition of the requirements and not stabilizing 
those requirements causes a tremendous opportunity for waste 
and abuse, especially in cost-plus contract arrangements.
    Furthermore, not having adequate personnel who can manage 
cost, quality, and performance, including determining when and 
whether under what circumstances incentive and award fees ought 
to be paid, results in tremendous amounts of waste and 
potential abuse as well.
    Dr. Snyder. In our congressional system here, which 
committee here is responsible to provide the oversight and make 
the legislative changes necessary?
    Mr. Walker. I think it would probably be a shared 
responsibility.
    Dr. Snyder. Shared between whom and whom?
    Mr. Walker. The Armed Services Committee, obviously, is the 
authorized committee, and you have House Government Reform 
which oversees government operations. Off the top of my head, 
those would be the two that I think would have the most 
interest in this.
    Dr. Snyder. Mr. Walker, quick question. Not talking about 
your colleagues sitting next to you, but as a whole in 
government, are the inspector generals independent enough? I 
saw a smile.
    Mr. Walker. They are clearly intended to be independent and 
there are a number of features associated with their 
appointment that can lead them to be independent. They do, 
however, have a divided client base. They work for the head of 
the agency and they periodically report to the Congress of the 
United States. And so they are independent of the line 
operations within individual departments and agencies. They are 
not independent of the executive branch. So it depends upon how 
you want to define ``independence.''
    Dr. Snyder. The topic came up from Ms. Drake a moment ago 
about the $10 billion in Iraqi money. I would assume that you 
all--and you talked about five convictions--that we have no 
jurisdiction over Iraqi money. Is that a fair statement?
    Mr. Walker. This is a very important point and something 
that I included in this document. The United States had a 
fiduciary responsibility to properly use and account for the 
DFI funds, the Development Fund for Iraq. Stuart Bowen and I 
have worked together along with my colleague, Dr. Abdul-Basit, 
who is head of the Board of Supreme Audit in Iraq, to gain 
access to those documents for the Board of Supreme Audit so 
they can do the audit work. It took a number of months to make 
it happen. They now have it.
    I think it is important that we recognize that while we 
don't have audit authority over it, the appropriate entity to 
do it is the Board of Supreme Audit in Iraq, and we need to 
make sure that we are giving them the records that they need to 
do their work, and the U.S. should not wash its hands of this. 
We had a fiduciary responsibility with regard to those funds.
    Dr. Snyder. Are we giving them the records that they need?
    Mr. Walker. My understanding is that most of the 
information has been provided, but now the U.S. government is 
trying to get the Board of Supreme Audit to sign an agreement 
that basically says the U.S. government is not responsible for 
anything once the records are turned over. Furthermore, it also 
came to my attention that the U.S. Army entered the home of the 
Auditor General of Iraq, unexplained, took the weapons of his 
security forces, his predecessor was assassinated. He still has 
not been given an explanation nor an apology.
    Dr. Snyder. Mr. Bowen, you mentioned the number of people 
who were convicted: five. Seems pretty small. That averages 
about one and a quarter people a year for the four years we 
have been in the war. How many people that are U.S. personnel 
or contractors or military personnel have been fired, 
reprimanded, had something happen to their careers?
    Mr. Bowen. I don't have those figures, but I can tell you 
that we have 23 cases at the Department of Justice now that are 
in various stages of completion, and I expect over the next 
quarter that we will see that number----
    Dr. Snyder. I am correct, you said at this point you have 
had five convictions?
    General Brogan. That is right. Fraud investigations are 
time consuming, and they usually take two years; and thus, 
given that time line, a number of them are ripening right now.
    The Chairman. Thank you.
    Ms. Bordallo.
    Ms. Bordallo. Thank you very much, Mr. Chairman.
    Gentlemen, the numbers and amounts of funds that we are 
talking about today are perhaps too large to get our hands 
around. The task of providing effective oversight of figures in 
the hundreds of billions is admittedly enormous, and I commend 
you for your efforts even in an environment where it seems we 
had many who didn't welcome your oversight. Let me tell you 
this: this Congress supports your efforts, but America and we 
want to hear the truth.
    I have a question for you, Mr. Krongard. You mentioned in 
your testimony about limited resources and security was--one of 
you mentioned that security was one of the top priorities. You 
also mentioned the embassy, the U.S. Embassy compound. I am 
curious, what is the cost of that compound?
    Mr. Krongard. The Congress, I believe, appropriated $592 
million for the building of that new embassy.
    Ms. Bordallo. Five hundred ninety-two million dollars. And 
it is ongoing; is that correct?
    Mr. Krongard. That is correct.
    Ms. Bordallo. Now I don't really understand that when they 
are bombing Baghdad, throwing missiles around, even if it is in 
the green zone, why would we put that as a priority? Wouldn't 
you want to wait until things calm down a bit before going into 
building an American Embassy at that cost? Isn't that a risk?
    Mr. Krongard. That is a policy judgment that was made by 
the Congress and by the Secretary of State, so I really 
couldn't comment on it.
    Ms. Bordallo. Congress set a time?
    Mr. Krongard. Excuse me?
    Ms. Bordallo. Congress set a time when we should----
    Mr. Krongard. A proposal, I believe, was submitted to the 
Congress for construction of the new embassy, and it is due to 
be completed in this coming July with a move into the embassy 
beginning in September and to be completed by year end.
    Ms. Bordallo. Well, I understand. I have been in Iraq many 
times, and I have stayed even overnight at the palace, what 
they call it now, where the embassy is housed, and I just 
wonder why. You know, it could very well be that that could be 
destroyed during all of these attacks going on, and I just 
wonder why we made that a priority. And certainly it could have 
been put on hold. That was my question. How do you feel about 
that, Mr. Walker?
    Mr. Walker. Well, first the security situation is a lot 
more stable inside the green zone than it is outside the green 
zone. It is not that there is zero risk in the green zone; 
there is some. When I was there last, I was going to meet with 
my counterpart, and we had to relocate because a bomb-sniffing 
dog sniffed a bomb where we were supposed to meet. I think from 
a practical standpoint, there is some risk, but the risk is 
relatively low in the green zone, I would say.
    Ms. Bordallo. Okay. And my second question is to you, Mr. 
Walker. As you may know, I represent a small territory, the 
U.S. territory of Guam. We don't have enormous companies like 
Bechtel and Parsons doing business in Guam, although the 
potential of $15 billion in military construction (MILCON) in 
the next decade or so has attracted these folks to Guam. But we 
do have many, many small businesses who do fantastic work and 
who become real parts of our community. And I am interested----
    The Chairman. Would the gentlelady suspend? Would you take 
the chair since it is necessary that I go vote?
    Ms. Bordallo. I will just take it from here, Mr. Chairman.
    The Chairman. No. You need to come up here, please.
    Ms. Bordallo [presiding]. When I was speaking on how small 
I am, now I have become quite a bit larger. I am very honored 
to represent the Chairman, and I will kind of take time here so 
that we can keep the hearing going.
    But I represent Guam. We are U.S. citizens. We are part of 
the U.S. family; however, we do not vote on the floor. So that 
is one reason that I am here, and hopefully that will change in 
the near future.
    But getting back to the small business, and this question 
is addressed to you, Mr. Walker. And I mentioned that possibly 
because of the increase of military personnel to Guam from 
Okinawa, we are going to do a lot of military construction, and 
we probably will be attracting some of these larger companies. 
But I am interested in your thoughts on how effectively our 
policies have engaged small businesses, whether U.S. or Iraq. 
Has the large size of the contracts we have utilized made 
oversight more difficult and abuse more likely as compared to 
if we had smaller contracts and were engaging smaller 
businesses? I would like to hear from you, Mr. Walker.
    Mr. Walker. We have done work with regard to the small 
business set-aside and with regard to some of these issues. I 
would like to be able to provide some more specific information 
for the record, but I will tell you that with regard to Iraq, 
the biggest problem is providing contracts to Iraqis to make 
sure that Iraqis have an opportunity to benefit from the 
reconstruction of their own country and in order to be able to 
try and help deal with their, you know, very high unemployment 
level, which then could potentially provide some more 
stability.
    I will be happy to provide you some information for the 
record, though, with regard to what else we have done on the 
small business set-aside.
    [The information referred to can be found in the Appendix 
beginning on page 98.]
    Ms. Bordallo. Thank you very much. I am a member of the 
Small Business Committee, so I am very interested.
    At this time I would like to recognize Mr. Forbes from the 
State of Virginia.
    Mr. Forbes. Thank you, Madam Chairman.
    And, gentlemen, thank you all for being here. We appreciate 
your testimony and your expertise. And I want to thank you, Mr. 
Walker. We appreciate your enthusiasm to offer your suggestions 
and for all of you for being here today.
    Before I came to Congress, I had the opportunity in 
practicing law to represent a lot of corporations. At any given 
time I would represent approximately 300 corporations, and they 
would range from large ones to small, medium-sized companies. 
And one of the most frustrating times of the year is when we 
would sit down with our audit teams, because I would always be 
frustrated because the audit teams would always come in and 
tell us all the things that happened wrong with the 
corporation, and I would always think, why in the world didn't 
two guys come in in the beginning and get involved in the 
planning that would do it? You guys are here today to get 
involved in the planning.
    The other two observations that I have is that when we look 
at agencies throughout government, we know that it is great to 
say because I am in charge of an agency today that I have 
responsibility for that agency, and that is fair to say, but we 
know those agencies have been built up not just over years, but 
over decades, and the inertia to change agencies is incredibly 
difficult. My constituents and people who talk to me across the 
country, when we look at them, they are always saying, look at 
Federal Express, look at UPS how they can manage these budgets, 
they can get stuff, they can deliver products; but look at our 
agencies, and we have a hard time doing it, whether it is in 
Katrina, whether it is in Iraq.
    And the two questions I would ask for you guys to respond 
to for us today is, one, have you seen that there is any 
threshold beyond which in terms of dollar amount of budgets 
that we just don't have the governmental capability as agencies 
to manage without significant waste, or does the dollars not 
really matter? Because I hear over and over again, we just 
can't manage X number of dollars and do it effectively. And 
then the second thing is what kind of built-in institutional 
problems do we have governmentally that keep our agencies from 
really cutting down on some of the waste that we see, be it in 
Iraq, Katrina or wherever? So if you would take a bite at those 
two, I would appreciate it, and thank you.
    Mr. Walker. Well, first I agree with you, Mr. Forbes, and 
it is frustrating when somebody comes in after the fact and 
said, you know, the horse is out of the barn, and it shouldn't 
have gotten out of the barn, and it doesn't do a lot of good, 
quite frankly. That is why one of the things we try to do, and 
I would imagine my colleagues also try to do, is to focus on 
planning, systems, controls, people, process, the key elements 
that can help assure that you don't have a problem to begin 
with.
    Now, unfortunately the larger the department or agency, the 
more complexity, the more diversity, the more ingrained nature, 
you know, that there is. I mean, Defense Department, 60 years, 
it will have its 60th anniversary this year. So my view is that 
we need to focus on what types of systems, controls, processes 
and people, practices need to be in place in order to minimize 
the possibility of having problems down the road, and that is 
how we are trying to focus our efforts.
    Last thing, the federal government, quite frankly, its 
organizational model, its classification/compensation systems, 
many of its financial management systems are based on the 1940s 
through the 1970s, and at least it is the 1940s rather than the 
1840s, but this is a key part of our effort to try to help 
transform government, and it is also addressed in detail in our 
21st Century Challenges document, reexamined the base federal 
government which was issued in February of 2005.
    Mr. Bowen. Congressman, I think you are exactly right with 
respect to how others can best help an organization be more 
efficient, and particularly in Iraq, given the short timeline 
between appropriation and execution. Real-time advice is 
essential, and others will tell you that has been my watchword 
from the start, real-time auditing, which means a much more 
consultative approach than a long-term review approach. I tell 
my auditors, we don't play gotcha. We work with management to 
identify what the problems are as we find them, and essentially 
what I like when I see my audits done is that the findings that 
we had are already resolved by the time the reports come out.
    Mr. Krongard. Sir, if I could add to what Mr. Bowen has 
said. And I, like yourself, have been a product of the private 
sector, having spent 40 years there before coming to government 
less than 2 years ago. I do believe that if people such as 
ourselves were able to be a little bit earlier in the process, 
it might be helpful. However, if you noticed from the 
questioning today, there have been several questions raised 
using the term ``independence'' and questioning just how 
independent people such as ourselves are, and every time we get 
involved in the front end of things rather than the back end, 
people challenge the independence and whether we are getting 
involved in policymaking and planning and operations and so on.
    So I think it is a little bit of a Catch-22. I do come in 
from--I was a lawyer for 40 years, and I understand client 
services, and I think you can be a consultant and you can bring 
to bear good ideas. And the comptroller general is very correct 
that, without generalizing, it is true that the government 
agencies and policies and structures are rooted in past 
decades, and there isn't enough turnover to bring in new 
expertise as new forms of technology and management rear their 
heads. So I think on both counts it would be helpful to have 
more turnover, more new people coming in. It would also be 
helpful to get people such as ourselves involved a little bit 
earlier in the process without the risk that we all run of 
being challenged as being non-independent.
    Ms. Bordallo. Thank you. Thank you, Mr. Forbes.
    The Chair now recognizes the gentleman from New Jersey, Mr. 
Andrews.
    Mr. Andrews. Thank you, Madam Chairwoman.
    I very much appreciate the testimony of the panel. I 
apologize for not being personally present during the 
testimony.
    Mr. Walker in particular, I wanted to thank you for the 
great work of your staff and colleagues. I have had the 
opportunity now on, I believe, three occasions to receive a 
classified briefing on the status of affairs in Iraq. The work 
of your colleagues has been exemplary, thorough, and I commend 
your colleagues for the great work that they have done. And it 
leads to two questions I have as follow-up to that work.
    The first is that this was a classified briefing, and, 
obviously without getting into the substance of the briefing, 
it was my conclusion that much of the material that was shared 
with me should not be classified. Much of the material really 
goes to subjective interpretations of the dynamic on the ground 
in Iraq as opposed to specific facts that might put our 
individual people in jeopardy.
    Could you give us your assessment as to whether generically 
there is overclassification throughout the executive branch, 
and specifically whether you think that there has been 
overclassification of the information that I have made 
reference to?
    Mr. Walker. As I touched on earlier, I believe that there 
is a problem with potential overclassification within the 
executive branch. I think part of it is inherent in the system. 
The way the system works is the department or agency who has 
the information is the one that makes the classification 
determination, and, in fact, this is an area where I believe we 
may have some work going on right now. If not, it is something 
we may want to take a look at to try to get a sense as to 
whether and to what extent this is an area of concern, and 
what, if anything, ought to be done about it.
    Let's face it, departments and agencies are comprised of 
human beings, and human beings have to make judgments, and it 
is not just an issue with regard to whether or not it might 
compromise our security, but sometimes there is information 
that could be embarrassing, and human nature being what it is, 
people would might prefer not to release that. But I think 
people need to understand it is eventually going to get out.
    Mr. Andrews. I think you draw the line at exactly the right 
place. I think we should always err on the side of protecting 
sources and assets so as not to jeopardize any American serving 
this country or any other innocent person serving his or her 
country. But our job in oversight is to find embarrassing 
realities and let the constituents of the countries know they 
exist. And the realities of the reports I have heard from your 
agency or--there is a lot of information that I think needs to 
be in the public domain. I would encourage you to take whatever 
steps that you feel are appropriate to do that.
    Second, and it is a related question, I note that in the 
summary of your testimony, you talk about some difficulty of 
getting complete assessments of Iraqi security forces at the 
unit level, and it seems to me that one of the central 
questions in light of the Baker-Hamilton report is the level of 
readiness of Iraqi forces. Overall generic characterizations 
are not very useful; unit-by-unit assessments are quite useful.
    I wonder if you could elaborate on the difficulties you 
have encountered and make any suggestions you could to the 
committee as to how we could help you get access to that very, 
very important information.
    Mr. Walker. Well, I am working with Deputy Secretary Gordon 
England, and we have agreement in principle that we are going 
to receive this information, but unfortunately we haven't 
received it yet. As you know, the department is a very large 
bureaucracy, and there are differences of opinions within the 
department about what should or shouldn't be released. I am 
expecting to hear back from the deputy secretary by the end of 
this week. I am hopeful that we will get it favorably resolved, 
but if not, believe me, I will let this committee and other 
relevant committees know because I believe that this is 
absolutely critical information that the Congress needs to 
know, although I will say that this is classified information. 
I mean, you know, at the level of detail we are talking about, 
it is classified information.
    Mr. Andrews. I think it should be, and we would welcome 
your cooperation on it.
    Mr. Bowen, let me thank you in particular for your 
courageous and exemplary service. Do you have the tools and 
resources you need to do the work you are doing, or is there 
more that we need to give you to make your efforts even more 
effective?
    Mr. Bowen. Well, Congress recently extended the term of our 
office and in doing so requested that SIGIR perform a forensic 
audit, which is, as I have learned, a very significant 
undertaking and will require substantial additional resources 
to execute. And a forensic audit means really a thorough review 
of how the Iraq Relief and Reconstruction Fund was committed, 
obligated and expended, and that is over $21 billion spent in a 
war zone. That is a significant task, and thus very directly we 
will need more resources to execute that significant endeavor.
    Beyond that, I think that there is more to be done to 
answer the core question that Congress has asked, and often 
that is what have we got for an investment in Iraq's 
infrastructure?
    Mr. Andrews. I will tell you the last couple of days' 
testimony fueled my skepticism that we heard that we need 
15,000 new Americans to go secure Baghdad. At the same time we 
have also been told we have 325,000 trained Iraqis. If the 
training has been as effective as has been represented, it 
seems to me that there would be sufficient numbers of Iraqi 
soldiers to carry out that effort. I know that you are more 
focused on reconstruction, but I am particularly interested in 
training or the lack thereof.
    Mr. Bowen. Well, we do look at that as well, because a 
significant portion of the Iraq Relief and Reconstruction Fund 
was used to fund the training of Iraq forces, and issued an 
audit report last quarter looking at just the logistical 
supports to those forces and found that it was weak. And indeed 
325,000 have been trained, but how many are operational is a 
different question.
    Mr. Andrews. Thank you very much.
    The Chairman [presiding]. Dr. Gingrey.
    Dr. Gingrey. Mr. Chairman, thank you very much.
    I would like to thank the comptroller and the inspector 
generals for being here this morning. I wanted to pertain my 
question I guess to the inspector general of State and to Mr. 
Bowen as well. It is my understanding from what the President 
said when he addressed the Nation last week that he was going 
to ask for in the supplement of an additional $1.46 billion 
from the State Department for a number of things, the CERP 
program, the Commander's Emergency Response Program. I would 
like for you to tell us a little bit about that in regard to 
how far down that goes in regard to allocating some of that 
money to your field offices down to what level. And what is the 
average amount of money that is given, and do we have audit 
oversight or responsibilities for that particular line item?
    And then the other thing, maybe even more importantly, and, 
again, this would be, Mr. Krongard, under your jurisdiction, 
the $486 million that would be going to Iraqi political parties 
and human rights groups, I am real concerned about the 
possibility of waste, fraud and abuse in an area like that, and 
I would like for you to discuss that.
    And maybe finally, a couple of years ago we were talking 
about building the embassy. I don't think I was the only one 
that was concerned about the $750 million price tag for embassy 
Baghdad. I think that that got reduced to maybe the low $600 
million, but even that seemed like an awfully high number, and 
if you can address those issues, I would appreciate it.
    Mr. Krongard. First, let me say that the Commander's 
Emergency Response Program is already under the Department of 
Defense, so for that portion I would turn to Mr. Gimble, who I 
know can answer those questions.
    With respect to the new embassy, the number, I believe, 
came out to $592 million. We have been providing oversight with 
respect to various aspects of that construction. It is 
presently on target. It is on schedule and on budget, which is 
kind of unique.
    There have been a great deal of unforeseen challenges in 
building that embassy. I have been there a couple of times. I 
have toured it. I participate in a program that reviews it 
every month under the leadership of the Assistant Secretary of 
State for Overseas Building Operations, General Williams. And 
so I believe that when you try and consider how much 
interference you can have and how much oversight you can have 
as something is being built, I am comfortable with what we are 
providing. There were policy judgments made as to how big it 
would be and when it would be constructed and where it would be 
constructed. Those decisions were made in consultation, I 
believe, with the Members of Congress who provided the funding. 
So I have some feeling that the oversight has been provided 
with respect to the new embassy.
    Dr. Gingrey. And, Mr. Gimble, yes.
    Mr. Gimble. With regard to the CERP funds, Army Audit 
Agency completed an audit on the Iraqi CERP fund, I believe, 
last year, and we are in the process of completing. We will 
issue probably within the next three weeks a review of the CERP 
funds in Afghanistan. I know this has been primarily aimed at 
Iraq, but we do a lot of work in Afghanistan also, and it is 
probably time to do a follow-up on the CERP funds in Iraq, and 
we will certainly take it under advisement. I will be working 
with our partners from Army audit, and then also if we need to 
do the work, we can do the work also.
    Mr. Bowen. Mr. Gingrey, we are conducting an audit of CERP 
now as well as we have done two previous audits. In both 
audits, although there were problems with how some of the money 
was executed in documentation, overall the program has been one 
of the more successful in Iraq, and in our lessons learned 
report on contracting in Iraq, we recommended that the CERP 
program be expanded and thus believe that this additional money 
put into CERP is a wise and proper move.
    Dr. Gingrey. In my remaining time, if you could address the 
$486 million that was called for for the political parties and 
the human rights groups, is it just sort of a payoff; is it a 
payoff money to buy loyalty? Sometimes going to the highest 
bidder? I can imagine that the audit will be very difficult on 
this fund, and if you can respond to that.
    Mr. Krongard. Sir, I will have to get back to you on that 
because I am not sure what makes up that $482 million request. 
I am simply not familiar with that. So if you would like, I 
will look into that and get back to you.
    [The information referred to can be found in the Appendix 
beginning on page 98.]
    Dr. Gingrey. Thank you very much.
    Thank you, Mr. Chairman. I yield back.
    The Chairman. Let me mention to you gentlemen as we 
mentioned to the previous panel, be as timely as possible in 
making your for-record responses. We would appreciate that 
rather than weeks away. If you can do it just as quickly as 
possible, we would appreciate that.
    Mr. Larsen.
    Mr. Larsen. Mr. Krongard, I have a question regarding your 
statement on page two of your testimony. You said, a 
significant audit work has included a survey of the bureau of 
international narcotics and law enforcement funding for Iraq 
and currently in progress review of large contracts for Iraq, 
police training and support. I have visited twice, most 
recently in July, the Jordanian International Police Training 
Center, which I think was funded for operations through the 
INL, if I am not mistaken. But I was wondering, while we were 
there, they said that JIPTC was going to close on December 16 
despite the capital investment that we made there to build the 
facility and use the facility. I was wondering, did the 
facility close? And what is its disposition?
    Mr. Krongard. Sir, I have been to JIPTC as recently as late 
September. I share your--if you are saying it was a very good 
facility, and there was a lot of good training there----
    Mr. Larsen. It is a facility that is in great shape, and 
millions of taxpayer dollars built it, and we are going to 
close it.
    Mr. Krongard. Well, as I understand it, it is being closed 
for the training of Iraq police, but it is going to be 
continued for other uses, which include training of security 
forces from other entities in the region and doing other 
things.
    I share with you and I have voiced my concern that I have a 
very high regard for that facility, and it should be used to 
the highest degree possible. I also expressed concern that the 
staff, which was a multinational training staff which had been 
put together, was highly efficient, worked very well together, 
has put together some wonderful computerized reference 
materials for the training of police, and I was concerned that 
this organization was going to be disbanded and that the next 
time we had a need somewhere in the world for that kind of a 
resource, we would not have that.
    This being early January, I don't know exactly whether the 
multinational training force has stood down or is being 
continued in a skeleton way. But I do know that the facility 
itself is being continued to be used, and there are a lot of 
economic considerations because of the cost of operating that. 
But I do share your concerns, and I have voiced some of those.
    Mr. Larsen. Well, what was driving the closure of that 
facility as a training facility? I am not going to sit here and 
argue that I have any confidence in the Iraqi police force 
because I do not, but the capital facilities there and, as you 
said, the multinational nature of the staff there certainly had 
a lot of value, and yet there was still this direction headed 
toward closing it as a training facility for the Iraqi police.
    Mr. Krongard. Let me answer in a couple ways. First, let me 
point out that in July of 2005, nearly a year and a half ago, 
we and my colleagues at the Department of Defense issued an 
interagency assessment of Iraq police training, and you can 
find in there a great deal of discussion about what was going 
to happen to the JIPTC facility.
    Second, with regard to the reasons for closing, the Iraqis 
themselves have expressed concern about sending their trainees 
out of country and into Jordan for the training. And so they 
have been perhaps the leading reason why it is being closed as 
a facility for training Iraq.
    Mr. Larsen. What is underlying that concern? We heard that 
as well when we were there. What is underlying that concern?
    Mr. Krongard. It is security. It is people being taken out 
of the country. It is concern that other trainees who are being 
trained, as Mr. Bowen referred to, Baghdad police, colleagues 
in other places would look down upon it or would maybe look up 
upon it as a way of getting out of the country. I mean, it 
creates a rivalry, a competition.
    The language problem is severe in terms of training these 
people with international trainers from many different dialects 
and speakers.
    So for a number of reasons, the Iraqis have not been 
desirous of continuing the training at Jordan. I am also told 
that there are continuing DOD classes that are going to be 
using that facility as well. I don't know if you have anything 
that you can add to that.
    Mr. Larsen. Perhaps we can get the--the yellow light is on. 
I have a question for Mr. Bowen. If I can ask Mr. Johnson to 
move to your right just a little bit. Mr. Johnson, can I ask 
you to move over a little bit? Thanks a lot.
    Given that there has been extensive support to Iraqi 
security forces funded to IRRF, is it appropriate that a 
similar review be given to funds provided to support the Iraqi 
security forces through the Iraq Security Forces Fund?
    Mr. Bowen. Yes. And those reviews are ongoing. I know DOD 
IG Mr. Gimble is conducting a review now, and the GAO is also 
reviewing those forces.
    So you are exactly right. We looked at the IRRF portion of 
the funding, but that money was commingled with Iraq Security 
Forces Fund allocations as well, and thus to get the full 
picture, the balance of that expenditure needs to be addressed.
    Mr. Larsen. Do you feel like you need to be doing that, or 
are you comfortable with DOD and the comptroller general doing 
it?
    Mr. Bowen. I think just the execution of oversight is 
important of how that money is used.
    The Chairman. Thank the gentleman.
    Mr. Hayes. May I just interrupt a moment, Mr. Hayes?
    Mr. Bowen, could you help me? A few moments ago we 
discussed, and we also discussed in my office, the figure of 20 
percent waste. In a few moments I would like for you to in--as 
much as possible to detail that, and if there are some 
unaudited areas, please tell us that, too. But think about that 
for a few moments.
    Mr. Hayes.
    Mr. Hayes. Thank you, Mr. Chairman.
    Thank you, gentlemen, for coming. Certainly you face a 
daunting challenge, and we appreciate your efforts. They are 
absolutely crucial.
    Could you comment in general, there is a--and at the risk 
of mischaracterization, there is a history and culture, a 
different way of doing business, in Iraq as it relates to items 
that you all are monitoring. Is there any way in your 
monitoring process that you are evaluating their practices 
based on our principles, if that makes any sense? How do you--
given the differences, and unfortunately, yes, their 
similarities, how do you filter that as you evaluate? I know 
the facts are the facts, but just the culture differences, does 
that impact your ability to get information that you need to 
present to us? And have I made myself at all clear?
    Mr. Walker.
    Mr. Walker. Well, obviously we are all auditing U.S. funds, 
and to a great extent, to the extent you are talking about, 
these cultural differences, a lot of that would have to do with 
Iraqi funds rather than U.S. funds.
    I can tell you as an example that we at the GAO have agreed 
to provide a number of capacity-building assistance items to 
our counterparts in Iraq, and that is not only with regard to 
sharing professional standards and methodologies, but also 
training some of their leadership and some of their emerging 
leaders, and also providing a periodic senior advisor, although 
the State Department needs to, you know, deal with its 
paperwork problems in approving this. But we are trying to 
focus on enhancing the capabilities, their capacity to deal 
with some of the systemic problems that exist, many of which 
fuel corruption.
    Mr. Gimble. I would also like to add that we have 
actively--the three inspector generals down here have had an 
ongoing process to try to establish and foster an inspector 
general community in the Iraqi system, and what that entails 
is, as Mr. Walker just said, laying our standards out and 
business approaches to try to give them a tool to track 
corruption, and which is basically an underlying problem in 
that society.
    So we believe we have made good progress on that. There is 
a lot left to be done. Mr. Krongard just alluded that he and 
the State Department has just hired a senior person to kind of 
lead that group. I have two people, permanent detail now to 
Iraq, that are working through the Multi-National Security 
Transition Command-Iraq (MNSTC-I) group to establish an 
inspector general in the Ministry of Defense (MOD) and the 
Ministry of Interior (MOI), making some progress, but it all 
needs to come under the auspices of the 31 Iraqi inspectors 
general and then also with the Board of Supreme Audit (BSA).
    Mr. Hayes. Mr. Walker, thank you. Your answer crafted my 
question much better than I did. For the benefit of the 
committee and the American public, I think you are providing us 
with a great service. Going forward, my training the folks who 
are managing--and in most cases it is U.S. funds going through 
Iraqi hands, if you can keep us updated as to how you feel in 
terms of their adopting traditional international accounting 
anticorruption standards, I think that is a measure, as well as 
the charts and other things we talk about daily, that will give 
us and the people back home a feeling about whether substantial 
progress is being made. So that was very helpful.
    Mr. Walker. Of course you know, Mr. Hayes, we are focussing 
on our counterparts, which would be the accountability 
community rather than management, but then they have a 
government wide perspective, and part of their job is to try to 
make sure these types of systems and controls and other items, 
you know, are input in order to fight corruption and in order 
to improve performance and assure accountability. We will 
continue to do our part.
    Mr. Hayes. So you have seen some progress in that regard? I 
am not trying to lead the witness.
    Mr. Walker. We are in the early stages, but there is 
clearly committed professionals who want to do the right thing. 
I might also add that the auditor general community has an 
international organization which I am on the board and head of 
strategic planning, and I have also worked with my counterparts 
in that part of the world, the Middle East, as well as 
headquarters to try to help them help the Iraqis as well, not 
just relying upon us, including Arabic-speaking countries.
    Mr. Hayes. Thank you very much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you.
    Before I go to Mr. Johnson, Mr. Bowen, in your professional 
judgment, would you tell us how you reach the 20 percent figure 
that in your opinion is wasted?
    Mr. Bowen. Well, in our discussion in your office, as I 
said, we are working on getting supportable hard data on the 
amount of money that was potentially wasted, and that requires 
defining waste. What you asked me is what my--what the 
potential estimate of that amount was, and I said it could be 
up to $3 billion, which is a little under 20 percent.
    The Chairman. Could you get details on that?
    Mr. Bowen. Specifically what we are doing is we are looking 
at each of the large contractors and going to do an audit of 
them. The first one is almost done, and that is Bechtel. They 
were the largest recipient of Iraq relief and reconstruction 
funds, and what I have tasked my auditors to do is to identify, 
what did Bechtel construct and complete with the money that 
they were allocated, and what did they initially contract to 
complete; how much money was spent in executing that versus how 
much was initially contracted for those projects; and what is 
the delta. I think as we analyze that delta, the difference 
between how much--what they built and actually completed cost 
and how much they set out to build, then we can begin to parse 
what the actual waste number is.
    The Chairman. Do you know what the figure is as of this 
date?
    Mr. Bowen. I don't have a figure yet.
    The Chairman. Your judgment as to this date.
    Mr. Bowen. As I said, the potential loss, you know, could 
be 10 to 15 percent, but we are waiting until we finish the 
actual hard analysis of how those large contractors did before 
I can----
    The Chairman. When will that be?
    Mr. Bowen. That will be executed in the course of this 
year.
    The Chairman. I will can ask the other gentlemen the same 
question.
    Mr. Walker.
    Mr. Walker. Well, first we have done work on reconstruction 
contracts, noting that about 30 percent of the cost on average 
of reconstruction contracts deals with overhead, which is very 
high. That 30 percent includes approximately 10 percent 
associated with security cost. Obviously that is due to the 
unstable security environment.
    My personal opinion is it depends upon how you define 
waste. I think there is a lot of waste that doesn't have 
anything to do with security issues. For example, when the 
government says, I want you to do X by Y time, but you don't 
give enough guidance on the details, or you ask the contractor 
to do something that is totally unrealistic, that can result in 
tremendous waste. And so I think the numbers, frankly, will be 
higher than you might expect.
    The Chairman. Well, then, what is your best professional 
judgment as we speak?
    Mr. Walker. Given GAO's professional standards to be able 
to have an evidential manner, I can't give you an estimate 
right now. I can tell you it is billions. How many billions, I 
can't tell you right now.
    The Chairman. Mr. Gimble.
    Mr. Gimble. We haven't done the work to have an estimate, 
but one thing I would like to point out as I mentioned to you 
earlier in our off-line conversation, the reconstruction fund 
is somewhere in the $22 billion to $32 billion arena. There is 
a number of other contracts out there that increase that number 
significantly. If you take the total supplementals, it is an 
additional $400 billion that this Congress has appropriated for 
the war on terrorism since we started, most of which has been--
is being spent in Iraq.
    We are concentrating in our efforts in that area more so 
than in the reconstruction. For example, we are doing some work 
on the acquisition of armored vehicles which is being bought 
within the supplemental funds. So there is a bigger picture to 
that than just the reconstruction fund. There is a lot of work 
that is being engaged in the oversight community in that.
    The Chairman. Mr. Krongard.
    Mr. Krongard. Sir, I cannot give you a specific figure, but 
I want to tie into what Mr. Bowen said about a lot depends on 
how you define waste. And we have all talked about the highly 
increased costs because of the logistics and security 
requirements, and in some ways you could say that is waste 
because it didn't go to the actual construction project, it 
went to protecting and moving people and supplies; but on the 
other hand, it had to be paid, and people received it, so it 
went somewhere for a service. So there is a question really is 
as to what you include under the heading of waste.
    Mr. Bowen. Mr. Chairman, if I may follow up, too, we did an 
audit last quarter on the administrative overhead issue that 
Mr. Walker referred to, and precisely to address the waste 
issue. And it arose as a result of the fact that once those 
costs-plus contracts were awarded in the spring of 2004, 
contractors were ordered to deploy to Iraq ready to do $500 
million worth of work. However, the actual issuance of task 
orders was very slow, and as a result there was administrative 
overhead funding those large contingent contractors who didn't 
have much work to do in 2004, early 2005. That is--we termed as 
waste and that audit substantiates lost funds.
    The Chairman. Let me ask, would you, each of you, within 60 
days of today, A, agree on what waste is, and, B, tell us your 
best professional opinion individually based upon that standard 
that you agree upon, how much waste is involved, both 
percentagewise and dollarwise. That is a request 60 days from 
now.
    [The information referred to can be found in the Appendix 
beginning on page 97.]
    The Chairman. Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman. And I would like to 
thank all of you gentlemen for appearing in front of this panel 
today, and just to follow up on the chairman's request to you, 
I might ask with respect to the definition of waste, does that 
include fraud?
    Mr. Walker. Well, I think clearly, fraud would be a subset. 
To me, waste is much broader than fraud. It is mismanagement, 
it is commissions, omissions, it is where we are not getting 
appropriate value for money because people either did or didn't 
do certain things that they should have done. Fraud is a narrow 
subset, I believe.
    Mr. Johnson. Anyone else have any----
    Mr. Gimble. I agree with that, and I think to me the bright 
line on that is fraud is somebody that is doing a willful crime 
to benefit themselves versus the just--you know, bad management 
or whatever.
    Mr. Johnson. Correct.
    Mr. Bowen. And fraud has been a relatively small component 
of the loss in Iraq. Waste is clearly the overwhelming issue.
    Mr. Krongard. I agree. Fraud is clearly part of waste.
    Mr. Johnson. Well, certainly fraud would be prosecutable, 
whereas waste would simply be a matter of efficiency in doing 
one's job, but now have there ever been any investigations of 
fraudulent activity with respect to taxpayer funds?
    Mr. Bowen. Yes, there have. We have 87 cases going on right 
now arising from allegations of fraud, waste and abuse, and 
indeed have had five convictions to date of U.S. officials who 
have fraudulently disposed of U.S. funds.
    Mr. Johnson. How much money did those five prosecutions 
allege was fraudulently dispersed and the 87 investigations 
that are ongoing, or the 83 investigations that are ongoing, 
how much fraud is alleged to have occurred as a result of those 
prosecutions and ongoing investigations? Dollar amount.
    Mr. Bowen. With respect to the 87, those are ongoing 
investigations, so we can't talk about the specifics of them, 
but with respect to the convictions, they centered around a 
conspiracy to defraud the government that occurred during the 
coalition provisional authority days in Hillah involving a 
significant contractor and the comptroller, the south central 
comptroller for the coalition of provisional authority and over 
$10 million was in issue there.
    Mr. Johnson. Ten million dollars. And as I understand it, 
there have been over $495 billion allocated or appropriated by 
the Congress agencies, military and diplomatic for efforts in 
this global war on terror, most of it having been spent in 
Iraq, and about I think on September 30, according to Mr. 
Walker's paper, $257.5 billion for military operations in Iraq. 
Additionally, as of October of 2006, about $29 billion had been 
obligated for Iraqi reconstruction and stabilization efforts. 
However, problems with the processes for recording and 
reporting global war on terror costs raised concerns that these 
data may not accurately reflect the true dollar value of war-
related costs, and that being the case, I believe it would 
probably be difficult to speculate as to how much waste was 
involved, and certainly how much fraud was involved, but we 
also understand that about $14 billion in oil revenues from the 
country of Iraq have been spent or allocated for 
reconstruction, about $14 billion. Mr. Bowen, is that a true 
figure?
    Mr. Bowen. That is development fund for Iraq money and that 
is derived from oil revenues, but as I said earlier, the actual 
execution, the capacity of the Iraqi government to execute its 
own capital budget is weak.
    Mr. Johnson. Certainly, and I understand from listening to 
Secretary Gates's testimony last week that that $14 billion is 
on deposit in U.S. banks?
    Mr. Bowen. That is right.
    Mr. Johnson. And who has the authority to allocate that 
money or administer that money? Is it the banks themselves, 
government officials here in the U.S.? Or Iraqi officials?
    Mr. Bowen. It is the Iraqi officials.
    Mr. Johnson. And how much money have they spent of the $14 
billion for reconstruction?
    Mr. Bowen. Well, given the fact that there has been three 
governments over the last three years in Iraq and the lack of 
accountability on the Iraqi side of how they have disposed of 
their funds, we don't have a firm figure of how much has been 
spent since 2004.
    Mr. Johnson. So they have deposited $14 billion into 
American banks but have they withdrawn that same amount?
    Mr. Bowen. Yes. That money was formerly the oil for food 
money, and it was redesignated development fund for Iraq.
    The Chairman. Mr. Wilson.
    Mr. Johnson. Thank you.
    The Chairman. Mr. Wilson.
    Mr. Wilson. Thank you, Mr. Chairman, and thank you for your 
service, and I have always been impressed by inspectors 
general, your independence and how you look out for the 
taxpayers, so thank you for your service.
    I am very familiar, I have been to Iraq now six times, been 
to Afghanistan twice. The challenge that we have of 
reconstruction, it was really shocking to me to find out that 
the funds that would normally be and the infrastructure of the 
country, such as the electrical generation grids, that the 
money had been diverted by Saddam Hussein to his palaces, but 
in fact, there were two grids in Baghdad, one for the elite, 
which was a modern electrical system, and then for the general 
public, there was actually a grid that dated back to the 
1930's, and then if you really wanted service, you had to bribe 
the electrical provider, so the challenge is just incredible 
that has to be faced. Part of facing that, and Mr. Gimble, you 
referenced it with your work in Afghanistan, the provincial 
reconstruction teams, could you tell how these work? And part 
of the President's program, the new way forward, is to enhance 
the provincial reconstruction teams in Iraq.
    Mr. Gimble. The reconstruction teams basically are U.S. 
military that have expertise to rebuild, and if they go out and 
build a school or a hospital or whatever, and those funds are 
generally spent for the core engineers. Challenges they have 
obviously in Iraq or Afghanistan--number one they don't have 
the security, have the safety to go out and do the work they 
need to do. We have done limited work on that in Afghanistan. 
We plan to do more work, and it goes back to determining how 
the requirements are determined and how that money is executed, 
and we will be doing that in the future as part of our plan in 
increased presence in Afghanistan.
    To whether they do a good job or not, I think they are very 
critical, rebuilding the infrastructure of the country, and in 
my view, that is the way forward.
    Mr. Wilson. And I was very impressed, the persons I met 
with indeed were with the U.S. Corp of Engineers working with 
forces of allies such as South Korea, the Netherlands. It was 
just really impressive what was being done, and I am very 
hopeful that can be continued, but obviously being monitored. 
Additionally, Commander's Emergency Response Program that you 
referenced, several of you referenced, the CERP program, I was 
very happy in my introduction of that to see that the first 
level of accountability are judge advocate generals. I happen 
to have been one for 25 years, which I think is a really 
excellent use of military attorneys. Can you tell us what the 
levels of accountability are or whoever would be responsible 
for the CERP?
    Mr. Gimble. As I understand it, the CERP is really a 
commander's fund and I think the staff and judge advocates you 
are talking about are probably his own judge advocates. What I 
review of the CERP program in Afghanistan, frankly we went down 
and went to the accountability of funds and how the funds 
were--primarily cash operation, and so we looked at the 
accountability and control and documentation of the 
expenditures. Overall, we found a few minor issues that we 
thought could be corrected and move forward, but the overall 
purpose of the program we thought was very good and being 
executed very well.
    Mr. Wilson. And when you say the program, can you tell us 
what these funds were being spent for?
    Mr. Gimble. Such things as school building and, you know, 
village reconstruction and so forth.
    Mr. Wilson. Wells, bridges, sewage?
    Mr. Gimble. In Afghanistan, I don't think there is sewage. 
Having been there, you know, it is very primitive as you get 
into the outlying villages, in my view, is it is much more 
primitive than even Iraq is kind of my----
    Mr. Wilson. And these are direct efforts to win the hearts 
and the minds of the people we are working with, is that 
correct?
    Mr. Gimble. Correct, yes.
    Mr. Wilson. And any suggestions you have on how this can be 
improved or enhanced or expanded, I look forward to hearing.
    Mr. Gimble. Okay.
    The Chairman. Thank you very much, Mr. Wilson. Ms. 
Gillibrand.
    Ms. Gillibrand. Thank you, Mr. Chairman. And thank you for 
each of you for coming to testify before our committee. We are 
very appreciative of your work. I would like you to address the 
current status of the oil revenues in Iraq. Who owns them, how 
are they distributed, what is the current oversight, do we have 
a role, and what do you foresee as the next six to nine months 
of how we address them?
    Mr. Bowen. Well, the current status of the oil revenues is 
going to be determined by the passage of a hydrocarbon law, 
which has been pending now for a couple of months, and reports 
indicate that resolution of that is imminent. Agreements on 
distribution will be provided for through the hydrocarbon law, 
but currently, the revenues are deposited in the Federal 
Reserve Bank in New York, and then disposed of or expended by 
the government of Iraq, but managed primarily by the ministry 
of oil, and that is why a hydrocarbon law is necessary, because 
for instance, there is no effective agreement in place between 
the ministry of oil and ministry of electricity for providing 
fuel to power plants in Iraq, and thus, some of the power 
plants we have built are running on the wrong fuel. There is no 
arrangement between the ministry of oil and the ministry of 
defense for fueling Iraqi units in the field, and thus, the 
United States government is paying for virtually all the fuel 
that keeps the Iraqi security forces going. All of that is a 
waiting resolution by the Iraqi counsel of representatives 
through the hydrocarbon law.
    Ms. Gillibrand. So currently we have no role in the 
oversight? Because I have received reports from men in the 
field that there is extraordinary amount of oil on the black 
market, and that there is extraordinary amounts of profiteering 
with regard to at that. So do you have any information about 
the status of it?
    Mr. Bowen. Well, that is right; corruption within the oil 
sector is significant. Three days ago, deputy prime minister 
Barham Salih said just from the Bayji refinery last year, about 
$1.5 billion was lost to corruption. It is a huge problem, and 
it needs legislative resolution, but it also needs bolstering 
of the oversight entities, that is the ministry of oil 
inspector general's office, the CPI, Commission on Public 
Integrity, which has many, many cases ongoing involving 
corruption in the oil sector.
    Ms. Gillibrand. Did you have anything to add?
    Mr. Walker. Yes, if I could give you some benchmark data, 
from 2006 to the present time, oil production in Iraq is about 
2.1 million barrels per day, and that compares to 2.6 million 
barrel as day prior to the war and compares to a goal of 3 
million barrels per day. There is tremendous theft and 
corruption associated with the energy field. There is no 
question with it. When I was over and participated in our top 
leadership meeting in Iraq involving both military and civilian 
leaders, they showed some data, this was last January, with 
regard to all production pricing and it didn't take me more 
than about 10 seconds to say there is tremendous theft going 
on, the numbers just don't come close to working out.
    Mr. Krongard. I would just add to that, that in addition to 
what you would think of as pure corruption, there is also some 
waste that arises and encouragement toward corruption that 
arises out of economic theory. The fuel in Iraq is subsidized 
to keep prices low. That is an encouragement for people who can 
get their hands on fuel to take it outside the country, or sell 
it on the black market within the country to go outside at 
higher prices. So you have economic theory in government policy 
which get into this as well.
    Ms. Gillibrand. My second question is about the 
reconstruction, America has 56 engineering construction 
projects in the oil and gas sector right now, 25 are completed, 
31 are ongoing. Going forward, the U.S. contractors are doing 
its reconstruction. Is there any potential or ability to begin 
to transfer reconstruction contracts both in this sector and in 
basic infrastructure, roads, schools, hospitals to Iraqis? Do 
they have the capability to begin to be doing that 
reconstruction work?
    Mr. Bowen. The oil sector was probably the most 
sophisticated of the infrastructure sectors in Iraq prior to 
2003. 95 percent of their income comes from the sale of oil and 
gas products, and there are 26 separate entities operating 
within that universe that produces oil and gas.
    The Chairman. Mr. Hunter.
    Ms. Gillibrand. Thank you.
    Mr. Hunter. Thank you, Mr. Chairman. If you want to finish 
your thought there with the gentlelady, that would be fine too. 
I will yield for that.
    Mr. Bowen. Thank you. Just 9 percent of the Iraq relief and 
reconstruction fund was spent on the oil sector, even though 
the oil sector produces 94 percent of Iraq's income. Thus, 
given the dilapidated state of that infrastructure, significant 
more investment must come in both from the Iraqi government and 
from the outside.

    STATEMENT OF HON. DUNCAN HUNTER, A REPRESENTATIVE FROM 
    CALIFORNIA, RANKING MEMBER, COMMITTEE ON ARMED SERVICES

    Mr. Hunter. Thank you, Mr. Chairman. Gentlemen, this has 
been an excellent hearing, and Mr. Chairman, I want to 
congratulate you on this hearing. I think it is very timely. 
Let me go into a couple of things. First, you may have seen a 
little turbulence in the newspapers over the months following 
the defense bill in which it was--some quarters allege that 
somehow we had cut off Mr. Bowen as a special inspector, you 
had been cut off too quickly, and that the provision that we 
had in the defense authorization bill was somehow a trick to 
try to get you and your shop off the job, and that what we did 
in October or in September we put this bill together.
    Actually, August, we looked at the rules that said that 
when the reconstruction money was 80 percent spent, I believe 
it was 10 months after that your shop was supposed to hand off 
their jobs since the money would be gone at that point, back to 
Mr. Gimble at the Inspector General for DOD and Mr. Krongard 
for State. And you would hand that off.
    So our staff folk putting the bill together in August said, 
looks like we are about 25 percent spent. So it looks like we 
are close to 80. So let us add about 10 months from November or 
October, and we will complete the bill. Looks like that is 
about October of 2007. So the hand-off shall take place, and I 
think it was October 10th of 2007. So we don't do things in the 
dark of night. We have signature sheets for Democrats and 
Republicans when we all agree on something that is non-
controversial. So we had the little sheet that said the hand-
off will take place October of 2007 and everybody signed it 
over, signed it, Democrat and Republican and Senate and House. 
And it wasn't even on my radar screen. I didn't think it was a 
big deal. The New York Times said, ``Ah-ha, it is a trick. The 
Armed Services Committee is trying to cut off this special 
inspector general before he can do his job.'' And subsequent 
editorials were somewhat derogatory with respect to Mr. 
Gimble's shop and said this is giving the fox control of the 
hen house; DOD, OIG is not competent to do this.
    Was it a trick, Mr. Bowen? Was that about the right formula 
to make this hand-off?
    Mr. Bowen. No, it wasn't a trick, and the only additional 
fact in that mix is that I think also the Defense Authorization 
Act expanded the funds that SIGIR should have oversight of. But 
as of September when this agreement was made, your estimates I 
think were spot on that, under our previous jurisdiction, 
SIGIR's oversight would expire in October of this year.
    Mr. Hunter. So it makes sense to have a date certain when 
you handed off to Mr. Gimble?
    Mr. Bowen. That is right.
    Mr. Hunter. And he appears to be quite competent?
    Mr. Bowen. Yes.
    Mr. Hunter. There is your seal of approval.
    Let me go to the heart of this issue which has been 
discussed which I think is waste. I think we have got a 
responsibility here. We have got submarines that are based in 
my district and other districts around the country which we are 
producing right now and all of the king's horses and all of the 
king's men in a construction environment with nobody shooting 
at them with all of the Congress pressing them to cut down 
costs will, instead of being the one and a half billion dollars 
they were supposed to cost, be well over $2 billion. And there 
are a lot of reasons for that. We have got two yards building 
them instead of one. That is estimated by most sources to be an 
additional cost for $200 million per submarine. You have got 
the problem that if we build a small number so the economies of 
scale do not apply. We are going to overrun the cost of those 
submarines by probably $500 million per submarine. That means 
if I had 10 of them, which I would love to have in San Diego at 
any given time, that is roughly twice the overrun that you have 
said may attend your audit with respect to funds spent in Iraq.
    My point is that those--that extra money we spent on those 
submarines is not waste. It is an overrun. There are lots of 
reasons for it. We try to beat them down. We try to achieve the 
economy of scales and other things, level funding and all of 
the things that Mr. Walker regularly recommends to us to pull 
down the cost of weapons systems. And in my good colleague the 
distinguished chairman's district, we have got the B-2 bomber. 
Those B-2 bombers all cost more than $300 million a piece more 
than they were supposed to cost. And all of the king's horses 
and all of the king's men building them in quiet factories in 
places with nobody shooting at them somehow couldn't pull the 
cost of those bombers down to what we initially said we were 
going to be able to build them for. Nonetheless, the chairman 
and I know, knowing how effective those B-2 bombers are in 
serving Americans and how they throw down those joint direct 
attack munition (JDAMs) to precise points of the face on the 
earth where we want to project American power, we don't think 
it is a waste.
    So I think you have got to be careful when you describe 
money if it is wasted. If somebody is making a hole and filling 
it back up and they are calling and they are giving you a bill, 
that is a waste. But if you look at what is happening in Iraq 
with what you have described, that is lack of competent local 
subcontractors, massive security problems, lack of enablers 
like electricity, water, food, tools competent companies. Add a 
corruption problem in the culture, I think that, you know, in 
that environment, of all of those attendant factors which are 
going to drive costs sky high, I think you need to be careful 
before you say that the things that we needed to start 
reconstructing, to start bringing electricity to hospitals and 
to start bringing fuel to the places where the Iraqi government 
could start to stand up, those things have to happen. They are 
happening in a very inefficient way. But don't ascribe 
inefficiency or describe that as cost because that thing called 
a television over there will immediately translate that into 
some idea in a pejorative way that there are dishonest people 
in the American government who are undertaking massive, massive 
wasteful programs with the implication of self-dealing. If 
there is self-dealing in a given case, it should be prosecuted.
    But please differentiate between what is always, standing 
up, in an occupied country with no infrastructure and massive 
security problems, standing up public works projects and 
comparing them to the cost in a benign environment is one that 
will always give you a massive overrun, and if you describe 
that overrun as waste, then I think to some degree you are 
disserving the conversation.
    So, Mr. Chairman, just a couple little things, and the last 
thing I wanted to ask to get your take on is this: I think 
these big projects lend themselves to sabotage. For example, if 
you have got a big electrical plant and the bad guys can blow 
up one line and put a city out of juice, that is an enormous 
leverage that you give them. If you take the same amount of 
money and you put a generator on a truck and you run it into a 
neighborhood and the neighborhood takes their electricity out 
of their generator and it could be moved, it is modular, it is 
mobile, and it can be repaired by guys with wrenches and a 
modicum of understanding with respect to electricity and 
generators and engines; then you have given the community 
something that they can use that will endure.
    So my question to you is a little bit off your subject, but 
do you think we would be more efficient if we moved these 
infrastructure-enabling projects in small pieces, smaller 
generators rather than the big power plants, smaller potable 
water producers, smaller modular hospitals and clinics that can 
be moved around that don't require big standups? Small things 
that average people can handle and that the people of Iraq can 
maintain?
    Thank you, gentlemen.
    Mr. Bowen. Congressman Hunter, I think that is what--you 
are exactly right, and that is what the CERP emphasis aimed at, 
and that is executing local high-impact, easy-to-execute 
projects, specifically small water projects. Indeed, as the 
water program evolved from its initial strategic plan to what 
it currently is, it moved down that path from very large 
treatment facilities to water sustainment plants which built 
hundreds of small projects serving local villages that has, in 
the end, even though the water program was cut by half, 
effected great improvement to millions of Iraqis. They now have 
pure potable water that they didn't have before.
    So I think the emphasis on the CERP project seeks to 
achieve exactly that, and that is the emphasis of the joint 
contract and command of Iraq now, and that is to execute small 
projects through Iraqi contractors.
    The Chairman. I thank the gentleman from California. Thank 
you very much.
    In response to my request, the 60 days from now request, a 
note of suggestion early on, please agree on the definition of 
waste. I don't want you to come up after 59 days and say, 
``Hey, we can't agree on what waste is.'' So I am sure, Mr. 
Walker----
    Mr. Walker. Let my say for the record now, if the 
government doesn't do a good job in defining requirements, and 
if the government ends up constantly changing those 
requirements, that is waste, at least that is going to be my 
definition. And we have billions of waste every year outside of 
Iraq, and so it is exacerbated when you get into a conflict 
zone, obviously.
    The Chairman. Okay. Just so you all are singing from the 
same sheet of music when you send your answers 60 days from 
now.
    Mr. Marshall.
    Mr. Marshall. Thank you, Mr. Chairman.
    I guess I have a joint question for the inspectors general, 
and I would ask that you respond to this in writing if you have 
a response, if you have something to add.
    I take it that, for the most part, you feel that you have 
access to what you need to have access to, that you have the 
funding that you need to have, that you have the authority that 
you need to have in order to ferret out what each of you 
individually think should be ferreted out in order to assist us 
in our oversight, in order to assure that taxpayer dollars 
aren't being wasted, and we are heading in the right direction. 
If I am wrong about that, and if in fact you think there are 
gaps in any of those categories, it would be very helpful to 
the committee if you would share those gaps with us. And I 
would rather not do it right now because I have a series of 
questions for Mr. Walker, and I only have five minutes. But if 
each of you can do that, I will take the failure to respond 
that I--that that is an indication that you think everything is 
fine as far as those categories are concerned.
    Mr. Walker, I appreciate very much what you do, and I 
appreciate this report that you are working on. And I have just 
a couple of questions about it. Very briefly, if you know, and 
if you don't, there is somebody on your staff that does, when 
DOD was not receptive to all of your suggestions concerning 
securing ammo dumps throughout Iraq, and basically, I think the 
language that you used was that they partially concurred with 
the recommendation that be done, and it was made in December of 
2006, it was the same recommendations that repeated delegations 
of Members of Congress have made for three years now. Could you 
list real quickly why it was only a partial concurrence and 
what reluctance DOD had? If you can't do it right now, what I 
would like to do is get whoever on your staff who has the 
expertise to come to my office and give us the quick summary of 
that.
    [The information referred to can be found in the Appendix 
beginning on page 98.]
    Mr. Walker. We will do that. Davi D'Agastino is responsible 
for that work and will get that done.
    I will tell you, part of this was because it was inadequate 
planning, and there was an inadequate number of boots on the 
ground in order to be able to adequately secure these 
facilities.
    Mr. Marshall. This is regarding the current status. We have 
had three years to deal with this. Either dispose of what is 
there--we have the capacity and we use the capacity to remove 
damaged tanks. We haul those things out of Iraq. Seems to me a 
higher priority needs to be put on the access that insurgents 
might have that can harm us rather than a tank, but that is--it 
is important to remove technology that might be inspected and 
consequently used to our disadvantage later.
    But still, you mentioned that you know GAO gives us $105 
return for every dollar that is invested. You know, if we 
doubled the dollars and the return dropped to $52.50, then we 
really haven't improved. In fact, the situation has gotten 
worse because we are spending twice as much for the same thing. 
It is statistics like that that tend to suggest what the 
answers should be but don't conclusively prove what the answers 
should be. I would like to focus a little bit on your emphasis 
that in order for us to assess where we are, we need to have 
very current accurate detailed information about unit-by-unit 
readiness measured by us for the Iraqi military.
    Do you--does your group--are you of the opinion that we 
ought to have level one units in the Iraqi security forces? Do 
you have an opinion about what level they should be?
    Mr. Walker. Well, if our objective is to make sure that the 
Iraqis are in a position to take the lead and to function 
independently, then obviously one needs to understand to what 
extent do we have Iraqi units that, based upon their readiness, 
on a full scope of readiness, are in that category.
    Mr. Marshall. Have you made the conclusion that we as a 
country should want the Iraqi security forces to be in a 
position to act independently?
    Mr. Walker. That is a policy decision. I think what is 
important for us to do is to provide the facts such that 
Congress can properly discharge its constitutional 
responsibilities. That is a policy assertion that is being 
made, but you don't have enough facts in order to determine 
whether or not the assertions that are being made as to the 
numbers and the readiness and the adequacy are accurate.
    The Chairman. The time has expired.
    I have in this order, Mr. Taylor, Mrs. Boyda, Mr. 
Ellsworth, Ms. Davis, Mr. Courtney and Mr. McIntyre. We have 
two votes right now. We can probably get through Mr. Taylor and 
Mrs. Boyda. And is the desire of the remaining colleagues to 
come back? I will be glad to do so for those who wish to come 
back.
    Mr. Taylor. I yield to the gentleman from Georgia.
    The Chairman. The gentlemen yields.
    Mr. Marshall. Briefly following up on the question, so GAO 
as an auditor does not plan to give us advice concerning 
whether or not, for example, there is an appropriately mature 
political system in Iraq so that level one military units would 
be subjected to civilian control and are not apt to go off on a 
frolic of their own. That sort of thing. You are not going to 
be focusing on that, and you are not going to be making some 
recommendation of what level of competence we should be seeking 
for Iraqi units at this point?
    Mr. Walker. We don't contemplate that at the present time. 
We are concentrating on political, economics, on all of those 
dimensions; we are going on that. But I will make sure that we 
can come up and have you briefed on the other issues. I also 
want to provide for the record an answer for the record because 
the answer is, we are not adequately funded.
    Mr. Marshall. I would like to ask all of you that. I want 
all four of them to answer. I would like to talk to the staff 
that is doing that.
    The Chairman. The gentleman from Mississippi.
    Mr. Taylor. Mr. Walker, a year ago right now, we were still 
dealing with the aftermath of Hurricane Katrina. One of the no-
bid cost-plus contracts was delivery of travel trailers. By the 
time my staff put a pencil to it, it turned out we were paying 
$16,000 per trailer just to pick them up and move them about 60 
miles, hook them up to plug them in, hook them up to a garden 
hose, hook them up to a sewer tap. And the company that did it, 
being on cost-plus contract, had no incentive to get better. In 
fact, they probably delivered fewer trailers toward the end on 
a daily basis than they did in the beginning. The long and 
short of it is, I promised that vendor that based on his shoddy 
performance in south Mississippi, that I wanted to look into 
every one of his contracts in Iraq. That vendor happened to be 
Bechtel. I made that promise to rally Bechtel. So what I am 
asking from you is I would like a copy of every report you have 
on Bechtel Incorporated because my hunch is as horrible as 
their work was in Mississippi, it is probably ten times worse 
in Iraq.
    Second, I would like to know one of the frustrations I saw 
in that people from GAO would come back to us and say, ``Well, 
it was a cost-plus contract. We are not here to determine 
whether or not it was a good idea to give it to them. We are 
just here to see if the money is being spent properly.'' My 
question is, in Iraq, how often do you look at something and 
say, ``Gee, that was a stupid way to spend money. Why did we 
spend $15 million to repair the water palace so the generals 
would have a really nice office when large segments of the 
economy don't have water?'' How often do you go out seeking out 
waste and fraud, do you say, why on earth are we doing this?
    Mr. Walker. First, Mr. Taylor, with regard to Bechtel, I 
will be happy to provide that, but I would respectfully suggest 
that most of that work is probably going to be in SIGIR's hands 
because they are on the front lines. They are probably going to 
have it, but if we have it, I will be happy to give it to you.
    Second, I think we need to understand that Katrina and Iraq 
both represented catastrophic events of different natures but 
that many of the contracting problems that we are experiencing 
are similar because they were catastrophic events. One of the 
things that government needs to do, it needs to recognize the 
reality that hurricanes are going to happen, that other natural 
disasters are going to happen, that man-made catastrophic 
events could occur and other things are going to happen. We 
need to to move beyond cost-plus contracts as much as 
absolutely possible, and when we do our audit work----
    Mr. Taylor. What recommendations are you going to give to 
our committee toward that end, because I would welcome them.
    Mr. Walker. Don't worry. You will get plenty. We have had 
some in the past. We rely too much on cost-plus contracts.
    Mr. Hunter. Would the gentlemen yield on that point?
    Mr. Taylor. Certainly.
    Mr. Hunter. When you said that, how do you get people who 
are going into something like Katrina or a situation like Iraq 
with massive uncertainties, if you don't have a cost-plus 
contract and we have tortured ourselves over this in other 
ways, how do you get somebody to ever give you a firm bid on 
accomplishing something when you have uncertainties that could 
run them bankrupt? Will you be able to get any companies to 
bid?
    Mr. Walker. It depends upon what it is. Trailers, we make 
trailers all the time. There is nothing new about making 
trailers. With regard to providing food and lodging and things 
of that nature, you do that. There are certain things you are 
not going to get an advanced bid on. There are other things you 
could. You can draw on a task order, so that the taxpayers get 
a reasonable deal for their money. Right now we don't do it 
until after the event occurs. There is no way you have any 
leverage on that. And as a result, you are trying to deal with 
the people who need to be dealt with and costs go through the 
roof.
    The Chairman. Mr. Taylor, you have another minute and a 
half.
    Mr. Taylor. Do you have the legal authority, number one? 
And are you legally charged to make recommendations as to how 
to avoid waste, and give me an example of when you have 
recently done that if it is so.
    Mr. Walker. We do it all the time. We can give you the 
legal authority. Our job is to maximize government performance 
and assure accountability. It is economy, efficiency, 
effectiveness and equity. It is much more than legal. As you 
know, the law represents the floor of acceptable behavior. You 
can do something that is not illegal, but it represents waste 
and abuse and so, you know, we make----
    Mr. Taylor. The example, sir.
    Mr. Walker. With regard to this particular area? What I 
will do is I will send up to you the 15 generic problems that 
we have identified and made recommendations on with regard to 
acquisitions and contracting and DOD. There are 15 specific 
problems and many of which we have talked about today.
    Mr. Taylor. Thank you, Mr. Chairman.
    The Chairman. I would like to ask Mrs. Boyda and Mrs. Davis 
to come back. And, gentlemen, we will finish before 1 o'clock.
    Okay. Thank you.
    [Recess.]
    The Chairman. Mrs. Davis.
    I understand that Mr. Walker's deputy is here. Who is that? 
Your name, please.
    Mr. Christoff. Joseph Christoff. I am GAO's director.
    The Chairman. Mrs. Davis.
    Ms. Davis of California. I know my colleagues have asked a 
number of questions, and I hope I am not going to repeat any of 
those, but I also wanted to just say, reading the report, 
especially the GAO report I found that such a damning document; 
I don't know whether you would like to respond to that in terms 
of the difficulty with looking at some of these issues and 
being able to fix them and if you wanted to just, you know, let 
me know what were the thoughts of the folks who were 
encountering all who were there, if you could respond to that 
very quickly, and I want to go on with my questions.
    Mr. Christoff. I think we tried to cover at GAO all of the 
efforts in Iraq, political efforts. Also the security forces, 
and I think in each of those areas you find just enormous 
challenges to help this country help itself, and we have made a 
series of recommendations starting with strategy when the 
President does give you the details of his revised strategy 
that you need to focus on whether they are clear roles and 
responsibilities, what are the costs? What are the outcomes and 
measurements of the strategy? All of the way down to whether 
these natural gas turbine engines that we bought so proudly 
three years ago don't work today.
    Ms. Davis of California. Thank you. I appreciate that. I 
think trying to fix that and put into place the kind of 
procedures and the implementation of some of these ideas is 
going to be tough.
    I wanted to turn, Mr. Krongard, to you and just talking 
about the recruiting and the retaining of audit personnel, 
particularly you mention in your testimony, in your written 
testimony that that is a major concern. Could you address how 
we get there given the security situation in Iraq, the fact 
that people are not going to want to go in to Iraq. You 
mentioned Qatar. But I am also concerned about what kinds of 
training over and above other requirements of folks who are 
decent auditors, having been in the green zone on a number of 
occasions, I know that we called on people who did not have the 
professional capabilities to do their job and in this instance, 
it would be very important to do that. How do we get there?
    Mr. Krongard. If you are talking about, in our current 
capacity, it is a significant problem. We were focusing at the 
time on the transition, if there were to be one, from SIGIR to 
the rest of us. And at that point in time, I went over to Iraq 
and with Mr. Bowen's assistance and cooperation, we talked to 
all of the existing people who were there, and we were very 
pleased to find that more than enough people were willing to 
stay on and interested in staying on under our leadership, were 
there to have been a transition. So that we would have been 
able to get the people because the people are already there. In 
other words, if Mr. Bowen's organization were to have gone out 
of existence, those people would have become available. It 
isn't like they were off to do another thing.
    So the problem is different whether you look at it in terms 
of our ongoing situation or whether we would have been 
transitioned. In the ongoing situation, we need either 3161 
authority or the ability to hire personnel service contractors 
because those are the ways you get people. I don't have the 
ability to direct my people to go there, and we don't have 
direct assignments. So that is a significant problem.
    Ms. Davis of California. Is that something that you asked 
for, that authority?
    Mr. Krongard. We have. We have asked each legislative 
session, and there have--I believe each time there has been a 
bill under consideration, but I don't think it has gotten 
anywhere.
    Ms. Davis of California. Why do you think that is true?
    Mr. Krongard. I couldn't answer that.
    Ms. Davis of California. I think General Walker mentioned 
as well that we are just beginning to call on the international 
community to help in this regard. Is it that we never asked, 
that there was little interest, the security problems obviously 
were overwhelming? Why has it taken so long to get more of that 
involvement on the part of the international community in this 
regard in the audit area?
    Mr. Christoff. In the audit area, I think what we have been 
trying to do is the inspector general in the different 
ministries and our equivalent are in the process of trying to 
establish their own audit procedures standing up their own 
services, just getting the staff that is needed. And it is 
difficult for them, as it is with GAO, to try to do good 
auditing in a poor environment, a security environment. Just 
the international community in general has made a commitment to 
try to help Iraq with its reconstruction efforts. It pledged 
$13.8 billion at the Madrid conference years ago. Most of that 
was in loans, and they have been slow to try to provide their 
reconstruction assistance because they understand it is not a 
good environment, and they want to make sure that their money 
is being spent in the right places and they can audit the 
results.
    Ms. Davis of California. One of the others that has been 
raised is the ability of the Iraqi government to actually spend 
the dollars that have already been committed. We then look at 
the dollars that are being proposed. What ability does the 
government have to actually spend those dollars to get those 
out on the street and to be able to make good on the kinds of 
development that we are all looking for? How would you grade 
that?
    Mr. Christoff. That is infant stage in trying to be able to 
establish good budgeting procurement, contracting personnel 
rules. The United States Agency for International Developmnet 
(USAID), the State Department do have programs, what is called 
ministerial capacity building, but as we pointed out in this 
report, the minister of oil, for example, was supposed to have 
spent $3.6 billion to repair the dilapidated infrastructure. He 
spent $4 million because it did not have all of the contracting 
procurement procedures in place to do its job.
    Ms. Davis of California. You talked about fraud, abuse, 
incompetency, all of those being a large factor in the 
situation that we face today. If there is any one message that 
you would like to leave the committee with, that we can 
address. The investigations and oversight committee is 
obviously going to be taking the reports and testimony that you 
presented and having the--and having some opportunity to take a 
look at those issues, what would you like, all of you, just to 
share, if you might, I know there has been some time lapse 
between the beginning of your testimony and now. Could you 
deliver that one message that we need to have?
    Mr. Christoff. Well, I think the one critical message is, 
we began our reconstruction efforts in 2003 with the 
presumption that we would have a secure environment, a 
permissive environment. All of the cost estimates, all of the 
hopes, all of the expectations, all of the projects, that long 
list of projects was based upon having a secure environment. 
Didn't happen. So a lot of the money had to go into security. A 
lot of the challenges in trying to engage not only in oversight 
but building what we promised to build has been complicated by 
that overwhelming problem with security.
    Mr. Gimble. I would agree with that. The other point I 
would make, and I probably haven't made this very well, but the 
reconstruction fund is very critical. There is a lot of money. 
It is around $30 billion. And the Department of Defense, we 
have--Congress has put another $4 billion out there, and it is 
in direct support, and it is imperative that we have the 
oversight in both Iraq also as well as back in the continental 
United States. So our challenge is going to be to ensure that 
we have a good comprehensive plan that covers all of those 
issues that come up both in Iraq and back in the States.
    Mr. Krongard. I would agree with security and I would also 
emphasize the need to get our hands around corruption in not 
just Iraq but every place because in order to get an 
international compact, in order to get foreign investment, you 
need an investable environment.
    Mr. Bowen. Three things. First, the Iraqi government has to 
be held accountable for executing its own burden in the 
reconstruction program, and as we have learned, as you have 
heard at this hearing, the Iraqi government didn't do that last 
year, and that is unacceptable. Thus the U.S. taxpayer bore the 
great preponderance of funding the reconstruction program. And 
that must change. And indeed one of the things that has worked 
in Iraq is the International Monetary Fund (IMF) Standby 
Agreement entered into a little over a year ago which required 
the Iraqi government to take specific steps, economic 
adjustments, for instance, subsidy reform, in order to receive 
debt relief. And it worked, and thus providing incentives like 
that may help push them to respond.
    Second, simply engaging the international community to come 
through on their pledges. The international contract for Iraq 
is the next step, so the United States doesn't have to bear the 
burden of reconstruction.
    And third is simply to have an effective program, be it 
funded by Iraqi dollars, international, U.S. dollars. There has 
to be some semblance of security, and that is not there.
    Ms. Davis of California. Thank you all very much. Thank 
you, Mr. Chairman.
    The Chairman. Thank you, Mrs. Davis.
    The World Bank, the U.N. Development Group, and the 
Coalition Provisional Authority back in 2003 estimated that 
there would be or there was a requirement for $55 billion 
reconstruction in Iraq. Have you identified the needs as we 
speak toward that $55 billion that they identified?
    Let us go down the line.
    Mr. Christoff. The $55 billion was developed by the World 
Bank, and the U.S. helped with that development. And it was 
premised on the assumption that all of the reconstruction 
efforts again would be done in a benign environment, and the 
additional costs associated with security were not even part of 
that $53 billion. In other words, it was going to be more than 
$53 billion. Subsequently, the minister of oil and the minister 
of electricity have stated that they collectively need $50 
billion just to rehabilitate their two sectors. The U.N. 
estimate was on most of the sectors across Iraq. So, clearly, 
more money is going to be needed beyond the $29 billion that we 
provided in reconstruction, the roughly $4 billion the 
international community has provided and, quite frankly, the 
minimal amount that the Iraqis have provided.
    The Chairman. How much have the Iraqis provided?
    Mr. Christoff. As we stated in this report, in--for capital 
dollars, they have proposed to spend about $6.5 billion dollars 
in 2006. And at most, they have spent in the hundreds of 
millions.
    The Chairman. Not even close.
    Mr. Christoff. No.
    The Chairman. I thank you very, very much for sticking it 
out with us today, and the testimony has been excellent. This 
is a landmark hearing, and we are most appreciative. If there 
is no further business, we are adjourned.
    [Whereupon, at 1 p.m., the committee was adjourned.]
      
=======================================================================
                            A P P E N D I X

                            January 18, 2007

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

              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                            January 18, 2007

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

      
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
      
=======================================================================

             QUESTIONS AND ANSWERS SUBMITTED FOR THE RECORD

                            January 18, 2007

=======================================================================
      
                   QUESTIONS SUBMITTED BY MR. SKELTON

    The Chairman. Let me ask, would you, each of you, within 60 days of 
today, A, agree on what waste is, and, B, tell us your best 
professional opinion individually based upon that standard that you 
agree upon, how much waste is involved, both percentagewise and 
dollarwise. That is a request 60 days from now.
    Mr. Gimble. The Department of Defense Office of the Inspector 
General (DoD OIG) has not performed the body of work required to 
provide a dollar amount or a percentage amount of funds ``wasted'' in 
contracts for reconstruction and support activities in Iraq. The DoD 
OIG issued several reports which identified mismanagement of funds for 
the global war on terror (GWOT) and lack of appropriate oversight 
related to contracting for goods and services.
    In DoD OIG Report No. D-2006-007, ``Contracts Awarded to Assist the 
Global War on Terrorism by the U.S. Army Corps of Engineers,'' October 
14, 2005, we found that design and construction requirements were 
unclear and kept changing, which increased the cost of the work, and 
standards for Afghan construction were not formalized. In addition, we 
found that the Army Corps of Engineers:

       inappropriately used Army operations and maintenance funds 
for a construction project for U.S. troops valued at $35.2 million, a 
potential violation of the Anti-deficiency Act;
       had two contracting offices awarding contracts pertaining 
to the same projects;
       although several options were available, the U.S. Army 
Corps of Engineers still placed requirements (valued at $19.7 million) 
with a single contractor when more competitive contracts were 
available;
       contracting officials permitted out-of-scope items on one 
contract; and
       improperly awarded task orders without clearly describing 
the work to be performed and without negotiating a fair and reasonable 
price prior to a contractor beginning work.

    In DoD OIG Report No. D-2004-057, ``Contracts Awarded for the 
Coalition Provisional Authority by the Defense Contracting Command-
Washington,'' March 18, 2004, we found that:

       personnel who generated contract requirements did not 
establish firm contract requirements;
       contracts were awarded using General Service Administration 
Federal Supply Schedules and contracting officers misused General 
Service Administration Federal Supply Schedules;
       contracting officers inappropriately awarded personal 
services contracts;
       contracting officers permitted out-of-scope activity;
       contacting officers did not support price reasonableness 
determinations; and
       officials performed little or not Government surveillance 
on awarded contracts.

    Additionally, we have identified DoD organizations that did not 
track or review GWOT related funds resulting in $7.9 million of unused 
funds that were returned to the DoD Comptroller, where it was put to 
better use. We also have identified potential GWOT funds of $4.6 
million that were used for activities that did not support areas of 
Afghanistan and southwest Asia.
    The Chairman. Let me ask, would you, each of you, within 60 days of 
today, A, agree on what waste is, and, B, tell us your best 
professional opinion individually based upon that standard that you 
agree upon, how much waste is involved, both percentagewise and 
dollarwise. That is a request 60 days from now.
    Mr. Krongard. With regard to the definition of ``waste'', 
Comptroller General Walker transmitted to you on February 7, 2007, on 
behalf of all four witnesses, such a definition. With regard to a 
professional opinion as to the amount of waste, please be advised that 
my Office of Inspector General has not done sufficient work to permit 
such an overall estimate to be made.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MR. MARSHALL
    Mr. Marshall. I take it that, for the most part, you feel that you 
have access to what you need to have access to, that you have the 
funding that you need to have, that you have the authority that you 
need to have in order to ferret out what each of you individually think 
should be ferreted out in order to assist us in our oversight, in order 
to assure that taxpayer dollars aren't being wasted, and we are heading 
in the right direction. If I am wrong about that, and if in fact you 
think there are gaps in any of those categories, it would be very 
helpful to the committee if you would share those gaps with us.
    Mr. Gimble. The authorities given Inspectors General under the 
Inspector General Act of 1978, as amended, are sufficient to allow this 
office to obtain the information required to conduct audits, 
investigations, and inspections of Department of Defense programs and 
operations. Additional resources would enable us to undertake more 
projects. Within our current fiscal year budget we have expanded our 
presence regarding Iraq to include offices in Camp Victory, Qatar, and 
Kuwait.
                                 ______
                                 
                  QUESTIONS SUBMITTED BY MS. BORDALLO
    Ms. Bordallo. I am interested in your thoughts on how effectively 
our policies have engaged small businesses, whether U.S. or Iraq. Has 
the large size of the contracts we have utilized made oversight more 
difficult and abuse more likely as compared to if we had smaller 
contracts and were engaging smaller businesses? I would like to hear 
from you, Mr. Walker.
    Mr. Walker. [The information referred to was not available at the 
time of printing.]
                                 ______
                                 
                   QUESTIONS SUBMITTED BY DR. GINGREY
    Dr. Gingrey. If you could address the $486 million that was called 
for for the political parties and the human rights groups, is it just 
sort of a payoff; is it a payoff money to buy loyalty? Sometimes going 
to the highest bidder? I can imagine that the audit will be very 
difficult on this fund, and if you can respond to that.
    Mr. Krongard. [The information referred to was not available at the 
time of printing.]

                                  
