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





                         [H.A.S.C. No. 110-164]

                        CONTINGENCY CONTRACTING:

                 IMPLEMENTING A CALL FOR URGENT REFORM

                               __________

                      COMMITTEE ON ARMED SERVICES

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD

                             APRIL 10, 2008


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                   HOUSE COMMITTEE ON ARMED SERVICES
                       One Hundred Tenth Congress

                    IKE SKELTON, Missouri, Chairman
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
SILVESTRE REYES, Texas               ROSCOE G. BARTLETT, Maryland
VIC SNYDER, Arkansas                 HOWARD P. ``BUCK'' McKEON, 
ADAM SMITH, Washington                   California
LORETTA SANCHEZ, California          MAC THORNBERRY, Texas
MIKE McINTYRE, North Carolina        WALTER B. JONES, North Carolina
ELLEN O. TAUSCHER, California        ROBIN HAYES, North Carolina
ROBERT A. BRADY, Pennsylvania        W. TODD AKIN, Missouri
ROBERT ANDREWS, New Jersey           J. RANDY FORBES, Virginia
SUSAN A. DAVIS, California           JEFF MILLER, Florida
RICK LARSEN, Washington              JOE WILSON, South Carolina
JIM COOPER, Tennessee                FRANK A. LoBIONDO, New Jersey
JIM MARSHALL, Georgia                TOM COLE, Oklahoma
MADELEINE Z. BORDALLO, Guam          ROB BISHOP, Utah
MARK E. UDALL, Colorado              MICHAEL TURNER, Ohio
DAN BOREN, Oklahoma                  JOHN KLINE, Minnesota
BRAD ELLSWORTH, Indiana              PHIL GINGREY, Georgia
NANCY BOYDA, Kansas                  MIKE ROGERS, Alabama
PATRICK J. MURPHY, Pennsylvania      TRENT FRANKS, Arizona
HANK JOHNSON, Georgia                BILL SHUSTER, Pennsylvania
CAROL SHEA-PORTER, New Hampshire     THELMA DRAKE, Virginia
JOE COURTNEY, Connecticut            CATHY McMORRIS RODGERS, Washington
DAVID LOEBSACK, Iowa                 K. MICHAEL CONAWAY, Texas
KIRSTEN E. GILLIBRAND, New York      GEOFF DAVIS, Kentucky
JOE SESTAK, Pennsylvania             DOUG LAMBORN, Colorado
GABRIELLE GIFFORDS, Arizona          ROB WITTMAN, Virginia
NIKI TSONGAS, Massachusetts
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
                    Caterina Dutto, Staff Assistant






                            C O N T E N T S

                              ----------                              

                     CHRONOLOGICAL LIST OF HEARINGS
                                  2008

                                                                   Page

Hearing:

Thursday, April 10, 2008, Contingency Contracting: Implementing a 
  Call for Urgent Reform.........................................     1

Appendix:

Thursday, April 10, 2008.........................................    33
                              ----------                              

                        THURSDAY, APRIL 10, 2008
     CONTINGENCY CONTRACTING: IMPLEMENTING A CALL FOR URGENT REFORM
              STATEMENTS PRESENTED BY MEMBERS OF CONGRESS

Hunter, Hon. Duncan, a Representative from California, Ranking 
  Member, Committee on Armed Services............................     2
Skelton, Hon. Ike, a Representative from Missouri, Chairman, 
  Committee on Armed Services....................................     1

                               WITNESSES

Gansler, Dr. Jacques S., Chairman, Army Commission on Army 
  Acquisition and Program Management in Expeditionary Operations.     8
Parsons, Jeffrey P., Executive Director, Army Contracting Command     6
Young, Hon. John J., Jr., Under Secretary of Defense for 
  Acquisition, Technology, and Logistics, Department of Defense..     5

                                APPENDIX

Prepared Statements:

    Gansler, Dr. Jacques S.......................................    66
    Parsons, Jeffrey P...........................................    51
    Young, Hon. John J., Jr......................................    37

Documents Submitted for the Record:

    [There were no Documents submitted.]

Witness Responses to Questions Asked During the Hearing:

    [There were no Questions submitted during the hearing.]

Questions Submitted by Members Post Hearing:

    [There were no Questions submitted post hearing.]
 
     CONTINGENCY CONTRACTING: IMPLEMENTING A CALL FOR URGENT REFORM

                              ----------                              

                          House of Representatives,
                               Committee on Armed Services,
                          Washington, DC, Thursday, April 10, 2008.
    The committee met, pursuant to call, at 10:06 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, we welcome you to 
today's hearing on Contingency Contracting: Implementing a Call 
for Urgent Reform.
    We have with us today the top acquisition official of the 
Department of Defense, the Under Secretary of Defense for 
Acquisition, Technology, and Logistics, the Honorable John 
Young. We also have representing the Army the executive 
director of the new Army Contracting Command, Jeff Parsons. And 
we also have with us the distinguished former Under Secretary 
of Defense for Acquisition, Technology, and Logistics, Dr. 
Jacques Gansler, who chaired the Commission on Army Acquisition 
and Program Management for Expeditionary Operations. We thank 
you, and thank you for your long service, Dr. Gansler.
    Let me begin by recognizing that we are here today to 
discuss serious problems with contracting and those problems 
are in part the result of actions taken by Congress and by our 
committee. In the late 1990's, we tried to cut the so-called 
``tooth to tail'' ratio in the Department of Defense, and in so 
doing we pushed you to significantly reduce the size of the 
acquisition workforce.
    It is now clear that, just as with the Army's combat force, 
the acquisition workforce was cut too much. When the wars in 
Afghanistan and Iraq began, the Army lacked the capacity to 
manage the explosion in contingency contracting. The result has 
been disturbing mismanagement of contracts, unprecedented 
waste, and high levels of outright fraud, which all of us 
deplore.
    We here on this committee have been working to address 
these problems now for several years. In our fiscal year 2006 
National Defense Authorization Act, we required the Department 
of Defense (DOD) to develop and implement a joint contingency 
contracting policy, and urged you to establish a contingency 
contracting corps. In our fiscal year 2007 bill, we established 
the Panel on Contracting Integrity and directed you to expand 
the joint policy to areas of requirements and program 
management.
    In our fiscal year 2008 bill, with our Senate colleagues, 
we created an Acquisition Workforce Development Fund and we 
required you to work with the State Department and the United 
States Agency for International Development (USAID) to clarify 
interagency responsibilities for management of contractors and 
contracts. We also worked to address policies which have 
discouraged highly skilled civilians from deploying to combat 
theaters to assist our military personnel.
    I want to thank Dr. Gansler for his commission's report. 
Dr. Gansler, your commission told the Army what it needed to 
hear. That contracting, which has always been a core function 
of the Army, but is especially critical in this era where 
contractors outnumber soldiers on the battlefield, is simply 
not being organized, manned, or resourced properly. Your report 
calls for a cultural shift in the Army. I agree with your 
assessment.
    I give our former colleague Pete Geren a tremendous amount 
of credit for requesting your study. I believe, however, that 
it will also require great leadership on his part to achieve 
the cultural shift in the Army that is needed. Although he is 
not here with us today, Mr. Parsons, I hope you will take back 
this committee's continuing deep concern about getting 
contracting right.
    The single most compelling area of your recommendations for 
me came in your focus on reestablishing general officers within 
the chain of command for contracting. We look forward to 
hearing from all of the witnesses about how the Department will 
make its decision about this critical issue and whether 
legislation is needed.
    Let me also commend you, Dr. Gansler, for tackling the 
issue of contracting and the Department of Defense's 
interagency partners in your report. As I mentioned, we have 
required the Department of Defense, State, and USAID to address 
this issue in a memorandum of understanding that is due this 
summer, but I am also interested in your idea of an Integrated 
Expeditionary Command. I hope that all our witnesses will 
address the issue of how we manage contractors on the 
battlefield when those contractors work for and report to 
agencies across the Federal Government.
    We look forward to your testimony, and I turn now to my 
friend and ranking member, Duncan Hunter.

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

    Mr. Hunter. Thank you, Mr. Chairman, and thanks for calling 
this very timely hearing. Before we get started, I just wanted 
to recognize that we have a dear friend of mine, Vernon Oakley, 
who was with me in the Army in 1969 and 1970. He is with us 
today with a contingent of distinguished veterans from the 
Virginia and North Carolina area. I am sure glad that they had 
an opportunity to come in and to be with us today.
    This is a very timely hearing. To our witnesses, we 
appreciate you being with us today. I am glad that we had a 
chance to schedule this hearing because I think it goes to the 
heart of the effectiveness and efficiency of our operations in 
Iraq and Afghanistan. I think that one of the best services we 
can provide our warfighters to improve their readiness today 
and to improve the way we fight in the future, is to capture 
the lessons learned that we have learned about how to rapidly 
and ethically provide goods and services to our fighting men 
and women.
    During every major conflict in our Nation's history, the 
United States has learned to rapidly procure the equipment and 
supplies needed by our warfighters. The price we pay for these 
lessons is heavy. It is often paid in the blood of our sons and 
daughters. Every time the conflict is over, the capabilities we 
have gained atrophy or are subsumed by the peacetime 
bureaucracy. We can't allow this to happen again. That is why I 
believe that effective contracting is at the very heart of our 
ability to effectively win wars and defend this Nation.
    When the Gansler Commission's report was released last 
November, I have to admit that I read it with mixed emotions. 
First and foremost, I was pleased to see that an independent 
body validated many of my concerns and recommendations made by 
this committee. However, I continue to lament the circumstances 
that led Secretary Geren to authorize the commission and the 
time and money we have wasted getting there.
    I also continue to fear that DOD will only take partial 
steps to implement Dr. Gansler's recommendations. In any major 
military operation, there will be individuals who see conflict 
as an opportunity for personal gain, rather than a call to 
duty. It is unfortunate, but it is expected to a certain 
degree. But gentlemen, I am afraid that inaction on the part of 
the Department has, in large measure, allowed corruption to 
take root where it otherwise would not.
    In May, 2005, this committee voted to require the Secretary 
of Defense to establish a Contingency Contracting Corps. I can 
remember sitting down with our senior staff members and 
drafting that legislation. Let me read to you briefly from the 
report accompanying the fiscal year 2006 National Defense 
Authorization Act. ``This corps would be directed by a senior 
commissioned officer with appropriate acquisition experience 
and qualifications who, when deployed, would report directly to 
the combatant commander in an area of operations requiring 
contingency contracting support. In addition, this section 
would attempt to leverage contingency contracting assets in 
both deployed and non-deployed locations to efficiently carry 
out the mission of the Contingency Contracting Corps.
    ``Training of the corps would take into account all 
relevant laws, regulations and policies related to contingency 
contracting and would be required even when the corps is not 
deployed. The committee intends that the commander of the 
Contingency Contracting Corps be appointed at a grade senior 
enough to interact effectively with a combatant commander. The 
committee believes that an office in the rank of lieutenant 
general or vice admiral for the Navy is appropriate for this 
responsibility. The committee intends that the Contingency 
Contracting Corps maintains a sufficient level of readiness in 
peacetime to be able to rapidly deploy to emergency contingency 
operations.
    ``The commander of the Contingency Contracting Corps should 
consider the development of a standardized contingency 
contracting handbook which summarizes all relevant laws, 
directives and regulations related to contingency contracting 
to assist the day-to-day operations of the contingency 
contracting workforce.
    ``Finally, the committee urges that the Contingency 
Contracting Corps utilize an integrated contracting and 
financial management system to ensure that contracting 
operations are not hindered by technological limitations that 
can be easily avoidable through the use of readily available 
systems.''
    That is what we said in 2005. That sounds an awful lot like 
the recommendations of the Gansler Commission. But the 
Department fought it with everything that they had. They hated 
this idea of a contingency contracting corps, and when it came 
time to negotiate with the Senate, who had been scrubbed 
heavily by the Administration, we were forced to compromise on 
a joint policy on contingency contracting. In reading your 
testimony, I see that the development of that policy has paid 
dividends, or would have paid dividends. I have to wonder where 
we might be today if the Department had been more responsive, 
instead of defensive.
    Forget about 2005. Where would we be today if the 
Department had at anytime in the intervening years implemented 
these changes on its own? All the same, ``we told you so'' is 
not particularly helpful in assisting you to move forward. We 
want you to be successful. I look forward to hearing more about 
the actions you have already taken and those that are in the 
works.
    For example, I understand that the Army has created four 
contracting support brigades that will deploy during 
contingency operations, but right now each of these so-called 
``brigades'' is staffed with only 19 officers and non-
commissioned officers (NCOs). How is the Army planning to 
increase the size of these brigades, ensure that they train 
with operational forces, and maintain their contingency 
contracting competencies during peacetime?
    I also understand that the Army plans to place a two-star 
in charge of the recently formed Army Contracting Command now 
led by Mr. Parsons. But if the Army has no general officers 
with experience in contracting, how does the Army plan to fill 
that bill in the near term?
    I would also like to explore more fully with Dr. Gansler 
and Mr. Young the Commission's recommendations regarding the 
increase in the number of general officer billets and billets 
at the Defense Contract Management Agency.
    Dr. Gansler, why do you believe that five Army and five 
joint general officer billets represent the right balance?
    And Mr. Young, in your testimony you allude to alternative 
approaches to the 583 additional billets for the Defense 
Contract Management Agency (DCMA) that Dr. Gansler's commission 
recommended. Are you at liberty to expand upon that statement?
    Finally, I will leave you with a parting recommendation. I 
know that the report required by last year's defense bill 
regarding the implementation of the Gansler Commission 
recommendations is due at the end of May. It was supposed to be 
due earlier, but the veto delay pushed the final due date to 
the right. Here is my recommendation. If you wait until the end 
of May to submit the report, it will be too late for us to 
assist you. If the Department needs legislative relief to fix 
these provisions and if you wait until the end of May to tell 
us, it will be a sign to me that the Department is still not 
taking these matters seriously.
    So please do everything in your power to do the right thing 
now and in time to allow us to assist you. It is unacceptable 
to punt to next year or to the next Administration. This 
committee will not allow that to happen on the backs of our 
Marines and soldiers.
    So thanks to our witnesses. I appreciate your testimony 
today. One last point, we had in the mid-1990's after the Cold 
War, we had a Contracting Acquisition Corps, basically the 
shoppers for our military systems, a little in excess of 
300,000 people--basically two U.S. Marine Corps's of shoppers, 
of acquisition personnel in the Pentagon bureaucracy.
    Mr. Chairman, we cut that down to about one U.S. Marine 
Corps of acquisition personnel. I think that is plenty. And 
looking at the problems and the corruption that we saw in the 
contracting problems that have arisen in the last several 
years, and people for whom bribery became a way of life, those 
problems are not a function of too few people.
    Putting more people into the acquisition corps overall in 
the huge peacetime bureaucracy that we have that does 
acquisition does not change the ethics of the few people that 
were in high-level positions who were United States military 
officers who bypassed and neglected all ethical standards in 
turning to basically a career of self-dealing which has brought 
such a tragedy to this country in those areas that you and I 
have been briefed on extensively.
    So I don't think it is a matter of pumping in another 
Marine Corps-sized body of professional shoppers to do the 
acquisition for this country. I think it is a matter of having 
quality and capability, but also having a Contingency 
Contracting Corps which works closely with the combatant 
commanders in these warfighting theaters to get what we need to 
get to our troops quickly and efficiently, and in some cases to 
cut away bureaucracy. But in all of this, there is no 
substitute for the honest and ethical soldier. We need to make 
sure that we have only those people in those key positions.
    So thank you, Mr. Chairman, for holding this hearing. It is 
very timely. I welcome our guests. They are very fine public 
servants and I look forward to their testimony.
    The Chairman. I thank the gentleman. We will now to go to 
the witnesses.
    Secretary Young, you are on.

   STATEMENT OF HON. JOHN J. YOUNG, JR., UNDER SECRETARY OF 
DEFENSE FOR ACQUISITION, TECHNOLOGY, AND LOGISTICS, DEPARTMENT 
                           OF DEFENSE

    Secretary Young. Chairman Skelton, thank you.
    Ranking Member Hunter and distinguished members of the 
committee, thank you for the opportunity to appear before you 
today. The committee has rightly focused attention on the 
Department's contingency contracting capability, as well as the 
increasing role of contractors in our deployed forces 
operations. The Department is acting with deliberation and 
determination on the full spectrum of issues in this area.
    I will comment briefly on the key issues seeking to move to 
the committee's questions. For a number of reasons, including 
the illegal actions of some people, the Secretary of the Army 
requested an independent review, and I believe the work done by 
Dr. Gansler and his team have been very helpful to the Defense 
Department.
    With regard to the Gansler Commission, I directed the 
Deputy Under Secretary of Defense for Acquisition and 
Technology, Tim Finley, to lead a task force to address the 
Gansler Commission's recommendations related to the Office of 
the Secretary of Defense and to coordinate a comprehensive DOD 
response. This task force is actively addressing every 
recommendation. I would note the efforts of very experienced 
leaders on our team, Jay Assad and Dick Kinman, to work these 
issues through a set of subcommittees and work them with the 
services so that we have a joint response.
    A number of efforts were already underway in the Department 
in advance of the commission report, such as the contingency 
contracting handbook, which we are using to train people. 
Similarly, a number of concerns have been raised regarding the 
use of personal security contractors in the Iraqi theater. I 
asked the Deputy Under Secretary of Defense for Logistics and 
Materiel Readiness, Jack Bell, to coordinate the Department's 
response to these issues.
    The Department, as you know, has entered into a memorandum 
of agreement with the Department of State governing the 
coordination of personal security contractor (PSC) movements, 
and defining PSC activities and requirements. DOD has 
reinforced the training and certification requirements for 
these personnel and reiterated that they operate only in self-
defense under the rules for the use of force.
    With the help of Congress, the Defense Department is moving 
to enforce the Uniform Code of Military Justice and the 
Military Expeditionary Extraterritorial Jurisdiction Act, 
MEEJA, to improper actions by contractors. The Department still 
has many actions to undertake. Some actions, such as increasing 
the experience and skills of contracting officers and 
rebuilding the contingency contracting capacity in developing 
senior leaders, will require time.
    I appreciate the Congress's attention to these issues and I 
would ask for your continued support of our efforts. I look 
forward to your questions.
    [The prepared statement of Secretary Young can be found in 
the Appendix on page 37.]
    The Chairman. Thank you so much, Secretary Young.
    Now, the executive director, Army Contracting Command, Mr. 
Jeff Parsons. Mr. Parsons.

   STATEMENT OF JEFFREY P. PARSONS, EXECUTIVE DIRECTOR, ARMY 
                      CONTRACTING COMMAND

    Mr. Parsons. Thank you, Chairman Skelton.
    Representative Hunter, distinguished members of the 
Committee on the Armed Services, thank you for this opportunity 
to appear before you to discuss the Army's efforts to improve 
contracting operations in support of expeditionary operations.
    Since our last report to you, and in keeping with the 
recommendations of the Gansler Commission, Secretary of the 
Army Pete Geren directed the realignment of the Army 
Contracting Agency to the Army Materiel Command and the 
establishment of a two-star Army Contracting Command within the 
Army Materiel Command. We established the organization on March 
13 as a provisional organization, pending approval of a concept 
plan that will formally authorize and resource this new 
command.
    As the first executive director of the new Army Contracting 
Command, it is my job to oversee and implement improvements to 
contracting operations, especially in support of expeditionary 
operations. I have a written statement that I respectfully 
request be made part of the record for today's hearing.
    The Chairman. Without objection.
    Mr. Parsons. I would like to take this opportunity to thank 
the committee members and committee leadership for your 
unwavering support to our men and women in uniform. Mr. 
Chairman, as you know, the Secretary of the Army created the 
Special Commission on Contracting led by Dr. Jack Gansler to 
look at the long-term strategic view of the Army's acquisition 
and contracting system in support of expeditionary operations.
    The Army Contracting Task Force, which was co-chaired by 
Lieutenant General Thompson, the military deputy to the 
Assistant Secretary of the Army for Acquisition, Logistics and 
Technology, and Ms. Kathryn Condon, the executive director of 
the commanding general of the Army Materiel Command, was formed 
to review current contracting operations and implement 
immediate corrective actions where necessary.
    The Gansler Commission's four key recommendations for 
improvement are consistent with the Army Contracting Task Force 
findings. The Army is making steady progress in addressing the 
structural weaknesses and shortcomings identified, and we 
continue to work closely with the Office of the Secretary of 
Defense and our sister services on the way forward.
    It is clear that achieving our objective will require 
resources, time and sustained leadership focus. My written 
statement outlines the major actions taken to date, which 
include accelerating plans to set up the contracting structure 
recommended by the commission and increasing the size of the 
contracting workforce.
    As a result of ongoing operations in Southwest Asia, the 
Army has increased its focus on contingency contracting. Up 
until two years ago, we did not have a defined structure to 
support expeditionary operations or support a modular Army. We 
now have established a contingency contracting structure that 
consists of contingency contracting support brigades, 
contingency contracting battalions, and four-person contingency 
contracting teams.
    We are beginning to fill with trained military contracting 
officers and noncommissioned officers the 4 brigades, 6 
battalions, and 121 teams previously established. We will 
continue to expand the structure over the next few years by 
adding 3 new brigades, 5 battalions and 51 teams. This 
structure consists of active-duty personnel, reservists, and 
National Guard members.
    The critically important issue is the size, structure and 
training of the military and civilian contracting workforce. 
The acquisition workforce has declined significantly in the 
last decade, while the workload and the number of dollars 
associated with that workload have increased significantly.
    Furthermore, the Army has never fought an extended conflict 
that requires such reliance on contractor support deployed with 
our forces. We are addressing the need to expand, train, 
structure and empower our contracting and non-contracting 
personnel to support the full range of military operations.
    We are developing a detailed contracting campaign plan to 
implement the necessary changes to contracting, incorporating 
improvements in doctrine, organization, training, leadership 
and materiel. This will require Army, the Office of the 
Secretary of Defense (OSD), the Administration and Congress 
working together to make the systemic fixes needed for 
contracting to be a significant core competency.
    This concludes my opening remarks, Mr. Chairman. I look 
forward to your questions.
    [The prepared statement of Mr. Parsons can be found in the 
Appendix on page 51.]
    The Chairman. Thank you, Mr. Parsons.
    Now, an old friend, Dr. Jack Gansler.

STATEMENT OF DR. JACQUES S. GANSLER, CHAIRMAN, ARMY COMMISSION 
  ON ARMY ACQUISITION AND PROGRAM MANAGEMENT IN EXPEDITIONARY 
                           OPERATIONS

    Dr. Gansler. Thank you, Mr. Chairman.
    I would like to very briefly summarize my prepared remarks, 
and I would request that the prepared statement be made part of 
the record.
    The Chairman. Without objection.
    Dr. Gansler. Last summer, I was asked by the Secretary of 
the Army, Pete Geren, to convene an independent commission to 
assess the Army's capability in expeditionary contracting and 
program management. I was honored to chair the Commission on 
Army Acquisition and Program Management for Expeditionary 
Operations. I was joined by five very distinguished 
commissioners, people with unique insight and expertise in 
government acquisition, including program management and 
contracting.
    Specifically, the commissioners included General David 
Maddox, General Leon Salomon, Rear Admiral David Oliver, and 
two very senior experienced Department of Defense civilians, 
David Berteau and George Singley. Our charter was forward 
looking. We were asked to recommend actions to ensure that the 
operational Army and the overall Department of Defense would be 
best positioned for future expeditionary operations, operations 
which will most likely be joint, multi-agency, political-
military events.
    Let me simply highlight for you the three most critical 
items requiring action by the Congress. First, increase general 
officer billets for the Army and for joint organizations in the 
contracting area back to the levels we suggested that existed 
in 1990. We believe there are appropriate actions in the other 
services as well.
    Second, increase the number and the training of government 
contracting personnel, military and civilian, including those 
required for the increased role that is necessary in the 
Defense Contract Management Agency.
    And third, increase incentives and awards for the civilian 
government contracting personnel who volunteer to go into 
dangerous expeditionary operations. These benefits should be 
similar to the benefits received by their military and by their 
private sector counterparts.
    I must emphasize that we found that the DOD has an 
extremely dedicated corps of contracting people. The problem is 
that they are understaffed, overworked, under-trained, under-
supported, and most important, under-valued. The commission 
greatly appreciates the very strong support we have already 
received from the Congress, particularly from this committee as 
well.
    The commission is also heartened by the strong support from 
the Department's leadership. Concurrent with the report's 
release, the commission briefed both the Secretary of Defense 
and the Secretary of the Army. Each indicated full support of 
the commission's report. And to ensure forward momentum, both 
the Army and the Office of the Secretary of Defense have 
established task forces for implementation. The Office of the 
Secretary of Defense task force includes the other services and 
relevant agencies.
    These task forces are coordinated with each other and with 
the stakeholders, including the commission. We were briefed by 
the Army in January and expect another briefing in a few weeks. 
I personally met with the OSD leadership approximately once a 
month. The Army and OSD are working together to develop a 
scorecard to ensure changes have an enduring impact on 
expeditionary operations.
    This scorecard will be used to continuously monitor and 
measure the improvements undertaken in response to the 
commission's recommendations. They have kept the commission 
apprised of progress and frequently solicit our feedback on 
implementation activities.
    During these progress reviews, the commission has heard of 
some very noteworthy implementation actions already. For 
example, OSD has published an important tool, a joint handbook 
for contingency contracting, which didn't exist previously. 
Also, the Army has restructured its contracting organization 
per the commission recommendations.
    The commissioners were delighted to participate in the 
February, 2008 ceremony to, I must point out provisionally, 
stand up the new Army Contracting Command. During our 
interactions with the Army and with OSD, we have heard that in 
all cases they are aiming to implement the intent of all the 
commission's recommendations. We look forward to working with 
them to ensure full and successful implementation.
    In closing, as the Secretary of Defense noted in his 
response to our report, the problems the commission identified 
are not just confined to the U.S. Army. Many have been 
identified across the DOD, and in fact more broadly across the 
government. Independently, each of these problems is a daunting 
challenge. Together, they demand a significant cultural, 
structural and policy overhaul of the kind that requires a 
specific focus by senior leadership.
    It is heartening that our commission's report has received 
as much positive attention as it has from the Congress, the 
Army and the Defense Department. We believe this issue is 
critical to America's future security, particularly to our 
warfighters, but also to our taxpayers. It deserves priority 
attention.
    Thank you.
    [The prepared statement of Dr. Gansler can be found in the 
Appendix on page 66.]
    The Chairman. Dr. Gansler, thank you so much.
    Secretary Young, let me ask you, if I may, the 
understanding that the Secretary's required reports will not be 
due until the end of May, which is in all probability past the 
markup time here in our committee. Can you tell us if you 
believe that any statutory relief is required in order to fully 
implement the fixes that are identified in the Gansler 
Commission report? In particular, do you believe that such 
relief is required in the area of assigning sufficient general 
officers to such contracting? That would be helpful.
    Secretary Young. We are taking a couple of steps. First and 
foremost, I would tell you activities in the Department require 
funding. The supplemental will include funds that lets the 
Defense Contract Management Agency hire additional people to 
immediately support operations, so the supplemental is critical 
to the Department in many ways. One small way is DCMA and its 
ability to add support as the commission called for in-theater.
    Beyond that, the commission, as you know, made a number of 
legislative proposals. The Department is reviewing each of 
those and has indeed drafted potential legislative proposals 
that are being considered in the Federal Government for 
communication to the Congress. Some of those I think are 
obvious and what you would expect, and that is when we have a 
protest environment, we need expedited procedures to resolve 
protests so we can move forward.
    We need relief in some areas, we believe, to assure 
contracting officers have the authority to buy goods and 
services in the country where the contingency operations are 
occurring. In some cases, consistent with my comment about 
DCMA, we need expedited hiring authority where we have 
shortages of skills in particular places.
    And then with regard to civilians who volunteer and go to 
serve in these positions in-theater, there are commission 
recommendations that I think have merit with regard to letting 
them adjust their life insurance through the federal life 
insurance program, and possibly expanding on what the committee 
has already given us some relief on, and that is an annual pay 
cap so that they can be paid for the work they do.
    The Chairman. It would help if you could get your 
recommendations to us I would hope before May 1. I know that is 
pushing a bit, but that would certainly help.
    Mr. Hunter.
    Mr. Hunter. Thank you, Mr. Chairman.
    Again, thank you, gentlemen.
    Dr. Gansler, I am looking at the recommendations here. I 
think it is page 52 of the establishing an expeditionary 
contingency contracting command. It looks like a Xerox of what 
the committee wrote in 2005, does it not?
    Dr. Gansler. It certainly has the same intent, congressman.
    Mr. Hunter. What do you think, in your estimation, you 
know, one reason we put this thing in was not just to ensure 
the integrity of the system. Again, as you know, you have had 
the briefings on what occurred in Kuwait. There is no 
substitute for honesty. You can't reform a dishonest system 
with more effective overlays and boxes and a change of command. 
There is no substitute for an honest officer and in some cases 
we did not have that.
    But one reason that we put this section in and voted it out 
of this committee was to ensure also that we respond to 
combatant commanders for things that they need, which developed 
as a result of looking at the warfighting theaters in Iraq and 
Afghanistan and understanding that in many cases you had two 
U.S. Marine Corps and you had two U.S. Armies. You had the 
operators who were in-theater and who were out there in the 
battlefield everyday trying to win the war. And then you had 
the storekeepers, if you will, the producers of systems who 
have their own kingdom, their own issues, somewhat removed and 
disconnected from the battlefield commanders.
    When we would go over on congressional delegations (CODELs) 
and we would say, what do you need, and we would see basic 
things that people needed, and we would get back here and we 
would review what had been the reaction and the response from 
the bureaucracy to the warfighters. It was in many cases a 
pretty tepid and a slow response. So the idea was we were going 
to hook things up.
    We were going to have a Contingency Contracting Corps which 
worked quickly and under the direction of the combatant 
commanders in the theater. So when the combatant commander in 
the theater would say, I need more armor up here to protect my 
guys from being killed and having their legs blown off from 
roadside mines, he got reaction from the bureaucracy that was 
in the continental United States (CONUS).
    That is why we put this language in, providing for the 
Contingency Contracting Corps. So I would hope that as we move 
this thing forward, that we move it forward with an eye not 
just to have a reform of these ethical lapses that we have 
had--and you really can't reform ethical lapses with structure; 
you have to reform it with people who will be honest--but that 
we would also look to the need to get equipment quickly to the 
battlefield.
    That is really the idea that you would have in some cases a 
colonel in the combatant commands beseeching a two- or three-
star general back here in CONUS in the bureaucracy to get a 
piece of equipment. And the response is often very lukewarm and 
not a response that really did justice to the warfighters. That 
is one reason we put this thing in here.
    Did you look at that dimension--the idea of moving 
equipment quickly into the warfighter's hands, not just the 
ethical problems that we have seen in-theater?
    Dr. Gansler. Yes, Congressman. Let me definitely comment on 
that because that is a major issue--the response time. I would 
also highlight the fact that when we think about contracting, 
we need to think much more than just the person who writes the 
contract. This is the requirements process. You know, if a 
general says, I want this, has he defined it adequately in 
order to be able to buy it.
    It also involves the program management. After the contract 
is signed, the management of it was very weak over there and 
that was part of the problem that caused some of the fraud and 
abuse, because people weren't monitoring the contract after 
they were awarded.
    But I strongly agree with you about the importance of the 
military leadership in this environment, this expeditionary 
environment, where people are literally shooting.
    And that is why we do need these general officers for this 
expeditionary operation, who have the experience and who can be 
listened to by the top commanders. It is the combat commanders 
who aren't appreciating fully the value of the fact that more 
than half of their force are actually contractors and these 
people need to be a part of the culture, in effect, recognized 
as they go through their leadership training that they are 
going to be facing this in the future.
    This is the typical environment we are going to have in the 
future, and that people need to be trained for that, and you 
need military leadership over there to do it. But you also need 
it as part of the overall institutional Army.
    And that is the reason we argued so strongly for the 
general officers and for the joint operations.
    As you pointed out, properly, this is going to be a joint 
activity. And since the command of this needs to be a joint 
command, the other services are going to have to step up to it.
    Defense Contract Management Agency also used to have, in 
1994, general officers. They have none now, either. The Army 
had five general officers in 1990, they have zero now with a 
contracting background.
    This is what we want to fill that gap back in. The number 
of contracts, the number of actions. Certainly in an 
expeditionary operation, the difficulty, as you point out, the 
need for expeditious treatment, and the fact that it is an 
environment in which they need rapid response when they are 
being shot at.
    That requires you to have people who are trained and 
experienced, not only in writing contracts, but in managing 
those contracts, you know.
    Mr. Hunter. Let me ask this question: When you have a 
warfighting environment, as you have in Iraq and Afghanistan, 
do you feel that there is a place for the combatant commander 
to be able to command the delivery of a system into the 
theater, rather than ask for it?
    Dr. Gansler. Well, in fact----
    Mr. Hunter. In other words, to command the development of a 
system?
    Dr. Gansler. One of the problems we have now is the lack of 
clarity in the chain of command for contractors. Do they report 
back through Rock Island? Do they report through someone out in 
the field who can actually say, ``I need that now''?
    Now, they can't say I need it now to violate the law. It 
has to be within the laws. But they need fast response, and 
they need people who are skilled and experienced in getting 
this.
    And most of the time, by the way, this is services, not 
even equipment, so----
    Mr. Hunter. How about if you have a difference in judgment? 
Let's say you have a combatant commander, let's say you are 
General Petraeus, in-theater. Would you say I need a certain 
type of jammer immediately. And I have looked at them. Let's 
say he says I have looked at this thing that the Brits have or 
that the Israelis have, or something that has been developed by 
this company. And I have looked at it and I have looked at this 
performance. That is what I need. I want them.
    Should he be able to command the production of that system 
into his command, or should he simply be able to make a request 
that will be, then, evaluated and ruled on by a requirements 
counsel in CONUS, in the bureaucracy? What do you think?
    Dr. Gansler. Well, I think, first of all, he needs to do 
this through his organization. There are some legal people who 
are chartered to sign the contracts.
    But I personally believe that he should have the ability 
for those fast responses, in an environment of wartime, to be 
able to not have to go back into the chain of command, not have 
to go through the regular requirements process or the budget 
process or the congressional approval process. He needs to be 
able to get that fast response. That is the reason most of the 
federal acquisition regulations have a little asterisk. It says 
in wartime, you can take some exceptions. That is what John 
Young just pointed out. They now have a manual that points out 
to train people.
    Mr. Hunter [continuing]. By this company. I have looked at 
it, and I have looked at this from the bureaucracy. What do you 
think?
    Dr. Gansler. Oh, I think in an environment of wartime to be 
able to not have to go back into the chain of command, not have 
to go through the regular requirements process or the budget 
process or the congressional approval process. He needs to be 
able to get that fast response. That is the reason most of the 
federal acquisition regulations have a little asterisk. It says 
in wartime, you can take some exceptions. That is what John 
Young just pointed out. They now have a manual that points out 
to train people.
    Mr. Hunter. Well, we have a manual that we gave you guys. 
It is one page and it is a law, and the law says this. And we 
wrote this thing several years ago to get the first portable 
jammer that we had ever had into theater. It is one page. It 
says the Secretary of Defense (SecDef) can say if he can 
certify that he is taking casualties on the battlefield and he 
needs a certain piece of equipment that will allay those 
casualties, he can order the production of that system and 
waive every acquisition regulation on the books in doing it. 
And he signs his name at the bottom of the page.
    He has only done that twice. He did that with our jammer 
that this committee mandated, and we did that because there was 
no portable jammer for our dismounted troops. All these 
jammers, as you know, are pretty heavy. So we mandated and then 
put in money for the first 10,000--the first portable jammers 
we have ever had. We got them researched and developed (R&D'd), 
produced and delivered to the field in 70 days. But DOD has 
never used that particular provision since.
    My question is a threshold, important question for us to 
decide. Should a combatant commander who is fighting a war be 
able to command the production system to give him something? Or 
should he simply be in a position to request it and have his 
request ruled on by the bureaucracy in the states? That is a 
threshold question we are going to have to decide.
    We are entrusting these guys with the lives of our troops 
and making momentous decisions. I think that was manifest in 
the last couple of days with General Petraeus's testimony. 
Should a General Petraeus be able to command the production of 
an article and to have the system back here serve that 
production command? Or should they be autonomous in their own 
right and be able to rule on whether or not General Petraeus's 
request is a valid one, a reasonable one, and give what they 
think the requirement bodies here feel should be produced?
    Where do you come down on that basic decision?
    Dr. Gansler. I think there should be standby legislation 
for the next expeditionary operation, as well as the current 
one, that allows them to do that. As you suggested, it may even 
be a foreign product that they have to buy. They could go 
through some of the other provisions. I think that they need to 
have the ability to get what they need when they need it, as 
long as it is within the law. So therefore, if there are any 
laws that prohibit them from doing it, those have to be in 
standby provision waived.
    Mr. Hunter. Okay. But you think the combatant commander 
should be able to command the production of an item?
    Dr. Gansler. Yes.
    Mr. Hunter. Okay. Thank you.
    Thank you, Mr. Chairman.
    The Chairman. I thank the gentleman.
    Mr. Ortiz.
    Mr. Ortiz. Thank you, Mr. Chairman.
    I thank the witnesses for joining us today.
    Dr. Parsons, Dr. Gansler's November, 2007 report 
identified, ``the Army acquisition workforce is not adequately 
staffed, trained, structured or empowered to meet the needs of 
the 21st century deployed warfighters,'' based on the fact that 
only 56 percent of the military officers and 53 percent of the 
civilians in the contracting career field are being certified 
for their current positions. I think what we have done in the 
past years is that we overwhelmed the system.
    I can remember when I first came back in the 1980's and 
1990's, when I came to Congress, it appeared that every 
military facility and even depots had a yard sale. You know, A-
76 came in, and look what we have inside the depots. We will 
contract it out. But nothing was being done on the outside to 
bring jobs into the depots.
    Now, I am a firm believer that contracting out, when it 
makes sense, it is good. But I think what we have done is that 
we have completely overwhelmed the system to where there is no 
accountability. All you have to do is go back and look at what 
is happening now.
    But I appreciate what you all are doing. This is a good 
beginning, but I think that the system that we have in place is 
totally overwhelmed. By Dr. Gansler's report, we need to corral 
and bring it back to where we have a balance, and to where we 
do justice to the taxpayers.
    What is the Army's plan--and I know, Mr. Parsons, that you 
touched on it--to address the current challenge to increase the 
workforce expertise in acquisition, technology and logistic 
programs? And how long do you think it will take to accomplish 
this plan? At the same time, what is the plan to provide short-
term oversight and protection for the taxpayers? I think this 
is very serious, but I am glad that something is being done 
now.
    Mr. Parsons. Congressman, we have been very active in 
increasing our training and preparation of our acquisition 
workforce, not just contracting, but across the board. 
Lieutenant General Thompson, who is the military deputy to the 
Army acquisition executive, is in charge of overseeing the 
acquisition corps and making sure they are trained.
    Your point on their certification levels has been something 
that he has been focused on tremendously. He has issued 
guidance out to all the commanders to ensure that we are 
getting our acquisition workforce properly trained, 
specifically for the jobs that they are in.
    The plan that we have put together to put together this 
Army Contracting Command really is a three-year plan that is 
going to require us to hire some additional people and bring on 
new military members. It is a very aggressive plan. We have 
training plans put in place to get them trained as quickly as 
we can. To be honest with you, part of that is they have to 
have the experience. You can send people to classrooms, but we 
have to get them into the workforce where they are actually 
doing the day-to-day contracting to get prepared for the 
future.
    In regard to your remarks about the outsourcing, one of the 
other things the Army is doing right now is taking a very hard 
look through a total Army analysis on what portion of our work 
should be accomplished by soldiers; which could be accomplished 
by Department of Army civilians; and which should be done by 
contractors. So your point is a good one. The Army is taking a 
hard look at that as well.
    Mr. Ortiz. I know that today we are focusing on a small 
area, but what really concerns me is that when you have 140,000 
troops fighting a war, but you have 200,000 contractors. I 
think that we need to do something to correct this. I know that 
we are paying out a lot of money, and maybe at the time it 
needs to be done. I am not pointing fingers at anybody. But I 
just can't imagine having 200,000 contractors out there and 
only 140,000 troops.
    But that is a subject for another day. I just want to thank 
you for being with us today, and I appreciate your help.
    I yield back my time.
    Mr. Parsons. Thank you.
    The Chairman. Thank you.
    Mr. Bartlett.
    Mr. Bartlett. Thank you very much.
    There are two general contracting modes, and I am going to 
grossly oversimplify them for this discussion, that can be used 
in contracting. I have two questions relevant to that. Which 
one of these do we use and where? And have we done definitive 
studies to determine the efficacy of these two different modes 
of contracting?
    One is to determine what you need, the performance 
characteristics of the platform you need. And then to design 
something which will provide you that performance, to then let 
the contract, and then to assign a number of people to watch 
every detail of the manufacturing process to make sure that 
they are doing it right.
    The other mode of contracting is to determine what you 
would like your platform to do, to very carefully define the 
performance characteristics, and then to accept delivery of 
that after it meets these performance requirements.
    As an example, I understand that the Israelis can buy a 
fighter plane much cheaper than we buy the fighter plane 
because we buy the fighter plane after it has been produced on 
an assembly line where we have a lot of people looking over the 
shoulders of those making it. That slows down the process and 
we pay twice for that. We pay the people looking over the 
shoulder and we pay the increased time it takes to build the 
plane because they are looking over the shoulder. The Israelis 
simply buy the plane if it flies.
    Now, which of these contracting modes do we use and where? 
And have we done definitive studies to determine which of these 
modes is the more efficacious?
    Secretary Young. I guess that is my question. I am not sure 
either of those modes are black and white. I think people would 
characterize some of the comments you made about the first 
mode, to some of the older practices, there was a time, as 
Secretary Gates pointed out, when we had 24,000 people in the 
Defense Contract Management Agency. I don't know, but certainly 
then we had more people to go and monitor the production 
process and monitor contracts.
    Today, they are at 9,000, and we are pulling people out of 
any of those monitoring jobs where possible to send them to 
Iraq to work on contingency contracting oversight. So I can't 
tell you that we are in that latter model. We do try to do 
adequate oversight. I would tell you many of the recent reports 
from U.S. Government Accountability Office (GAO) and other 
people characterize our oversight as deficient at this point in 
time. But we are doing what we think is responsible and what 
the Congress has asked us to do in monitoring the performance 
of contractors and asking them to meet specifications.
    Mr. Bartlett. Sometimes the size of our bureaucracy reminds 
me of a complaint that our founding fathers had against King 
George. I have no idea what he did, but their complaint was 
that he had established a multitude of new offices and sent 
hither swarms of officers to harass our people and eat out 
their substance. I thought that was a great definition of our 
regulatory agencies, and reasonably described the over-
assignment of people to monitor what is going on.
    Have we done definitive studies to determine which of these 
modes are more efficacious? And if we haven't, shouldn't we? 
Because these are two distinctly different modes. You are 
saying we have kind of an amalgamation now sometimes, but these 
are two distinctly different modes of procurement, two totally 
different philosophies. Which of these is the more efficacious 
philosophy?
    Secretary Young. There probably are definitive studies. I 
mean, things like performance-based logistics and performance-
based contracting tend to resemble this latter model, where we 
set a standard and ask people to deliver to that. But I could 
cite for you examples where we have done that, and we now have 
issues where the Congress has cited and it has been reported 
and it is being investigated, where people didn't perform to 
those specifications.
    I don't think the government is prepared to accept limited 
to no oversight over the process. The real question I think you 
are rightly asking is what is the right balance of oversight to 
get efficiency.
    Mr. Bartlett. How do we get there? Is it trial and error? 
Is there a program or procedure for getting there?
    Secretary Young. I think we are maturing and have a ways to 
go in looking through a lot of efforts of our training 
processes and deciding essentially what is the right size of a 
program office, what are the minimum functions they need, what 
skills do those people have to have. We are working very hard 
on determining the competency required in our acquisition 
workforce. I think that takes us several steps toward what you 
are talking about.
    Mr. Bartlett. Thank you very much, Mr. Chairman.
    The Chairman. Dr. Snyder.
    Dr. Snyder. Thank you, Mr. Chairman.
    Dr. Gansler, I wanted to ask you--Mr. Hunter has obviously 
spent a lot of time working to understand these issues and has 
talked for some years now about the shoppers. I think that is a 
generic term for anyone involved in contractors. There is no 
military occupational specialty (MOS) for a shopper. I assume 
that most of the people we are talking about were formerly 
called the contracting office technical representative.
    I need to be sure if we are talking about the same thing. 
Your report uses the word ``understaffed'' several times. You 
talk about the need for additional people. Are you and Mr. 
Hunter in conflict on this point? Is he saying we don't need 
more and you are saying we do need more?
    Dr. Gansler. I think we are probably using a different 
definition in the sense that the person who writes the contract 
is just one piece of a very extended process associated with 
contracting. I would argue that the program management people, 
for example, are not really shoppers. They are in a sense an 
oversight function, but a management function, really. I would 
argue that the people who end up testing the equipment--are 
they shoppers?
    And the people most important--and this is what we were 
talking about earlier--the people who write the requirements, 
the combatant commanders. They are very much involved in the 
acquisition process. I wouldn't call them shoppers. They are 
people with the need.
    So I think there is a different definition of the total 
scope. For example, the Defense Contract Management Agency 
people that John Young just talked about, those people are the 
ones who monitor the program after the contract is written. 
They try to check the performance. Now, they do some of that in 
the factory, but the biggest problem in Iraq and Afghanistan 
has been buying services, not buying products. They need 
somebody who can monitor those contracts afterwards.
    In fact, one of the problems we found in Iraq and Kuwait 
was that there were no people there to close out contracts. 
That is a perfect invitation to fraud and abuse, if you can't 
close out. So there needed to be some people doing that. There 
were no people there who were doing pricing. A contractor said 
it was going to cost X. Okay, it is going to cost X. We need 
some government people who can say, no, X isn't what it should 
be. It should be X minus Y.
    So there is a whole spectrum here associated with the 
overall contracting process that I think we feel there were 
clearly inadequate numbers. But much more important was the 
training in terms of expeditionary operations--what you can do 
and can't do in an environment of an expeditionary operation. 
As Congressman Hunter pointed out, the combatant commander 
needs to be able to say, I need this, and I want to know how to 
expedite that process; I don't want to hold six months of 
writing the request; I don't want to hold six months for the 
competition.
    Dr. Snyder. Let me ask, in your study, you talked about 
staffing, the training, the needs in an expeditionary 
situation. Did you run into any situations or did your study 
encompass or discover any kind of coziness in the arrangements 
between the watchdogs and the people that are contracting with 
the government? Or did you not delve into that kind of thing?
    Dr. Gansler. No, we didn't find that at all. In fact, what 
we found was an inadequate number of the oversight program 
management people, and inadequately trained. They would walk up 
and say, you are now a contract monitor. They would say, well, 
what is that? That is not a proper training for those jobs, but 
there weren't enough people doing that, so they had to have 
somebody who was going to do it.
    Dr. Snyder. Mr. Parsons, maybe you are the person to ask. I 
want you to pretend that I am a builder and I am overseas right 
now in Kuwait or Iraq--say, in Iraq. We have an incident in 
which a mess hall and a water system is destroyed, and we need 
to get it back up right away. And you want to use an 
undefinitized contract action to get that thing moving.
    Walk me through as somebody who may not have done one of 
those before. What is the process by which you are going to 
give me assurances that we are going to get this thing moving 
and built, and then how does it play on out from there?
    Mr. Parsons. To issue an undefinitized contract action?
    Dr. Snyder. Yes.
    Mr. Parsons. Sir, if there is an urgent need and there is 
money available, the contracting officers are trained to react 
to that as quickly as possible. They can either use an existing 
contract to place an order against. If there is not an existing 
contract, they can issue a letter contract. They have expedited 
procedures to do that, especially in a contingency environment 
today.
    Dr. Snyder. So as the builder, what will I get from this 
person?
    Mr. Parsons. What do you get for the purchase?
    Dr. Snyder. Yes, what will I get from this person? You are 
going to give me something. I assume you are going to give me 
something within 12 hours of the mess hall going down. You need 
the mess hall put back up. What will I get to get me going?
    Mr. Parsons. Sir, I guess I am not really following.
    Dr. Snyder. Well, you are not going to have time. I assume 
by the nature of these is you are not going to have time to lay 
out a 50-page contract describing this, with specs and 
everything. What am I going to get to get me going? I assume 
you are going to give me some kind of letter. That is the 
nature of undefinitized contract action, is it not? What are 
you going to give me?
    Mr. Parsons. Sir, I would say that for the situation you 
are describing today, we have existing contracts for those 
dining halls, so it is a matter of just giving direction to the 
contractor to come in and effect the repairs and put in place 
whatever equipment may have been destroyed or hurt. And then 
issuing a change order or a direction to change the contract, 
they can act on that instantly and place money against it 
instantly, and then the contractor provides the----
    Dr. Snyder. I am out of time now, but you are using 
undefinitized contract actions (UCAs) in Iraq and Afghanistan, 
are you not?
    Mr. Parsons. Yes.
    Dr. Snyder. Yes. Well, we didn't get to how that was going 
to be.
    Okay. Thank you.
    The Chairman. Thank you.
    Mr. Jones from North Carolina.
    Mr. Jones. Mr. Chairman, thank you very much.
    Gentlemen, thank you for being here today.
    Secretary Young, I am going to write a letter to you 
regarding the Small Arms Program with the United States Army 
and the future of the program, and also the M4 carbine, what 
the future looks like for that weapon. So I am going to put 
that in writing to you and your staff, if you don't mind, 
instead of asking you those questions.
    I want to go to the point that some of my colleagues have 
picked up. I will never forget as long as I live, in 2005 I was 
visiting Camp Lejeune, which is in my district. I don't 
remember, it might have been a sergeant major or master 
sergeant, whatever. They were showing me the new sports bar at 
Camp Lejeune, and we were there about five o'clock, and we were 
chatting at one of the stand-up bars. He had been to Iraq 
twice. He said to me, will we ever know how much money 
Halliburton has made off this war? That was three and a half 
years ago, and I still remember it like I can see him today as 
I am looking at you.
    That goes to this point. I think what you gentlemen are 
bringing to the Congress today, and my many friends here on 
this dais who have been here longer than I in leadership, this 
to me is absolutely so critical not only to the warfighter, but 
to the taxpayer. You will never be perfect in contracts or in 
oversight, but the fact is that we do a better job, and that 
enhances the warfighter, but also helps the taxpayer.
    One thing that Ms. Boyda said, and I am sorry she left, but 
she asked last week that doesn't specifically speak to your 
report, but I want to know if this came up in the discussion. 
She asked Mr. Bell a question about the mine resistant ambush 
protected (MRAP) vehicle, with the progress. He said, well, it 
is moving forward, and he said we have a little problem there 
and we have to buy a certain type of steel from a foreign 
country.
    That is not your fault, but the fact is as we discuss how 
we are going to make contracting more efficient, and this 
country becomes more and more dependent on foreign governments 
to make equipment, possibly one day to make weapons. I don't 
know. Maybe they are doing that now. But this is interrelated 
to what you are recommending.
    Is there a concern from people at your level, and maybe you 
can do nothing about the economy of this country, and I know 
you can't, but the point is as we continue to become more and 
more of a service nation and the fact that certain types of 
steel has to be bought from foreign countries to help complete 
the MRAP vehicle, is a great concern to me as a citizen.
    Does this indirectly--it is an issue that will be before 
the United States Army, the Department of Defense? Indirectly, 
it will relate to the contract because if they have to 
negotiate, or someone above them negotiate it, to buy products 
from foreign countries.
    Secretary Young. MRAP is a pretty special case, but it is a 
very good illustration of that in that we now have a fairly 
complex body of legislation. So some of the people don't get to 
manage programs right now. They have to find their way through 
all the rules, regulations and statutory limitations on trying 
to buy products. MRAP ran into exactly that. Luckily, within 
that maze, there was a waiver that let us buy some foreign 
steel.
    As you know, MRAP has put a steel capacity demand on this 
nation that is unprecedented and that is going to go away in 
about six more months. So then you end up with another 
question, and that is, do we maintain that level of capacity 
and potentially not use it? And what will the taxpayer pay for 
that? That is another hard question.
    In the alternative, another question that I feel enormous 
pressure from the Congress and my own enterprise, is to control 
the cost of weapons systems. There is no question that in many 
places, there is a premium for doing business where the 
business volume is small and companies don't want to go into 
that business space. So we try very hard to use U.S. companies. 
In some places, though, there are commodity products in our 
weapons systems that U.S. suppliers don't want to be in that 
business. So I can either pay them a lot to be in that 
business, increase the cost of weapons, and then I have a lot 
of questions about the cost of weapons. Or I rely on worldwide 
availability of some commodities.
    So you have asked a very good question with a lot of 
different dimensions to it. The next piece of that answer is 
yes. As director of defense research and engineering (DDR&E), I 
tried to understand and update our critical technologies list 
so we at least understood what technologies were critical to 
this Nation and to our weapons systems, and we could make sure 
we had access, if not U.S. capability, in those critical 
technology areas. I think we require continued vigilance in 
that space.
    Mr. Jones. Thank you, Mr. Chairman.
    The Chairman. Thank you, Mr. Jones.
    I think we have time for Ms. Davis to make inquiry, and 
then we will break. We have a total of three votes--a 15-minute 
vote and two 5-minute votes.
    Mrs. Davis.
    Mrs. Davis of California. Thank you, Mr. Chairman.
    Thank you to all of you for being here.
    I wonder if you could expand somewhat on the value culture, 
because basically in your remarks you say that none of this is 
going to work if we don't address that systemically. As I read 
it quickly, really you are referring to at least five billets, 
I think, within the Defense Management Agency. Can you give me 
more of a sense of that? Because what I am trying to understand 
is what are the obstacles to doing that? If we grab hold of 
that, what else do you have to clear away in order to have that 
kind of a culture change? Is it just having the billets there? 
How does that work?
    And if I might just follow up with a totally different 
question. When I was in Iraq, I happened to sit with a colonel 
who was working on a water project in the Green Zone. He was 
furious about the way the contract had been let and the lack of 
use of local contractors, the dollars that had been wasted and 
literally thrown away in the Green Zone over that project. How 
does this solve his problem there? Is it related and how do we 
get at that?
    Dr. Gansler. Ultimately, it involves smart people who are 
buyers and managing their contracts and so forth. But it 
clearly does come down to the people and their stature and 
their value. That is where the culture part comes in. If the 
culture says that everyone in uniform must be somebody who is a 
tank commander, a fighter pilot, or ship-driver, rather than 
some people in senior positions in the military also taking 
care of things like contracting, then you have a real problem 
because it is not respected and it is not listened to. When you 
get into an environment in which you really need something 
badly, the people aren't there to do that job.
    So these are people who are senior people in the military. 
That is the general officers we asked for. It is also some of 
the noncommissioned people who are trained in this field, and 
it is all the way up. It is a career path question in terms of 
culture. If there are no general officers, why, as a major, 
would you want to go into that career? You want to have a place 
you can get promoted to. So there is a culture that holds you 
back.
    On the civilian side, these are all volunteers. If you 
don't get any benefits or rewards for going overseas and 
getting shot at, why would you want to do that when you can 
stay home with your family? So that is a challenge as well.
    Mrs. Davis of California. Is there a different financial 
incentive that you are talking about? Clearly, it hasn't been 
valued, so that there has been no reason for people to do that. 
But on the other hand, is there something else, something more 
insidious that is at play that makes it difficult for people 
even to want to make that decision if the career path was 
there?
    Dr. Gansler. In the sense of the civilians, I think it does 
require some additional financial incentives because they see 
that their military counterparts and their contractor 
counterparts are getting benefits and they are not. In 
addition, at home their current boss says, we need you here; 
you can't go. Unless there are enough people to be able to fill 
those gaps, you will have no one back home doing the 
contracting work that should be done.
    So there again needs to be a look at the total needs 
between expeditionary and at home. I think in general, the 
recognition of the problem which is now what we have because of 
all the fraud and other things, now should get people's 
attention to the cultural change.
    Fortunately, Secretary Geren has really placed a lot of 
emphasis on this now, and I think that Secretary Gates is 
placing emphasis on it. That is necessary, but not sufficient. 
The senior people in uniform also have to place emphasis on it. 
It has to be part of their training, part of their cultural 
indoctrination. That includes the recognition of the importance 
of these civilians who are taking part in this activity.
    Mrs. Davis of California. You looked at the Army, but we 
are assuming this is DOD-wide. These are all the services. What 
in the way of jointness needs to happen so that this is spread 
throughout? Does every service need to take its own look at 
this issue? Or is it something that you think can actually take 
hold because one service perhaps is going to show the best 
practices and then the rest will follow suit?
    Dr. Gansler. We think it follows for the other services as 
well. We have heard that there are similar problems, but we 
didn't investigate those in depth. But clearly, the activities 
in the future will be joint, not only joint between various 
parts of the DOD, but joint with the State Department which has 
to be worked out as well.
    Mrs. Davis of California. Right. Interagency reform.
    Dr. Gansler. Interagency is going to clearly be a major 
issue for the cultural change as well.
    Mrs. Davis of California. Right. Thank you for your work.
    Secretary Young. Mr. Chairman, if I had a chance maybe when 
we come back, I would like to expand on that.
    The Chairman. We have a moment right now. Go ahead.
    Secretary Young. Okay. As someone who has been in the 
building several years, I want to amplify what Jack said. You 
have to have senior flag officer positions to which people can 
aspire to and be promoted to and pursue those as career paths 
if you want to get people. Right now, the Army doesn't have 
contracting people at junior levels because there is no flag 
officer level to aspire to in the Army.
    The Congress has laws about promotion rates in the 
acquisition workforce. You talk about the number of flag 
officers, but these issues are really one at a time. 
Incrementally, I have frequently seen us not promote one less 
acquisition person and one more line officer. And then I find 
myself being asked by the chiefs of the services to take line 
officers to run acquisition programs in areas where they don't 
have the skills for it.
    Furthermore, those choices to take away those contracting 
billets and apply them into line officer functions creates more 
pressure not to promote contracting officers because now the 
demand is promote another line officer to fill that job, which 
is a job I just created by stealing the contracting billet.
    We have to restore those billets. The service chiefs are 
going to have to acknowledge the need for these contracting 
skills, acknowledge the need for these contracting billets, and 
acknowledge the need to promote people in these positions.
    Mrs. Davis of California. I appreciate that.
    Can I just ask a quick question. I think what the public 
would get from some of this is that somewhere along the line, 
people are making a whole lot more money within their contracts 
because somehow there is not the oversight that has been built 
into what I would think would be the officer corps. Is that--?
    Dr. Gansler. I personally don't think that is the issue.
    Mrs. Davis of California. Okay.
    Dr. Gansler. I think it is the warfighter is not getting 
what he needs. That is what is really critical. That is the 
perspective here. The contractors are trying to do their job 
under the contract and the government needs to supervise that. 
But the real problem is I really believe the warfighter has to 
be satisfied in their needs.
    The Chairman. Thank you.
    Mr. Young, let me ask you, are you recommending flag 
officer billets in addition to what we have?
    Secretary Young. I am not prepared to, and I don't think I 
have the authority to do that, sir.
    The Chairman. No, I am asking you on a personal and 
professional level. You have the authority to answer my 
question.
    Secretary Young. There is no question we need to restore 
the joint billets. For two years now, we have needed a military 
officer to be the head of the Defense Contract Management 
Agency and haven't been able to get a qualified nominee. The 
services have to have promotion change, and then they have to 
have some robustness in that so that I can fill joint flag 
officer billets. I believe some of the billets that have been 
taken out of these positions need to be restored. If we cannot 
accomplish that, then we will have to put new flag officer 
billets into these positions.
    The Chairman. That answered the question. Thank you.
    We have three votes. We shall return and we appreciate your 
patience. Thank you.
    [Recess.]
    The Chairman. We have Mr. Johnson, Mr. Ellsworth when we 
come back, and hopefully we will have others join us.
    Mr. Johnson is next on the list.
    Mr. Johnson.
    Mr. Johnson. Thank you, Mr. Chairman.
    I was just wondering if there is any--I mean, there has 
been a suggestion that the ability to authorize and appropriate 
expenditures should be shifted from Congress to a field 
commander. Is that a fair assessment of what we have been 
talking about this morning?
    The Chairman. Excuse me. May I make a suggestion? Would you 
get just a little closer to the microphone?
    Mr. Johnson. All right. Thank you.
    The Chairman. Thank you.
    Mr. Johnson. It just seems to me that that could be a 
constitutional issue. I don't know if anybody is prepared to 
answer that.
    Dr. Gansler. When I answered Congressman Hunter about the 
authority of the combatant commander to make a decision that he 
needed something, it was certainly intended that that be within 
the dollars available. Secretary Young pointed out, unless for 
example it was in the supplemental and those dollars were 
needed, then as long as the dollars were available, then you 
could go get something that the combatant commander badly 
needs.
    On the other hand, he needs to be able to say, I need this, 
rather than, I would like to have it and I wish I had the 
money. The money has to be there. You don't want to change that 
responsibility. But within the dollars available, then the 
combatant commanders need to be able to get what they need when 
they need it. They can do that through the acquisition 
capability of their organization. They don't do it themselves. 
They don't go out and buy something on the shelf like we might 
do at the supermarket. They say, I need a tent city or I need 
meals, or whatever, and then they go through their acquisition 
authorities, and with the dollars available, that was what we 
are talking about.
    Mr. Johnson. So you are not advocating a change in the law 
in that regard?
    Dr. Gansler. No.
    Mr. Johnson. Okay.
    Secretary Young. No, I am not. I would make clear, though 
that being able to do things is extremely contingent on the 
availability of funds to do it. In fact, in some places the 
Congress has helped. We could not have built MRAPs, for 
example, without extraordinary actions on the part of the 
Congress.
    Another piece of this, though, is when we build our budget, 
it is a cumbersome process, and then we come and defend it 
before the Congress. So a lot of people do a lot of good work 
to build a budget that delivers a broad spectrum of capability 
for the Nation through the Defense Department. Those people 
rightly hold those dollars because it is their chance to 
deliver a high mobility multipurpose wheeled vehicle (HUMVEE) 
or their chance to deliver a ship.
    When new requirements emerge, it is not as simple. As I 
tell people, every dollar in the Defense Department comes to a 
zip code. Going back and getting that mail, getting that dollar 
back to go do something that is very urgent in the field is 
tougher than it sounds. That is why it is critical where the 
Congress provides us some flexibility in funding that lets us 
respond to combatant commander demands, to be able to have 
those funds to do that.
    Dr. Gansler. To answer your point, the Congress officially 
authorized during the Balkans environment that there be a 
standby fund to be able to address exactly your problem. The 
Congress has also authorized that for USAID. They have not 
authorized that in the DOD activities even in Iraq today. As a 
result, there are significant inefficiencies associated with 
the flow of money. So there are some financial issues. I 
covered that in my statement.
    Mr. Johnson. And once we are able to politically be more 
expedient in terms of the money, we still need the 
transformation of the Army's culture toward contracting to 
change. And we need a major systematic change in the way that 
the Army organizes, trains and equips for contracting.
    How will the Army ensure that changes currently being 
considered achieve this sort of comprehensive cultural shift, 
rather than just resulting in a reversion to the norm when 
attention shifts from this issue?
    Mr. Parsons. I will go ahead and address that, congressman.
    One of the things that we have done, and it gets to the 
point that Dr. Gansler made about making a career path for 
people who want to come into contracting in the military and 
have the ability to accelerate and get promoted, is we have now 
developed this structure that will allow us to bring officers 
and NCOs in at the five- or six-year point and give them a very 
deliberate career path.
    For the officers, that could be leading a contingency 
contracting team. They could move up then to be a battalion 
commander or eventually a brigade commander. One of the 
commands that is now going to be part of the Army Contracting 
Command is a one-star expeditionary contracting command. So 
part of change in the culture of getting people who want to be 
professionals in the contracting career field is to provide 
that type of a career path.
    The other thing that we are doing, too, gets to another 
point of the Gansler Commission report, is we need to make sure 
that the operational Army understands contracting. So we have 
expanded the amount of training that we are giving to non-
acquisition-type people. So all new two-star general officers 
now have a block of construction on contracting and contractor 
management. We are starting to do that at the senior service 
colleges and the intermediate-level of education as well.
    So those are some of the things that we are doing in the 
Army to try to change the culture so that people recognize the 
importance of contracting and contractor management, and also 
have a desire to be in this career field.
    Secretary Young. I would just add, I think your point is 
exactly right. It will require the leadership level. It can be 
worked from those levels and you do have to have a promotion 
path that brings people into that career field and trains them. 
For example, to the chairman's question, additional flag 
billets actually rewards the bad behavior where the Army took 
five contracting positions and put them somewhere else in the 
Army. Over time, that erosion cannot happen again.
    If the Congress decides to give them five additional flags, 
the leadership from here forward--and there is no question in 
the current leadership with Secretary Geren has this view--but 
ensuing leadership has to keep those flag positions in place 
and not decide to go to a flavor-of-the-day command over on the 
line side and steal those flag officers.
    Mr. Johnson. Thank you.
    The Chairman. Dr. Gingrey.
    Dr. Gingrey. Mr. Chairman, thank you.
    I want to thank the witnesses. I have found this hearing 
particularly interesting, and I am encouraged by the testimony 
of each one of you.
    Dr. Gansler, it sounds like the report that you were 
commissioned to provide by Secretary Geren is very similar, as 
the ranking member, Duncan Hunter, mentioned in regard to what 
we had in the authorization bill a couple of years ago. So I am 
pleased that we have said double-dittos here, as we definitely 
need to do.
    Mr. Parsons, I think you just made some comments that I 
fully agree with in regard to the training--and Secretary Young 
also in regard to where you put these offices. You need a track 
that is a real track, and not one that keeps shifting back and 
forth, so that there is a career path, as you point out, for 
this level of expertise.
    So I am encouraged by all of that. When you are talking 
about in this op tempo that we are faced with now, with as much 
as $10 billion a month, obviously there are a lot of contracts. 
There are a lot of things that have to be done pretty quickly. 
I am not sure that I fully agree with Ranking Member Hunter in 
regard to a combatant commander being able to snap their 
fingers too quickly and getting something done. I think we have 
the Community Emergency Response Team (CERT) program for 
smaller things, and I think that works pretty well, but if you 
have a major acquisition certainly it needs to be vetted a bit. 
So although I am usually right in line with my former chairman 
and now ranking member, I will have a little caveat there and 
concern.
    My question, and this will be directed mainly to you, 
Secretary Young, I have been pleased the chairman appointed me 
as the ranking member on a roles and missions ad hoc committee. 
We completed our report. It was a six-month study chaired by 
Jim Cooper, my colleague in the majority from Tennessee. We 
looked a lot, Mr. Secretary, at this jointness, not within the 
branches of the military, not Goldwater-Nichols, but maybe a 
next phase of that in the jointness interagency approach.
    I think we probably need that in regard to this 
contracting. In fact, section H-61 of the National Defense 
Authorization Act of 2008 required DOD, the State Department 
and USAID to enter into a memorandum of understanding on 
contracting in Iraq and Afghanistan no later than July 1, 2008. 
The memorandum will clarify the roles and missions of these 
respective agencies in managing and overseeing contracts.
    The question very specifically is what progress has been 
made on that memorandum of understanding, and how do you feel 
about the importance of this interagency jointness in regard to 
contracting?
    Secretary Young. I will try to be brief, and maybe I could 
reserve one second to comment on your other point. But my 
understanding is that the memorandum of understanding (MOU) is 
in draft and being coordinated. I believe it has become as or 
more important in the last months as we recognize the total 
importance of, one, agencies understanding what other agencies 
are doing in terms of contractors and with contractors, be they 
personal security or contractors performing war functions.
    And then frankly, the theater continues to reemphasize all 
the way up to the combatant commanders the need for interagency 
cooperation to succeed in these phases of war activities where 
there is a combination of trying to restore peace and 
opportunity in the Nation and still warfare against contingency 
operations. You might not expect it, but it is very important 
for interagency cooperation of our whole national effort to 
achieve success there.
    If I could use one second to comment about the other one, I 
agree with you very much, and I didn't speak earlier. The 
combatant commander, it is vitally important for them to say 
what they need, and sometimes point, but they do not have 
enough time to look at all the ways to solve their problems. If 
anything has come up short, we do need the acquisition team to 
act with urgency when they bring that to our attention. But we 
do have urgent operational need statement processes that have 
done a lot of things for combatant commanders fairly quickly.
    You never know whether one thing they see could be done 
much better. I do know if we buy something they want and it 
fails, the acquisition team is going to take the black eye for 
it. So I want to have one chance to make sure we meet their 
requirement and meet their need, not necessarily with the 
hardware, but if the hardware is right, we will go buy it.
    Dr. Gingrey. Right indeed. And there is a fine line there, 
of course, as we all understand.
    Mr. Chairman, thank you.
    The Chairman. Thank you.
    Mr. Ellsworth of Indiana.
    Mr. Ellsworth. Thank you, Mr. Chairman.
    And thank you, gentlemen, for being here. I appreciate what 
you are doing. I don't think a lot of people, and sometimes 
ourselves, understand the daunting task that you have in trying 
to equip our warfighters with everything like we talked about--
food, weapons, equipment, toilet paper, toothpaste--the entire 
gamut of everything they need to do their job. We appreciate 
that.
    I have to associate my comments with Mr. Jones earlier that 
we also, while everyone on this committee, Republicans and 
Democrats, want to do everything we can for the warfighter, 
that we have to also have that responsibility. Those soldiers' 
families are home paying taxes and want us to watch their 
dollars also.
    Mr. Gansler, I would call attention to one of the things 
you said in your earlier statement that we have to give them 
incentives and rewards. On page three of your document, it 
talks about the problem is understaffed, overworked, under-
trained, under-supported, and most importantly, under-valued.
    I would like you to explore that a little further. Some of 
these contractors who do go south, are we making excuses for 
them? Isn't the carrot their salary, the contract and the 
profit they build into that contract themselves? I know that 
some of the contractors--and I remember when I was in 
government before I took this job, I lost two deputy sheriffs. 
I can remember the brochure offering $125,000 a year tax free, 
and they quit my department and went over and served in a 
security sense. So is that not the incentive and reward?
    And going back to my former life, I always thought my 
deputies deserved more money and deserved a bigger salary, but 
county government didn't let me give them that. They knew that 
when they signed that contract coming in. They knew they were 
going to make this much and here was their insurance package 
and here was their benefit package and here was their pension 
and their dollars. I knew they deserved more money, but when 
they did mess up and steal or they took something they didn't 
deserve, then they either got fired and they got punished and 
some went to jail.
    So my question would be, are we making excuses? I think 
this committee and this Congress should give you everything you 
need to do your job, but I don't also want to make excuses for 
those that head south, and out of greed steal from this 
government.
    I guess my ultimate question is, how many are in jail? How 
many have we prosecuted and arrested? And I am not talking 
about the country-club jail. I am talking about the Gray Bar 
Motel, and we backed the U-hauls up to their houses with their 
wife and kids there and took the proceeds like we did from drug 
dealers and take their drug proceeds. How many times have we 
put their pictures in the paper in their hometown newspaper and 
say, here is the guy that stole your tax dollars?
    I appreciate what you are doing, and I don't know if there 
is an answer to this question, but I don't want to enable these 
folks and say it is our fault. We are all overworked, and I 
have a lot of people overworked. It didn't mean they stole and 
they had a right. It is like that old thing, well, it is a big 
company and they won't miss it. I think this is a huge task, 
but we have to keep in mind, we just have to give you the tools 
to do what is right and to catch the bad actors when they mess 
up. And then give them that punishment, give them the stick, 
not the carrot.
    So if you want to respond, that is fine.
    Dr. Gansler. I would very much like to respond, because I 
do separate the illegal actions from what we requested for the 
volunteer government workers. I think on illegal actions, there 
is absolutely no basis for anything except putting them in 
jail. That is certainly the case in the civil world. It is the 
case here as well. That is why we have jails, and we certainly 
want to make sure that there are no illegal actions. Even one 
is bad. As you know, we have over 90 cases being looked at and 
trying to put them in jail is they deserve to go to jail.
    The issue we are really talking about, however, are the 
civilian government employees who when they signed up, they 
signed up to work in Dayton, Ohio doing contracting, and now 
they are being asked to go over in a war zone, get shot at, not 
have their insurance covered, not given many major long-term 
health benefits, not given tax waivers, et cetera, and being 
told go over.
    Those people are the ones that we feel deserve something 
for volunteering to go to something they hadn't signed up for 
originally. We think those provisions need to be considered. It 
is almost unethical that those people aren't being rewarded for 
what they are doing, which is volunteer to go into a war zone 
for the country's good and for the taxpayer's good. If they are 
overseeing a contract, that is for the taxpayer's good. The 
fact that you have people overseeing them is probably going to 
cut back on the amount of illegal actions.
    Mr. Ellsworth. I couldn't agree more. I appreciate that 
clarification.
    Mr. Chairman, I have no further questions. Thank you.
    The Chairman. Thank you.
    Mr. Spratt.
    Mr. Spratt. Thank you very much for your contribution and 
your effort. This has been done several times before, though. I 
am sure you found along the path you traveled many other 
instances where other commissions have tried to effect similar 
change and somehow or another it has not taken root and it 
really hasn't blossomed.
    The last commission, as I recall, was the Packard 
commission.
    Dr. Gansler. I served on that.
    Mr. Spratt. You were on that commission?
    Dr. Gansler. Yes.
    Mr. Spratt. As I recall, Mr. Packard came to the conclusion 
that the easiest way to get good talent aboard was to go to the 
uniformed military services, that while there was good and 
commendable talent in the civilian ranks, you were more apt to 
find it in the military, and in the near-term to attract 
military officers into these procurement and acquisition and 
program management posts than go out and look for civilian 
talent.
    That requires creating a procurement corps, as it were, 
that is a credible, attractive, appealing career path for 
military officers. Would you agree we simply don't have that 
today in any of the services--the Army or any of the other 
services?
    Dr. Gansler. Yes. In fact, that is particularly the point 
of the general officer positions, that if you are going to come 
in as a major, or you are going to come in as a captain, trying 
to decide on what my career is going to be in the Army. And if 
there is no potential to become a general, you are not going to 
stick in that if you are a top person. So we have to create 
that incentive.
    I would argue it is not an either/or, though, between 
military and civilian. There are civilian roles in this case 
and there are military roles, but we need at the leadership, 
particularly in the expeditionary environment, senior military 
people.
    Mr. Spratt. Well, I had this experience when I was in the 
service and worked at the Pentagon some many years ago. An 
officer was created by McNamara through Robert Anthony, who was 
a professor of finance at Harvard Business School. He brought 
down from Harvard during Vietnam young men who needed a direct 
commission in Officer Candidate School (OCS) and things like 
that. He brought them down and set up the Operations Analysis 
Group. And in that group were guys like Hank Paulson and Steve 
Hadley. It attracted an unusually appealing group of very 
capable people, but it didn't retain them.
    Nevertheless, they made a huge contribution while they were 
there. I thought then really the services and DOD together 
don't make a good case for the attractiveness of these jobs. If 
they gave these young bushy-tailed management ambitious types, 
very bright types, the opportunity, some would stay longer than 
two to three years. Some might even stay 20 years if rising to 
the top meant something other than being just a senior 
bureaucrat.
    We simply have not been able to take that and 
institutionalize it for some reason. Is it because of the 
forces against that at the Pentagon? Or is it just difficult to 
do? Do you have an explanation for that?
    Dr. Gansler. That was the cultural change we talked about 
earlier, where the warfighters need to recognize the value of 
these people who are supporting them. Their career paths need 
to be equal. They need to be rewarded for the work they do, 
whether it is civilian or military.
    Mr. Spratt. They also want line management authority. They 
really want to be doing something. They don't want to just fill 
some administrative job doing ministerial things and carry out 
orders from below and shuffle papers. They want to make tough 
management decisions and have those decisions respected.
    Dr. Gansler. And they have to be respected as individuals, 
and that does require some senior positions, particularly on 
the military side.
    Mr. Spratt. One of the things that we picked up from 
previous inquiries here is that there needs to be some 
differential or merit pay to recognize talent and to recognize 
performance, to recognize thoroughness and effort and things 
like this. There needs to be at least a pay band. There was a 
China Lake experiment that is frequently referred to. We tried 
to codify that some years ago, and I think we lost the trail. 
We are as guilty as anybody else because from time to time, we 
come to this task and say, this needs addressing, this needs 
serious attention.
    And then we do something. We pass a bill and we don't 
follow it up adequately to see that it is being carried out. To 
some extent, all we can do is jawbone the Defense Department 
anyway. If they are not inclined and are not structurally able 
to make the change, we kind of are left to our own frustrations 
here.
    What did you find about differential pay? Do you think that 
is an essential part of the solution here?
    Dr. Gansler. You referred back to the Packard commission. 
We actually looked at the China Lake experiment at that time 
and recommended it. But Congress authorized me when I was Under 
Secretary to run an experiment with it.
    Mr. Spratt. I sponsored the legislation.
    Dr. Gansler. Exactly. Of the 90,000 people you approved, 
only 30,000 signed up. The unions fought it fiercely. My last 
year in office, I was sued for some people who didn't get their 
pay for living another year, instead of contributing.
    John, you may want to comment on the current personnel 
system. It is trying to do that again, and I think it should be 
encouraged.
    Secretary Young. I would agree. It is critical, and we have 
tried very hard and been given the tools through the national 
security personnel system to discriminate in terms of 
performance and recognize it with financial rewards, as opposed 
to minor variations in pay that don't discriminate and reward 
people's performance. It is a very important tool for us going 
forward.
    Mr. Spratt. In connection with that pay, I think 
particularly with the government pension being an important 
part of the incentive for people to work in the Federal 
Government, there needs to be more portability, it seems to me, 
of pensions. That way, you can attract young people. They may 
give you five years. They may give you 10 years, but it will be 
10 good years they will give you. And they are not going to do 
that unless they have something to show for that 10 years.
    Most of them, unless they have something like a pension 
that they can pick up and take with them, roll it over or 
something along those lines, so that the pay package is an 
attractive pay package, not just in terms of current income, 
but pension income, too.
    Secretary Young. Mr. Chairman, could I add a comment, if 
you don't mind?
    The Chairman. Yes.
    Secretary Young. I do think, since you raised the Packard 
commission, the trend, and certainly what I have experienced in 
the building, is where we are on the edge of eroding some of 
the capability of our acquisition workforce which the Congress 
has focused a lot of attention in. Those people, especially as 
the comments have arisen of late about the cost growth in 
programs and the movement of requirements, some of that--you 
know, it is not perfect--but some of that is tied to the fact 
that I need an acquisition program manager to do what you said: 
make tough decisions and take tough stands to defend the 
taxpayer's dollars.
    He is often doing that with a requirements officer who is a 
very capable line officer, has a very good promotion potential 
to flag, and worried about if I say no to this requirement 
because I think it is a little excessive and it is definitely 
going to cost us a lot more tax money and it is going to break 
my budget, is that going to hurt me in that flag board when it 
comes up?
    We have to continue to take care of those people and 
actually give them more responsibility and authority to be good 
stewards of the taxpayer's dollar, meet the warfighter's 
requirements, but as you know, the system has come to set those 
requirements bars excessively high and chase dollars. Sometimes 
we need to moderate that. That is another hearing discussion, 
but it is very important to talk about that issue the way you 
did.
    The Chairman. I thank the gentleman.
    What was the China Lake experiment?
    Dr. Gansler. It was basically trying to pay people for 
their performance, rather than for having lived another year.
    The Chairman. Rather than what?
    Dr. Gansler. Rather than just living another year and 
having a temperature of 98.6 degrees. The whole idea was you 
will rate people on their current pay and their performance, 
and if their current pay is low relative to what they should be 
getting, then you give them a significant impact. If their pay 
is high and they are not performing, you don't give them a 
significant impact. So it is pay for performance, which is, as 
John said, basically what they are trying to now implement with 
the personnel system.
    Secretary Young. Mr. Chairman, I believe it also had 
another dimension of hiring. It was a demo program that 
included the dimension, too, of us being able to hire technical 
people who can command greater salaries out in industry--can we 
have different hiring processes and pay processes that will let 
us hire the best engineering talent, which isn't always the 
case today in the government.
    The Chairman. Thank you.
    One last question. Back in the 1990's, we passed the 
Defense Acquisition Workforce Improvement Act, which required 
workforce training to perform necessary duties. Should we 
revisit that act that we passed as it relates to contingency 
contracting?
    Secretary Young. I certainly would welcome comments from my 
colleagues. For my part, I would tell you I think the Act has 
been very effective. The training that we are putting in place 
has effectively trained people. We need to constantly improve 
that training. One of our bigger issues, and I regret that 
Congressman Hunter is not here, is the DOD budget is up 34 
percent since 2001. The research and development (R&D) budget 
is up 70 percent, and we have spent over $600 billion of 
supplemental money, without adding much in the way of 
workforce.
    I think the Congress has a legitimate expectation that 
those monies will be carefully managed and overseen, not 
wastefully, but appropriately. I am going to have to add some 
people to the workforce in the right skill areas. In fact, the 
demands are greater than we see here, where industry 
increasingly offers us unrealistic programs. Then we have 
protests, as you are well aware. That puts greater burdens on 
the government team, and then now we need things to be 
interoperable because that brings great value to the joint 
warfighter.
    Some of that integration has to occur on the government 
side to at least define it, because I can't tell----
    The Chairman. Will you make formal recommendations along 
those lines?
    Secretary Young. Yes, sir.
    The Chairman. I would appreciate it very much.
    Any other questions? If not, I thank my colleagues and 
thank the witnesses. It has just been excellent.
    [Whereupon, at 12:32 p.m., the committee was adjourned.]
?

      
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                            A P P E N D I X

                             April 10, 2008

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              PREPARED STATEMENTS SUBMITTED FOR THE RECORD

                             April 10, 2008

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