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



 
         FEDERAL CONTRACTING: DO POOR PERFORMERS KEEP WINNING?

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

                                HEARING

                               before the

                 SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,
                     ORGANIZATION, AND PROCUREMENT

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               __________

                             JULY 18, 2007

                               __________

                           Serial No. 110-105

                               __________

Printed for the use of the Committee on Oversight and Government Reform


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 HENRY A. WAXMAN, California, Chairman
TOM LANTOS, California               TOM DAVIS, Virginia
EDOLPHUS TOWNS, New York             DAN BURTON, Indiana
PAUL E. KANJORSKI, Pennsylvania      CHRISTOPHER SHAYS, Connecticut
CAROLYN B. MALONEY, New York         JOHN M. McHUGH, New York
ELIJAH E. CUMMINGS, Maryland         JOHN L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
DANNY K. DAVIS, Illinois             TODD RUSSELL PLATTS, Pennsylvania
JOHN F. TIERNEY, Massachusetts       CHRIS CANNON, Utah
WM. LACY CLAY, Missouri              JOHN J. DUNCAN, Jr., Tennessee
DIANE E. WATSON, California          MICHAEL R. TURNER, Ohio
STEPHEN F. LYNCH, Massachusetts      DARRELL E. ISSA, California
BRIAN HIGGINS, New York              KENNY MARCHANT, Texas
JOHN A. YARMUTH, Kentucky            LYNN A. WESTMORELAND, Georgia
BRUCE L. BRALEY, Iowa                PATRICK T. McHENRY, North Carolina
ELEANOR HOLMES NORTON, District of   VIRGINIA FOXX, North Carolina
    Columbia                         BRIAN P. BILBRAY, California
BETTY McCOLLUM, Minnesota            BILL SALI, Idaho
JIM COOPER, Tennessee                JIM JORDAN, Ohio
CHRIS VAN HOLLEN, Maryland
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
JOHN P. SARBANES, Maryland
PETER WELCH, Vermont

                     Phil Schiliro, Chief of Staff
                      Phil Barnett, Staff Director
                       Earley Green, Chief Clerk
                  David Marin, Minority Staff Director

  Subcommittee on Government Management, Organization, and Procurement

                   EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania      BRIAN P. BILBRAY, California
CHRISTOPHER S. MURPHY, Connecticut   TODD RUSSELL PLATTS, Pennsylvania,
PETER WELCH, Vermont                 JOHN J. DUNCAN, Jr., Tennessee
CAROLYN B. MALONEY, New York
                    Michael McCarthy, Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on July 18, 2007....................................     1
Statement of:
    Smith, Robin, former Wackenhut security officer at DHS 
      Headquarters; Lawrence Brede, senior vice president, 
      Wackenhut Services, Inc.; and Scott Amey, general counsel, 
      Project on Government Oversight............................    96
        Amey, Scott..............................................   133
        Brede, Lawrence..........................................   105
        Smith, Robin.............................................    96
    Woods, William, Director, Acquisition and Sourcing 
      Management, Government Accountability Office; Elaine Duke, 
      Chief Procurement Officer, Department of Homeland Security; 
      Richard Skinner, Inspector General, Department of Homeland 
      Security; William Desmond, Associate Administrator, 
      accompanied by Tyler Przybylek, Senior Adviser to the 
      Administration, National Nuclear Security Administration, 
      Department of Energy; and Gregory Friedman, Inspector 
      General, Department of Energy..............................    10
        Desmond, William.........................................    64
        Duke, Elaine.............................................    23
        Friedman, Gregory........................................    74
        Skinner, Richard.........................................    34
        Woods, William...........................................    10
Letters, statements, etc., submitted for the record by:
    Amey, Scott, general counsel, Project on Government 
      Oversight, prepared statement of...........................   136
    Brede, Lawrence, senior vice president, Wackenhut Services, 
      Inc., prepared statement of................................   107
    Desmond, William, Associate Administrator, National Nuclear 
      Security Administration, Department of Energy, prepared 
      statement of...............................................    66
    Duke, Elaine, Chief Procurement Officer, Department of 
      Homeland Security, prepared statement of...................    25
    Friedman, Gregory, Inspector General, Department of Energy, 
      prepared statement of......................................    76
    Skinner, Richard, Inspector General, Department of Homeland 
      Security, prepared statement of............................    36
    Smith, Robin, former Wackenhut security officer at DHS 
      Headquarters, prepared statement of........................    99
    Towns, Hon. Edolphus, a Representative in Congress from the 
      State of New York, prepared statement of...................     4
    Woods, William, Director, Acquisition and Sourcing 
      Management, Government Accountability Office, prepared 
      statement of...............................................    13


         FEDERAL CONTRACTING: DO POOR PERFORMERS KEEP WINNING?

                              ----------                              


                        WEDNESDAY, JULY 18, 2007

                  House of Representatives,
            Subcommittee on Government Management, 
                     Organization, and Procurement,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:10 p.m., in 
room 2154, Rayburn House Office Building, Hon. Edolphus Towns 
(chairman of the subcommittee) presiding.
    Present: Representatives Towns, Murphy, Welch, Maloney, 
Bilbray, and Platts.
    Staff present: Michael McCarthy, staff director; Rick 
Blake, professional staff member; Cecelia Morton, clerk; John 
Brosnan, minority senior procurement counsel; Emile Monette, 
minority professional staff member; Brian McNicoll, minority 
communications director; and Benjamin Chance, minority clerk.
    Mr. Towns. The hearing shall come to order.
    We are here today to consider an important question: Is 
there any penalty for poor performance as a Federal contractor? 
This committee's investigation has gathered evidence of 
serious, well-documented performance problems with large 
Federal contracts. But these problems never seem to prevent the 
companies involved from getting new work.
    I remember the old saying, ``Fool me once, shame on you; 
fool me twice, shame on me.'' Well, in my view, the taxpayers 
are being fooled time and time again. This must stop.
    I hear from my constituents and from small minority-owned 
businesses nationwide that they can't get contracts with the 
government, only subcontracts from these enormous firms that 
get all the prime contracts. I am very concerned that when the 
government does not expect existing contractors to meet high 
standards, innovative new companies are effectively frozen out.
    We could really shake up Federal contracting if we could 
cut out the middleman and give some new people a shot. And it 
would be an incentive for everyone to step up their performance 
if they knew that doing a lousy job would mean the next 
contract went to someone new.
    For this hearing we have put together some case studies to 
look at how the system for measuring past performance works or 
does not work, as the case may be. I want to focus on the 
policy behind managing for performance. How is the contractor's 
performance measured? How is it weighed in the selection 
process? Do our contracting officers have the tools they need? 
Does it matter when contractors don't pay their taxes, violate 
labor laws or face court judgments for fraud or discrimination? 
These are the types of questions we should consider today.
    Our first case study is Wackenhut. Wackenhut has provided 
security for the Department of Energy at the Oak Ridge nuclear 
site since 2004. The Department of Energy inspector general 
reported that Wackenhut tipped off guards to a security drill, 
making the drill useless, required personnel to work overtime 
in excess of safety guidelines, and falsified records of 
security guard training. The IG found that Oak Ridge security 
cost nearly double during the Wackenhut 5-year term, and that 
the company may have unduly profited. But Energy officials are 
pleased with Wackenhut's performance, they have awarded ratings 
of 98 and 99 percent, granted millions in award fees and 
renewed the Wackenhut contract.
    Wackenhut also provided security at DHS headquarters; we 
have a former Wackenhut guard who will tell us about security 
breaches and mismanagement in that contract. In fact, DHS has 
decided not to employ Wackenhut at DHS headquarters anymore. 
But just a few months after that decision, the Border Patrol 
within DHS hired Wackenhut for a 5-year, $250 million contract 
to transport immigration detainees in the Southwest.
    Our second study is Bechtel, one of the largest contractors 
in the world. At the Department of Energy, Bechtel holds a 
massive construction contract for nuclear waste storage at the 
Hanford site in Washington. Under Bechtel's management the 
project's estimated cost has increased more than 150 percent to 
about $11 billion, and the completion date has been extended 
from 2011 to 2017. GAO attributed most of the cost increase and 
delays to Bechtel's poor performance.
    The Department of Energy also experienced problems with 
security and management at Los Alamos National Laboratory which 
was managed by the University of California. The problems got 
so bad that Energy decided to rebid the contract and look for 
new management. They found new management, a joint venture 
between Bechtel and the University of California.
    After Katrina, Bechtel got an emergency no-bid contract to 
install and maintain trailers. The cost of that contract 
spiraled out of control and auditors found more than $55 
million of incorrect charges. More than 6 months after the 
emergency, DHS finally put the contract out for competitive 
bids. After the competition, Bechtel received a new contract to 
continue its trailer work.
    Let me point out, I am not against contracting or 
contractors. I am against weak management and shoddy work. I 
know responsible contractors share my views. The flaws in the 
system are just as frustrating for companies who do high-
quality work as they are for Congress and the taxpayers.
    From a policy view, one problem seems to be that 
contracting officers often don't have a clear view of company 
track records when making procurement decisions. There is no 
easy access to relevant information like audit reports, IT 
reports, a court decision reviewing previous work.
    My colleague from New York, Carolyn Maloney, has introduced 
a bill to acquire a data base for this type of information, and 
we should discuss that approach today.
    At this time, I would like to yield to the ranking member 
of the committee, Congressman Bilbray from California.
    [The prepared statement of Hon. Edolphus Towns follows:]

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    Mr. Bilbray. Thank you, Mr. Chairman, I thank you for 
having this hearing.
    Mr. Chairman, I have served in many different functions in 
government. At 25, I was a city council member, at 27 I became 
mayor; I served 10 years for a small little group of citizens 
called the county of San Diego, 3 million, and had the 
privilege of coming here and serving in Congress. In that time, 
the one thing that has become obvious to me is that there are 
different schools of thought about the best way to provide 
services to the public.
    Frankly, I was forced as a young mayor when we lost 40 
percent of our city funding under Proposition 13 to eventually 
eliminate the police department and contract out that service. 
We did it because the in-house bureaucracy had become so loaded 
and inefficient that we needed to add competition to the 
process; the only way to do that was to bring in outside 
agencies.
    Today I am looking at the explanation of this hearing, and 
I would like to remind everybody that poor performance, keep 
getting the contracts, also applies to those of us who are in 
government. But poor performance is not a monopoly resting on 
private contractors. I will give you an example.
    I am shocked this town and the media didn't jump more on 
the horrendous performance of the RTC with the liquidation of 
the billions and billions of dollars of public assets. If you 
think they were very efficient, take a look at the huge profits 
of the people who bought up those assets of the RTC during that 
period and said those profits could have been resources of the 
taxpayer.
    So we see the savings and loan debacle, we look at the 
private sector. I spent most of my career in the public sector 
realizing it was those on this side of aisle who really ripped 
off the taxpayers by mismanaging those assets.
    The lack of performance is something I think we need to 
look at. One of things that I have seen is that fair 
competition is where contracting really gives the ability to 
get effectiveness.
    There are some people I have worked with here as a 
government official; I saw great success in some of these 
companies. I would only say, I see contracting as being an 
essential part of the ability of the Federal Government to 
provide cost-effective service to the American people.
    This hearing today should not be a crucifixion of the 
private sector; it should be a way of being able to improve a 
system that is essential, because when I came here to 
Washington and looked around and looked at situations like a 
powerhouse owned by the government that is still burning coal 
at the turn of the century, all I thought was, My God, there 
has to be a better way than having the Federal Government try 
to do it all in house.
    Mr. Speaker, there is a reason why today, across this 
country and around this world, we have private contractors 
defending our Naval bases and securing our facilities and that 
is because we cannot afford not to. So I hope that this hearing 
is a way to be able to take a system that is essentially to the 
protection of the American people and improve it and get the 
most cost-effective way of providing services, because honestly 
there is no way we can make that claim if we try to say we 
abolished the participation of the private sector and try to do 
it all in house.
    I think the record will show we will not go back to the 
1930's. We need to do it with a competitive system, and 
hopefully this will correct misconceptions and find some 
situations that we can improve as partners in this concept of 
providing essential services to the American people.
    I yield back at this time, Mr. Chairman.
    Mr. Towns. Thank you very much, Mr. Bilbray.
    Congressman Welch.
    Mr. Welch. I have no opening statement.
    Mr. Towns. Congressman Murphy.
    Mr. Murphy. Thank you, Mr. Chairman. Just a brief remark to 
say, I think what we discuss here today is not a crucifixion of 
the private sector, not to create a justification to end 
Federal contracting as we know it, but to ask a simple 
question: When the Federal Government knows about 
inefficiencies and lapses of judgment with a contractor doing 
business with the Federal Government, what are our 
responsibilities? If there is an indictment to be made today, I 
think it lies with both the private and public sectors.
    In the State of Connecticut we spent a great deal of time 
in Southington remediating a situation with a contractor who 
did some major work on schools that was millions upon millions 
of dollars over budget, or was well beyond schedule; and came 
to find out that this contractor had had a long history of 
problems in other school districts, unbeknownst and undisclosed 
to the small town of Southington.
    This isn't that situation. This is a situation where we are 
not talking about information undisclosed; we are talking about 
public information that U.S. Government agencies have regarding 
the inefficiencies and poor work performance of private 
contractors.
    The question to be asked today is not necessarily, to the 
ranking member's point, whether or not we go with more or less 
Federal contracting, but what do we do with the information? 
The way we are doing it now is not working. I certainly think 
that can lead to an appropriate conversation as to whether we 
are doing far too much over the private sector, but today's 
conversation is how we utilize taxpayer dollars when we have 
already made the decision to send that money into private 
hands.
    I look forward to testimony of the witnesses before us.
    Mr. Towns. Thank you very much, Congressman Murphy.
    Congresswoman Maloney.
    Mrs. Maloney. Thank you, Mr. Chairman, for calling this 
hearing on a critically important issue. It is really Congress' 
responsibility to ensure that the taxpayers' dollars are used 
wisely and not wasted on contracts that will not be fulfilled 
or be fulfilled up to standards.
    I will say that the chairman and I grew up in the rough and 
tumble of New York City politics where we have had our share of 
contract scandals. I chaired the committee on contracts in New 
York City and authored a bill called VINDEX. It basically says, 
before a procurement officer lets a contract, they must go into 
the centralized data base and check whether or not that 
contractor has good credit, whether or not that contractor has 
completed the work on time, whether or not that contractor has 
cost overruns, whether or not that contractor has a record of 
having completed work and done it well, or if they have a 
record of debarments and fines and penalties and punishment. 
And that VINDEX system allows procurement officers to make good 
choices when they make a decision to spend taxpayers' dollars 
for a service.
    The bill that I introduced does exactly that, it is built 
on the copy of the H.R. 3033, Contractors and Federal Spending 
Accountability Act and it will really put teeth behind and 
fortify the current Federal suspension and debarment system.
    When we put this into context, the United States is the 
largest purchaser of goods and services in the entire world, 
spending more than $419 billion on procurement awards in 2006 
alone and $440 billion on grants in 2005. Yet the Federal 
Government's watchdogs, the Federal suspension and debarment 
official, our procurement officers, currently lack the 
information that they need to protect our taxpayers' dollars 
and the interest of business and government in getting a 
contract built and done on time in the right manner.
    To what our bill does is that right now we have no 
centralized, confidential, governmentwide method to study and 
account for the performance of our contractors and to assist 
the procurement officers in making informed choices on who can 
get the job done right.
    I do want to cite data from the Project on Government 
Oversight on a report that they did in 1995 of the top 50 
Federal contractors, based on the total contract dollars 
received. Mine have a total of 12 resolved cases, totaling $161 
million in penalties paid; so my question is, why in the world 
are we giving contracts to people who are being penalized for 
poor performance? Obviously our procurement officers do not 
have access to this information, this bill would give them that 
information.
    Additionally, these 50 contractors paid approximately $12 
billion in fines and penalties. I mean, so we really can do a 
better job and this bill would help create a system that would 
allow us to have a more open and transparent government so that 
our procurement officers could make better decisions on wisely 
investing taxpayers' dollars in--over $400 billion in private 
contracts.
    So I thank you for calling this hearing, I think that one 
of the things we have to continue to work on is better 
oversight, better decisions, better procedures to protect 
taxpayers' dollars, and this hearing and this bill will do 
that.
    I yield back, thank you.
    Mr. Towns. Thank you very much, Congresswoman Maloney.
    Let me add, we invited Bechtel to this hearing and they 
declined. I just want the record to indicate that, they 
declined.
    Will the witnesses please stand? We always swear in our 
witnesses here.
    [Witnesses sworn.]
    Mr. Towns. Let the record reflect they all answered in the 
affirmative.
    You may be seated.
    Let me introduce our witnesses at this time. William Woods 
is the Director of Acquisition and Sourcing Management with the 
Government Accountability Office, an agency he has served with 
since 1981. He is responsible for GAO's reviews of Federal 
agency contracting and is an expert in the field.
    Welcome.
    Mr. Woods. Thank you.
    Mr. Towns. Elaine Duke is Chief Procurement Officer at the 
Department of Homeland Security. Ms. Duke previously served as 
Department of Homeland Security's Deputy Chief Procurement 
Officer and as the Assistant Administrator for Acquisitions for 
the Transportation Security Administration. She spent much of 
her career in acquisition for the U.S. Navy.
    Welcome.
    Richard Skinner is the Inspector General at the Department 
of Homeland Security. He was formerly the FEMA IG, and has 
previously served with the Department of State, Department of 
Commerce, the Arms Control Disarmament Agency and other Federal 
agencies.
    Welcome.
    Mr. William Desmond is Associate Administrator for Defense 
Nuclear Security at the National Nuclear Security 
Administration in the Department of Energy. He is a career 
executive who has held a number of senior management posts in 
nuclear security. Mr. Desmond is accompanied by Mr. Przybylek; 
is that correct?
    Mr. Przybylek. Yes, it is.
    Mr. Towns. I want you to know I have been struggling with 
that.
    He was Senior Adviser to the Administrator at NNSA.
    Gregory Friedman is Inspector General at the Department of 
Energy. He has served at the Department since 1982 and has 
worked in the Federal auditing field since 1968.
    Mr. Woods, why don't you proceed with your opening 
statement and let me just say, we would like for you to speak 
for 5 minutes at the most; and then, of course, we allow the 
committee the opportunity to ask questions. And, of course, 
thank you so much; we will begin with you, Mr. Woods.

STATEMENTS OF WILLIAM WOODS, DIRECTOR, ACQUISITION AND SOURCING 
  MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE; ELAINE DUKE, 
  CHIEF PROCUREMENT OFFICER, DEPARTMENT OF HOMELAND SECURITY; 
  RICHARD SKINNER, INSPECTOR GENERAL, DEPARTMENT OF HOMELAND 
SECURITY; WILLIAM DESMOND, ASSOCIATE ADMINISTRATOR, ACCOMPANIED 
   BY TYLER PRZYBYLEK, SENIOR ADVISER TO THE ADMINISTRATION, 
NATIONAL NUCLEAR SECURITY ADMINISTRATION, DEPARTMENT OF ENERGY; 
 AND GREGORY FRIEDMAN, INSPECTOR GENERAL, DEPARTMENT OF ENERGY

                   STATEMENT OF WILLIAM WOODS

    Mr. Woods. Thank you, Mr. Chairman, Mr. Bilbray, Mrs. 
Maloney, Mr. Murphy. Good afternoon, it is a real pleasure to 
be here, and I thank you for inviting me.
    As Mrs. Maloney pointed out, the Federal Government is the 
largest single buyer in the world, spending over $400 billion 
annually on goods and services. Many of our agencies are highly 
reliant these days on the use of contractors to carry out their 
vital and important missions; and that makes it all the more 
important and critical that we make sure that we award 
contracts only to responsible contractors and that we have 
systems in place to hold them accountable.
    What I would like to do in a few minutes I have available 
today is to run through some of the existing ways in which 
contractor performance is considered in the award and 
performance of government contracts.
    Second, how that actually happens in practice, I will have 
to point out that we are not involved in an in-depth evaluation 
of the contractor performance, but we do know a little bit 
about how that process is supposed to work; and I hope we can 
provide that information to the committee this afternoon.
    Third, we have a mechanism at GAO, a bid protest function 
that allows us a particularly illuminating picture into how 
past performance and other issues in the award of government 
contracts actually happened on the ground; and I will 
illustrate--my statement illustrates some cases where the use 
of past performance has been an issue in some of those bid 
protest decisions.
    First--there are basically four ways in which a 
contractor's performance might come into play, first, in the 
area of source election. Now we as consumers in our ordinary 
day-to-day lives would certainly agree that past performance is 
important as we would pick contractors to perform services for 
us, but surprisingly, it is not until relatively recently that 
past performance became a required evaluation factor in 
selecting government contractors.
    It was in the mid-1990's that Congress enacted legislation, 
largely shepherded by this committee, as well as others, 
requiring that past performance be a critical and important 
evaluation factor. The Federal Acquisition Regulation was 
subsequently revised to require that past performance be an 
evaluation factor in all government procurements.
    The second way that contractor performance might come into 
the play is in the area of responsibility. Now, once an agency 
selects a contractor going through the evaluation process, 
weighing the various evaluation factors and selecting a 
contractor, it must then determine that selected contractor is 
responsible; and that means that he has the business resources, 
has the key personnel available, as well as the ethical 
foundation in place, to be able to adequately carry out the 
contract.
    The third area is in the area of surveillance. The 
government is responsible for the day-to-day monitoring of 
contracting performance, and at the end of contracts is 
responsible for completing a performance evaluation for all of 
the contractors and making that available governmentwide, 
entering it into a governmentwide data base.
    And then fourth, where contractors fail to perform in a 
very serious manner, there is a process, suspension and 
debarment, and the Federal Acquisition Regulation specifically 
says that a contractor who has a history of not performing up 
to the requirements of a contract, that contractor may be 
debarred from further contracts, and the debarment process can 
last up to 3 years.
    There are a number of guidance regulations, that is, policy 
documents, etc., that are outlined in my statement--I won't get 
into detail on those; some of those are governmentwide, the 
Federal acquisition I mentioned. The Office of Federal 
Procurement Policy within OMB also issued guidance on the use 
of past performance in selecting contractors. There are also 
specific guidance documents that individual agencies have; the 
Department of Homeland Security, for example, Department of 
Defense, Department of Energy all have their own guidance 
documents that provide further elaboration on how past 
performance ought to be considered.
    Basically, there are a number of key points that must be 
considered as contractor performance is factored into the 
source selection process. First of all, agencies have very 
broad discretion in how they are going to weigh past 
performance. As I said, it is a required evaluation factor, but 
it is up to the agencies to decide how much weight that factor 
is going to apply in individual procurements.
    Mr. Towns. Can you summarize?
    Mr. Woods. I certainly will.
    The key to all of this is whatever the solicitation says as 
to how past performance is going to weigh, the agency must 
adhere to that evaluation scheme. They do not have the 
discretion to depart from an announced evaluation scheme.
    Thank you, sir.
    Mr. Towns. Thank you very much.
    [The prepared statement of Mr. Woods follows:]

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    Mr. Towns. Ms. Duke.

                    STATEMENT OF ELAINE DUKE

    Ms. Duke. Good afternoon, Chairman Towns, Ranking Member 
Bilbray and members of the subcommittee. Thank you for the 
opportunity to speak before you and meet with you this 
afternoon. I am the Chief Procurement Officer for the 
Department of Homeland Security and a career executive, with 
most of my 23 years in public service in the procurement 
profession.
    Before addressing the responsibility determinations, I 
would like to convey my top three priorities, which are 
essential to enhancing DHS's ability to procure from 
responsible contractors. Those priorities are first, to build 
the DHS acquisition work force; second, to make good business 
deals; and third, to perform effective contract administration.
    As the Chief Procurement Officer, I provide oversight and 
support to eight procurement offices within DHS. I provide the 
acquisition infrastructure by instituting policies and 
procedures that allow DHS contracting officers to operate in a 
uniform and consistent manner.
    Mr. Chairman, I know that you are very interested in 
ensuring that DHS and its components procure goods and services 
on behalf of the American taxpayer from responsible 
contractors. I can assure you that we share your interest and 
take seriously our obligation to award only to responsible 
contractors.
    In my written testimony, I outline in detail the processes 
and systems we rely on to ensure that we do business with 
contractors holding a good track record of performance. In 
addition to following the processes described in the 
regulations, we have developed further guidance within DHS to 
ensure contracting professionals make appropriate business 
decisions based on the particular facts of each given 
situation.
    Our Homeland Security acquisition regulations and Homeland 
Security acquisition manual supplement the Federal guidance and 
reiterate the requirement that our contracting officers are to 
perform responsibility determinations prior to making a new 
contract award. Thus, if a contracting officer finds that a 
company has a record that includes negative information, he or 
she must assess its relevance in the requirement before award.
    The role past performance plays in DHS-negotiated best-
values procurements is receiving increased attention. Just last 
month my office issued an extensive, practical guide to source 
selection to all components. The guide stresses the requirement 
for evaluating past performance on all negotiated competitive 
acquisition above the simplified acquisition threshold.
    At the Department we are increasingly emphasizing 
comparative adherence to the processes and the mechanics of 
contracting processes. Very recently, the Under Secretary for 
Management issued a memorandum to all members of the DHS 
acquisition community, reinforcing the requirement to perform 
performance evaluations on all of our contractors.
    In response to the central question of this hearing, why do 
poor performers keep winning, we are making concerted efforts 
to improve contractor accountability and minimize those 
instances where a poor performer receives a DHS contract award.
    This fiscal year our eight components have executed over 
59,000 contract actions representing total obligated dollars 
over $6.5 billion, involving 12,000 different vendors. In 
compliance with the FAR, contracting professionals are 
consulted and we participate in the Interagency Suspension and 
Debarment Committee.
    I will address two specific businesses, Wackenhut and 
Bechtel. In April 2006, DHS awarded a contract for guard 
services for our Nebraska Avenue complex to Paragon Systems 
incorporating lessons learned from DOD and more stringent 
requirements. The predecessor Wackenhut contract was a legacy, 
made, awarded and based on a operations contract vehicle for 
significantly less robust security requirements. That contract 
was with armed Navy active duty personnel.
    The Wackenhut contract awarded Customs and Border 
Protection to transfer immigration detainees to consider past 
performance as a key evaluation factor as part of the source 
selection process. Positive feedback from two Federal agencies 
was received by Customs and Border Protection, and thus far 
performance has been satisfactory.
    The Wackenhut contract awarded by Immigration and Custom 
Enforcement [ICE], for guard services were awarded as task 
orders of the General Services Administration schedule. GSA 
makes the required responsibility determinations and monitors 
contract performance on key aspects of contractor compliance 
through the life of the contract.
    With regard to Bechtel, the past performance questionnaires 
were sent to the company and individuals, returned in sealed 
envelopes, and past performance was considered in the 
competition of the Individual Assistance-Technical Assistance 
Contract at FEMA.
    We continue to grow and train our work force in DHS and 
look forward to answering questions this afternoon.
    Mr. Towns. Thanks you very, very much, Ms. Duke.
    [The prepared statement of Ms. Duke follows:]

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    Mr. Towns. Mr. Skinner.

                  STATEMENT OF RICHARD SKINNER

    Mr. Skinner. Good afternoon, Chairman Towns, Ranking Member 
Bilbray and members of the subcommittee. It is a pleasure to be 
here.
    There are several points I would like to make. The first 
deals with acquisition resources. It should not be a surprise 
to anyone there is acquisition management crisis within the 
Federal Government today, the problem is not a new one.
    For the past decade, management capabilities have been 
downsizing while procurement workload was on the rise. 
Procurement spending in the Federal Government has more than 
doubled just in the past 6 years alone from $203 billion to 
$412 billion.
    I also think it is important to note that when the 
Department of Homeland Security was created, it was 
shortchanged. On one side of the ledger, it required the entire 
assets and programs of 22 disgruntled agencies. Yet on the 
other side of the ledger, it did not require proportionate 
share of the acquisition management assets needed to support 
those programs and operations.
    DHS contract spending has tripled over the past 3 years 
from $3.4 billion to $15.8 billion. DHS is now one of the 
largest user of contractors in the Federal Government after the 
DOD and Energy; yet while its contract spending has grown 
significantly, its ability to manage those contracts has been 
unable to keep pace.
    My second point goes to expediency over substance, schedule 
concerns trump performance concerns. Like many other Federal 
agencies, the Department of Homeland Security is in a catch 22 
situation. The urgency of this mission demands rapid pursuit of 
major investments programs. The contracts, however, limit the 
time available for adequate procurement claims and development 
of technical requirements, acceptance criteria and performance 
measures.
    Without the basic provisions that specify precisely the 
expected outcomes and performance measures, the government has 
no basis to assert that a contractor failed to perform and, 
thus, no basis to pursue suspension and debarment or other 
remedies to protect the taxpayer in future procurements. The 
government must lay the groundwork from the very beginning of 
the acquisition process, not after millions have been spent 
with little or nothing to show for it.
    My final point is the contracting vehicles being reported 
today to ensure procurement of goods and services. The 
Department of Homeland Security, like many Federal agencies, 
has become increasingly reliant upon risky contract types that 
can be easily abused unless properly managed. These contracting 
vehicles, such as the performance based contract, indefinite 
delivery, indefinite quantity, IDIQ contracts, and time and 
material contracts should only be used in limited 
circumstances, fully justified, and only when an agency 
acquisition infrastructure is in place, to provide sufficient 
oversight.
    Before I close my statement, Mr. Chairman, I would like to 
say a few words about contract performance information and the 
ability of agencies to share access to such information.
    For many years, the Federal Government has pursued data 
bases that contain contractor performance information and 
provide easy access to agencies planning to award new 
contracts. In fact, several systems with varying levels of 
functionality exist today. Nevertheless we do not have a single 
system that includes all relevant information. For example, 
consent decrees, negotiated settlements, reports of 
investigation, audit reports, State government information are 
not readily available in these systems.
    The current task force is with our inspector general at 
GSA. The Justice Department initiated this effort last fall and 
focused the resources and talents of U.S. attorneys, inspector 
generals and other parts of the government we're finding 
procurement fraud.
    Our legislative committee is looking at what statutory 
changes would be needed to strengthen the tools to prevent and 
remedy misconduct in Federal contracts. One proposal we are 
exploring would address the issue of sharing contractor 
performance information.
    I understand, Congresswoman Maloney, that you have 
introduced legislation just this past Friday, cosponsored with 
Chairman Towns.
    Mrs. Maloney. Yes.
    Mr. Skinner. I applaud you for that and look forward to 
working with you and exploring ways that we can improve 
information sharing in the Federal Government on procurement 
operations.
    In summary, DHS and the Federal Government can do a better 
job protecting public interest in major acquisitions. The long-
run solutions include strong, clearly articulated program 
goals, defined program technical requirements, performance 
measures and acceptance terms, well-structured contacts and 
sole costs and performance oversight.
    In the near term, DHS mitigates risk exposure through such 
actions as writing shorter-term contracts with smaller 
incremental tasks, using contract vehicles that better share 
risk between government and the vendor and ensuring the 
government has a negotiating bar with decision points and 
options.
    Mr. Chairman, this concludes my remarks. I will be happy to 
answer any questions you or the committee may have.
    Mr. Towns. Thank you very much, Mr. Skinner.
    [The prepared statement of Mr. Skinner follows:]

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    Mr. Towns. Mr. Desmond.

                STATEMENT OF WILLIAM J. DESMOND

    Mr. Desmond. Good afternoon, Mr. Chairman, Ranking Member 
Bilbray and members of the subcommittee. I appreciate the 
opportunity to appear before you today to discuss your concerns 
with the performance of Department of Energy security 
contractors.
    Let me briefly begin by introducing myself and providing a 
description of the roles and responsibilities of the Office of 
Defense Nuclear Security within the National Nuclear Security 
Administration. I have worked in various security positions 
since July 1967, encompassing a wide range of activities, 
including the implementation of security programs at nuclear 
facilities, the formation of nuclear security policy and site 
security program direction and management. These positions have 
spanned the U.S. Department of Energy and the Nuclear 
Regulatory Commission. I believe my experience affords me a 
unique perspective on nuclear security.
    As the Associate Administrator, I am responsible for the 
overall direction and management of physical security programs 
at these sites. I serve in the organization for providing 
engineering, technical operational and administrative security 
support and oversight to both headquarters line management and 
field elements. This includes physical security, personnel 
security, nuclear materials control, accounting, sensitive 
information protection and technical security programs.
    In carrying out my responsibilities, I work with the NNSA 
site offices which, in turn, has many service security programs 
at the laboratories and the plants. I have also been designated 
as the Chief, Defense Nuclear Security, pursuant to section 
3232 of the National Security Administration Act. As such I am 
responsible for the implementation of security policies as 
directed by the Secretary and the Administrator.
    With respect to the recent selection of Wackenhut Services, 
Inc., as the protective force contractor at the Oak Ridge 
Reservation, I served as source selection official and made the 
final decision to award the contract to WSI. This was after 
reviewing the proposals and the evaluation report prepared by 
the source evaluation board. I made the best-value decision in 
selecting the winning proposal.
    As part of the evaluation and selection process, they 
carefully reviewed the materials submitted by each offeror for 
a technical approach, business management approach and relevant 
past experience. The SEB also evaluated responses to customer 
feedback questionnaires, interviewed references contained 
within the RFP submissions and reviewed independent reports as 
a DOE Inspector General, and the Defense Contract Audit Agency.
    We also evaluated the information available from the 
governmentwide past performance information retrieval system 
and the Excluded Parties List system. We paid particular 
attention to four recent DOE IG reports providing security at 
the Oak Ridge site. As with most criticisms, some of the 
findings were precisely on target, some we disagreed with and 
some seemed exaggerated.
    In one report it was alleged that protective force 
personnel cheated on force and force exercise. While NNSA 
agreed that the scenario of information control procedures were 
insufficient, we noted that the performance test was conducted 
for training, not protection evaluation purposes; therefore, 
the loss had no impact on Y-12 security. The Y-12 site office 
took coordinated action with the operating contractor and WSI 
management to improve the planning, coordination and execution 
of performance tests to ensure the integrity of the results. 
There have been no recurrence of this problem.
    In another case, NNSA disagreed with the IG in its 
conclusion that protective force personnel had been given 
credit for training that they did not receive. However, NNSA 
concurred with the findings and recommendations as a means to 
improve the quality in the administration of the protective 
force program. My written testimony, Mr. Chairman, provides 
more details on these and other issues raised by the IG.
    Based on the information we received in the evaluation and 
selection process that was followed, this award was thorough, 
fair and honest; the process followed departmental acquisition 
guidelines.
    As you have mentioned, I am accompanied by Mr. Thomas 
Przybylek, the Senior Adviser to the NNSA Administrator and the 
NNSA's former General Counsel. Mr. Przybylek served on the 
Source Evaluation Board for the Los Alamos National Laboratory 
management and operations contract, which was awarded in 
December 2005, and was the source selection official for the 
Livermore National Laboratory management and operations 
contract, which was awarded this past May. He and I will be 
pleased to answer your questions, Mr. Chairman.
    Mr. Towns. Thank you very much, Mr. Desmond.
    [The prepared statement of Mr. Desmond follows:]

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    Mr. Towns. Mr. Friedman.

                STATEMENT OF GREGORY H. FRIEDMAN

    Mr. Friedman. Mr. Chairman, it is entirely up to you. Given 
the size of the panel and the hour, I would be more than happy 
to waive my short statement, whatever you prefer.
    Mr. Towns. Go ahead and proceed.
    Mr. Bilbray. You have been patient.
    Mr. Friedman. I have done this before and am more than 
happy to pass, if you would prefer.
    Mr. Chairman, Mr. Bilbray and members of the subcommittee, 
I am pleased to be here today, at your request, to testify on 
issues pertaining to contract management of the Department of 
Energy.
    The Department is highly dependent on its contractor work 
force. There are about 15,000 Federal employees at the 
Department; in contrast, there are about 100,000 contract 
employees plus a significant number of subcontract employees 
who operate the Department's national laboratories, production 
facilities and all environmental remediation projects.
    The operations performed by contractors consume at least 
three-quarters of the Department's project. As we have reported 
annually, contract administration is one of the most pressing 
management challenges facing the Department. This permeates 
every aspect of the Department's programmatic and 
administrative activities, including those of the National 
Nuclear Security Administration. Our work is documented and the 
Department administers its contracts.
    Specifically, contract activities very often were not 
conducted in an economic, efficient manner; and health and 
security issues, which are extremely important in the 
Department of Energy setting, were not always given the 
attention they deserved. Most importantly, contractors were not 
always held accountable for their actions.
    The subcommittee expressed its interest in agency contracts 
with Wackenhut Services, the Bechtel Corp., and the University 
of California, three of the Department's most prominent 
contractors. In my shortened testimony, I was planning to 
discuss our findings with regard to three examples; I refer you 
in my full testimony where those are described, and I will 
proceed from there.
    Each of these reports is different in terms of scope and 
purpose, but they are representative of the Department's 
continuing challenge to effectively manage a contract work 
force.
    As to those who have proceeded before me, there are a 
number of changes in process in the Department of Energy, but 
clearly the Department needs to do a better job in contract 
administration. As we have testified previously, the Department 
should first ensure that its contracts are structured properly 
and that competition is maximized, establish realistic 
expectations of desired outcomes and achievable contractor 
metrics, effect monitor performance and hold individuals in 
contractors accountable when expectations are not met.
    With reference to accountability, contracting officials 
need to be aggressive in redirecting work assignments, making 
fee determination evaluations and making cost allowability 
determinations, and when called for, pursuing contractor 
suspensions and debarments.
    Regarding suspensions and debarments, I would like to point 
out, the Department of National Nuclear Security Administration 
currently had 54 individuals and companies on their debarment, 
or excluded parties, list; each one of these actions resulted 
from the investigations and recommendations by the Office of 
Inspector General. To fully achieve the goals of the agency, 
the Department must place square emphasis on the deference to 
adopt and maintain salary contract administration practices.
    Furthermore, as the Department explores new governance 
models, it is imperative fundamental oversight principles are 
maintained as a means of ensuring accountability and protecting 
against waste and mismanagement.
    Mr. Chairman and the members of the committee, this 
concludes my statement, and I would be pleased to answer any 
questions you may have.
    [The prepared statement of Mr. Friedman follows:]

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    Mr. Towns. Thank you very much. Now we would like to ask a 
few questions.
    Mr. Desmond, I want to ask more about the Wackenhut 
contract at Oak Ridge. I don't understand how Wackenhut can be 
caught cheating on a drill and still receive--I heard your 
statement, a 97 or 98 score on the final evaluation.
    When I was in school, if you were caught cheating on a 
test, your score was zero. You either flunked--in some 
instances, they would put you out.
    It seems that a seventh grader is actually held to a higher 
standard than the nuclear security contractors. Could I get 
your answer? I heard you say--but I want to hear more about 
this, yes.
    Mr. Desmond. Mr. Chairman, there are a variety of tools in 
the toolkit that we use to assess the performance of our 
contractors. They range from full-scale exercises, red team 
against blue team, down to security surveys done by our--self-
assessments done by contractors.
    In the present exercise, which occurred in June 2004, a 
test was established to evaluate the adequacy of the strategy 
that was used to implement a brand-new design basis threat 
policy of the Department of Energy. It was not used to evaluate 
the performance of the contractor because the policy had just 
been instituted and was not fully required for implementation 
for several years. So this was determined a diagnostic test; in 
fact, it was a training exercise.
    In this exercise there was a security system called JCATs, 
Joint Combat Assessment Tool, where blue and red teams will 
gain security strategy. Two of the supervisors of the 
protective force had access to the scenario the day before. And 
while it was not permitted, our procedures had been changed to 
prevent that from recurring in the future. This was not an 
organized activity by the part of the company, but initiative 
by two of the individual supervisors.
    Nevertheless, the Department of Energy, NNSA, Wackenhut, 
took this as a very serious event, and have changed our 
procedures. And Wackenhut was, in fact, penalized during that 
award period for this activity, for not having better controls 
in place. So, hence, I say it had no impact, sir, on the 
security of Y-12, but it did impact the diagnostic evaluation 
at that particular time.
    Mr. Towns. Can you give me an example of a security 
contract in DOE where the contractor got low scores?
    Mr. Desmond. No scores?
    Mr. Towns. Low scores, l-o-w.
    Mr. Desmond. Within the National Nuclear Security 
Administration we have a variety of models of security 
contracting, from direct contracts to the government to 
proprietary contracts----
    Mr. Towns. What led to the low scores?
    Mr. Desmond. When there are instances of low scores, it 
would be based upon performance, inadequate or performance that 
did not meet our expectations. There have been examples, Mr. 
Chairman, at Nevada in a particular test in December--excuse 
me, August 2004--in which the contractor was given a very low 
score for that reporting period. We have only two contractors 
who are separately evaluated for security purposes and those 
are the security contracts at Y-12 and at Nevada.
    Mr. Towns. OK.
    Let me ask--I guess this is to all of you--are contracting 
officers really the most objective people to be grading 
performance? Don't they have a stake in the success of the 
contract?
    Let me go down the row here very quickly.
    Mr. Woods. Well, certainly when we enter into a contract, 
we want the contract to be successful certainly. But the 
contracting officer is not the customer of the required goods 
or services; in many cases, he is acting on behalf of a program 
official, for example, to acquire goods or services from the 
private sector. So--he is not directly impacted by the quality 
of the goods and services, so he may be in a better position to 
provide that kind of evaluation.
    Mr. Towns. Well, if you lose a contract they won't have 
anything to evaluate, that is--I mean, doesn't that play into 
it? For instance, if for any reason they lose a contract and 
the person that is responsible for it, you know, isn't that a 
reflection?
    Mr. Woods. As I said all, parties want the contract to be 
successful--the contractor, the contracting officer and the end 
user of the goods and services, they all want the contract to 
be successful. But they all have an interest in ensuring that 
the performance is what it needs to be, particularly the end 
user; and we've seen a number of instances where that end user 
has not been reluctant to provide low scores to contractors 
that don't perform as required.
    Mr. Towns. Let me run just down the line, and ask about 
procurement.
    Ms. Duke. Sure.
    I agree with Mr. Woods: The person that owns the budget, 
owns the mission, is the program office, the customer. They are 
in the best position to valuate the contractor's performance. 
They are the ones responsible for delivering performance by in-
house personnel or contractor, and the contracting officer 
provides the business partnership to that program office.
    In DHS, we require the COTRs and contracting officers, the 
technical representatives, to evaluate performance so that, 
from the technical side, they are talking about the technical 
issues of performance; from the contracting officer's side, we 
evaluate their business abilities, whether they are performing 
in the right business fashion.
    So I think both are important.
    Mr. Przybylek. Mr. Chairman, the way we do it in the 
National Nuclear Security Administration is that each program 
that has funding at a particular facility and a statement of 
work has a contracting officer representative. That person, at 
the end of the year, is responsible for providing to our 
contracting folks an evaluation of the performance of that 
specific piece of work. So it is very much the way Ms. Duke 
described it.
    The contracting officers then roll out the overall 
evaluation of that contractor's performance, and at the end of 
the year our administrator looks across all eight of our 
facilities to make sure we consistently evaluate the 
performance of the contractor, so that we are neither too 
severe nor too lax in terms of evaluating the performance, and 
then he ultimately sets the amount of fee that they earn for 
the year.
    Mr. Towns. Mr. Friedman.
    Mr. Friedman. Mr. Towns, I think you hit upon it and you 
have it right. It is a partnership, and it has to be on a 
wholistic approach. It needs the program officials, as well as 
the procurement officials, to make those kinds of evaluations 
intelligently. And there have to be metrics in place, because 
you evaluate the contract and they have to be quantifiable and 
outcome oriented. So I agree with your point.
    Mr. Towns. Any other comments?
    Mr. Skinner. I agree with Ms. Duke and Mr. Woods and others 
on this panel.
    The CO is in a good position to put together an evaluation 
of the contractor's performance, but we have to ensure that 
there are, in fact, performance measures, metrics in place so 
there is consistency when we do those evaluations.
    Also, I think there has to be discipline. A lot of our 
contracting officers are spread very, very thinly, and 
therefore they cannot always go out to do outreach, to ensure 
those performance measures, performance reports are, in fact, 
obtained and input into any systems that we may have. We need 
discipline, we need metrics.
    The final thing, I think, that concerns me most is, we are 
not always reaching out to other parties that have input. For 
example, audit reports are now oftentimes overlooked when they 
do the performance evaluation, reports of investigation, 
whether they turn anything up, criminal or not, nonetheless 
should be taken into consideration. But there are no avenues or 
means to do this at this point in time, and that is one of the 
concerns we have.
    Mr. Towns. Also you indicated that there were 3 billion, 
and now up to 15 billion, and the staff has been decreased to 
be responsible for the monitoring of it. That, to me, is very 
disturbing.
    Mr. Skinner. I didn't want to discuss that the staff has 
been decreased. As a matter of fact, the Department of Homeland 
Security and Ms. Duke recognize the situation that we are in 
here, that our procurement activity is increasing faster than 
our ability to hire staff to manage these contracts. It is not 
an easy task to bring in and train the program managers and the 
COTRs and project managers and other experts necessary to 
provide oversight to these complex, large contracts that--the 
projects that the Department has ongoing. We have a long way to 
go before we can reach a level of assurance that we have the 
resources needed to manage these contracts.
    Mr. Towns. Thank you very much.
    I yield to the ranking member, Mr. Bilbray.
    Mr. Bilbray. Thank you.
    Mr. Skinner, in a small way, it reminds me of what happened 
with the Roosevelt administration in the late 1930's- early 
1940's, when there was no way the bureaucracy was ever on line 
to be able to do that contracting. Would that be a fair 
comparison?
    Mr. Skinner. Yes.
    Mr. Bilbray. Mr. Woods, I have to agree with the chairman, 
I think we hear a lot of hoopla about private contractor 
accountability, but it does come into the system--the in-house 
employees' accountability, bureaucracy--inherently the Civil 
Service system insulates bureaucracy so often that when we were 
talking about the concept of having the outcome reflect on the 
future employment or future engagement of private contractors, 
some say maybe the outcome doesn't affect the bureaucracy and 
their future employment, future engagement.
    Is there a way we can sort of put the heat on those who are 
actually administering these contracts, so they have a 
personal, vested interest in success and a dread of failure 
here, along with the taxpayers?
    Mr. Woods. Of the things that can be done, No. 1, Mr. 
Skinner mentioned the number of personnel that we have assigned 
to this area. I couldn't agree more that we need more folks 
that are involved in the administration of contracts. No. 1, 
that is a challenge across the Federal Government.
    The other response that I would have is, we looked in-depth 
at the Department of Defense, at their ability to monitor 
contracts and the mechanism, the bureaucracy, that they had in 
place to do that. Ms. Duke mentioned the contracting officer's 
technical representatives; those are really the frontline 
people that are responsible for monitoring contractor 
performance.
    We found a number of deficiencies at the Department of 
Defense in that regard. They were not properly trained. There 
were not enough of those people, they were not properly 
motivated, and they did not have--as you were alluding to--the 
right incentives to do their job. For many of them, it was 
other duties assigned; it was not their primary responsibility, 
and frankly, it became a secondary consideration for them.
    So I think there are actions that can be taken across the 
board in that regard.
    Mr. Bilbray. We run across these problems, and it is 
inherent, basically, with the public service system that there 
is job protection. We don't want to go to the score system, but 
the flip side is, that insulation may create the feeling that I 
really don't--my job is invested with the outcome--just as long 
as the process looks good and I keep my supervisor happy one 
way or the other. I guess what we need to look at here is how 
to turn the heat up on this.
    Mr. Skinner, one of the things you were saying about the 
exchange of information, a lot of this I looked at as fire 
walls, basically information fire walls. A lot of these were 
created after Watergate with a lot of information about 
agencies not sharing information, individuals not sharing 
information; and when you say it is time to put that behind us 
and start sharing information more and more in the Federal 
Government, rather than always being paranoid worrying about 
Big Brother knowing too much about us----
    Mr. Skinner. I don't think the worry is so much fire walls. 
We do have systems to provide information on contractor 
performance. We looked at some of those systems as we prepared 
to do our reviews as DHS contract management. We are finding 
that there are gross inconsistencies on how people put 
information into these systems. It doesn't appear that there is 
any discipline or standards on what needs to be put in, what 
format should be put in.
    As we looked at several of the contractors that we knew had 
historic problems, we found nothing in these systems there 
across the government saying anyone ever had a problem with 
these contractors; and we know, in fact, there were problems. 
So there is not so much the fire wall as it is the discipline; 
it is the standards, the guidelines to ensure that certain 
basic information, in fact, is input into the system.
    Mr. Bilbray. It is not exclusive to this operation. Lateral 
transfer has been the greatest scam, for one government agency 
to shift problems over to somebody else, Yeah, he was a great 
guy; go ahead and take him.
    The Wackenhut test supposedly--let's face it, we make 
statements up here, our staff gives us these statements, 
everybody is cheating, whatever, when you are doing this 
exercise. As the head of the Public Protection Agency for San 
Diego County, we did exercises. We said, we are going in 
because a cruise ship has sunk and everybody has to respond.
    They knew the test was coming. Rather than someone 
screaming that it was cheating, cheating, it sounds to me more 
like what every teacher in America is doing now, that is, 
teaching to the test.
    Was that a situation where you use a testing process as 
part of the learning process and actually throw the test out 
there, because, I mean, cheating is pretty hard work?
    Mr. Desmond. The test was a training exercise. There was 
not a conscious attempt to train to the test, but in fact, that 
is what happened, sir, yes.
    Mr. Bilbray. So if we want to be outraged at Wackenhut, 
maybe we ought to be outraged at the national education system 
that is basically doing the same thing with our children year 
after year. I just think it is fair. You can take these 
situations, spin it a certain way and really put them out 
there.
    I don't think any reasonable person would say the American 
educational institution is teaching our kids to cheat, though 
some would love to say that, but I think that in all fairness 
we ought to be balanced in the approach.
    Thank you very much for my time, Mr. Chairman.
    Mr. Murphy [presiding]. I would like to ask Mr. Friedman if 
he has any comments on that last issue.
    Mr. Friedman. First, it is my report that covered this 
issue; you have very lofty goals for this hearing.
    We got into this at the request of the Federal site manager 
at Y-12. He was concerned because the actual results of this 
test were far superior to the computer-generated, anticipated 
results, and he could not make the--he could not understand--
there was a disconnect which he could not understand.
    He initiated his own inquiry and found, in fact, there was 
a compromise of the test, but he wanted a third party to look 
at it; and as many Federal administrators do in terms of the 
inspector general, we took on the responsibility and our 
results speak for themselves. I think the report stands on its 
own, and it is one that I stand behind. We did not use the word 
``cheating'' in the report, but the test was compromised.
    Mr. Bilbray. So, in other words, you think they--would it 
be fair to say, they were teaching to the test in this 
exercise?
    Mr. Friedman. I am not sure teaching to the test is the 
right way to characterize it, Mr. Bilbray. But what I will tell 
you is that the defender force was given information about the 
offender force's strategy. When you have that information prior 
to the test, obviously the test is compromised and the results 
are questionable.
    Mr. Murphy. Thank you.
    Mrs. Maloney.
    Mrs. Maloney. I want to thank all of the panelists for 
their testimony, and I want to really followup on Mr. Skinner's 
offer to look at the legislation and put your input in it. I 
will send it to you and maybe we can make an appointment next 
week to meet on it and see where it goes.
    You were saying that we could put standards and format in 
place, and I think we could do that, but how long do you think 
it would take to fix this? You say it is not working. How many 
systems are there out there? You say there is no centralized 
system, but----
    Mr. Skinner. There is no single system, and I can't say how 
many systems are out there categorically--Elaine might know 
that better than I.
    The point I am making, there is no consistency as far as 
what we are putting in there from our Departments--from DHS, 
Department of Energy, DOD. It is all across the board.
    Mrs. Maloney. It seems simple to come out with a list of 
format and standards and have everyone follow them. There 
should be some performance metrics in place.
    If we could hear from you, what you think they should be--I 
think it should be whether or not they have the history of the 
company, whether or not they have financial standing, whether 
or not they have gotten prior contracts, if they were completed 
on time, whether there are cost overruns, are they listed with 
the organized crime businesses--there are just a few.
    What else would you put in as a metric?
    Mr. Skinner. Those are exactly the types of things that we 
had in mind as well, to deliver the product or service as a 
contractor. Do we do it on time? Do we do it within budget? 
These types of basic information in a standard format that is 
consistent across the board.
    Also using other input, the evaluations from OIGs or others 
that--including GAO. If we can come up with an inventory of 
things that need to go into this system, we can do it in a 
standard fashion, I think it will help the contracting officer 
when they query these systems.
    Mrs. Maloney. It would remove really the intuition; you 
would have specific indicators there.
    I would like to ask all the panelists to submit to the 
committee and to my colleagues what you think would be the 
indicators that should be part of a centralized system. I think 
that would be helpful.
    Can anyone answer my original question: How many systems 
are out there and why are they not working?
    What gets me is, you always say--a lot of times we will 
say, oh, we have a system, and it is OK; but repeatedly, you 
see usually the same people get the contracts again and again, 
and there are billions of dollars oftentimes in cost overruns 
and waste on the previous work, and this is really an example 
of a process that is not working.
    So could you elaborate, Ms. Duke, on how many systems or 
centralized data processing areas are out there now?
    Ms. Duke. There are three primary systems we use to make 
your responsibility determinant. One is Dun & Bradstreet, a 
commercial system we use principally for financial 
responsibility-type issues.
    The second is the Excluded Parties List, administered by 
the GSA, where we look to see if a party, an individual or 
company has been suspended or disbarred. Past Performance 
Retrieval System [PPIRS], that is where we store past 
performance information. So as Federal agencies do past 
performance evaluations, they are required to put it into the 
PPIRS system.
    There is no system for some of the things Mr. Skinner 
talked about--IG reports, GAO reports, other indicators; I 
would put those all in the administrative realm.
    In terms of, if we cross into the legal realm--potential 
indictments, cases going on, legal areas--I believe right now 
there is consciously no system to either allow access or to 
aggregate that information.
    Mrs. Maloney. Are you required to access the three existing 
systems now before making a decision as a procurement officer?
    Ms. Duke. We are required to check PPIRS and the Excluded 
Parties List. Dun & Bradstreet was discussed. It doesn't 
mandate that you use Dun & Bradstreet, that's just the standard 
practice.
    Mrs. Maloney. Why are there so many mistakes? How do the 
same people get contracts over and over again?
    Why can't we break them down into smaller ones? Sometimes 
they hand out huge contracts to manage an entire country. Why 
are there so many scandals in our contracting process now?
    Ms. Duke. I think when we look at the scandals in our 
contracting process--Mr. Skinner in his opening statement 
talked about setting the requirements up front.
    The contracting officer has always talked about 
procurement; procurement is the result of a process where the 
government says what it wants, how it wants it and negotiates a 
deal with industry. I think if you don't have that solid 
foundation, then that is where the deals go awry.
    It is not only selecting the right contractor, but it is 
having the right requirements and having clarity of what you 
want from that company, or not having clarity. And that is a 
very big challenge, especially in Homeland Security as we have 
the urgency of our mission; where a new mission arises, we have 
to very quickly develop the program and go with a contract.
    I think sometimes we are choosing to meet the mission and 
choosing to consider that over some of the more deep processes, 
and then we end up having to manage out of that or do some of 
the partnership steps later in the process; where if we had 
more time, I think we would set a more solid foundation.
    It is just like someone renovating your home. You want a 
real meeting of the minds between you and your contractor 
before they bring a sledge hammer to your basement. And that is 
really the key.
    Mrs. Maloney. I am told by staff that there are actually 
more than 50 existing data bases that can be used; is that 
true?
    Ms. Duke. I am not familiar what specific ones. There are 
many data bases. The ones I listed are the three principal ones 
for responsibility.
    Mrs. Maloney. Could you look into how many data bases are 
out there? I am sure my colleagues would like to see the list, 
in addition to the three that you have given us.
    My time has expired, thank you very much.
    Mr. Murphy. Thank you, Mrs. Maloney.
    Mr. Platts, we have votes coming up in 10 minutes, we will 
try to finish this panel.
    Mr. Platts.
    Mr. Platts. Thank you, Mr. Chairman. I will try to be 
quick. I would like to thank all of the witnesses here for your 
participation in this hearing.
    Mrs. Maloney has introduced legislation to try to 
strengthen the information available. I know there are various 
sources of information--past performance, an information 
retrieval system that is easily accessed.
    I want to focus, Ms. Duke and Mr. Przybylek, with your 
direct involvement in procurement, on the other information 
that is also out there and specifically deals with liens, tax 
debt owed that is not automatically included in that retrieval 
system.
    How easy do you find it to become aware of that 
information, and what do you and your staff seek out regarding 
potential contractors?
    Ms. Duke. Right now, there is a requirement in the 
Representations and Certifications for Contractors to disclose 
any criminal activity, as specified in the Federal Acquisition 
Regulations, for a company in the specified period, and that 
specifies what type of activity, convictions they have to 
disclose.
    There is also a Federal Acquisition Regulation case ongoing 
that will require contractors to certify if they have similar 
problems with the Internal Revenue Service in terms of taxes.
    Other types of activity--criminal activity, current tax 
issues--that is not information that contracting officers can 
receive, unless it is available in the public. We have no more 
rights to that information than the public in terms of 
receiving that.
    Mr. Przybylek. In addition to what Ms. Duke just described, 
we looked at the Nuclear Regulatory Commission Data base on 
notices of violation, our own departmental nuclear safety 
rules, Price-Anderson data base.
    We try to get information concerning environmental 
noncompliances, and as I mentioned to staff, we actually use 
common search engines to see if we can find any more 
information to help us in making that judgment.
    Mr. Platts. Is that a common practice at DHS as well, 
proactively searching in open domain information of potential 
contractors?
    Ms. Duke. Not totally. It is more, principally--looking at 
past performance references on other similar Federal and 
commercial contracts would be the principal driver of the 
decision.
    Mr. Platts. On the information required under FAR to 
disclose regarding criminal record activity or civil liability, 
such as tax debt, are there instances that you have had 
contractors not disclose that, that you later learned they had 
a tax debt?
    Ms. Duke. Yes, we can consider that. There is one caveat; 
if we are going to use negative past performance information 
gathered from other than the contractor as part of our 
decisionmaking, we have to give the contractor an opportunity 
to comment on that.
    Mr. Platts. If they submitted a contract bid, not disclosed 
a tax debt they should have, what action does the Department 
take in response to that failure to disclose as required by 
law?
    Ms. Duke. That isn't in play yet. Once it is finalized, 
that is certification, and we would consider that potential 
fraud, and we would turn it over to the inspector general, 
because any suspected fraud we immediately turn over to the 
inspector general.
    Mr. Platts. I am going to run out of time.
    Mr. Skinner, how would you approach that? Would that be 
grounds for pursuing debarment, that failure to disclose?
    Mr. Skinner. I personally think it would be grounds for 
debarment, and therein lies the problem, when you start talking 
about the bad behavior or criminal past. Or it may not reach 
the level of criminality; there is no one place you can go to 
identify whether anyone has had fees, fines, penalties, has 
been indicted, has negotiated settlements. Working under PTAMs, 
there is just no place for the contracting officer to go to 
determine whether these people have a history.
    It is particularly problematic when you start thinking 
about State of New Jersey has just debarred one of DHS's 
contractors for the State of New Jersey. But there is no place 
for anyone in the Federal Government to go find----
    Mr. Platts. That is automatically made available to you?
    Mr. Skinner. It doesn't exist. This is something we are 
exploring right now.
    Mr. Platts. I see my time is up.
    In relation to that Mr. Skinner and other procurement 
officials, I assume the effort of Mrs. Maloney in terms of 
trying to better legislate that requirement so that there is a 
one-stop shop per se is something that in theory would be 
beneficial to your efforts to ensure that credible individuals 
are doing business, and those who are less trustworthy are 
identified early on?
    Ms. Duke. I would add one caveat to your statement. We have 
to be careful not to put contracting officers in the position 
of GS-9s, in the position of having to judge whether an 
indictment in a particular peculiar area of law, be it labor or 
tax, is grounds for debarment from the government.
    I think it is clear-cut that this is right or wrong if they 
have a tax lien, but I think when we start in the area of 
indictments and fines, the regulations require us to consider 
mitigation. I really think we have to be careful that there is 
a system in place that adequately can use that information and 
appropriate uses it so we don't end up creating in essence a 
blackballing system without the right people in charge of that.
    Mr. Platts. Thank you, Mr. Chairman. My thanks again to all 
the witness.
    Mr. Murphy. Mr. Welch.
    Mr. Welch. Why isn't it possible, as part of the 
application process, to require the person or company seeking a 
multimillion dollar contract from the taxpayers to disclose 
whether they have been indicted, whether they have had labor 
disputes that have resulted in actions, that they have had 
ethical complaints?
    Does somebody want to answer that question?
    Mr. Woods. If I could start, there are provisions in the 
standard solicitation for contractors to make those kinds of 
disclosures. It may not be a totally comprehensive list, but as 
Ms. Duke pointed out, efforts are under way, for example, to 
add tax liens to that.
    Mr. Welch. Why doesn't that work? If the governmental 
entity is going to issue a contract, why isn't it known 
immediately upon receipt of the application whether the person 
or the company seeking the contract is a felon?
    Why do we have to set up some elaborate process that 
requires an enormous amount of computer software, another 
expense, to get information that nobody's going to read?
    Mr. Woods. They are required to make certifications in 
terms of criminal activity, etc., but the problem is they are 
not required to certify to a whole range of other actions that 
some may want to consider in determining whether this is a 
responsible contractor.
    Mr. Welch. The obvious things are, A, have they had 
disputes with the government where they have had to repay 
because of poor billing, ripping off the taxpayer, any number 
of things that your office investigates. Why can't that simply 
be on the form?
    If they have had disputes with labor that have resulted in 
action, that result--as a result of that action that they had 
poor labor relations. That is relevant to the contracting 
officer; that information can be made immediately available on 
the application process. You do not have to have a G-9 make an 
evaluations about whether this is a threshold event or not.
    Is there a problem in doing that, in getting the 
information that Representative Maloney, in her effort, is 
seeking?
    Mr. Przybylek. We routinely in large competitions ask for 
and provide a questionnaire that we want the customer--a 
Federal contracting officer, for example--to fill out and send 
back to us, so our evaluation board can take that into account.
    The other thing----
    Mr. Welch. Wait. Is it done or is it not done?
    Mr. Przybylek. We do it routinely.
    Mr. Welch. I am mystified because, in a short time, there 
has been one example after another of colossal rip-offs of the 
taxpayers. I have yet to find anyone--anywhere, for any reason, 
for performance, for just massive fiscal rip-off--pay any 
consequence whatsoever. And it is mystifying to all of us that 
it doesn't seem to matter what you do, why you do it or how you 
do it.
    You all are coming in to investigate, and I would think it 
would be kind of frustrating to you if your work was ignored, 
in effect.
    Mr. Woods. There are some consequences. For example, in 
preparing for this hearing and going through some of our bid 
protest decisions, there are many instances where, in rating 
past performance contractors, contractors will be downgraded in 
some cases very severely for the kinds of abuses that you 
identified.
    Mr. Welch. Mr. Friedman, let me ask you--when you have to 
make a decision about when and whether to investigate, let me 
ask you about that incident about the anthrax out there at the 
nuclear facility where Wackenhut had a contract, and there was 
an envelope that was opened in the vicinity of Mr. Chertoff, I 
think, of Homeland Security; and no investigation occurred, 
even though that was potentially a very serious national 
security issue.
    What is the threshold to make you decide, ``yes'' or 
``no,'' to do an investigation when the mistake, negligent or 
intentional, goes to the heart of the performance required, 
namely national security?
    Mr. Friedman. Maybe this is the ultimate answer to your 
question. I am not aware of that situation.
    Mrs. Maloney. Wackenhut. That is Skinner.
    Mr. Welch. Mr. Skinner. Thank you.
    Mr. Skinner. Yes, with the Wackenhut incident, that 
contract was actually a Department of Defense contract. It 
was--we received allegations in, I believe, February 2006, and 
the contract was about to expire in March 2006. That--coupled 
with the fact that we were doing the preliminary work on those 
allegations, we were asked to step down by the two Senators who 
referred the allegation to us for fear that those who made the 
allegation would become known to the contractor.
    Given those variables----
    Mr. Welch. You were asked by what?
    Mr. Skinner. The allegations came to us through Congress. 
They came from employees of Wackenhut through Congress and were 
referred to us.
    We were in the process of taking a close look at those 
allegations to determine whether they merited a close 
investigation or a further review, when we discovered the 
contract was not a Department of Homeland Security security 
contract, but it was a DOD contract. Because the facility at 
that time, early on, was in fact a DOD facility, and the 
Department of Homeland Security had just moved in in March 
2003.
    And Department of Homeland Security--Elaine, I believe you 
were involved in this as well--was in the process of rebidding 
a security contract, the contract that was about to expire in 
March; and I believe we actually took and bid and hired another 
contractor in June.
    Mr. Welch. The investigation was never completed, correct?
    Mr. Skinner. That is correct. That does not mean that we 
will not continue to take a very close look at that.
    Mr. Welch. Take a close look at that now?
    Mr. Skinner. The contract expired. The contractor is no 
longer providing services for that facility; however, they are 
providing services at other facilities, so our concern now is, 
if they, in fact, had problems at that facility, who is to say 
they are not going to have problems at other facilities?
    Mr. Welch. If it happened a while ago and you think it is 
still relevant, why hasn't it been investigated?
    Mr. Skinner. The incident at the unit--because that 
contractor is no longer employed there.
    Mr. Welch. This is not making sense to me, with all due 
respect.
    Mr. Murphy. You may want to wrap up. We are about to----
    Mr. Welch. You say it is still relevant to you because 
Wackenhut has other contracts at other places and it is 
relevant, what happened there, to determine whether the work 
they do elsewhere meets the requirements of the taxpayer.
    So obviously it means that if you want to get that 
information, getting it sooner is better than later, right?
    Mr. Skinner. Yes. And we are, in fact, planning to do that.
    You have to understand, we have very limited resources as 
well; and it had to work its way up the chain. It is something 
that is on our to-do list.
    Mr. Welch. We are all saved by the vote.
    Mr. Murphy. Thank you very much, Mr. Welch.
    One of the downsides of being a substitute chairman: We 
have nine votes that we expect to take about an hour, so we 
will be back here in approximately an hour to reconvene with 
our second panel.
    We thank all of our six panelists this afternoon, and we 
thank you very much.
    [Recess.]
    Mr. Towns. I'd like to welcome our second panel.
    As with the first panel, it is our committed policy that 
all witnesses are sworn in. So please rise and raise your right 
hands.
    [Witnesses sworn.]
    Let the record reflect that they have all responded in the 
affirmative. You may be seated.
    Robin Smith was a Wackenhut security officer at DHS 
headquarters. Robin is a veteran of the U.S. Air Force where 
she guarded aircraft on alert with nuclear weapons for the 
Strategic Air Command, and she has worked as a security 
contractor at other Federal facilities.
    Welcome to the committee.
    Lawrence Brede is senior vice president at Wackenhut 
Services, Inc. He has worked on security at several Federal 
nuclear sites and has retired from the U.S. Army.
    Welcome to the committee.
    Scott Amey is general counsel for the Project on Government 
Oversight where he has worked on investigations of government 
waste, fraud and abuse since 1993.
    Your entire statements will be put in the record, so I ask 
that you summarize in 5 minutes and, of course, allow us the 
opportunity to be able to raise some questions with you.
    So why don't we start with you, Mrs. Smith--Ms. Smith.

STATEMENTS OF ROBIN SMITH, FORMER WACKENHUT SECURITY OFFICER AT 
   DHS HEADQUARTERS; LAWRENCE BREDE, SENIOR VICE PRESIDENT, 
  WACKENHUT SERVICES, INC.; AND SCOTT AMEY, GENERAL COUNSEL, 
                PROJECT ON GOVERNMENT OVERSIGHT

                    STATEMENT OF ROBIN SMITH

    Ms. Smith. Chairman Towns, Ranking Member Bilbray and 
distinguished members of this committee, thank you for the 
opportunity to tell you about my experience as a Wackenhut 
security officer.
    My work in private security has been an extension of my 
military service. It's a privilege to serve my country and keep 
it safe. I knew that serving in Homeland Security made my work 
even more important, but I see my managers didn't take the work 
that seriously.
    While working for Wackenhut at the Department of Homeland 
Security, my duties included monitoring the cameras located in 
different buildings on the site, ensuring that all individuals 
entering the building were properly identified, cleared and 
documented. That gave me a lot of experience witnessing the 
problems we had before access control: lack of training, 
careless weapon-handling, open posts, failed security tests, 
security breaches, falsified documentation, and the 
irresponsible handling of hazardous substance attacks. I saw 
the careless storage of weapons that could have had grave 
results. On several occasions, I saw the weapon armory wide 
open and unattended. When officers come off post, they go to 
the armory to return their weapons and ammunition. The armory 
was in the Program Manager's office. There have been times when 
I saw the sergeants leave the armory open and unattended. I 
also saw unattended weapons left in the lead weapon barrel 
instead of being secured. There were times when the door to the 
armory was left open, unlocked and unoccupied. If the door is 
open, anyone can access the weapons armory.
    There are many contractors working onsite at the Department 
of Homeland Security. There have been times when I have walked 
through the armory and have seen a loaded weapon there, a 
weapon that could have been accessed by anyone. Any disgruntled 
contract employee could easily walk through the open door, pick 
up a weapon and ammunition, and any terrorist could do the 
same.
    There is a reason for some of this. We had a really high 
turnover for the officers who worked extended shifts. Some 
officers were so tired that they would make up for their lost 
sleep on the job. On many occasions, there were supervisors and 
officers caught sleeping on the job, but management never 
reprimanded them.
    But you can't blame sleeplessness for the way Wackenhut 
security managers handled a suspicious letter that came to the 
building where Secretary Chertoff's office was. This was at the 
height of the anthrax scare. A DHS employee opened the letter 
which contained an unidentified white powder. Some of it 
spilled onto the employee's body. Two security officers got a 
report of this incident and notified their superiors. When the 
two lieutenants arrived at the scene, they could have isolated 
the contaminated area and kept other DHS employees from 
entering the area, but they didn't do that. Instead, they told 
the employee to wash the powder off of herself, so she did that 
by crossing the hall, passing Secretary Chertoff's office and 
potentially contaminating a larger part of the building. The 
white powder should be considered to be potentially dangerous, 
but it was apparent that proper safety precautions were not 
taken. Everyone in the vicinity could have been contaminated if 
the white powder had been a chemical threat. The two 
lieutenants observed and handled the envelope from all angles. 
They didn't evacuate the section. The ventilation system was 
still on, which left easily carried particles of the white 
powder to other buildings with the--to other sections of the 
building. The building was only evacuated when Federal 
Protective Services arrived at the very late stages of the 
event. I firmly believe that Wackenhut knew of these problems 
and did nothing to rectify the situation.
    I hope that my testimony today will help paint a more 
complete picture of Wackenhut's performance, which I think 
deserves congressional investigation.
    I thank you, once again, for the opportunity to meet with 
you today.
    Mr. Towns. Thank you very much, Ms. Smith, for your 
testimony.
    [The prepared statement of Ms. Smith follows:]

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    Mr. Towns. Dr. Brede.

                  STATEMENT OF LAWRENCE BREDE

    Mr. Brede. Chairman Towns, Ranking Member Bilbray, and 
members of the subcommittee, I too appreciate the opportunity 
to participate in this subcommittee hearing today.
    My name is Dr. Lawrence Brede, and since 2005 I have served 
as the senior vice president and executive general manager for 
the Department of Energy Operations in Wackenhut Services, Inc.
    In that role, I oversee our protective services contracts 
at five Department of Energy facilities: Oak Ridge, the 
Savannah River Site, the Nevada Test Site, the Office of Secure 
Transportation, and the Department of Energy headquarters. 
Prior to that time, I managed our contract at the WSI Savannah 
River Site for more than 12 years.
    For 26 years, I was privileged to serve our country in the 
U.S. Army, including service in three armed conflicts: Vietnam, 
Operation Just Cause in Panama, and Operation Desert Storm in 
Iraq. I commanded the elite military forces during my last two 
combat tours.
    Today, I am privileged to oversee other elite forces. 
Wackenhut Services' operations include paramilitary protective 
services, response teams equipped with rapid fire and other 
special weapons, armored vehicles, helicopters marine patrol, 
and other state-of-the-art security technologies. We are proud 
to have served the U.S. Government for more than 40 years at 
the Nevada Test Site, nearly 25 years at the Savannah River 
Site and, since the year 2000, at Oak Ridge where we were 
recently awarded a 5-year contract.
    During that entire period, we have consistently been 
awarded high performance ratings. For example, in 9 of 10 DOE 
performance ratings over the past 5 years at the Nevada Test 
Site, we have received scores over 95 percent. In our last 10 
DOE performance ratings at Savannah River Site, we have scored 
96 percent or higher, including five perfect scores of 100 
percent. And at Oak Ridge, all of our performance ratings were 
93 percent or higher, with an average score of 97 percent.
    In addition, we have won numerous awards for our work, 
including the South Carolina Governor's Quality Award, the 
highest level of recognition in the South Carolina State 
Quality Award process, and we won a similar award in the State 
of Nevada. Underscoring our technical competence, WSI Security 
Police Officers have won the national level Department of 
Energy's Security Police Officer training competition 4 years 
in a row.
    I understand the primary reason we were invited to this 
hearing is because of DOE IG reports regarding our contract 
sites at Oak Ridge, TN. The conclusions drawn from each of 
those reports have been challenged by senior Federal officials 
at both the local and headquarters levels. It has been 
incomplete because of a failure to consider all pertinent 
information provided to the inspector general during those 
investigations. In at least one case, the DOE's Office of 
Independent Oversight--the technical oversight organization 
within DOE--conducted an inspection of our training practices 
and arrived at an entirely different conclusion than the DOE 
IG.
    Our security contracts receive extensive repeated scrutiny 
by the government, not only by contracting officer technical 
representatives at the local level, but also by the DOE's 
Office of Independent Oversight, the GAO, the Defense Contract 
Audit Agency, and other ad hoc special review teams.
    Given the subject of this hearing, I am surprised and, 
quite frankly, disturbed at how WSI's past performance on 
government contracts could possibly be characterized as 
``poor,'' considering the overwhelming evidence to the 
contrary. The 8,000 men and women who work for Wackenhut 
Services are dedicated, hardworking, patriotic individuals. 
Most come from a military or a law enforcement background, and 
our protective forces include former Army Rangers, Navy SEALs 
and personnel from other Special Operations Forces.
    I welcome this opportunity to address any concerns you may 
have about our service to the government. We are proud that 
many of our Security Police Officers have taken leave to serve 
on Active Duty in Afghanistan and Iraq. We look forward to 
their return, and we honor the memory of those Wackenhut 
employees who, sadly, will not be returning to us, having made 
the ultimate sacrifice of dying for our country in the war on 
terror.
    Mr. Chairman, I have submitted some additional materials 
concerning our performance for the record. I thank you for this 
invitation to set the record straight.
    In summary, I will just reiterate how proud I am of the 
work we do for the U.S. Government. Our protective forces are 
well-trained and are as capable as any of the elite forces with 
which I have served.
    I will be glad to take your questions this afternoon.
    Mr. Towns. Thank you very much, Dr. Brede.
    [The prepared statement of Mr. Brede follows:]

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    Mr. Towns. Mr. Amey.

                    STATEMENT OF SCOTT AMEY

    Mr. Amey. Good afternoon, Chairman Towns and Ranking Member 
Bilbray and members of the subcommittee. Thank you for inviting 
me to testify today about the state of the Federal contracting 
system. I am Scott Amey, general counsel and the senior 
investigator with the Project on Government Oversight, a 
nonprofit, public interest, watchdog organization founded in 
1981.
    POGO investigates and exposes corruption and other 
misconduct in order to achieve a more accountable Federal 
Government. Throughout its 26-year history, POGO has created a 
niche in investigating, exposing, and helping to remedy waste, 
fraud and abuse in government spending.
    The subject of today's hearing is near and dear to POGO, 
and I am excited to share POGO's view about contractor 
accountability. I agree with everything that IG Skinner said on 
panel I, except for one fact. There is one central depository--
repository for responsibility determinations, and that is the 
Project on Government Oversight. POGO back in 19--or back in 
2002 introduced a Federal contracting misconduct data base. 
Today, we are re-releasing that data base that is more user-
friendly and with more instances. Currently, it has the top 50 
government contractors, and it will eventually be expanded to 
the top 100.
    The difference--and I talked to IG Skinner after his 
testimony--is we are a ``dot org'' rather than a ``dot gov,'' 
but it is a repository that government contracting business 
should go to.
    For years, POGO has been scaring public sources to compile 
instances of misconduct for the top 50 Federal contractors. The 
new data base, which covers instances of misconduct from 1995 
to the present, includes the source documents for each 
instance, drawing on government documents. That is DOJ press 
releases, U.S. Attorney press releases, DOE press releases, and 
the like. POGO hopes that the contracting officers will use it 
as a resource when awarding contracts, to assure that taxpayer 
dollars are only being sent to responsible contractors. POGO 
will expand the Federal contractor misconduct data base to 100 
contractors later this year.
    Contractor misconduct is not on the wane. Currently, there 
is widespread evidence of waste, fraud and abuse in Federal 
contracting. The Department of Justice has recovered $18 
billion since 1986, and just last year they reported a record 
$3.1 billion that has been returned. The President's Council on 
Integrity and Efficiency and the Executive Council on Integrity 
and Efficiency reported last year that they have $9.9 billion 
in potential savings from audit recommendations and $6.8 
billion in investigatory findings. These councils identified 
procurement and management--or ``procurement and grant 
management'' and ``performance management and accountability'' 
as two of the most serious management and performance 
challenges facing Federal agencies. Federal contracting 
officers need to have comprehensive information on contractors' 
culture of responsibility that is more readily available than 
what we have here, than what we have now--misinformation.
    The Federal Acquisition Regulations state that contracts 
are only supposed to go to responsible contractors. I argue 
that they are not. Without this information, major contracts 
continue to be awarded to risky contractors.
    As we can see by the discussions that we had earlier today 
with panel I and also by even the Army's recent awarding of the 
LOGCAP IV contract, Dyncorp has 3 instances of misconduct in 
our data base; KBR has 5; and Flour has 21 instances of 
misconduct. Their misconduct histories include false claims 
against the government in violations of the Anti-Kickback Act, 
fraud, conspiracy to launder money, retaliation against worker 
complaints, and environmental violations. Some of those 
companies have had questionable histories in Iraq and also in 
responding to Hurricane Katrina.
    First, the Federal Contractor Misconduct Data base reveals 
that 50 percent of our contract dollars are going to those top 
50 government contractors. As Representative Maloney stated 
earlier, we also have instances where--we have 376 instances 
that account for $12.5 billion. I don't claim that we have 
every instance of misconduct. That's only what we've been able 
to find, as someone mentioned on panel I, doing Google searches 
and also going through Federal press releases. There are eight 
contracts which have zero instances. So I have heard the 
complaint before that when you have so much Federal contracting 
dollars that it's just inherent that you're going to have 
misconduct. But with 8 of the 50 having zero instances, I think 
there are good contractors out there for the government 
contractors to turn to.
    Monetary penalties range from a relatively small $2,400 
penalty paid by Honeywell in a State environmental enforcement 
action to a record-setting $3.56 billion civil verdict against 
ExxonMobil for gas royalty underpayments. The legislation 
proposed by Representative Maloney, the Contractors and Federal 
Spending Accountability Act, H.R. 3033, which mandates that the 
government create a contractor performance and responsibility 
data base and requires contractors to report such instances 
when bidding on the contracts, will help to ensure taxpayer 
dollars are going to responsible contractors.
    For example, it will provide governmentwide access to 
administrative agreements that are not shared by agencies. 
Nearly a year ago, POGO FOIA'd administrative agreements, and I 
have yet to have that for you in an insert. Why is H.R. 3033 
needed, and why is POGO into this business? Because there isn't 
currently a central repository for this type of information. 
The government claims that they search papers, that they go to 
the excluded parties' list. Past performance isn't the same as 
contractor responsibility in all terms, and the excluded 
parties' list had 7,300 cases last year in 2006. None of them 
were--no large contractor was on the suspension and debarment 
list. In our research, we have shown that Boeing is the only 
contractor in the last 10 or 15 years to be on that list, and 
they've had that suspension waived on three occasions, and it 
only lasted 18 months.
    I will just sum up that--I conclude by quoting President 
Bush, who earlier this year stated ``Accountability is not a 
way to punish anyone. Accountability to taxpayers isn't 
punishment. It's a way to improve the way the government 
works.''
    Thank you again for this opportunity to share POGO's views 
on responsibility in contracting. I am pleased to answer any 
questions that you may have.
    Mr. Towns. Thank you very much for your testimony.
    [The prepared statement of Mr. Amey follows:]

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    Mr. Towns. Let me begin with you, Ms. Smith. You indicated 
certain things.
    Were top DHS officials aware of the problems with the 
performance at Wackenhut? Were the top officials aware of it?
    Ms. Smith. I would say yes.
    There was an incident where Secretary Chertoff came in and 
caught guards, several times, acting inappropriately; and maybe 
about 2 weeks into it, in one incident they lost control; they 
lost the building, building 1, which was his office. At one 
time, we had his office. There were guards that weren't 
performing, and I don't know if he personally said something, 
but shortly after that, we lost that one building.
    Mr. Towns. So you think that he might have known about the 
unprofessional behavior?
    Ms. Smith. I think it probably took some time before 
certain things got to his attention, but at a certain point in 
time, it was just so blatant that you'd have to be blind not to 
see it.
    Mr. Towns. All right. Well, you have served in sensitive 
security posts in both the Air Force and with other private-
sector employers. Were there any differences in the approaches 
of delivering security services for a classified installation 
between these experiences and the experiences you had with 
Wackenhut? Was there any difference?
    Ms. Smith. I've never seen anything like the way Wackenhut 
ran Homeland Security. Homeland Security, I think, on any other 
contract would have been considered the most prestigious 
contract you could have next to the White House. I've worked 
with other security companies, and any time there has been an 
issue of officers' sleeping, inappropriate behavior, falsifying 
documentation, I have never seen 24 hours go past without 
someone from corporate headquarters coming down to investigate, 
and I've never seen a situation in which people will repeatedly 
do the same thing and report to duty the next day. I have never 
seen it. I have never seen--I have never seen officers falsify 
documentation, fill out their time sheets for the month in a 
guard mount and the supervisors never say anything. I have 
never seen officers leave a site with a weapon in D.C. not 
being an SPO, and not being reprimanded for it. I have never 
seen an armory left wide open. I have never seen an armory in a 
project manager's office. I have never seen--I've never--I've 
been--I worked at the Department of Interior, and we've had 
several incidents with suspicious powder. I have never seen it 
handled that way. I have never seen anyone take an envelope and 
not know what the substance was and walk down the hall, walk 
past the Secretary's office, look at it, call people over to 
witness what they have, take it outside, let a few other people 
see it, discuss it with people, and then call FPS Services to 
investigate. I have never seen, never seen anything run the way 
Wackenhut ran Homeland Security. I have never seen any company 
disrespect a government contract to that proportion.
    Mr. Towns. Let me just ask you some questions.
    Were you ever terminated for poor performance?
    Ms. Smith. Never.
    Mr. Towns. What were your on-the-job performance 
evaluations while you were with the company? Was it----
    Ms. Smith. In the year that I worked there, we never got a 
performance determination.
    Mr. Towns. So, I guess we would have to say it was good. 
You weren't fired.
    Ms. Smith. I wasn't fired.
    Mr. Towns. I think that's the conclusion there.
    Do you have any lawsuits against Wackenhut?
    Ms. Smith. No.
    Mr. Towns. Why did you come forward at this time with what 
you saw?
    Ms. Smith. I have to be honest. Initially, I didn't come 
forward. Another officer came forward and called me and asked 
if--I was one person there who had access and knowledge of 
several events, of probably any major event that would go on, 
because I monitored the cameras and because I was emergency 
dispatcher. So if something happened, I would get the call 
first, and then I would notify the supervisors.
    So I was one of three people, because there was three 
different shifts that would have firsthand information. And the 
other officer was really disgusted with some of the things he'd 
seen. He went to the press, and I guess he got a lot of flack 
for it, because nobody else would validate what he said. And I 
have to be honest. I told him that I wouldn't bring the 
information forward because I didn't believe anyone would 
really act on it. I felt that this was Homeland. I knew 
Wackenhut's top officials knew what was going on, because I 
witnessed several phone calls, and I've made several myself, so 
I knew that the head of the company knew, and I knew that 
nothing had been done. And I really didn't think anyone was 
going to investigate, and if they did, I thought it would 
probably be handled--that it would make a news article; you 
know, a lot of people would read it, and then, the next day, 
it'd be shoved under the cover like so many things are.
    So I really didn't believe that anyone really cared how the 
contract was working on that site, but another officer asked 
me, and I told him that--you know what? If somebody asks me, if 
someone asks, I'd be open and honest and tell what I knew. And 
someone asked me, and that's why I'm here today.
    Mr. Towns. Thank you very much.
    At this time, I yield to Ranking Member Bilbray.
    Mr. Bilbray. Thank you.
    Mr. Amey, you were discussing the problems with Boeing. Do 
you think that they should be eliminated from consideration for 
any contracts? Should they be disqualified based on what you 
know about them?
    Mr. Amey. Should they be disqualified? That's a judgment 
call where I think you need some flexibility. But what I think 
we need is we need openness in the system; we need to make sure 
that contracting officers are taking a look at their overall 
record, not just their performance record.
    Like I would imagine, and as the doctor has testified, his 
company has a wonderful performance record. I'll predict that 
contractors have satisfactory performance grades. But are 
contracting officers taking a look at their criminal history, 
their civil history and their administrative history? If 
they're not, then the taxpayers aren't getting the best deal.
    Mr. Bilbray. Well, wait. Whoa, whoa, whoa, whoa.
    Now I'm asking you about somebody you do know. And first of 
all, when you talk about some of these histories, I have a real 
problem in trying to figure out--if it wasn't a company, if it 
was an individual, and I was a public employee saying, I'm 
going to consider--I'm going to now--you've worked for me in 
the past and I find out that you've got something in your 
record that you didn't disclose.
    Now that's the question you get into. Are you talking about 
something they were required to disclose or are you talking 
about something like--a good example is misconduct. Are we 
talking about--what constitutes misconduct? Is that being 
charged with misconduct? Is that being proven with misconduct, 
or is it both?
    Mr. Amey. In our data base, we do have both. We have actual 
instances of misconduct, and we have pending cases.
    Mr. Bilbray. You know, I'll tell you something. If it's an 
individual--and if I tried to do this as a mayor, to somebody 
who is one of my employees--I'd be dragged out before the 
courts right and left, based on charges.
    The fact is, you know, we've had to abandon the concept of 
``Have you ever been arrested?'' in the State of California. 
You have to say, ``Have you ever been convicted or sentenced?'' 
Just to be charged has never in this country been an assumption 
of guilt.
    Mr. Amey. Well, our pending cases aren't. Our pending cases 
are left very open, and I think our data base is very fair. In 
instances of misconduct when they move over from a pending 
case, when we combine instances where there's been a fine, a 
settlement, a penalty, we do have what we call ``investigative 
findings,'' but those are left as administrative and with a 
zero balance. We include them in there only so that contracting 
officers and government officials have the full scope of a 
contractor's performance and responsibility record.
    Mr. Bilbray. Do you agree that allegations being included 
play suspect on the whole thing because it becomes part of an 
angle? I know the fact that--competing companies. You have 
competing companies who love to play these games. You have 
people at organized labor that will use this as part of a 
tactic to be able to--as part of the negotiation games. The 
fact is--we can get so many employees to charge, but the fact 
is, if allegations are given weight, that raises a whole lot of 
concerns about the credibility of the entire process.
    Mr. Amey. I agree with you, and that's--the purpose of our 
data base is, actually, not to include a labor violation where 
somebody didn't have their hardhat on.
    What we've tried to do is get to real instances of 
misconduct in which there's a violation of Federal law--arms 
export violations, false claims--you know, things that are very 
germane to the government.
    Mr. Bilbray. But where it has been proven----
    Mr. Amey. Yes.
    Mr. Bilbray [continuing.] Not just where somebody has 
accused them?
    Mr. Amey. Yes.
    Mr. Bilbray. OK.
    Mr. Amey. Down to--also, into administrative agreements. We 
do include those, which I know the contracting industries do 
get upset with us for including those types of cases. But we do 
include them when they're fined penalties and settlements that 
are attached to them.
    Mr. Bilbray. You start by saying we consider--we include 
the charges without their being proven. Now you're saying that 
you want to go back and say it should be only those things that 
have been adjudicated.
    Mr. Amey. No. I said that we do include pending cases. We 
do have them on a side column, but they are not part of our 
instances of misconduct.
    Mr. Bilbray. Well, pending cases can last for 10, 15 years.
    Mr. Amey. No doubt about it.
    Mr. Bilbray. You're putting a cloud over somebody's head 
who's just been charged, and I'll tell you that's a big 
concern. But I'm back to Boeing.
    Mr. Amey. Right.
    Mr. Bilbray. You identified Boeing as being a bad character 
in this process. If we struck Boeing out of the process, would 
that be good or bad?
    Mr. Amey. Well, personally, the Project on Government 
Oversight would say, ``Well, that's probably a good thing 
because I think there are other places you can go for that 
business.''
    Mr. Bilbray. And where would we go?
    Mr. Amey. I think there are other contractors out there. I 
think if we debundle contracts, there are other vendors that we 
can go to to provide that work.
    Mr. Bilbray. OK.
    Mr. Amey. What I heard from the government in asking about 
the listing of Boeing's suspension when I talked to the 
official was they said, ``Off the record, I will tell you we 
had to waive it on three occasions because we had nowhere else 
to turn.'' It ended up being a consolidation of the industry 
issue, which is bad for the taxpayer overall; which POGO's 
fought consolidation for many years in the defense industry, 
and I think we'll have to get into it in the IT sector, but----
    Mr. Bilbray. Well, let me tell you something. You talk 
about the big guy. The fact is that I've seen again and again 
in my 30 years in politics where Washington, DC, and government 
intervention has killed the little guy, killed the little guy. 
And then it complains when there's a monopoly for the big guy 
because the little guy did it.
    I mean--I'll just digress, Mr. Chairman, but people are 
wondering why big oil has such an influence in this country. 
It's because we've killed little oil with government regs and 
with tax cuts. We've basically run the competitors out of the 
market. And it's Washington doing this, saying, ``We're going 
to protect the consumer.'' And we've shafted the consumer down 
the line, and I'm just concerned that when we do this 
oversight, we make sure we do it with an outcome that matters. 
And, you know, I have to say that effect on competition has to 
be a consideration; wouldn't you agree?
    Mr. Amey. 100 percent. We have been fighting the bundling 
issue for many, many years.
    Mr. Bilbray. And bundling is there. You heard my reference 
to the liquidation of the savings and loan assets.
    Mr. Amey. Right.
    Mr. Bilbray. A classic example. Now, that was in-house. 
That was Federal Government employees making a decision----
    Mr. Amey. Right.
    Mr. Bilbray [continuing.] And throwing billions of dollars 
of taxpayers' money away because they didn't want to bother 
with the little guy.
    Mr. Amey. Right.
    Mr. Bilbray. Wouldn't you agree?
    Mr. Amey. Yes.
    Mr. Bilbray. Mr. Chairman, I just want to make sure that as 
we get into this that we make sure that we keep an eye on the 
fact that--let's not go in and do more damage and then wonder 
about the problems we've done in the past. The outcome of how 
we handle this is what is going to be really critical, and I 
think--I appreciate your testimony on that. I just want to make 
sure that when we go in there and start whipping, we understand 
that we may be whipping the only, you know, horse that can pull 
us on here, or keep as many horses in so we can pick the best 
one, so we don't end up in a situation of not having a choice 
into it.
    Now let me just say publicly--I want to say something 
because I happened to have the privilege, when I was very 
young, of building the most cost-effective transit system in 
America in a place where people said you couldn't do it: San 
Diego, CA, Southern California. And we built that line, and 
there were people that built political careers on that. 
Congressmen went out there. You've got Pete Wilson, who became 
Governor and Senator, if you'll remember, and Bechtel built 
that line, and I will go to my grave knowing--I don't know what 
they're doing with these other contracts, but there was no way 
in the world I wouldn't testify that Bechtel was the best 
company that I could ever work with. It created miracles, and 
they did great things.
    Now, people may want to attack them--and they're not here 
today to defend themselves--but I will say for the history that 
when I built a system in San Diego County with some--the 
toughest problems in the world, Bechtel delivered in a way that 
the people of San Diego County are going to benefit for 100 
years on.
    With that, Mr. Chairman, I will yield back.
    Mr. Amey. If I may just say, I agree with the ranking 
member and your comment earlier with the first panel.
    This isn't to point fingers at contractors. This is really 
a genuine issue of contracting officers and the way we're 
awarding contracts. It really gets down to a very circular 
argument about government contracts. And you hit the nail on 
the head with competition. If you only have five different or 
two different vendors that come forward, then at that point you 
do have to make a best-value determination and pick the best of 
those two.
    My hope here is that we can incorporate all of these things 
together, get more competition and pick the best vendors 
available without picking risky vendors. That's where I think 
the question comes in. Are we picking responsible vendors or 
are we picking risky vendors?
    Mr. Bilbray. And I appreciate that, and I thank you very 
much. And let me just say, because we brought up this hearing 
and we're specifically looking at security in some of these 
facilities--if I could ask the chairman to consider one thing, 
which is that one of the shocks I've had working on Homeland 
Security stuff when I--when the voters gave me my 5-year 
sabbatical from Congress, is that today, as far as I know, the 
Pentagon is still using the same antiquated access system/swipe 
card that it was using on 9/11, with no biometric confirmation, 
with no face recognition technology. It's basically using 
technology that's 30 years old and have not--anybody who ends 
up being able to acquire one of those cards, either by theft or 
by persuasion, could enter that facility. And I think that we 
ought to be looking at what we're doing to make sure that we're 
doing the right thing so contractors can do the right thing.
    I yield back, Mr. Chairman.
    Mr. Towns. Thank you very much.
    Mr. Murphy.
    Mr. Murphy. Thank you, Mr. Chairman.
    I want to thank the panel for being here today and sticking 
with us throughout our votes.
    Mr. Brede, I want to thank you for being here, especially 
given the fact that the other subject of our hearing today 
chose not to attend.
    Ms. Smith, I want to thank you very much for your service, 
prior to your work in private security, in the U.S. Air Force 
and would appreciate you opining for a moment on the comparison 
between the training. You've talked a little bit about your 
experience on the job. I want to talk for a second about the 
training that you received prior to your time in preparation 
for your service in the Air Force and during your service 
there, versus the training that you received as an employee of 
Wackenhut.
    Ms. Smith. The training--I want to be fair to Wackenhut 
also. The training doesn't compare to the training I received 
in the Service because it was intense. It was a test program. 
They enlisted--at that point in time, there weren't women 
combat-trained in the Air Force; other branches, but not the 
Air Force. So when they enlisted the 125 women, the training 
was intense.
    We went to Camp Bolus. We trained at an Army base. The 
training was very, very intense. And as far as the Air Force 
goes, you had women in there, and the government wanted to make 
sure that if those women went to war, we could stand beside any 
man and do our job. And I believe we could.
    As far as the training with Wackenhut, I went to the range 
and I qualified, and that was pretty much it. I wanted to 
qualify at the range, and I'd already known how to shoot. I'd 
been trained previously. When I went to Wackenhut, I went with 
my credentials. So me personally, I felt I was already very 
well-trained. What I have to say is that--taking me out of the 
situation--I ask, how were the rest of the guards as far as 
training?
    At Homeland Security, there were guards who never qualified 
at the range. They were still allowed to carry a weapon. We had 
several--we had three--to my knowledge, we had three guards and 
there probably were more, but I'm only going to talk about what 
I know personally. We had three guards who failed the range 
five times and were still working, still carrying a weapon, 
never passed the range. At a certain point in time when we knew 
there was a new contractor coming in when the contract--when 
the contract was almost at its end--and I'm going to say 2 
months before the contract officially ends is when they started 
sending us to training so that we'd have something official on 
the record.
    But initially, when I came in, I came in with my SPO. I 
have a license in Maryland and Virginia, and the only thing I 
had to do was qualify at the range, which I did. So I said it 
to say that the person sitting on my right and my left may or 
may not be able to handle a weapon, may or may not be able to 
shoot.
    Mr. Murphy. How about training in the disposition of 
suspicious packages or training in regards to the proper 
response to a chemical attack or a nuclear attack?
    Ms. Smith. We had extensive training in the military on 
that, obviously, training on crowd control, training as far 
as--we played war games. It was Strategic Air Command, so I was 
always on alert. For a week at a time, the alarm would go off, 
and once that happened, you had to react. So, being in the SAC, 
it was 24 hours a day of playing war, and we played it serious. 
There were consequences if you didn't perform.
    As far as Wackenhut goes, other than qualifying at the 
range, I worked there 8 months without any kind of official 
training. The only time training took place was at the end of 
the contract when the rumor was that there was going to be--the 
new contract was going to require GSA training, GSA 
certification. So at that point in time, when that information 
was given out at the last few months of the contract, they had 
a GSA class that we went to. But prior to that, I worked on 
that contract 8 months with no training.
    Mr. Murphy. And had you not had training in the Armed 
Forces related to terror attacks and suspicious packages, you 
would not have received the training up front?
    Ms. Smith. No. Actually, I worked for another company, and 
the HAZMAT training I received from them and the weapons 
training and the crowd control--all of that I received at 
another company, and I brought that to Wackenhut. As far as 
being trained by Wackenhut, the only official training I 
received was qualifying at the range.
    Mr. Murphy. Dr. Brede, that leads to an obvious question. I 
take Ms. Smith's testimony. I put it together with articles in 
the paper referencing interviews of 14-some-odd employees under 
the same contract, one of which testified that when he was 
presented with a suspicious package, he said, ``I didn't have a 
clue what to do.''
    And I wonder whether that makes you reconsider a statement 
made under oath here today, that you believe that the employees 
of Wackenhut are as well-trained and as capable as a member of 
the U.S. Armed Forces.
    It strikes--and I guess I ask that question because I'm not 
sure that they should be as well-trained as members of the U.S. 
Armed Forces. I think that they should receive much more 
training than it sounds like they have. But your statement 
today strikes me as a bit out of line, given the testimony that 
we've received today and testimony of other employees, and I 
would like to know if you would like to reconsider that 
statement.
    Mr. Brede. I will consider that statement, and I stand by 
it. What I said was--and I oversee elite forces that are 
equivalent to the forces that I served with in the United 
States--and I do. I oversee our DOE Special Police Officers, 
Security Police Officers.
    You have to understand the contract that we had at the DHS 
building was not a DHS contract. In fact, what it was--it 
started out as a facilities maintenance contract with the 
Department of the Navy. There was a small security piece of 12 
officers. Our contract with the Navy required minimal security 
training. DHS later moved into that facility and, over time, 
eventually took over the building but not the contract. In 
fact, we were held to contractual requirements by the 
Department of the Navy. We still have that contract today and 
continue to serve the Navy. The training that we provided our 
officers met the requirements of the contract.
    To a point made by the ranking member earlier, allegations 
are easy to come by and we are hearing some of them for the 
first time today from Ms. Smith. We've heard a few others in 
the past from disgruntled employees who'd been terminated and, 
in fact, who have been co-opted by the Service Employees 
International Union, an organization with an agenda that has 
mounted a campaign against us, a corporate campaign to besmirch 
our reputation. They have----
    Mr. Murphy. Are you alleging that Ms. Smith is part of 
that----
    Mr. Brede. I don't know if she is or not.
    I'm saying that the only allegations we have previously 
heard are those who have--those that had been made by 
disgruntled, terminated employees who have gone to the press 
and which we have investigated. I am hearing others today for 
the first time.
    Mr. Murphy. You draw issue with the reports of that 
contract in which individuals were not properly trained in 
terms of how to dispose of suspicious packages or with regard 
to potential instances of terrorism there. Do you believe that 
there was proper training for those potential incidents at that 
facility?
    Mr. Brede. No. What I said was that there were--the 
training that we conducted at that facility met the 
requirements of the Navy contract. I would tell you that DHS 
expected a higher level of security training, and when they let 
out--let their procurement, they looked for a higher level of 
security. We did not win that contract, but we never had one 
with them there in the first place. It has been 
mischaracterized as a DHS contract and one which we've had, and 
we have not--we did not have one with them there. We have 
several contracts with DHS elsewhere.
    For example, during Katrina, we were called upon because no 
other security company--or at least security companies called 
before us, could not deliver the number of officers to be 
trained and put out to the field in time to meet that awful 
disaster.
    Mr. Murphy. Mr. Chairman, I know I've gone well over my 
time here. I understand the tried-and-true method of deflecting 
accusations is to try to dispute the integrity of those who 
would accuse. I think we have made it very clear that Ms. Smith 
here has no ax to grind; in fact, she was an accomplished 
employee. And I would just say that I think the allegations 
that have been made are not necessarily that you didn't live up 
to the terms of the contract. It was the allegations being made 
here that the compromise--that the safety of that institution 
was compromised. That may be related to the work of Wackenhut. 
That may be related to the specs of the contract. But I think 
at least we leave here understanding that those--that those 
accusations that have been leveled in the Associated Press 
report and those by Ms. Smith today are ones that I hope we can 
all agree need to be addressed going forward.
    Mr. Brede. I have invited the DHS IG to look at the 
incident. I hope he does, as he was asked to do earlier; to 
look at the incident involving the white powder, an incident in 
which no WSI employee handled that powder. We wrote to the 
Secretary, pointing that out, and we would--we will certainly 
welcome any investigation looking at that particular incident.
    Mr. Murphy. Thank you, Mr. Chairman.
    Mr. Towns. Thank you. Thank you very much.
    Let me just sort of go further here, Dr. Brede. You know, 
Ms. Smith came here and I asked her some questions. I asked 
her, I said, ``Were you terminated because of poor 
performance?'' she said, ``No.'' I asked her were you--``What 
were your evaluations?'' she said, ``Good.'' Then I asked her 
did she have any lawsuits, you know, with the company, and she 
said ``No.'' And then I asked her, you know, ``Why would you 
wait until this point to come forward?'' she indicated, you 
know, and gave an answer that, I think, was very acceptable, 
you know, and I'm sure that she was struggling with it and 
finally made a decision, you know, to come. And she indicated 
some things there that--and I would like to just hear you 
respond to them because, you know, she didn't get fired, you 
know.
    Mr. Brede. She did not.
    Mr. Towns. She didn't have a bad evaluation. She didn't 
have any of those things. She comes to us, as I get it, out of 
real concern. And to me that's important.
    So I would like for you to sort of respond to the things 
that she talked about here in terms of--you know, could you 
just sort of go over that and let me know in terms of what 
happened, you know, as far as you're concerned?
    Mr. Brede. I can respond to two of them.
    As I pointed out earlier, I am hearing the others for the 
first time today. One of the allegations, I believe, had to do 
with access control. Once again, it's a criticism leveled at us 
through the news media, again, by a terminated employee co-
opted by the SEIU. We performance-tested that particular 
measure and, quite frankly, did quite well at it. We had layers 
of security. And you have to understand, in a facility like 
that, you've got layers of security, and the closer you get to 
potential targets, the tougher that security is.
    The other, I believe, in her testimony had to do with time 
sheets. We conducted an internal audit of that. I am not 
familiar with the results of that audit, but I could certainly 
take that for the record and make that available to you.
    Those are the only ones that I'm familiar with. I'm not 
familiar with the others, and I'm not, quite frankly, prepared 
to address them today.
    Mr. Towns. Ms. Smith, let me ask you, did you ever report 
any of this to Wackenhut or to DHS, any of this?
    Ms. Smith. When I worked at Wackenhut, I was there 2 weeks, 
and so I can't tell you how what I am about to explain came 
into it. I can only tell you that 2 weeks into the job, an 
official from Wackenhut, from their corporate office from 
Florida--I don't know if it's the corporate office. An official 
from Florida came to the site because, I'm assuming, prior to 
that there were so many complaints from officers that somebody 
from Wackenhut came to the site to see what was going on. I'd 
only been with the company 2 weeks. I was actually going 
offsite when someone said, ``There's a meeting you're supposed 
to be at,'' and I said, ``Well, I didn't know about it.'' So I 
went to the meeting, and what happened was this:
    The officers started telling them different issues that 
were--that was going on. As they went around the table, when 
they got to me, I said, ``Well, you know what? I've only been 
here 2 weeks, so anything I can say can only be based on a 2-
week observation.'' And I don't remember the gentleman's name--
I could find out--but he said, ``Well, in 2 weeks, what have 
you seen, and what do you think?'' I said, ``In the 2 weeks 
that I've been here, I would seriously, seriously make some 
changes.'' I said, ``You have employees who--you're working 
them--some employees are working pretty close to 24 hours a 
day.'' I said, ``You have an employee who came in to work''--my 
shift started at 6 a.m. I said, ``When I came to work, he was 
there,'' which meant he had been there on the night shift. I 
said, ``When I went to lunch, he was here.'' I said, ``When I 
came back from lunch, he was gone.'' I said, ``But when I 
left--when I went to go home, he was here,'' which means he 
lives someplace near, got about 2 to 4 hours' sleep and came 
back. I said, ``He's been here for 24 hours. He's carrying a 
weapon.''
    I said, ``In the 2 weeks I've been here, the weapon I drew 
out the other day fell apart.'' The barrel came off the .38, 
which means that it had just been placed up there, which means 
it had to be damaged. I said, ``So you have several weapons in 
there that don't even have handles on them.''
    I said, ``In the 2 weeks I've been here, you have officers 
who are sleeping on posts.'' I said, ``So my concern is that 
there are things going on here that your corporate office may 
not know about.'' I said, ``The things--all the things that I 
see are things that can be addressed. I do not see any--I've 
only been here 2 weeks, so I don't see anything major,'' I 
said. ``but I see something that's starting to build, and if it 
were my site, I'd be concerned and I would start asking the 
supervisors what is going on here.''
    And he said they were going to do a thorough investigation. 
He pulled me to the side later. We talked a little bit about my 
previous experience, and he said--he guaranteed and assured me 
that, you know, he appreciated me telling him the things I'd 
seen. And I even told him, I said, ``I don't know. I said this 
is the first time I've ever met the project manager of this 
site. I didn't even know who he was,'' I said, ``so I don't 
want him in a situation that maybe he doesn't know, but these 
are the things that are going on that I've seen within 2 
weeks,'' I said, ``and they need to be addressed,'' you know. 
And he assured me that it was going to be taken care of. He 
left. I never heard from him again, and it escalated. It just 
went from bad to worse.
    Mr. Towns. Well, you know--thank you very much, Ms. Smith.
    You know, Dr. Brede, I come from the school of thought that 
where there's smoke there's fire. And of course, you know, 
there's a lot of allegations that have been passed along here 
in reference to the company. Now I'd say maybe one was not 
accurate, two maybe, but there's just too many things here, you 
know. And I'm just listening to Mrs. Smith--Ms. Smith--who 
indicated in terms of her experiences here--and she has no 
reason, you know, to make up or to create, you know, and I just 
want to hear you.
    I think that there's some things here that need to be 
corrected. I mean--and I think they're very serious because of 
the fact that when it comes to security, that's a very serious 
matter in this day and age, and more than ever. And I think 
that you need to revisit this and to try and straighten these 
things out, I think, rather than saying, you know--you know, 
there are allegations, but the point is that there's a lot of 
allegations here, and I think that there's just too many for me 
to just sort of brush them off or push them off as just 
statements or somebody, you know, making some comments or some 
union that's upset.
    There's a lot going on here. And of course, I need to hear 
you respond to that. I mean, of course, I know you're saying 
that you weren't aware of it and you didn't know about it, only 
two of them. But this is a lot not to know about. I mean, let 
me ask you this: Do you read the paper?
    Mr. Brede. I certainly do read the paper, and I would tell 
you once again--and I don't think we can easily dismiss the 
reports that are prompted by--specifically by the Service 
Employees International Union.
    One of the things I would wonder is if Mrs. Smith has been 
prompted in any of this, for example, by the SEIU. There are 
distortions of fact. There is misinformation continuously put 
out in an effort for that union to displace--the unions that 
I'll represent are fine officers. It's something that we have 
refused to submit to. We don't take allegations lightly.
    For example, the allegation of cheating at Oak Ridge. I am 
very much offended by that. Once the IG looked at that, we did 
an internal investigation. Not only that, but there was yet 
another review conducted by the National Nuclear Security 
Agency. They came to a completely different conclusion than 
the--than the IG.
    For example, someone asked the question earlier, you know, 
was that really cheating? What that incident had to do with was 
a validation of a computer model, using an exercise on the 
ground to validate the validity of a training tool. Hence, 
people were indeed briefed on the scenario. We found that there 
was a difference between the computer simulation tool and the 
way our response would be executed on the ground. So that 
information was provided to the IG. We never heard anything 
again back.
    So we do take investigations--allegations seriously. We 
investigate them. If we knew of all of these at the time Ms. 
Smith was there, believe me, we would certainly investigate 
them. And I invite an investigation of them now, as I told the 
IG from the Department of Homeland Security today.
    Mr. Murphy. Mr. Chairman, can I ask just one last question? 
Thank you, Mr. Chairman.
    I just want to note for the record this isn't just 
promotional material sent out by SEIU. This hearing is convened 
because of reports from the IG's office, because of independent 
media reports by fairly reputable organizations such as the 
Associated Press. So this is not simply one particular group 
with an agenda. These are independent sources as well. That's a 
comment.
    The question is this: In our interchange, you talked about 
the changing circumstances on the ground in that contract, and 
you created a distinction between meeting the parameters of the 
requirements of the contract versus doing what may or may not 
be necessary to truly secure that facility.
    As the--if you believe--and this is a question I'm just 
curious about: If you believe as a contractor that the 
requirements of the contract are not sufficient in order to 
meet the security needs of the building, if the tenant changes 
in this case, which would prompt the security force to be 
elevated, do you believe it's the responsibility of the 
contractor of the agency providing security to either change of 
their own volition the security standards for that facility or 
to go back to the contracting agency and suggest that the 
contract be changed?
    Mr. Brede. That's a fair question.
    I believe it is our responsibility as a security contractor 
to offer our professional advice to the agency and advise them 
as to what is needed.
    Mr. Murphy. Thank you, Mr. Chairman.
    Mr. Towns. Thank you very much.
    Let me just ask you something really quickly.
    You know, Carolyn Maloney, who is a member of this 
committee, has a bill, and of course--in terms of data base and 
on the contract performance, and I know you have.
    What's the difference between what she has and what you're 
doing?
    Mr. Amey. Very little. And we've supported Representative 
Maloney with that bill for many years, back to when she first 
introduced it in 2002. That was when our original contractor 
misconduct data base came out, and we've supported her every 
year since then. So I've actually taken a look at the bill. 
I've seen the provisions in the bill. The things that she's 
added has changed a little bit this year from the previous 
years, but I think she's getting two--what Inspector General 
Skinner stated earlier was she's getting two very objective 
standards that can be used by contracting officers to evaluate 
the responsibility level of Federal contractors, and that's 
what we need. We have a real gap there.
    Mr. Towns. Let me thank all three of you for your 
testimony, and I think that it's very, very important that we 
do not take this lightly and--because, as I indicated early on, 
you know, security is very important. And I don't think we can 
just sort of like pass this off as some labor union is creating 
an issue or creating a problem, you know. I think this is 
something that needs to be addressed and needs to be addressed 
very seriously. And I want you to know that's my views and my 
feelings on it, and we're not going to go away. We're not going 
to go away. There's just too much of this going on, and we have 
to do something. And of course, this is the committee to do it.
    Thank you very, very much. I appreciate your testimony.
    This hearing is adjourned.
    [Whereupon, at 5:50 p.m., the subcommittee was adjourned.]

                                 
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