[Senate Hearing 110-331]
[From the U.S. Government Publishing Office]



 
                                                        S. Hrg. 110-331

                     DECONSTRUCTING RECONSTRUCTION:
                   PROBLEMS, CHALLENGES, AND THE WAY
                    FORWARD IN IRAQ AND AFGHANISTAN

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

                                HEARING

                               before the

                              COMMITTEE ON
               HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE

                       ONE HUNDRED TENTH CONGRESS

                             FIRST SESSION

                               ----------                              

                             MARCH 22, 2007

                               ----------                              

        Available via http://www.access.gpo.gov/congress/senate

                       Printed for the use of the
        Committee on Homeland Security and Governmental Affairs



                     U.S. GOVERNMENT PRINTING OFFICE

34-413 PDF                 WASHINGTON DC:  2008
---------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office  Internet: bookstore.gpo.gov Phone: toll free (866)512-1800
DC area (202)512-1800  Fax: (202) 512-2250 Mail Stop SSOP, 
Washington, DC 20402-0001


          DECONSTRUCTING RECONSTRUCTION: PROBLEMS, CHALLENGES,

              AND THE WAY FORWARD IN IRAQ AND AFGHANISTAN
For Sale by the Superintendent of Documents, U.S. Government Printing Office
Internet: bookstore.gpo.gov  Phone: toll free (866) 512-1800; (202) 512ï¿½091800  
Fax: (202) 512ï¿½092104 Mail: Stop IDCC, Washington, DC 20402ï¿½090001
        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TED STEVENS, Alaska
THOMAS R. CARPER, Delaware           GEORGE V. VOINOVICH, Ohio
MARK L. PRYOR, Arkansas              NORM COLEMAN, Minnesota
MARY L. LANDRIEU, Louisiana          TOM COBURN, Oklahoma
BARACK OBAMA, Illinois               PETE V. DOMENICI, New Mexico
CLAIRE McCASKILL, Missouri           JOHN WARNER, Virginia
JON TESTER, Montana                  JOHN E. SUNUNU, New Hampshire

                  Michael L. Alexander, Staff Director
                         Troy H. Cribb, Counsel
                  Kristine V. Lam, Research Assistant
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                    Jay W. Maroney, Minority Counsel
                 Melvin D. Albritton, Minority Counsel
                  Trina Driessnack Tyrer, Chief Clerk


                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator Lieberman............................................     1
    Senator Collins..............................................     5
    Senator McCaskill............................................    22
    Senator Coleman..............................................    24
    Senator Coburn...............................................    26
    Senator Levin................................................    29
    Senator Warner...............................................    32

                               WITNESSES
                        Thursday, March 22, 2007

Stuart W. Bowen, Jr., Special Inspector General for Iraq 
  Reconstruction.................................................     6
Hon. David M. Satterfield, Senior Advisor to the Secretary and 
  Coordinator for Iraq, U.S. Department of State.................     9
Major General Ronald L. Johnson, Deputy Commanding General, U.S. 
  Army Corps of Engineers........................................    13
Mark S. Ward, Senior Deputy Assistant Administrator, Bureau of 
  Asia and the Near East, U.S. Agency for International 
  Development....................................................    14

                     Alphabetical List of Witnesses

Bowen, Stuart W. Jr.:
    Testimony....................................................     6
    Prepared statement...........................................    57
Johnson, Major General Ronald L.:
    Testimony....................................................    13
    Prepared statement with attachments..........................    71
Satterfield, Hon. David M.:
    Testimony....................................................     9
    Prepared statement...........................................    65
Ward, Mark S.:
    Testimony....................................................    14
    Prepared statement with attachments..........................   106

                                APPENDIX

Documents submitted by Senator Coburn............................    35
Letter to Hon. Alberto R. Gonzales, Attorney General, from 
  Senator Warner, dated March 15, 2006...........................    55
Information and documents submitted for the Record from Mr. Ward 
  to Senator Coburn..............................................   124
Questions and responses for the Record from:
    Mr. Bowen....................................................   208
    Mr. Satterfield..............................................   211
    Gen. Johnson.................................................   220
    Mr. Ward.....................................................   226
Iraq Reconstruction, Lessons in Program and Project Management, 
  Report Number 3, March 2007....................................   264


                     DECONSTRUCTING RECONSTRUCTION:



                   PROBLEMS, CHALLENGES, AND THE WAY



                    FORWARD IN IRAQ AND AFGHANISTAN

                              ----------                              


                        THURSDAY, MARCH 22, 2007

                                     U.S. Senate,  
                       Committee on Homeland Security and  
                                      Governmental Affairs,
                                                    Washington, DC.
    The Committee met, pursuant to notice, at 10 a.m., in room 
SD-342, Dirksen Senate Office Building, Hon. Joseph I. 
Lieberman, Chairman of the Committee, presiding.
    Present: Senators Lieberman, Levin, McCaskill, Collins, 
Coleman, Coburn, and Warner.

            OPENING STATEMENT OF CHAIRMAN LIEBERMAN

    Chairman Lieberman. The hearing will come to order. Good 
morning, and thanks to all of you for being here, particularly 
thanks to our witnesses. I appreciate your presence very much.
    In today's hearing we are going to focus on a challenge 
that is critical to our success in Iraq and Afghanistan, but 
beyond that, in the larger war on terror and in other conflicts 
and post-conflicts, in terms of securing the future and 
rebuilding countries that we are involved in so they can fully 
and finally break from the legacies that they have had--in the 
case of Iraq and Afghanistan, obviously, the dark legacies of 
Saddam Hussein and the Taliban.
    If we want these nations to become free and prosperous 
societies that will be our allies in the war on terror rather 
than falling back into dictatorships that offer a haven and 
headquarters for those who would attack us, we must help them 
build the infrastructure upon which prosperity and freedom 
depend: Schools, roads, power projects, water and sewer 
systems, health care facilities, and communications systems. 
And, of course, we also need to help them strengthen democratic 
foundations that are necessary for long-term prosperity, 
freedom, and stability.
    Here in this country, the American people may be divided 
over the handling of the war in Iraq, but I do not think we are 
divided in our hope that the Iraqi and Afghani people will soon 
enter the community of peaceful, stable, and democratic 
nations. And that is the focus of the hearing today.
    Widely reported instances of waste and fraud in our 
reconstruction efforts have left many Americans wondering 
whether we are able to deliver this needed assistance 
effectively. They rightly ask what we have gotten out of the 
$38 billion spent in Iraq on reconstruction and the $4.3 
billion spent in Afghanistan. They wonder whether contractors 
have been held accountable when they overcharge or defraud our 
government, and in some sense, I think at the extreme, they ask 
whether the nations that we are trying to help are spending the 
money that we are investing in them effectively and ethically.
    Today's hearing is quite creatively titled--I do not take 
any credit for it; it is from a staff member--``Deconstructing 
Reconstruction,'' subtitled ``Problems, Challenges, and the Way 
Forward in Iraq and Afghanistan.'' And we are going to look 
today at what is working so we can build on our successes and 
what is wrong so we can fix it.
    I want to thank our witnesses: Stuart Bowen, Special 
Inspector General for Iraq Reconstruction, now adding a new 
acronym with great resonance to our vocabulary--SIGIR; the Hon. 
David M. Satterfield, Senior Advisor to the Secretary of State 
and Coordinator for Iraq; Major General Ronald L. Johnson, 
Deputy Commander, U.S. Army Corps of Engineers; and Mark Ward, 
Senior Deputy Assistant Administrator for the Bureau of Asia 
and the Near East for the U.S. Agency for International 
Development.
    We know that reconstruction in Iraq and Afghanistan is 
taking place in a very difficult and dangerous context. That is 
why the current clear, hold, and build strategy being carried 
out under General Petraeus is so important, not just to create 
security but to create security for the purpose of enabling the 
reconstruction and economic recovery and the political 
strengthening of the country.
    Each of the witnesses today before us, as well as the men 
and women who work for their organizations, have put themselves 
in harm's way to help the United States carry out its mission 
in Iraq and Afghanistan, and we thank them truly and deeply for 
that.
    Even with these security challenges, the audits of 
reconstruction projects done by the SIGIR show, if I may state 
it simply, that where projects were well planned and well 
supervised, the rate of success has been high. It is as simple 
as that, and yet it is a much more complicated story, as the 
Special Inspector General himself knows and will make clear.
    The problem is that there were too many projects that were 
not well planned and well supervised, and those rightfully 
agitate the public and Members of Congress because a lot of 
money appears to have been wasted. And it is a waste and a cost 
that is measured not just in dollars but in the undermining of 
the overall U.S. mission in these critically important 
countries.
    This is infuriating and heartbreaking, both to the American 
taxpayers, whose money we have spent and who want us to 
succeed, and to the people of Iraq and Afghanistan, the 
overwhelming majority of whom desperately also want and need us 
to succeed.
    I have in my prepared statement a number of examples of the 
waste, fraud, and abuse that the Special Inspector General has 
uncovered, and I am just going to enter them into the record. 
Unfortunately, it is not a short list. But today I think we are 
going to go from the focus on the scandalous, infuriating 
outrages of waste, fraud, and abuse to the lessons we learned 
from both what has worked and what has not worked. And this is 
an important turning point as we consider the fundamental 
reforms that we may want to make here because we also, as the 
witnesses will testify, I am sure, are at something of a 
turning point in terms of the relationship of our government to 
the reconstruction of Iraq. In some measure, as I was 
discussing with Mr. Bowen yesterday, we are completing the 
phase of large-scale American responsibility for the 
reconstruction of Iraq, and we are transitioning to what looks 
a lot more like a foreign aid program as the Iraqis are more 
capable of standing up on their own economically.
    The lessons that we hope to discuss today that we have 
learned from our experience in Iraq will help us help the 
Iraqis, help us as we offer assistance, and, most important of 
all, probably help us if and--more likely not if, but when we 
confront similar challenges and opportunities to rebuild 
countries that we have, with others, liberated from tyranny and 
terrorism.
    There are some very interesting ideas that Mr. Bowen has in 
his report. I am particularly taken by these ideas because I 
serve, along with Senator Collins, on the Armed Services 
Committee, and we do a lot of work on trying to implement the 
Goldwater-Nichols mission of making our military a joint 
operation. You can state it in a simple insight, in a sentence 
that Congress had at the time of Goldwater-Nichols: Warfighting 
will be joint; therefore, we must organize jointly to fight 
jointly.
    In this case, I think what we have seen with the 
involvement of the Department of Defense, the Department of 
State, and USAID is that each go their own way sometimes in the 
economic reconstruction of Iraq and Afghanistan. We know that 
these kinds of reconstruction missions, nation building, if you 
will, will always be joint and, therefore, we have to explore 
ways to organize jointly, which I believe is the charge and the 
challenge that the Special Inspector General is giving us in 
his report and testimony today. And to paraphrase, we do not 
shrink from the challenge. We welcome it because it is 
important to our Nation's future, to the cause of freedom, and 
also to the exercise of our responsibility on this Committee as 
an oversight committee.
    So I thank you all for being here. I look forward to your 
testimony.
    [The prepared statement of Chairman Lieberman follows:]

                PREPARED STATEMENT OF SENATOR LIEBERMAN
    Good morning. In today's hearing we will focus on a challenge that 
is critical to our ultimate success in Iraq, Afghanistan and the larger 
war on terror--helping those nations rebuild so they can fully and 
finally break free from tyrannical legacies of Saddam Hussein and the 
Taliban.
    If we want these nations to become free and prosperous societies 
that will be our allies in the war on terror, rather than dictatorships 
that offer headquarters for those who would plot to attack us, we must 
help them build the infrastructure upon which prosperity and freedom 
depends--schools, roads, power projects, water and sewer, health care 
and communications systems--And we must help them strengthen democratic 
foundations that are necessary for long-term prosperity.
    Americans may be divided over the handling of the war but we are 
not divided in our hope that the Iraqi and Afghan people will soon 
enter the community of peaceful, stable, democratic nations.
    But widely reported instances of waste and fraud in our economic 
aid have left many Americans wondering whether we are able to deliver 
the needed reconstruction effectively. They rightly ask what we have 
gotten out of the $38 billion spent in Iraq on reconstruction, and the 
$4.3 billion we have spent in Afghanistan. They wonder whether 
contractors are held accountable when they overcharge or defraud our 
government. They ask whether independent contractors are spending the 
money we give them efficiently and ethically.
    With today's hearing--``Deconstructing Reconstruction: Problems, 
Challenges, and the Way Forward in Iraq and Afghanistan'' we will look 
at what's working, so we can build on our successes, and what's gone 
wrong so we can fix it.
    I want to thank our witnesses for joining us today: Stuart W. 
Bowen, Jr. Special Inspector General for Iraq Reconstruction--or SIGIR; 
Honorable David M. Satterfield, Senior Advisor to the Secretary of 
State and Coordinator for Iraq; Major General Ronald L. Johnson, Deputy 
Commander, U.S. Army Corps of Engineers; and Mark S. Ward, Senior 
Deputy Assistant Administrator for the Bureau of Asia and the Near East 
for the U.S. Agency for International Development.
    We know that reconstruction in both of these countries is taking 
place in extremely difficult and dangerous circumstances that is why 
clear, hold and build strategy by General Petraeus is so important. 
Each of the witnesses today, and the men and women who work for their 
organizations, have put themselves in harm's way to help the United 
States carry out its mission in Iraq and Afghanistan.
    But even with these challenges, audits of reconstruction projects 
show that where projects were well-planned and well-supervised, the 
rate of success has been high.
    Where we've seen failure is when the U.S. Government failed to plan 
projects carefully and then failed to keep a close watch over 
contractors and now we've seen billions of dollars wasted--a cost 
measured not just in dollars but in the undermining of the overall U.S. 
mission in these war-torn countries.
    This is infuriating and heartbreaking both to the American 
taxpayers whose money we have spent want us to succeed and the people 
of Iraq and to Afghanistan who desperately need us to succeed.
    Some examples:

      In 2004, the U.S. government rushed into 12 large 
contracts worth billions of dollars to rebuild critical sectors of the 
Iraqi economy, like electricity, public works, water resources, 
transportation. The contractors were told to head to Iraq immediately. 
But when they got there, the government waited months to give the 
contractors specific projects, although their clocks were ticking away 
and the bills were piling up. For example, Halliburton's subsidiary, 
KBR, arrived in Iraq in February 2004 to work on oil infrastructure 
projects and then sat around for the next nine months with little to do 
because no one had mapped out what projects KBR was supposed to do. 
During that time, the government paid KBR $52.7 million for salaries, 
housing, food and other administrative costs.
      $43.8 million was spent on a residential camp for a 
police training academy in Baghdad that has stood empty for months. 
This spending included $4.2 million on work that was never authorized 
by the U.S. government, including an Olympic-sized swimming pool. As of 
the SIGIR's last report on this project January, this facility was 
still sitting empty.
      The SIGIR has found that the Department of State, under 
its contract with DynCorps for the training of Iraqi security forces, 
spent $36.4 million for weapons and equipment that cannot be fully 
accounted for.
      KBR burned through more than $75 million in a matter of 
weeks on the crucial Al Fatah oil pipeline crossing under the Tigris 
River and accomplished nothing because the company ignored warnings 
that their engineering plan was fatally flawed and doomed to failure.
      Efforts to build Primary Healthcare Centers in Iraq have 
been beset by performance troubles. Last year, only 6 of 142 planned 
Primary Healthcare Centers had been completed in Iraq. The U.S. 
terminated the contract for the healthcare centers with the primary 
contractor, Parsons, and re-awarded the work to Iraqi firms. But only 
two more have been completed since that time.
      In Afghanistan in 2004, USAID canceled most of its 
contract with the Louis Berger Group for reconstruction of school and 
health facilities because the completion rate for the projects began to 
lag far behind schedule.
      Yet USAID has just entered into a $1.4 billion contract--
given to a joint enterprise led by Louis Berger--to undertake the full 
range of infrastructure projects, from roads to energy projects in 
Afghanistan. This seems astounding on its face and today we must ask 
USAID whether we have any assurance that this mega contract will not 
suffer from the same cost overruns and delays.

    I could go on. There are many other examples--the cost overruns at 
the Basrah Children's Hospital, which are already $100 million over the 
original $50 million price tag--and still climbing--and the $73 million 
Baghdad Police Academy with such poor plumbing sewage is leaking 
through the ceilings.
    These things cannot be allowed to continue and we look forward to 
hearing from Mr. Bowen and our other witnesses about what fundamental 
reforms we can make, not just to improve contractor performance in Iraq 
and Afghanistan, but across the whole range of these kinds of 
contracts.
    The war against terror will not be won by military might alone. We 
must show the world that we are serious in our efforts to keep 
liberating nations like Iraq and Afghanistan from slipping into chaos 
by helping them build a strong democratic foundation and a modern 
infrastructure that promotes the dreams of a prosperous future.
    I agree with the SIGIR that the State and Defense Departments and 
USAID must work together much more effectively on post-conflict 
reconstruction and I will examine possible legislative fixes to achieve 
that goal.
    I look forward to today's testimony so that we may find a better 
way forward.
    I note that this is our Committee's second hearing on 
reconstruction, and today we will build on the hearing that Senator 
Collins chaired in August last year, at which Mr. Bowen presented his 
lessons learned findings on contracting.
    And with that, I turn to Senator Collins for her opening statement.

    Senator Lieberman. I would yield now to the Ranking Member, 
Senator Collins.

              OPENING STATEMENT OF SENATOR COLLINS

    Senator Collins. Thank you very much, Mr. Chairman. I very 
much appreciate your convening this important hearing.
    Reconstruction efforts, whether in war zones abroad or 
disaster areas at home, require careful planning, effective 
oversight, and wise stewardship of the taxpayers' investment. 
Regrettably, our reconstruction operations in Iraq have been 
plagued by a lack of coordination, poor management of many 
projects, and an overreliance on costly noncompetitive 
contracts.
    Today, we have the opportunity to learn from these serious 
mistakes as the Special Inspector General for Iraq 
Reconstruction releases his third and final Lessons Learned 
report. It includes nine thought-provoking recommendations. The 
most significant, as the Chairman has mentioned, calls for a 
new Goldwater-Nichols type of approach to coordinate efforts 
among the Departments of Defense and State, the U.S. Agency for 
International Development, as well as other agencies and 
departments involved in future reconstruction efforts. Other 
recommendations call for more funding of reconstruction and 
stabilization planning, clarification of who exactly is in 
charge, more involvement of local people in reconstruction, and 
improved management of non-U.S. funds. These are sound 
recommendations, and I look forward to hearing more about them 
today.
    Reflecting its disarray and uncertainty, the Federal 
Government has adopted four different strategies and structures 
to deal with reconstruction in Iraq. Each approach has 
experienced difficulties in making the progress necessary to 
improve the lives of the Iraqi people and to pave the way for 
the time when our troops can come home.
    The heart of the American reconstruction effort in Iraq and 
Afghanistan is an enormous network of contracts. The Department 
of Defense has a large role in managing the more than $30 
billion appropriated for reconstruction, and the Army alone has 
an estimated 60,000 contractor employees supporting its 
operations.
    The Special Inspector General has uncovered many disturbing 
cases of egregious waste and mismanagement, and in some 
instances, outright fraud, in Iraq reconstruction contracts and 
projects. His work strongly suggests that Congress should 
revamp the way the Federal Government conducts significant 
relief and reconstruction efforts, whether it is in Iraq, 
Afghanistan, or even in the Gulf Coast of the United States.
    It was the Special Inspector General's investigations as 
well as the findings from this Committee's Hurricane Katrina 
hearings that led me to introduce the Accountability in 
Government Contracting Act, with the welcome support of our 
Chairman and Senators Carper, Coleman, and McCaskill. This bill 
aims to improve our stewardship of taxpayers' money while 
increasing the fairness and transparency of Federal dealings 
with suppliers of goods and services.
    The fact is, obstacles exist to fair, effective, and open 
competition, as well as effective oversight, including 
inadequate documentation requirements, the overuse of letter 
contracts that fail to include all the critical terms, 
excessive tiering of subcontractors, and insufficient public 
data on Federal contracts.
    An example is a task order for an oil project that cost 
some $84 million. When the Defense Contract Audit Agency looked 
into the charge, it discovered that the work had been completed 
for more than a year before DOD negotiated the final terms of 
the contract. Unfortunately, the record of Federal contracting 
in Iraq is replete with this kind of lax oversight.
    The Special Inspector General last July identified 194 
individual task orders valued at $3.4 billion that were 
classified as ``undefinitized contract actions;'' in other 
words, they were missing key terms of the contract, such as 
defining the scope, the schedule, or even the price. The 
provisions of our contracting reform legislation would help to 
avoid such outrageous contracting abuses.
    Mr. Chairman, our witnesses today can offer us invaluable 
observations and guidance in our work to improve our 
reconstruction efforts overseas with corollary benefits to 
Federal reconstruction efforts at home, particularly on the 
Gulf Coast. I am very eager to hear their comments, and again, 
thank you for scheduling this important hearing.
    Chairman Lieberman. Thanks, Senator Collins.
    We are now ready to go to the witnesses. Again, I thank you 
for being here. We really look forward to your testimony. This 
is important business.
    Stuart Bowen, Special Inspector General for Iraq 
Reconstruction, thanks for all you have done. Thanks for being 
here today, and we are ready to hear from you.

TESTIMONY OF STUART W. BOWEN, JR.,\1\ SPECIAL INSPECTOR GENERAL 
                    FOR IRAQ RECONSTRUCTION

    Mr. Bowen. Thank you, Mr. Chairman.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Bowen appears in the Appendix on 
page 57.
---------------------------------------------------------------------------
    Chairman Lieberman, Ranking Member Collins, Members of the 
Committee, thank you for this opportunity to address you today 
on the important issues raised by our latest Lessons Learned 
report, which contains an extensive review of program and 
project management in Iraq reconstruction. But before I begin, 
let me briefly summarize what I learned in my last trip to 
Iraq--I returned last week--my 15th trip since I was appointed 
3 years ago. And I returned with a sense of cautious optimism 
about the progress in the Baghdad Security Plan.
    I met with the senior leadership, across-the-board 
military, and in the embassy, and in particular had very good 
visits with General Petraeus, and what I learned is that the 
preliminary results of this latest initiative in the Baghdad 
Security Plan have been positive. And so I wanted to begin my 
discussion by saying that cautious optimism is a good sign and 
something that I had not returned from Iraq with I guess over 
the last 20 months.
    Chairman Lieberman. I appreciate your beginning with that. 
That is good news. And your reaction was qualitatively 
different than on the previous visits you had made? And you 
said you have made 15 visits to Iraq?
    Mr. Bowen. Yes, sir.
    Chairman Lieberman. In the last 20 months?
    Mr. Bowen. In the last 3 years. But it has been about 20 
months since I have returned from Iraq with a sense of cautious 
optimism. I have that now.
    Chairman Lieberman. That is very encouraging. I do not want 
to interrupt you anymore. I will ask you some more questions 
during my time period. Please go on.
    Mr. Bowen. Yes, sir.
    SIGIR began the Lessons Learned Initiative 2 years ago. The 
purpose of it is to draw from the Iraq experience methods, 
processes, instructive lessons that can improve both what is 
going on in Iraq and Afghanistan and improve government 
preparedness for future post-conflict contingency relief and 
reconstruction operations.
    The first report was released a year ago, lessons learned 
on human capital management, and notably the government has 
been responsive to several of the recommendations raised in 
that report. Specifically, emphasis has begun on developing a 
civilian reserve corps, and that has been an initiative within 
the State Department's Office of Stability and Reconstruction, 
S/CRS. And I have met with Ambassador Herbst. He is focused on 
that, and the Federal Government is developing plans to ensure 
that we can adequately resource with human capital future post-
conflict operations.
    The second report was released at a hearing last August in 
front of this Committee on contracting, and I am very pleased 
that a number of the recommendations raised by that report have 
been directly and accurately and effectively addressed in the 
Accountability in Government Contracting Act of 2007, Senator 
Collins' bill, and in particular, I think these kinds of 
reforms are exactly what will save taxpayer dollars in a post-
conflict contingency environment and address very directly the 
problems that have been experienced in contracting in Iraq. 
Most notably, I think it is wise to put a cap on indefinite 
delivery indefinite quantity (IDIQ) contracts just to deter 
their overuse. I think it is important to legislatively mandate 
definitization, which means getting control of costs in cost-
plus contracts on time. I think that ensuring that we have 
enough contracting officers ready to go and work in a situation 
like this is essential to steward the taxpayers' dollars. So I 
really express my strong support for this act.
    Now to our latest report. This is the result of years' 
worth of research of all sorts, looking to the documentary 
evidence, visiting with all of those who were involved in 
program and project management in Iraq, convening a day-long 
conference a year ago--General Johnson was part of that--that 
examined the preliminary findings. The analysis at that 
conference drove the recommendations thereafter, and it has 
been vetted throughout the interested agencies, and I think has 
now been reduced down to what the core lessons are and the core 
recommendations. And, Mr. Chairman, as you pointed out, the 
most significant recommendation is the first one, and it takes 
account of the need to achieve jointness in post-conflict 
contingency relief and reconstruction operations. The 
Goldwater-Nichols reference is just an allusion to the success 
of the jointness achieved as a result of that 1986 Act, and 
subsequent conflict campaigns have reflected the success of 
that reform measure that Congress implemented.
    Pushing the same sort of jointness in post-conflict 
operations could yield the same fruit. It is a challenging 
proposal, I acknowledge that, because it involves 
interdepartmental interests, and, of course, every post-
conflict operation is going to be different in many respects. 
But, nevertheless, I believe from my experience, from the 
experience of those who participated in this, in all of these 
Lessons Learned programs, and really from anyone who has spent 
extensive time in Iraq, that promoting jointness in planning 
and structuring the United States' capacity to carry out 
contingency operations is a worthy endeavor.
    Our second recommendation proposes the authorization of the 
State Department's Office of Coordinator for Reconstruction and 
Stabilization. This is a good idea put forward by the President 
in NSPD 44, but it needs financial strength and legislative 
authority to carry out the good work that it has begun. And 
without that, I do not think that is going to make the kind of 
progress that is necessary to continue to reform how the United 
States approaches post-conflict situations.
    The third recommendation calls for clarity about leadership 
in post-conflict operations. Unity of effort, unity of command, 
those are buzz words that point to the need for better 
coordination in operations like this, and the occasional 
weakness in those two areas in Iraq has limited some of the 
progress of reconstruction.
    The fourth recommendation asks that the agencies implement 
that which they have learned in the course of Iraq 
reconstruction. The story of Iraq reconstruction is one of 
gradual progress. Systems have been developed along the way 
that have improved operations, and they should be captured and 
institutionalized, like the CERP program, as we recommended in 
our contracting report.
    Recommendation 5, program managers should integrate local 
populations at every level of planning from the outset. That 
emphasis has evolved over time in Iraq, and now a majority of 
contracting actions go to Iraqi firms. But it is more than just 
direct contracting with Iraqis. It is engaging the interests of 
the local population as much as possible in developing the 
program itself moving forward.
    Recommendation 6, funding should be designated in a more 
coherent fashion; in other words, try to depart from the 
supplemental-based funding streams and move toward a more 
comprehensive funding stream with the end in mind. I realize 
that contingencies and developments on the ground limit that 
capacity to a certain extent, but it is a worthy goal to 
pursue.
    Develop policies and procedures for managing non-U.S. 
funds. That is Recommendation 7. It takes account of the 
problems that my office has identified with respect to the 
management of the Development Fund for Iraq. Those rules, those 
processes should be worked out ahead of time.
    Recommendation 8, develop planning from the outset for 
effective capacity development. We had an audit about that in 
our latest quarterly that came out at the end of January, and 
there continue to be concerns about the capacity of the Iraqi 
Ministries to carry out their core duties and especially 
execute their capital budget programs. An effective, 
coordinated, joint strategy for capacity development that is 
well funded should be an essential element of any planning for 
any post-conflict contingency relief and reconstruction 
operation.
    And, finally, effective independent oversight present as 
part of the program from the outset will promote efficiency and 
deter fraud, waste, and abuse. And, finally, on that last 
point, fraud has not been a significant component of the U.S. 
experience in Iraq reconstruction. Part of that, I think, has 
been the robust deterrent presence of investigators on the 
ground. The real challenge has been waste, as you pointed out, 
Mr. Chairman, and I think that taking account of the lessons 
learned, applying them here, reforming how planning is done in 
the future by promoting jointness will ameliorate some of the 
problems and some of the issues that my office has uncovered in 
its work over the past 3 years.
    So thank you again, Mr. Chairman, for this opportunity to 
address the Committee.
    Chairman Lieberman. Thanks, Mr. Bowen. You have done a 
great job in your investigations and in the Lessons Learned 
reports, too, so I look forward to the questioning.
    Ambassador Satterfield, thanks very much for being here 
today. We look forward to your testimony.

 TESTIMONY OF HON. DAVID M. SATTERFIELD,\1\ SENIOR ADVISOR TO 
  THE SECRETARY AND COORDINATOR FOR IRAQ, U.S. DEPARTMENT OF 
                             STATE

    Ambassador Satterfield. Mr. Chairman, Senator Collins, 
Members of the Committee, thank you very much for the chance to 
appear before you today to discuss the progress we are making 
in implementing the President's strategy for Iraq to review 
what has been achieved with the foreign assistance Congress has 
provided and to highlight the steps that we are taking, based 
in significant measure on the excellent work of the Special 
Inspector General, to improve the administration of taxpayer 
monies.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ambassador Satterfield appears in the 
Appendix on page 65.
---------------------------------------------------------------------------
    On January 10, the President outlined a new strategy for 
Iraq. On January 11, Secretary of State Rice provided further 
detail on how specifically we are pursuing jointly--the U.S. 
agencies, State, the other civilian agencies of government, and 
the U.S. military--our New Way Forward along four critical 
tracks: Economic, political, security, and diplomatic.
    As part of the New Way Forward, the focus of our efforts in 
Iraq is changing. As Iraqis increasingly take the lead, as they 
must, in furthering progress along each of these four tracks, 
we have shifted our focus from large infrastructure projects--
Reconstruction with a capital R--to capacity development and 
technical assistance programs that increase the capacity of 
Iraqis to better plan and execute their capital budget, manage 
their reconstruction projects, and improve governance at 
national and provincial levels.
    A major focus of our efforts is the expansion of the 
Provincial Reconstruction Teams. While we will continue to work 
closely with the central government in Baghdad, we are 
extending and expanding our reach beyond the Green Zone to help 
local communities and leaders transition to self-sufficiency, 
and we are working to improve the relationship, including the 
financial relationship, between the center and local 
governments.
    Secretary Rice has appointed Ambassador Tim Carney as our 
Coordinator for Economic Transition in Iraq. Ambassador Carney 
already has forged a relationship with Iraqis that has begun to 
show progress. Implementation of a hydrocarbon law, an 
investment law, beginning of debt negotiations with Saudi 
Arabia--these are all positive signs that Iraqis understand the 
seriousness and are reacting appropriately to advancing 
economic reform.
    Questions have been raised--and we certainly understand the 
concern of the American people and the Congress--regarding 
allegations of fraud, abuse, and waste of Iraq Relief and 
Reconstruction Fund monies appropriated by the Congress. 
Secretary Rice has emphasized her complete commitment to 
transparency and accountability. She and we, both in Baghdad 
and here in Washington, have coordinated closely with the 
Special Inspector General. We will continue to do so. We 
welcome his most recent report. We look forward to an intense 
study of the recommendations that he has provided. We concur 
that out of the experience of the past 4 years in Iraq, lessons 
need to be learned, lessons need to be implemented. We are in 
the process of doing so and have been over these past years.
    Moving forward, the task at hand, accelerating transition 
to Iraqi self-reliance while providing critical U.S. oversight, 
will be a challenge. But we have begun to see progress along 
several critical fronts.
    As you know, the President decided to augment our own troop 
levels in Baghdad and Anbar Province to support Iraqi troops 
and commanders, who are now in the lead, to help clear and 
secure neighborhoods and create the conditions necessary to 
spur local economic development. The State Department is 
contributing robustly to this effort by expanding our own 
presence and by closely coordinating in a joint fashion, a 
wholly joint fashion, with our military counterparts in and 
outside of Baghdad, as well as with the Iraqi Government, to 
capitalize on security improvements by creating jobs and 
promoting economic revitalization.
    Critical to this effort is the expansion of our Provincial 
Reconstruction Teams. We are doubling the number of PRTs from 
10 to 20. We will be adding more than 300 new civilian 
personnel. The first phase of PRT expansion is soon to be 
complete, as the 10 new interagency PRT core teams will arrive 
in Iraq by March 31. These core teams recently completed the 
first specialized interagency PRT training course given at the 
Foreign Service Institute. This is part of our joint approach 
to putting a team together that works as a team, from the 
moment they are identified in Washington until and through 
their arrival and performance in the field. New PRTs are going 
to be collocated with Brigade Combat Teams engaged in security 
operations. Over this next month, PRT team leaders will work 
jointly with brigade commanders to develop plans for the 
``build'' phase of clear, secure, and build.
    To demonstrate our unity of effort, on February 22, the 
State Department and the Department of Defense signed a 
memorandum of agreement to codify, to make formal this joint 
civilian-military effort.
    PRTs will target both civilian and military resources, 
including foreign assistance and the Commanders' Emergency 
Response Program, against a common strategic plan to bolster 
moderate Iraqi leaders through targeted assistance, promotion 
of economic growth, and creation of new jobs. They will work 
jointly on developing provincial and local capacity to govern 
in an effective and a sustainable manner. PRTs will continue to 
play a leading role in coordinating U.S. programs funded by the 
Congress, including Iraqi Provincial Reconstruction Development 
Councils and USAID's local governance, community stabilization, 
and community action programs. We intend to complete fully our 
PRT expansion and staffing by the end of the calendar year. 
This completion, however, is dependent, Mr. Chairman, both on 
the level of funding appropriated in the fiscal year 2007 
supplemental as well as circumstances on the ground in Iraq.
    Iraqis, Mr. Chairman, understand they are in the lead, and 
the Iraqi Government is committed to doing its part to invest 
in its own economic development, including spending $10 billion 
from the fiscal year 2007 budget to help create jobs, foster 
economic growth, and further national reconciliation. The 
Government of Iraq has made progress, as I noted before, on the 
vital hydrocarbon framework law. The Council of Ministers 
approved a draft of this law on February 26. The law will be 
submitted shortly to the Council of Representatives when a 
revenue sharing attachment to that law has been approved by the 
cabinet.
    The Council of Representatives is also discussing a 
provincial powers law and is considering several drafts for 
significant de-Ba'athification reform. The Iraqi Constitutional 
Review Committee will present its report, including any 
recommended amendments to the Constitution, to the Council of 
Representatives in a few months' time. And at a conference co-
hosted by U.N. Secretary General Ban Ki-Moon on March 16, Iraq 
agreed to implement the comprehensive economic reform programs 
laid out in the International Compact with Iraq.
    The most pressing fiscal challenge preventing Iraq from 
being self-sufficient in economic affairs, Mr. Chairman, is 
Iraq's lack of capacity to execute its budget. The Iraqis have 
responded by designating budget execution as a high priority in 
2007, and to this end, the government of Iraq has formed a 
budget execution task force led by Deputy Prime Minister Barham 
Salih, Finance Minister Bayan Jabr, and Planning Minister Ali 
Baban. In coordination with Ambassador Carney, this task force 
already has held a conference for ministries and provinces to 
introduce new budget regulations and to dispel concerns about 
corruption allegations that in part stymied Iraqi spending in 
2006. The Iraqi Ministry of Finance has made early efforts to 
jump-start spending by allocating 10 percent of capital budgets 
released following February's passage of the 2007 budget. We 
remain cautiously optimistic that Iraqi resolve coupled with 
our support will result in better budget execution in February 
2007. Very frankly, Mr. Chairman, we see this year, 2007, as a 
critical transition period, a bridge period, to Iraqi self-
sufficiency so that their monies, their capital resources can 
be spent instead of U.S. taxpayer monies on the civilian 
assistance side.
    Iraq will need the help and support of its neighbors, not 
just the United States and not just the coalition, to foster a 
stable, prosperous, and peaceful future. On March 10, Iraq 
hosted a Neighbors Conference in Baghdad attended by high-level 
officials from each of Iraq's neighbors, plus the P5 of the 
U.N., the Arab League, and the Organization of the Islamic 
Conference. This is an important step for Iraq's engagement 
with its regional and international partners to discuss 
political reconciliation, security, and economic engagement, 
and we support efforts to continue this process.
    Finally, while our focus is on the way forward, we are 
determined to effectively manage the remaining funds in the 
Iraq reconstruction account. Despite challenges, including 
insurgent attacks, IRRF projects have made significant 
contributions and improved the life of Iraqis. Water, sewerage, 
electrical supply, despite difficulties, have been augmented. 
Iraqis are benefitting, and we expect to complete most of the 
remaining IRRF II projects during the course of 2007 and the 
beginning of 2008.
    I want to emphasize again that the State Department is 
strongly committed to oversight of the funds Congress has 
appropriated to us for our efforts in Iraq. We have supported 
14 audits by the Government Accountability Office, more than 80 
audits and reports issued by the Special Inspector General's 
office, and audits done by the individual agency Inspector 
Generals. We will continue to work closely with SIGIR, with the 
GAO, and with agency Inspector Generals to maintain the highest 
standards of oversight and accountability in Iraq.
    Thank you very much, Mr. Chairman.
    Chairman Lieberman. Thanks, Ambassador, and I know you had 
to make some adjustments in your schedule to be here, and I 
appreciate that you did.
    General Johnson, I just want to say for those who do not 
know, brings to our hearing the benefit of wide-ranging service 
in the Army, including his previous assignment as the 
Commanding General of the Gulf Region Division of the Corps. He 
also served as a U.S. Deputy Director of the Coalition 
Provisional Authority.
    So thank you for being here, and I look forward to your 
testimony now.

    TESTIMONY OF MAJOR GENERAL RONALD L. JOHNSON,\1\ DEPUTY 
        COMMANDING GENERAL, U.S. ARMY CORPS OF ENGINEERS

    General Johnson. Mr. Chairman, Senator Collins, and Members 
of the Committee, thank you for the opportunity to be here 
today. I am the Deputy Commanding General of the entire U.S. 
Army Corps of Engineers and the Deputy Chief of Engineers.
---------------------------------------------------------------------------
    \1\ The prepared statement of General Johnson with attachments 
appears in the Appendix on page 71.
---------------------------------------------------------------------------
    In 2004, I had the privilege of being the first Commanding 
General of the Corps' Gulf Region Division in Iraq, and from 
that experience I can tell you that the $18.4 billion Iraq 
reconstruction mission has been one of the most extensive and 
challenging construction programs of all time. It has also been 
one of the most important.
    Let me say up front that, as public servants, I and the 
entire Corps of Engineers take our responsibilities as stewards 
of taxpayer money very seriously. As engineers and construction 
managers, we also have a professional commitment to doing the 
job right. And as soldiers and civilians and members of the 
Army team, we also know that success in Iraq and in the global 
war on terror depends on our ability to help the Iraqi people 
build the infrastructure of a strong and functional democracy.
    Over the past 3 years, the U.S. Army has completed over 
2,800 Iraq Relief and Reconstruction Fund (IRRF) funded 
projects out of a planned total of 3,450 projects. The U.S. 
Army Corps of Engineers has had approximately 4,000 personnel 
deployments in support of the reconstruction effort. Consisting 
of both military personnel and civilian volunteers, these 
individuals have admirably served in an often hostile and 
dangerous environment. The accomplishments of these dedicated 
professionals did not come without a price. To date, we have 
had 14 casualties, with 12 personnel having been seriously 
injured and 2 personnel having given the ultimate sacrifice 
while supporting this reconstruction effort.
    The U.S. Army is proud of our accomplishments in Iraq. We 
have completed 13 refurbished hospitals that can serve 5,500 
patients a day. We have restored water treatment facilities, 
benefiting over 2.3 million Iraqis. We have completed over 250 
border forts, helping to secure more than 2,000 miles of Iraqi 
borders. We have completed over 800 new or renovated schools, 
serving 325,000 Iraqi children. We have increased electric 
power generation, benefiting 1.3 million homes. And we have 
increased crude oil production by 300,000 barrels a day over 
pre-war levels.
    I understand that despite these accomplishments, the 
successful projects are not usually the ones that receive the 
attention. Often most of the attention goes to projects 
experiencing problems. I will be the first to say that we have 
had our problems. However, where problems have been identified, 
the Corps of Engineers on its own, and also with the assistance 
of the Special Inspector General for Iraq Reconstruction 
(SIGIR), have taken a look at the way we do business. We have 
identified where improvements can be made and have incorporated 
lessons learned.
    Due to our experience in the reconstruction of Iraq, the 
Corps of Engineers is today a stronger, more capable 
organization. I realize that even in a challenging environment 
like Iraq, the people of the United States expect us to do our 
job right, on time, and on budget. We share that same 
expectation.
    It is important to note that, despite all the attention 
that goes to the problem projects, at least 80 percent of all 
the projects assessed by the SIGIR have met contract 
specifications, and in the SIGIR's most recent quarterly 
report, around 90 percent of the core projects have met 
contract requirements. For projects that do not meet those 
contract requirements, deficiencies are identified and 
corrective actions are taken to ensure that ultimately a 
quality project is delivered. Those same actions are then 
incorporated into other projects spirally to prevent problems 
before they occur with other projects.
    The Iraq Reconstruction Program is yielding positive, 
tangible results every day and has significantly improved the 
lives of the Iraqi people. Certainly, the work in Iraq is 
challenging and difficult, but reconstruction efforts are a 
vital component to our campaign in Iraq and in Iraq's progress 
toward stability and peace. With your continued support, I am 
confident we will succeed.
    Thank you also for your service to the Nation during this 
time of war, and I look forward to our discussion today on 
reconstruction in Iraq.
    Chairman Lieberman. Thanks, General Johnson. That was 
excellent.
    Our final witness on this panel is Mark Ward, a dedicated 
public servant who has been with USAID for almost 20 years and 
has had many assignments during that time, including being 
chair of the agency's Tsunami Task Force following the 
devastating tsunami that so wounded communities on the Indian 
Ocean in 2004. Mr. Ward has also previously served as the USAID 
Mission Director in Pakistan.
    Thank you very much for being here, and we welcome your 
testimony now.

     TESTIMONY OF MARK S. WARD,\1\ SENIOR DEPUTY ASSISTANT 
 ADMINISTRATOR, BUREAU OF ASIA AND THE NEAR EAST, U.S. AGENCY 
                 FOR INTERNATIONAL DEVELOPMENT

    Mr. Ward. Mr. Chairman and Ranking Member Collins, other 
Members, thanks very much for the opportunity to discuss this 
very important topic with you this morning: Improving 
procurement and program management for our programs in Iraq and 
Afghanistan. The letter inviting USAID to participate asked us 
to talk about Afghanistan as well, and so I will.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Ward with attachments appears in 
the Appendix on page 106.
---------------------------------------------------------------------------
    We understand your concerns. There have been problems in 
both countries, but we have learned a lot in the last couple of 
years, and we stand ready and look forward to the opportunity 
to work with your Committee and Senator Collins on how to 
address the problems in a manner that best addresses our 
overall reconstruction goals.
    It is important to sensitize the Committee to the unique 
challenges of procurement and program management in conflict 
situations--they are exceedingly complex--and just to draw your 
attention to some issues that stand in inherent tension.
    USAID has to balance a number of important concerns in the 
procurement process: The imperative that the U.S. procurement 
follows a realistic, comprehensive plan involving multiple 
partners; but it also has to be flexible in order to adjust to 
a rapidly evolving country context; it has to be as expeditious 
as possible and ensure rigorous accountability for work done by 
grantees and contractors and all the way down to the level of 
scores of subcontractors.
    Despite these difficulties and the fact that our work is 
taking place, as you have said, during active hostilities in an 
ongoing insurgency, much has been accomplished, and we have 
passed out some slides that I think will highlight for you some 
of those accomplishments that I think we can be very proud 
of.\1\
---------------------------------------------------------------------------
    \1\ The slides submitted by Mr. Ward appear in the Appendix on 
pages 115-123.
---------------------------------------------------------------------------
    As the General has said, our programs together have added 
almost 1,300 megawatts of electric generating capacity to 
Iraq's power grid, serving over 7 million Iraqis. Repairs and 
refurbishments of some major water and water treatment plants 
have provided more than 3 million more Iraqis access to potable 
drinking water and expanded sewage treatment to more than 5 
million Iraqis. Our rural water program is supplying clean 
water to over 400,000 villagers every day.
    The results in Afghanistan, a country that I have a lot 
more experience with, started from a much lower baseline and 
maybe are even more impressive for that reason. Six years ago, 
when the Taliban ruled large parts of Afghanistan, fewer than 1 
million children were in school. Today, thanks to the U.S. and 
other donors around the world, almost 6 million children attend 
school every day. Six years ago, it was estimated that less 
than 10 percent of the people had access to health care of any 
kind. Today, thanks again to all of us in the international 
community, that number stands at 80 percent. Before, fewer than 
50 kilometers of paved roads were usable. Today, it is more 
than 6,000 kilometers of paved, gravel, and cobblestone roads, 
and the U.S. contribution to that number is more than 4,000 
kilometers.
    There is a long way to go, but it is important to see what 
we have accomplished.
    As the Committee may know, USAID is a much smaller agency 
today than it was in the past. While we are still bringing 
basic education and health care to communities and some of the 
other infrastructure that we have talked about, the way we 
bring that assistance has changed a lot. In the past, one would 
have seen Foreign Service officers, like me, working at the 
local level on various projects around the world. Today, we 
have similar projects, but U.S. and local contractors and 
grantees are carrying out most of the work, with occasional 
visits by Foreign Service officers to monitor progress. The 
same holds true for the Corps of Engineers and other U.S. 
agencies. And in dangerous environments like Iraq and 
Afghanistan, visits by Foreign Service officers to monitor 
progress may be very rare. Security concerns often make it very 
difficult for us to leave the relative safety of the capital 
and the American embassy. That is one reason why we are such 
fans of the PRTs that Ambassador Satterfield talked about, the 
Provincial Reconstruction Teams.
    USAID's contractors and grantees and the people who work 
for them take on tremendous challenges and assume great risks. 
Many have been killed or injured in fulfilling the noble and 
urgent tasks that we have given them. I grant you, one or two 
may have abused the system, and we will find them. But most are 
doing very good work in very dangerous circumstances.
    Now, I know there are two principal criticisms of USAID's 
procurement practices. I used to be in charge of USAID's 
procurement shop before I went to Pakistan. One is that a 
relatively small group of USAID contractors and grantees 
continue to win the lion's share of contracts and grants and 
that our procurements are too large for smaller firms and NGOs, 
and they just cannot compete. We appreciate this concern, and 
we are trying to increase the pool of firms that will bid on 
our work.
    But it is important to understand why we use such large 
procurements in places like Iraq and Afghanistan. In conflict 
situations and after natural disasters, we have to move quickly 
and with as much flexibility as possible. Speed is of the 
essence because hearts and minds of local communities are in 
the balance. Iraq is a good case in point.
    Even before U.S. and British troops entered Iraq 4 years 
ago this month, USAID was actively developing a reconstruction 
program to be implemented as soon as the cessation of 
hostilities. We used what assessment tools we had at our 
disposal. We consulted with as many experts as we could, but we 
did not have the benefit of on-the-ground assessments. We 
relied on 40 years of development experience and made the best, 
prudent assessments of needs and costs with the information at 
hand.
    Had we waited for hostilities to subside and for more 
detailed assessments and cost estimates before announcing 
procurements, we would have waited a year or more, and that 
simply wasn't an option. The need for speed and flexibility 
required a contract that would allow us to assign a range of 
task orders as needs were identified. This meant a large 
contract covering many skill areas, and a program of this 
nature and scale would be beyond the capacity of the best of 
the small firms.
    The procurement and program management challenges in Iraq 
and Afghanistan are, I hope, a cautionary tale to those who 
might hamstring the agency in ways that might result in a 
better planned and slower procurement process at the expense of 
flexibility and quick response to changing circumstances. No 
one wants us to cede our position as the leader among major 
donors to respond quickly to conflict situations and natural 
disasters.
    The time to seek out smaller contractors and grantees for 
jobs is there, after the initial broad-scope contracts have 
been awarded and the work is proceeding. This is the way we 
have worked in Iraq and Afghanistan with some success. For 
example, smaller companies are involved in the building of 
district, provincial, and cobblestone roads in Afghanistan, as 
well as courthouses and district centers.
    More can be done to open up the procurement process to 
local firms. This is the second most common criticism of USAID 
and one that is included in Mr. Bowen's recent report. We 
should not lose sight of why the U.S. Government is present in 
developing countries in the first place. Building capacity in 
Iraq and Afghanistan is difficult but a critical element of our 
strategy for both countries. U.S.-based firms have always been 
higher priced relative to local firms, but much more expensive 
today in conflict areas because of the need to hire additional 
security, which currently amounts to as much as 15 to 20, even 
more than 20 percent more for comparable work in other 
countries. Extra costs for U.S. or foreign firms at the 
beginning of a reconstruction effort can be defended when it is 
clear that local firms do not yet have the capacity to do the 
work to acceptable standards. But at some point, several years 
into the campaign, a shift should be seriously considered. This 
is happening in Iraq now. Arguably, it may still be too early 
in Afghanistan. But at some point, sticking exclusively with 
U.S. firms too long becomes counterproductive to our goals.
    Let me just close by saying there is definitely room for 
improvement in the way USAID procures goods and services and 
manages programs and conflict in emergency situations where 
speed and flexibility are paramount. Senator Collins, we really 
appreciate the fact that your staff has already reached out to 
us for comments and suggestions on the legislation, and we look 
forward to more such dialogue. I also look forward to your 
questions.
    Mr. Chairman, thank you.
    Chairman Lieberman. Thanks very much, Mr. Ward.
    I want to first ask you, Mr. Bowen, to build a little bit 
on your reaction on your most recent trip to Iraq. I believe 
you said you came back about a week or so ago.
    Mr. Bowen. Last week, that is right.
    Chairman Lieberman. Last week. And you have been there 15 
times, but when you say that you came back cautiously 
optimistic and you had a more positive reaction to what you saw 
than you have in the last 20 months, I take it seriously and 
significantly, and I think most people who have followed your 
work do because you have gained a reputation as a straight 
talker. You are not a spinmeister, if I might say so.
    So obviously I am encouraged by that, but I wanted to ask 
you to just talk in a little more detail. What did you see that 
brought you back from your last most recent trip to Iraq 
cautiously optimistic about how our cause was proceeding there?
    Mr. Bowen. Well, first of all, what I experienced in my 
visits with senior leadership was a different tone, a more 
optimistic view of how the Iraqis are responding at this phase, 
differing from how they responded during Operation Forward 
Together I and II last year. And let me also say that the 
cautious optimism applies both to how the Baghdad Security Plan 
is moving forward on the military side and how the embassy is 
moving forward with its strategy in Iraq.
    To the first, what I saw every morning at the battle update 
assessment briefing was a true and effective and progressive 
coordination of the Baghdad Security Plan between General 
Petraeus and General Odierno, the operational commander of 
Multi National Corps-Iraq (MNC-I).
    February was a tough month. Let's be clear. Things have not 
gotten better in an instant. That is not what I am saying. What 
I am saying is that although February was the worst month for 
vehicle borne improvised explosive devices (VBIEDs), for 
example, by the last week the number of attacks had dropped 
significantly, and that has continued to be the case into 
March.
    Chairman Lieberman. In Baghdad?
    Mr. Bowen. In Baghdad. And that is also true with insurgent 
attacks within Baghdad, and I noticed it myself. Having been 
there so often, I have a sense of the security situation in the 
Green Zone itself, and I noticed a difference just in my 
immediate surroundings. I traveled a couple of times into the 
Red Zone and sense some difference as well. I visited a 
project, the Fire Brigade headquarters about 10 minutes 
northeast of the Green Zone, and also visited the President of 
the Board of Supreme Audit and got some sense there of an 
incipient change for the better.
    On the embassy side, what I saw was real progress on the 
PRT program. General Olson, who is the leader of that, is an 
excellent manager, and it has turned into a lesson learned 
itself about jointness. I think its own story will be one that 
we would like to tell in our report at the end of the year, the 
story of Iraq reconstruction, because it is Exhibit A for how a 
Goldwater-Nichols-like reform can be experienced. It is 
fundamentally a mixture of DOD, State, and USAID assets, with a 
mixed mission as well.
    Chairman Lieberman. With a lot of local input, too.
    Mr. Bowen. I think there are so many elements to the story 
of the PRTs that are important to learn from for future post-
conflict contingency planning.
    So, in sum, I have a sense of cautious optimism, but 
definitely a wait-and-see attitude about that with respect to 
the developments of the Baghdad Security Plan. As I tell 
people, there are a thousand problems in Iraq, and then there 
is one, and that one is security in Baghdad.
    Chairman Lieberman. Right.
    Mr. Bowen. And that is the essential prerequisite to 
solving the rest of those problems.
    Chairman Lieberman. OK. I really appreciate that report, 
and it means a lot to me. We are involved in a debate or a 
discussion here that is going to be on the floor of the Senate 
again next week. My position is known. But it is helpful to me, 
in that context, to have an independent voice like yours and 
eyes and ears like yours coming back and saying you see some 
progress and you are cautiously optimistic. Nobody is ready to 
say this is over, all the problems are gone. Obviously not. It 
seems like a very strange time to order the beginning of a 
withdrawal of American troops within 120 days, as we are 
beginning, as a result of the infusion of new troops, to turn 
the corner in the way you describe. So I am going to leave the 
rest of my debate on that for the floor. But I thank you for 
it.
    As I listened to you, Inspector General, as well as the 
three of you from the agencies, you are reminding us that, 
notwithstanding the episodes and instances of waste, fraud, and 
abuse in the Iraq reconstruction program on which you have 
spent billions of taxpayer dollars, we are carrying out the 
reconstruction to complete our mission. We liberated Iraq from 
Saddam Hussein. I suppose another nation might just have left. 
But we understood that we could not do that if we were going to 
secure what we had gained. So we have spent on a large scale. 
This is not unlike the Marshall Plan, although the Marshall 
Plan at this hindsight looks a lot better than Iraqi 
reconstruction.
    I am hearing you say that, notwithstanding the public 
instances of waste, fraud, and abuse, a lot of good things have 
happened. So I am going to ask you to do something arbitrary, 
if you don't mind. If you were grading Iraqi reconstruction, 
would you give it an A, B, C, D, or F on balance based on what 
we have done? I do not know. Mr. Bowen, do you want to start?
    Mr. Bowen. I would hesitate to give a grade because we are 
still carrying out an oversight mission.
    Chairman Lieberman. OK. How about Ambassador Satterfield?
    Ambassador Satterfield. I, too, would hesitate to assign a 
grade---- [Laughter.]
    For two reasons: First, because not just are many of these 
works still in progress, but also because in many cases, as 
most of the case for electricity, extraordinary efforts, which 
I would give an outstanding grade to, went into providing 
generation capacity. But security reasons, reasons related to 
issues of maintenance fueling Iraqi responsibilities, have 
failed. In general, I would give U.S. efforts on these critical 
areas--sewerage, water, electricity--high marks. I would not 
give similar marks to the process of transitioning over past 
years to full Iraqi responsibility for the maintenance and 
security of the investment we have made.
    Chairman Lieberman. So you have opted for what they call at 
college a pass/fail grading system. [Laughter.]
    That is OK. General Johnson.
    General Johnson. Sir, I shall not deviate, I shall not 
leave fallen comrades behind. [Laughter.]
    But I think reconstruction is a graduate-level course, so 
pass/fail would probably be appropriate. I could do the math 
for the Corps and the 11 projects out of the 2,280 we would 
deliver might suggest that we are doing better than we are.
    I think based upon what we have seen and what the SIGIR 
reports, we have treated reconstruction as if it were football, 
and with football and the transitions between offense and 
defense, the referee stops and allows the defense or offense to 
come back on the field. But reconstruction, I would say, is 
more like soccer. You have to be able to change your transition 
without changing the people on the field, and whether you are 
offense or defense, you have to know what to do with that ball.
    So we have to be able to deliver this more like soccer than 
we have been delivering it like football.
    Chairman Lieberman. Are we winning the game, the soccer 
match?
    General Johnson. Sir, soccer is a long game. [Laughter.]
    There have been no red cards.
    Chairman Lieberman. No red cards. OK, that is good. Mr. 
Ward.
    Mr. Ward. I remember the report cards I used to bring home, 
and I used to say to my parents, ``Don't focus on the grade. 
Look at the teacher's comments.'' [Laughter.]
    And the one I used to like to see was, ``Needs improvement 
but showing progress.''
    Chairman Lieberman. Yes.
    Mr. Ward. And I think what is very encouraging to me in 
both countries, but particularly in Afghanistan that I follow 
so much more closely, is that we are adapting to a changed 
situation on the ground. We are getting the local communities 
involved so much more now than we were before. We have learned 
how to talk to the Afghans, and we are learning through the 
PRTs how to talk more to the Iraqis as well.
    Recommendations like we get from SIGIR are very useful to 
us, and recommendations that we get from our own Inspector 
Generals are going to, I am confident, lead us to the day where 
I will share that grade with you.
    Chairman Lieberman. Thank you. Thank you all. Senator 
Collins.
    Senator Collins. Thank you, Mr. Chairman.
    First, let me caution the witnesses that in answering me, I 
do not want to hear any sports metaphors at all. [Laughter.]
    Since I have no idea what a red card is in soccer, but I 
gather it is not good.
    First, Mr. Bowen, I, too, want to thank you for your 
report. As one who has had a lot of concerns and skepticism 
about the President's policy for a surge, I welcome the 
evidence that you are bringing to us because, like the 
Chairman, I know that you are an individual who calls it as he 
sees it, and your report is very helpful.
    I also want to thank you for your support for our 
contracting reform bill. Many of the provisions in the bill 
were drawn directly from the recommendations and findings of 
your previous report, so I thank you for that as well.
    Mr. Ward, one of the important recommendations of the 
Inspector General deals with the need to involve local 
populations at every level of the planning and execution 
process, including contracting with local firms. And your 
statement in some ways anticipated the question that I am about 
to ask you.
    USAID has recently entered into a new contract with LBG, 
the Louis Berger Group, for Afghanistan reconstruction work 
despite a lot of problems with this contractor, which was hired 
to build schools and clinics in Afghanistan. It is my 
understanding that the contract is valued at $1.4 billion and 
that it covers a wide scope of reconstruction work.
    Putting aside the problems that USAID has had with this 
contractor, I want to focus on whether or not going ahead with 
such an enormous contract with this firm runs counter to the 
recommendation that we have just heard from the Inspector 
General. It seems that in Iraq, applying the lessons that we 
have learned, we have been moving away from these large design-
build contracts and toward smaller, more flexible contracts 
with local contractors so we can put local people to work, 
which is part of the reconstruction process, and we can also 
save money.
    So it seems to me that the award of this enormous contract 
runs exactly counter to Mr. Bowen's recommendation, and I would 
like to hear your response.
    Mr. Ward. Very good question, and I think were it not for 
the renewed insurgency in the south and the southeast in 
Afghanistan, they would not have decided to go that way. But 
what that large infrastructure contract provides to our team in 
Kabul is the opportunity to respond quickly and flexibly with 
infrastructure in those areas of the country where it is still 
too hard to get in, to anticipate the needs, and then to get in 
and do the full kind of assessment and costing that we would 
like to do.
    I wish very much that we had the private sector capacity 
and even the public sector capacity in Afghanistan that Iraq 
has. As the Chairman said, I was the aid director in Pakistan 
for a couple of years after September 11, 2001. I did not have 
to hire very many U.S. firms because of the capacity of the 
private sector in Pakistan. We could use Pakistani firms for 
the most part. They were very good, thanks in part to help from 
the United States over a number of years.
    In Iraq now, they are, as you said, turning much more to 
local content, local firms, and that is a very good thing. And 
we look forward to the day when we can do that in Afghanistan. 
One of the challenges that we have, Senator Collins, is that 
when we award a contract or a grant to a U.S. firm in 
Afghanistan, it is to make part of the scope of work--and I 
think your legislation touches on this--the mentoring so that 
they leave behind what I would call an ``Afghan child'' who can 
be mentored and who can then get the follow-on contractor 
grant. USAID has had a lot of success with this around the 
world, particularly in the former Soviet Union. And this is 
where I think we have to focus more effort now. But for this 
particular contract that you are talking about, I think it is a 
response to the insurgency.
    Senator Collins. Thank you.
    Mr. Satterfield, in your testimony you mentioned that you 
expect to double the number of PRTs in Iraq from 10 to 20, and 
it is my understanding that these teams can have as many as 100 
people drawing from different agencies and departments. I have 
also been told repeatedly, primarily by DOD, that the State 
Department has had a very difficult time in staffing the PRTs 
with State Department employees. Is that still the case?
    Ambassador Satterfield. It is not and has not been the 
case. Of the PRT teams that have existed, the 10 extant 
missions are fully staffed with State Department, USAID, and 
other civilian agency personnel. The rotations that will 
replace those individuals with new staffers for the 10 existing 
PRTs this summer are largely complete; officers have been 
assigned. And for the 10 new PRTs with respect to State/AID 
core staffing, those individuals have both been identified and, 
as I noted in my testimony, are currently in training.
    The large number of additional individuals, the some 300 
civilians who will come, will not for the most part be U.S. 
Government employees currently serving with USG agencies, 
whether the State Department or other. They will be specialists 
who have skills which are not found in the Federal Government--
agronomists, soil chemists, veterinarians. They will be brought 
in under a contracting mechanism which the State Department 
will oversee, but they will not be State Department personnel.
    We are very pleased, Senator, at the volunteers that we 
have over these last 4 years placed into Iraq service, and I 
would add Afghanistan, Pakistan, and Saudi service. We have 
risen to the challenge. The State Department and the Foreign 
Service continue to rise to that challenge.
    Senator Collins. Thank you.
    Chairman Lieberman. Thank you, Senator Collins. Senator 
McCaskill.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Thank you.
    Following up on Senator Collins' line of questioning, 
currently in Afghanistan we know that the most serious 
problem--and let me start by saying that terrorism is a tactic. 
It is not an enemy. It is a tactic. And if you look beneath the 
tactic, there are--it is just hard to say. We have a global war 
on economic and social circumstances and religious conflict 
that breeds a certain kind of fanaticism that brings about a 
sense of hopelessness and a belief that hurting other people 
and killing yourself is the right thing to do. That is too 
long. So we say a war on terror when it really is a war against 
a tactic.
    Now, underlying that in Afghanistan, of course, is the 
economy that is based on poppy, an economy that is based 
largely on a deadly drug. So agriculture, it seems to me, in 
Afghanistan should be the big enchilada. It should be the 
primary focus of what we are doing there. How many current 
employees of the U.S. Department of Agriculture are currently 
in the country of Afghanistan?
    Mr. Ward. Senator, I do not know. I do know this: That 
USAID provides funding so that six or seven USDA employees can 
serve in the PRTs. And in the past--I would have to check to 
see if this is still the case--through what we call a 
participating agency agreement, we have USDA staff embedded in 
our offices in Kabul, and then they have their own office where 
an officer goes back and forth between Islamabad and Kabul.
    If you look at the supplemental request that was submitted 
for fiscal year 2007 for Afghanistan, you will see a large 
increase in funding not just for agriculture programs but, more 
specific to your point, alternative development programs to 
combat the scourge of poppy.
    So we do not disagree with you at all, but it is important 
to note that President Karzai's priorities for the United 
States and Afghanistan sound something like this: Roads, roads, 
roads, and power.
    Senator McCaskill. Right.
    Mr. Ward. And so we try to listen to that as well.
    [Information submitted for the record from Mr. Ward 
follows:]
             VERIFICATION OF USDA EMPLOYEES IN AFGHANISTAN
          There are currently eight employees from the U.S. Department 
        of Agriculture (USDA) serving in Afghanistan. All eight are 
        funded by USAID. Seven are funded with a 632(b) Participatory 
        Agency Services Agreement (PASA) for staffing at the PRTs and 
        one is funded from a separate 632(b) PASA to work on livestock 
        and animal health issues.
          It is our understanding that USDA has an advisor (which they 
        are funding) serving as the Agriculture Attache in Islamabad 
        who makes periodic visits to Afghanistan.

    Senator McCaskill. If you could find out that number. I 
have been told it was six in the entire country, which brings 
me to the Ambassador and what you just said with Senator 
Collins. What I am frustrated about is what I have learned 
since I have been here in regards to the PRTs, even with the 
new PRTs that are going over, we are talking about fewer than 
1,000 people in the entire country of Iraq that will be working 
in this effort. Isn't that correct?
    Ambassador Satterfield. Senator, let me take a moment, if I 
may, to explain how we came to the numbers of staffers for 
those PRTs because in that lies, I think, an important point.
    Senator McCaskill. OK, briefly, because I want to make sure 
I get to my underlying point, which is how many Federal 
employees are actually being used.
    Ambassador Satterfield. Our underlying point, Senator, is 
how many civilians are of use in Iraq, not abstract numbers, 
because the numbers are not as significant as the mission to be 
performed. Our brigade combat team commanders, our existing PRT 
leaders, divisional commanders, and the embassy reviewed area 
of operation by area of operation--no cookie-cutter approach--
who was needed down to specific skill sets. Not just numbers 
but the position descriptions needed for each of these 
specialized employees, and they are not, for the most part, 
Federal Government employees currently serving. We do not have 
soil chemists who are able to serve in a combat area, who have 
the requisite skills and ability to undertake that kind of 
deployment. We are going to get them. We are in the process of 
arranging for them now. But the numbers are based upon the 
assessment of our mission, military and civilian, in the field. 
They are based upon an assessment of what is needed and what 
Iraq is capable of absorbing and, frankly, Senator, what 
protection we can provide and life support we can provide for 
them in what in many instances--because these new PRTs are 
located in conflict areas--is an active combat zone.
    Senator McCaskill. Well, in a previous hearing I was in, by 
someone else within your Department, it was said that the 
problem that--I know we have the requisite skills in the 
Federal workforce on any issue as it relates to agriculture, on 
any issue as it relates to education. We have a very large 
Federal workforce with incredibly diverse and extraordinary 
skill. And it was explained to me in another hearing that the 
problem was that it was very difficult to get Federal employees 
because we had not incentivized them to volunteer to do this 
work, and as a result, we are paying an extraordinarily high 
amount of money to contract out with non-Federal employees.
    Do you have the same ability to leverage incentives with 
Federal employees that you have in terms of entering into 
contracts with civilian employees? And if you have that same 
leverage, I would be shocked if we did not have a number of 
Federal employees that want to respond to the call of their 
chief executive officer, of the President they work for, who is 
saying we need to give more, we need to do more, and clearly--I 
do not think you answered my question. I believe it is less 
than 1,000 people we have total in the country as it relates--
even with the new addition, there will be fewer than 1,000 
people in the entire country doing the work that everyone seems 
to recognize is the most important key to our success, and that 
is the political success that is necessary for Iraq to stand 
up.
    Ambassador Satterfield. Senator, we do have incentives that 
as a department we offer to our employees to serve in Iraq, and 
we have received the volunteers necessary to fully staff the 
State Department commitment. We have requested from the 
Congress the authority to reimburse other Federal agencies for 
the service of their employees. And, of course, in the first 
instance, we look to Federal Government employees who have the 
requisite skill sets, the requisite medical clearances, the 
ability to serve in an active combat area. This is not the U.S. 
military. These are civilians being asked to serve in a fire 
zone, living in areas where the physical conditions are 
extraordinarily difficult. They will live as our troops live, 
no different, embedded with these brigade combat teams. That is 
a unique set of individuals both for skills and for abilities.
    We do have incentives to bring them to the field. We look 
to that service. But we will be relying as a government for the 
majority of these positions, based on the totality of these 
criteria, on individuals from outside the current Federal 
workforce. It is the nature of the very specialized skills and 
willingness and ability to meet the challenge of serving in a 
combat zone that leads us to that.
    Senator McCaskill. If you could get me the amount of money 
that we are spending for these employees that we are hiring, 
these private individuals we are hiring, as opposed to the 
salaries that are being paid, whatever Federal agency employees 
we have volunteering and what that number is. It is my 
understanding it is very low. It is my understanding they are 
getting paid much less than what we are paying to those people 
whom we are hiring to go into these zones that have the same 
skill set the Federal employees have. Thank you.
    Chairman Lieberman. Thank you, Senator McCaskill.
    By the rules we are following in terms of recognition, 
Senator Coburn was here earlier, though his presence was not 
continuous.
    Senator Coburn. I am happy to yield to the Senator from 
Minnesota.
    Chairman Lieberman. I just wanted to know whether Senator 
Coleman has time pressure that would lead him to want to go 
now.
    Senator Coleman. If it is possible, Mr. Chairman, that 
would be helpful.
    Chairman Lieberman. Yes, and thanks, Senator Coburn.
    Senator Coleman. I thank Senator Coburn.
    Chairman Lieberman. And then I will go right to you 
afterward.

              OPENING STATEMENT OF SENATOR COLEMAN

    Senator Coleman. Thank you, Mr. Chairman.
    First, I want to thank you. This has been a great panel, 
informative, candid, very helpful. I want to associate myself 
with the comments of the Ranking Member. I, too, have had 
concerns about the surge in Baghdad, particularly before 
getting the kind of commitment I think we needed to get from 
the Iraqis to hold up their end. I did not see that when I was 
in Baghdad in December, but it is encouraging to hear a little 
bit of optimism, but very cautious. But I agree with the 
Chairman that it would be foolish to tell the enemy we are 
leaving now and here is the date that we are going to be gone 
and at a time when at least there is the possibility of a 
better future for Iraq.
    The question I have is for Mr. Bowen. The first 
recommendation talks about the Goldwater-Nichols-like reform, 
greater integration of DOD and the State Department. One of the 
things that struck me in my visits in Iraq is conversations 
with both State Department and DOD personnel in which literally 
talking about having a meeting and the enemy, the other side--
it was not the Iraqis, it was not the insurgents. It was the 
State Department talking about DOD. The divide between the two 
was something anecdotal I heard many times.
    Were those anecdotal experiences way off the mark? If they 
are not off the mark, is this a legislative fix that is 
required or something else?
    Mr. Bowen. As I said in my opening statement, anyone who 
has spent an appreciable amount of time working within the Iraq 
Reconstruction Program understands the tensions that exist 
among the departments carrying out the program. And that is why 
I alluded to Goldwater-Nichols in this recommendation because 
the need for jointness is essential. I have called it 
``altering the DNA of post-conflict management,'' and that 
means ensuring that the three agencies that have significant 
responsibilities in that environment fully understand and are 
familiar with one another, their operations, their language, 
their approach, and essentially are integrated in their 
planning and in their structures.
    How to do that I did not specify in the recommendation. I 
suggested to the Chairman and Senator Collins yesterday that a 
commission might be a good first start to pull together experts 
that review the evidence, that hear from those who have worked 
there and get some good, solid data that supports the anecdotes 
that you heard and that some of us have experienced so that 
from that could develop perhaps a legislative reform.
    Senator Coleman. Leadership--not always but oftentimes--
from the top down makes a difference. I would hope at the 
secretary level that the secretaries would fully recognize 
this. My sense was in the past that was not the case and would 
kind of demonstrate the kind of commitment, which I hope we 
have now, but I am just saying in the past I did not see it, 
and I felt it when I was on the ground.
    Mr. Bowen. Let me just say that NSPD 44 and DOD Regulation 
3001.05 have both proposed internal departmental remedies to 
improve post-conflict management. My concern is that they could 
perpetuate the Balkanization of that process, that jointness is 
essential to succeed.
    Senator Coleman. Ambassador Satterfield, did you want to 
respond to that?
    Ambassador Satterfield. Certainly. Senator, I think it is 
wrong to believe that, inevitably in any institution the size 
and complexity of the civilian military mission in Iraq or in 
Baghdad, there are not individual anecdotal personality issues. 
It is real. It happens everywhere. But the jointness of the 
civil-military operation at the embassy and in the field in 
Iraq is greater than that of any mission of this kind, I think, 
in U.S. history. The commitment by outgoing Ambassador 
Khalilzad and former Commanding General George Casey to a 
jointly evolved campaign plan, a joint mission statement that 
guides the efforts of all of our common lines of operation and 
action really is without parallel. And certainly General 
Petraeus and incoming Ambassador Crocker will be continuing 
that cooperation, and it very much, Senator, is reflected in 
the coordination between Secretaries Rice and Gates, Chairman 
Pace, and all of us who work this issue.
    Senator Coleman. I appreciate that, and clearly it is 
essential. On Recommendation 5, talking about integrating with 
local populations, one of the things that has struck me, 
particularly on my last visit to Iraq, was that if you are an 
Iraqi and if you are seen talking--at least in Baghdad in 
certain areas--to a coalition person, there is the threat of 
death. How do you get cooperation with the local population if 
we still have an environment, 4 years after we entered Iraq, 
where simply the act of conversing with a coalition person may, 
in fact, mark you for death?
    Mr. Bowen. Well, these recommendations are aimed at 
adjusting the system so that the planning structures are 
improved. It is a prospective one. I think that your point is 
well taken. It is dangerous in Iraq, and the conditions in Iraq 
define behavior as you describe. But as the Congress looks at 
how to improve planning for post-conflict contingency relief 
and reconstruction operations, ensuring that incorporating 
local populations as an essential element is key. And the last 
point on the jointness, I agree with Ambassador Satterfield 
that today the jointness is better than it has been ever. The 
recommendation addresses not what is going on in Iraq now in 
particular, but it looks at the planning, the pre-war planning 
for relief and reconstruction operations and how that process 
is fundamentally structured.
    Senator Coleman. Thank you, Mr. Chairman, and I thank the 
Senator from Oklahoma.
    Chairman Lieberman. Thanks very much, Senator Coleman.
    At about 11:30, there will be four votes going off, so we 
have enough time for Senator Coburn and then Senator Levin, and 
then probably we will adjourn.
    Senator Coburn.

              OPENING STATEMENT OF SENATOR COBURN

    Senator Coburn. Thank you, and I thank all of you. I have 
read your testimonies.
    Inspector Bowen, in comparison to the funds that have been 
spent both in Afghanistan and Iraq, did you look at--and I have 
not had a chance to read this. It will be airplane reading for 
me.
    Did you do any comparison to CERP funds versus AID funds 
versus other funds in terms of waste, fraud, abuse, or misuse?
    Mr. Bowen. First of all, we do not have oversight in 
Afghanistan. Second, we have not done intra-departmental 
comparisons of how one agency has done vis-a-vis another. Our 
mission is to oversee the Iraq Relief and Reconstruction Fund, 
its investment, and the additional jurisdiction that the 
Congress has provided us.
    Senator Coburn. All right. Thank you.
    I have a few questions. This Subcommittee last year did 
oversight on USAID, and I have several questions for Mr. Ward. 
This all relates to Afghanistan. USAID claims to have built and 
handed over to the Afghanistan Government 140 medical clinics. 
Our Subcommittee received a letter from the Minister of Public 
Health stating that it had no record of the clinics. When we 
asked USAID to provide those, they gave us a list of 39 
clinics, and that took them 6 months to provide that answer to 
the Subcommittee.
    A couple questions come from that. First of all, why didn't 
the Afghanistan Government know where those clinics were? And 
where are the other 101 clinics that USAID claims to have 
provided?
    Mr. Ward. Senator, as you know, we have provided to you and 
to your staff a more recent letter from the Minister of Public 
Health that verifies that we have turned over a much larger 
number of clinics.
    Senator Coburn. But not 140 clinics.
    Mr. Ward. It is a much larger number.
    Senator Coburn. Than 140?
    Mr. Ward. Yes.
    Senator Coburn. OK. But what you have given to us, what 
they can account for, in other words, the listing of the 
clinics, where they are, it is 39 in terms of formal testimony 
from USAID, isn't it? The question really relates to--I do not 
doubt that they are there. Why can't USAID tell us where they 
are? And why doesn't the Afghani Government know where they 
are, when they are completed, and why does it take 6 months?
    The second question I have is in regard to the Louis Berger 
Group. They had a $1.4 billion contract for upgrading critical 
infrastructure in Afghanistan. But this was after USAID was 
forced to remove Louis Berger Group from the school and clinic 
construction for substandard performance and after this group 
did such a poor job on a section--not all of it, but a section 
of the Kabul to Kandahar highway, and I understand some of that 
was weather related. Also, our Subcommittee found some photo 
evidence of fraud where the Louis Berger Group claims to work 
on clinics it never did work on but still got paid for.
    Some of that can be disputed, some of it cannot. Why would 
we again go back and issue a contract to a firm that we have 
had those kind of problems with?
    Mr. Ward. If I may just quickly respond on the last part, 
we have actually provided to your staff photographs of all of 
the clinics so that you know where they are, and those have 
been provided in some hefty binders, and we brought another 
copy with us.\1\
---------------------------------------------------------------------------
    \1\ Information and documents submitted for the Record from Mr. 
Ward to Senator Coburn appear in the Appendix on page 124.
---------------------------------------------------------------------------
    Senator Coburn. Yes, but, again, that is 15 months. It took 
them 15 months to provide that evidence, and I would submit for 
the record--here is one of the pictures of the clinics they 
supplied. This is not a completed clinic, as the Committee can 
obviously see. It is a foundation with some pieces of steel 
rising.\2\
---------------------------------------------------------------------------
    \2\ The picture submitted by Senator Coburn appears in the Appendix 
on page 52.
---------------------------------------------------------------------------
    And this at the time, by the report from the Louis Berger 
Group, it reported that it was up to the bond beams, which this 
has--obviously, there is some inconsistency.
    I know it is tough over there. I am not trying to pick on 
that. I am just saying, with the lack of communication, with 
the lack of knowledge, with the lack of what is going on, why 
do we recontract? Are they the only ones that can do this? Is 
that why we are doing that?
    Mr. Ward. Senator Collins asked about this as well. There 
were six firms that competed for this second large 
infrastructure contract. The firm that won, Louis Berger, was 
in a joint venture with a very good firm in the power sector, 
Black and Veatch. The fact that they fell behind on the 
schedule for the schools and clinics under the first contract 
certainly had an impact on the evaluation, but the fact that 
the Louis Berger firm did so well overall on the Kabul to 
Kandahar and the U.S. portion of the Kandahar to Herat road, 
which is a large portion of this new contract, and has such 
good contacts with the firms that have to be hired to execute 
the work in Afghanistan, the fact that they are there now and 
mobilized, I mentioned before in response to Senator Collins' 
question the urgency of being able to keep infrastructure going 
because of the insurgency in the south and the southeast, and 
the fact that their joint venture partner, Black and Veatch, is 
so strong in the power sector outweighed the negatives, and 
they did win.
    Senator Coburn. So has USAID, given those very good 
reasons, set up a more stringent oversight and information flow 
so that you can factually watch where the money is going, how 
it is going, and so that you have timely information to know, 
not 6 months, not 15 months after the fact, but on a timely 
basis so you can judge the quality of their work?
    Mr. Ward. Senator, it is a great question, and we talked 
earlier about the challenges of working in the south and the 
southeast. If it were in another part of the country, I would 
answer you very quickly yes. I would be able to make sure that 
my officers were getting out there regularly. I would be able 
to ensure that Government of Afghanistan officials were getting 
out regularly. That will occur in those parts of the country 
where they can get out.
    Senator Coburn. And most of that is a security-related 
issue rather than a--but you have set up a more formalized 
structure under which you are following both the claims and the 
contracts under which this major contract has been issued. Is 
that correct?
    Mr. Ward. That is correct. We still have in place in our 
own staff an engineering staff; it is supplemented by seven 
officers from the Corps of Engineers, thanks very much to 
General Johnson, although I think we pay dearly for them.
    Senator Coburn. But they are worth it.
    Mr. Ward. Yes, they are worth it. We also have a structure 
that we have put in place of Afghan engineers to be able to get 
out without as many concerns about security, so if maybe the 
Foreign Service Officer engineers cannot get out, the Afghan 
engineers can get out.
    We also have--and we have talked about this a lot--the PRTs 
now and plussing up the numbers of people in the PRTs and 
making them aware of what national programs are going on in 
their AOR. This is something--we have talked about lessons 
learned, and this is clearly one of them.
    In the past, if I would visit a PRT--and I visited a lot of 
them in Afghanistan--the civilian and military advisers were 
very good at telling me about the projects that they were 
funding with CERP and USAID funds made available to the PRT. 
And that is great. But what they were not so good at telling me 
was what about the schools and clinics and roads and teacher 
training and other projects that are part of a national project 
funded out of Kabul that are going on in your province. We have 
come a long way on that, and now the PRTs know what national 
projects are going on in their neighborhood, if you will, so 
that they can be even more eyes and ears for us to know what is 
going on.
    Senator Coburn. That is great to know.
    Mr. Chairman, given the time constraints, I am going to 
submit three other questions having to do with shelter for life 
and also roofs that collapsed in, I think, 102 out of 105 
schools from substandard construction, and the questions that 
we need to have for that.
    I thank you for your straightforwardness. Raising the 
problems so that we solve them is very important because money 
misspent means less confidence by the Afghani and Iraqi people 
in what we are trying to do for them, and I thank you for 
holding the hearing.
    Chairman Lieberman. Absolutely. Thank you, Senator Coburn. 
Without objection, we are going to keep the record open for 15 
days for your questions and others that other members might 
have.
    Senator Levin.

               OPENING STATEMENT OF SENATOR LEVIN

    Senator Levin. Thank you, Mr. Chairman, and thank you for 
holding this hearing.
    The Inspector General's report is just full of discouraging 
examples of key facilities that suffered from poor design, 
sloppy construction, inadequate quality control, and barely 
functional buildings. One example in Mr. Bowen's report was 
that plumbing was so poorly installed at the Baghdad Police 
College that dripping sewage not only threatened the health of 
students and instructors but could affect the structural 
integrity of the building. He found that the security walls 
built for the Babylon Police Academy in Hilla were full of gaps 
and deficiencies, while lighting systems and guard towers 
called for in the contract were never installed, which left the 
academy vulnerable to attack.
    First of all, General Johnson, do you agree with Mr. 
Bowen's findings regarding the condition of the Baghdad Police 
College and the Babylon Police Academy?
    General Johnson. Sir, we do.
    Senator Levin. Can you tell us why the Corps failed to 
identify and correct the deficiencies in these facilities and 
require the contractor to correct them before the construction 
was completed or accepted?
    General Johnson. Sir, let me offer this. The SIGIR 
discovered those deficiencies in September. We asked the SIGIR 
to come out and do an assessment. We had discovered the same 
deficiencies, at least at the Baghdad Police College, in June 
2006 during part of our commissioning.
    As stated by USAID and Ambassador Satterfield, there are 
challenges with construction in Iraq. We have construction 
management teams that we put on every project here in Iraq. In 
every one of our districts, about half of the employees in 
those districts are Iraqi associates. These are qualified 
engineers that we use forward at project sites for quality 
assurance. The contractor is responsible for quality control. 
The U.S. Army Corps of Engineers is responsible for quality 
assurance.
    Senator Levin. You are also responsible for paying--
apparently, you approved the payment on these contracts. These 
are cost contracts, as I understand, but you do not have to pay 
for work that is poorly done. Was money paid for poorly done 
work?
    General Johnson. Sir, all of the deficiencies, the warranty 
work was completed within the budget that was allowed for those 
projects.
    Senator Levin. Well, in other words, we did not pay for--
all these stories that we read in this report, that they were 
all repaired at the expense of the contractors?
    General Johnson. Sir, all of the repairs that were made to 
those buildings were within the funds that were allocated for--
--
    Senator Levin. I am not sure what that means. Did we pay 
anybody to do something which they should have done without 
being paid extra?
    General Johnson. Sir, we did not. We did not pay additional 
costs to fix what should have been----
    Senator Levin. And where roofs were falling and sewage was 
dripping through pipes and all the rest, those repairs 
identified in this report were all made at the contractor's 
expense?
    General Johnson. Yes, sir. By October 22, 2006.
    Senator Levin. All right. Is that your finding, Mr. Bowen?
    Mr. Bowen. Our report did not address how the contractors 
were paid to make those improvements. We have follow-up reports 
that detailed the scope of the problems, and in it we noted 
that the Corps had pursued, I believe with AFCEA, contracting 
to make those repairs, and those repairs were ongoing.
    The latest visit we made in January of this year indicated 
that the solution with respect to the plumbing was to construct 
outdoor facilities.
    Senator Levin. My question has to do with payment. You have 
not gone into that issue?
    Mr. Bowen. No, we have not.
    Senator Levin. Now, also, the Inspector General said that 
the Army Corps spent $186 million on primary health care 
centers throughout Iraq and then terminated the contract with 
only six health care centers completed, 135 partially 
constructed, and the remainder de-scoped.
    Did we pay any money for the 135 partially constructed 
health care centers, do you know, General?
    General Johnson. Sir, we did. We paid the contractor that 
had that building and health project for the expenses they 
incurred and the construction. There were about 97 of those 
primary health care centers that were turned over to us at 95 
percent complete. We de-scoped those projects. We took them in 
the Gulf Region Division, and we did direct contracting with 
the Iraqi firm that was doing the construction because we 
thought the contractor was not capable of delivering. We 
thought they were not prepared to do adequate quality control 
at these project sites, and we typically terminated for 
convenience of the government.
    Senator Levin. And when we terminated them, we had paid 
them for the work that they had completed?
    General Johnson. Sir, we had paid them for the work that 
they had completed and for the pay that they were due based 
upon their expenses.
    Senator Levin. But even if we went to added expense to 
finish them, we still paid them?
    General Johnson. Sir, once we terminated them, we paid them 
what they were due. They were not paid for the additional work 
that was done.
    Senator Levin. And that additional work cost us money, 
though.
    General Johnson. Sir, it absolutely did.
    Senator Levin. Then the question is: Since it obviously 
would have cost us more money to pay somebody else to complete 
the work, did we recoup that money from the contractors that we 
had paid? Inspector General, can you tell us that?
    Mr. Bowen. This is the cost-plus contracting issue that 
Senator Collins' bill will address in part, and the answer is: 
Under that particular kind of contract, we pay the contractor 
for the work completed, whether that project is finally 
completed or not.
    Senator Levin. Now, under a cost-plus contract, we are not 
required to pay contractors for work that they do not complete 
when it is their fault they are not able to complete it; we are 
able to withhold the cost of completion.
    Mr. Bowen. We pay them for the amount of work accomplished, 
not the full value of the contract. You are right. And that is 
what has happened here.
    Senator Levin. Should we not have withheld money to finish 
those contracts? Under the cost-plus approach, can you not 
withhold money necessary to complete a contract when a 
contractor fails to do the work or do the work properly?
    Mr. Bowen. When the contractor is under contract, yes. This 
contract was terminated for convenience, and as a result, the 
billings continued to come in, and they had to be paid.
    Senator Levin. Should we have terminated this contract for 
convenience without withholding enough money to complete this 
contract and make the repairs as well? Should we not have 
withheld that at the time we terminated it?
    Mr. Bowen. I think that would have been a reasonable 
approach. I think perhaps termination for default would have 
been a reasonable approach as well.
    Senator Levin. But that was not used?
    Mr. Bowen. That was not.
    Senator Levin. All right. General, do you want to have a 
chance to comment on that?
    General Johnson. Sir, there is probably a reason why we did 
not TFD, or terminate for default, and I will tell you, the 
U.S. Army Corps of Engineers was not innocent here. We had 
responsibility for quality assurance. Again, we relied upon our 
Iraqi associates because they provide less of a footprint of 
coalition, they can help us get work done without the threat of 
bad guys destroying these facilities. But you accept risk in 
doing that.
    The other thing I would tell you is this: This company that 
came in and competed to get one of these large design-build 
contracts, they have a very good record, but I think they 
learned that construction in a contingency environment with 
bullets flying is not like doing it in the State of Delaware.
    Senator Levin. Thank you. Thank you, Mr. Chairman.
    Chairman Lieberman. Thanks, Senator Levin. It looks like we 
are having a joint meeting of the Homeland Security and Armed 
Services Committees right now.
    Senator Warner, I believe we have time for you to have a 
round before we adjourn.
    Senator Warner. Just very quickly, if both of you want to 
go on to the vote, I will join you. Just let them know I will 
be over there.
    Chairman Lieberman. Good.

              OPENING STATEMENT OF SENATOR WARNER

    Senator Warner. A very distinguished panel we have here, 
Mr. Chairman, and I have had the privilege of working with each 
of them through the years.
    First, to you, Stuart Bowen, you talked about the need for 
Goldwater-Nichols. Senator Levin and I worked on Goldwater-
Nichols years ago. But in the last Congress, when I was 
privileged to be Chairman of the Armed Services Committee, 
exactly 1 year ago I wrote to the heads of all of our 
departments urging their participation in the Presidential 
Directive 44, which is to try to bring about the management of 
interagency efforts concerning reconstruction. I would like to 
have a copy of that letter follow my questions here, Mr. 
Chairman, in the record.\1\
---------------------------------------------------------------------------
    \1\ Letter submitted for the record by Senator Warner appears in 
the Appendix on page 55.
---------------------------------------------------------------------------
    Chairman Lieberman. Without objection.
    Senator Warner. Then, specifically, our 2007 Defense 
Authorization Act required the President to issue a report to 
the Congress on how to improve interagency integration. The 
report is to provide Congress with a baseline assessment of the 
situation. It is due in April.
    Did you participate in the preparation of that report?
    Mr. Bowen. I have not.
    Senator Warner. Well, it would seem to me that whoever has 
that report on their desk, they certainly should solicit and 
receive your views because this is one that the entire Congress 
is going to review.
    Mr. Satterfield, did you work on that report?
    Ambassador Satterfield. No, Senator, I did not.
    Senator Warner. Well, I wonder if both of you would look 
into it because it is due to come to Congress to say what 
Congress can do to help the President enable people from each 
of your agencies and departments to come and join the overall 
effort. Repeatedly, the generals before our Committee, the 
Armed Services Committee--and my colleague here from 
Connecticut is a member of that Committee--have said, with 
their usual modesty, ``We are doing the military part of it, 
but we can only pull on the oars so hard unless the other 
departments and agencies can come along and do their portion.'' 
And this has been a lingering problem for some time.
    Mr. Satterfield, you have got a marvelous reputation here 
before the Congress, and your testimony and drawing on your 
experience in-country over there. I think it would be very 
important that you solicit through the Secretary, because it 
was directed to your Secretary, that you have an opportunity to 
review that report in its present status and hopefully make a 
contribution before it comes to the Congress.
    We also did other things in our bill. We introduced 
legislation to provide the heads of the agencies with certain 
authorities so that they could pay additional stipends and 
other things to the employees of your agencies who could step 
forward and be willing to take on the risk of going to what is 
truly what we call a 360-degree combat zone. There are no safe 
places. Just this morning, the report that the head of the 
United Nations was over there, and he experienced--fortunately, 
no harm to him personally and others with him--a mortar attack. 
It is serious business. So we think that some special benefits 
should be accorded to your employees that go in on this.
    Also in the 109th Congress, we introduced the Employee 
Combat Zone Tax Parity Act to give them a little financial 
inducement for the taxes. So I think the Congress has done a 
considerable amount, Mr. Chairman, to try to support our 
President in getting the people over there.
    What is the current status with the Department of State, 
Mr. Satterfield, on your ability to meet your--I do not know 
whether the word is ``quota'' or your ``obligations'' to 
participate in Iraq?
    Ambassador Satterfield. Senator, we have fully staffed the 
embassy in Baghdad, the largest in the world. We have fully 
staffed the existing PRTs. Our core teams for----
    Senator Warner. That is a very good report. You are up to 
full staff?
    Ambassador Satterfield. We are essentially full staff.
    Senator Warner. Those are the teams that are going right 
out with the troops and working side by side with the coalition 
of forces, notably the United States and the Iraqi troops in 
Baghdad.
    Ambassador Satterfield. Senator, the core Foreign Service 
and USAID staff for those 10 new PRTs not only have been 
identified, they are currently in joint training together. They 
will be boots on the ground by the end of this month in Iraq.
    Senator Warner. Very encouraging.
    Ambassador Satterfield. Where we are working still is on 
identifying and recruiting, both from within Federal Government 
ranks but more significantly from outside Federal Government 
ranks, the very specialized civilians who will fully staff by 
the end of this year those new PRTs and augment the existing 
PRTs.
    Senator Warner. My recollection is that the Presidential 
memorandum tasked the Secretary of State to be the coordinating 
Cabinet officer for all the other departments.
    Ambassador Satterfield. That is correct, Senator.
    Senator Warner. Is that part of your responsibility?
    Ambassador Satterfield. Yes, it is, Senator.
    Senator Warner. Well, we know where to look now. We will 
welcome you back again. [Laughter.]
    Thank you very much, to each of you. Sorry that I will have 
to terminate my questions.
    Thank you, Mr. Chairman.
    Chairman Lieberman. Thank you, Senator Warner. Very 
important questions.
    Thanks to the four of you. It has been an excellent morning 
of testimony. If I was to try to summarize it, I would say that 
Iraqi and Afghani economic reconstruction has gone better than 
probably most people think based on an understandable media 
focus on the shortcomings. But the reconstruction has not gone 
as well as any of us want it to or have a right to expect it 
to, and, therefore, we have more work to do.
    I think you continue to make a very substantial 
contribution, Mr. Bowen, and I am particularly taken with the 
notion that we need as much unity of command in post-conflict 
management of economic and political reconstruction activities, 
governmental reconstruction, as we do need unity of command in 
battle. How we do that is not clear to me, as it is not to you, 
exactly, but Senator Collins and I are going to proceed perhaps 
with legislation to create a short-term commission--we do not 
want to give it a long time frame--to take a look at that, and 
obviously a commission would want the input of all four of you.
    In the meantime, on behalf of the Committee I thank the 
four of you for what you are doing. I specifically say to the 
three of you who lead the agencies involved to please extend 
our gratitude to those who work with you for an important job 
being done in a very difficult environment and a job that is 
being done better than a lot of people think.
    Thank you very much. The hearing is adjourned.
    [Whereupon, at 11:49 a.m., the Committee was adjourned.]
                            A P P E N D I X

                              ----------                              

[GRAPHIC] [TIFF OMITTED] 34413.001

[GRAPHIC] [TIFF OMITTED] 34413.002

[GRAPHIC] [TIFF OMITTED] 34413.003

[GRAPHIC] [TIFF OMITTED] 34413.004

[GRAPHIC] [TIFF OMITTED] 34413.005

[GRAPHIC] [TIFF OMITTED] 34413.006

[GRAPHIC] [TIFF OMITTED] 34413.007

[GRAPHIC] [TIFF OMITTED] 34413.008

[GRAPHIC] [TIFF OMITTED] 34413.009

[GRAPHIC] [TIFF OMITTED] 34413.010

[GRAPHIC] [TIFF OMITTED] 34413.011

[GRAPHIC] [TIFF OMITTED] 34413.012

[GRAPHIC] [TIFF OMITTED] 34413.013

[GRAPHIC] [TIFF OMITTED] 34413.014

[GRAPHIC] [TIFF OMITTED] 34413.015

[GRAPHIC] [TIFF OMITTED] 34413.016

[GRAPHIC] [TIFF OMITTED] 34413.017

[GRAPHIC] [TIFF OMITTED] 34413.018

[GRAPHIC] [TIFF OMITTED] 34413.019

[GRAPHIC] [TIFF OMITTED] 34413.020

[GRAPHIC] [TIFF OMITTED] 34413.021

[GRAPHIC] [TIFF OMITTED] 34413.022

[GRAPHIC] [TIFF OMITTED] 34413.023

[GRAPHIC] [TIFF OMITTED] 34413.024

[GRAPHIC] [TIFF OMITTED] 34413.025

[GRAPHIC] [TIFF OMITTED] 34413.026

[GRAPHIC] [TIFF OMITTED] 34413.027

[GRAPHIC] [TIFF OMITTED] 34413.028

[GRAPHIC] [TIFF OMITTED] 34413.029

[GRAPHIC] [TIFF OMITTED] 34413.030

[GRAPHIC] [TIFF OMITTED] 34413.031

[GRAPHIC] [TIFF OMITTED] 34413.032

[GRAPHIC] [TIFF OMITTED] 34413.033

[GRAPHIC] [TIFF OMITTED] 34413.034

[GRAPHIC] [TIFF OMITTED] 34413.035

[GRAPHIC] [TIFF OMITTED] 34413.036

[GRAPHIC] [TIFF OMITTED] 34413.037

[GRAPHIC] [TIFF OMITTED] 34413.038

[GRAPHIC] [TIFF OMITTED] 34413.039

[GRAPHIC] [TIFF OMITTED] 34413.040

[GRAPHIC] [TIFF OMITTED] 34413.041

[GRAPHIC] [TIFF OMITTED] 34413.042

[GRAPHIC] [TIFF OMITTED] 34413.043

[GRAPHIC] [TIFF OMITTED] 34413.044

[GRAPHIC] [TIFF OMITTED] 34413.045

[GRAPHIC] [TIFF OMITTED] 34413.046

[GRAPHIC] [TIFF OMITTED] 34413.047

[GRAPHIC] [TIFF OMITTED] 34413.048

[GRAPHIC] [TIFF OMITTED] 34413.049

[GRAPHIC] [TIFF OMITTED] 34413.050

[GRAPHIC] [TIFF OMITTED] 34413.051

[GRAPHIC] [TIFF OMITTED] 34413.052

[GRAPHIC] [TIFF OMITTED] 34413.053

[GRAPHIC] [TIFF OMITTED] 34413.054

[GRAPHIC] [TIFF OMITTED] 34413.055

[GRAPHIC] [TIFF OMITTED] 34413.056

[GRAPHIC] [TIFF OMITTED] 34413.057

[GRAPHIC] [TIFF OMITTED] 34413.058

[GRAPHIC] [TIFF OMITTED] 34413.059

[GRAPHIC] [TIFF OMITTED] 34413.060

[GRAPHIC] [TIFF OMITTED] 34413.061

[GRAPHIC] [TIFF OMITTED] 34413.062

[GRAPHIC] [TIFF OMITTED] 34413.063

[GRAPHIC] [TIFF OMITTED] 34413.064

[GRAPHIC] [TIFF OMITTED] 34413.065

[GRAPHIC] [TIFF OMITTED] 34413.066

[GRAPHIC] [TIFF OMITTED] 34413.067

[GRAPHIC] [TIFF OMITTED] 34413.068

[GRAPHIC] [TIFF OMITTED] 34413.069

[GRAPHIC] [TIFF OMITTED] 34413.070

[GRAPHIC] [TIFF OMITTED] 34413.071

[GRAPHIC] [TIFF OMITTED] 34413.072

[GRAPHIC] [TIFF OMITTED] 34413.073

[GRAPHIC] [TIFF OMITTED] 34413.074

[GRAPHIC] [TIFF OMITTED] 34413.075

[GRAPHIC] [TIFF OMITTED] 34413.076

[GRAPHIC] [TIFF OMITTED] 34413.077

[GRAPHIC] [TIFF OMITTED] 34413.078

[GRAPHIC] [TIFF OMITTED] 34413.079

[GRAPHIC] [TIFF OMITTED] 34413.080

[GRAPHIC] [TIFF OMITTED] 34413.081

[GRAPHIC] [TIFF OMITTED] 34413.082

[GRAPHIC] [TIFF OMITTED] 34413.083

[GRAPHIC] [TIFF OMITTED] 34413.084

[GRAPHIC] [TIFF OMITTED] 34413.085

[GRAPHIC] [TIFF OMITTED] 34413.086

[GRAPHIC] [TIFF OMITTED] 34413.087

[GRAPHIC] [TIFF OMITTED] 34413.088

[GRAPHIC] [TIFF OMITTED] 34413.089

[GRAPHIC] [TIFF OMITTED] 34413.090

[GRAPHIC] [TIFF OMITTED] 34413.091

[GRAPHIC] [TIFF OMITTED] 34413.092

[GRAPHIC] [TIFF OMITTED] 34413.093

[GRAPHIC] [TIFF OMITTED] 34413.094

[GRAPHIC] [TIFF OMITTED] 34413.095

[GRAPHIC] [TIFF OMITTED] 34413.096

[GRAPHIC] [TIFF OMITTED] 34413.097

[GRAPHIC] [TIFF OMITTED] 34413.098

[GRAPHIC] [TIFF OMITTED] 34413.099

[GRAPHIC] [TIFF OMITTED] 34413.100

[GRAPHIC] [TIFF OMITTED] 34413.101

[GRAPHIC] [TIFF OMITTED] 34413.102

[GRAPHIC] [TIFF OMITTED] 34413.103

[GRAPHIC] [TIFF OMITTED] 34413.104

[GRAPHIC] [TIFF OMITTED] 34413.105

[GRAPHIC] [TIFF OMITTED] 34413.106

[GRAPHIC] [TIFF OMITTED] 34413.107

[GRAPHIC] [TIFF OMITTED] 34413.108

[GRAPHIC] [TIFF OMITTED] 34413.109

[GRAPHIC] [TIFF OMITTED] 34413.110

[GRAPHIC] [TIFF OMITTED] 34413.111

[GRAPHIC] [TIFF OMITTED] 34413.112

[GRAPHIC] [TIFF OMITTED] 34413.113

[GRAPHIC] [TIFF OMITTED] 34413.114

[GRAPHIC] [TIFF OMITTED] 34413.115

[GRAPHIC] [TIFF OMITTED] 34413.116

[GRAPHIC] [TIFF OMITTED] 34413.117

[GRAPHIC] [TIFF OMITTED] 34413.118

[GRAPHIC] [TIFF OMITTED] 34413.119

[GRAPHIC] [TIFF OMITTED] 34413.120

[GRAPHIC] [TIFF OMITTED] 34413.121

[GRAPHIC] [TIFF OMITTED] 34413.122

[GRAPHIC] [TIFF OMITTED] 34413.123

[GRAPHIC] [TIFF OMITTED] 34413.124

[GRAPHIC] [TIFF OMITTED] 34413.125

[GRAPHIC] [TIFF OMITTED] 34413.126

[GRAPHIC] [TIFF OMITTED] 34413.127

[GRAPHIC] [TIFF OMITTED] 34413.128

[GRAPHIC] [TIFF OMITTED] 34413.129

[GRAPHIC] [TIFF OMITTED] 34413.130

[GRAPHIC] [TIFF OMITTED] 34413.131

[GRAPHIC] [TIFF OMITTED] 34413.132

[GRAPHIC] [TIFF OMITTED] 34413.133

[GRAPHIC] [TIFF OMITTED] 34413.134

[GRAPHIC] [TIFF OMITTED] 34413.135

[GRAPHIC] [TIFF OMITTED] 34413.136

[GRAPHIC] [TIFF OMITTED] 34413.137

[GRAPHIC] [TIFF OMITTED] 34413.138

[GRAPHIC] [TIFF OMITTED] 34413.139

[GRAPHIC] [TIFF OMITTED] 34413.140

[GRAPHIC] [TIFF OMITTED] 34413.141

[GRAPHIC] [TIFF OMITTED] 34413.142

[GRAPHIC] [TIFF OMITTED] 34413.143

[GRAPHIC] [TIFF OMITTED] 34413.144

[GRAPHIC] [TIFF OMITTED] 34413.145

[GRAPHIC] [TIFF OMITTED] 34413.146

[GRAPHIC] [TIFF OMITTED] 34413.147

[GRAPHIC] [TIFF OMITTED] 34413.148

[GRAPHIC] [TIFF OMITTED] 34413.149

[GRAPHIC] [TIFF OMITTED] 34413.150

[GRAPHIC] [TIFF OMITTED] 34413.151

[GRAPHIC] [TIFF OMITTED] 34413.152

[GRAPHIC] [TIFF OMITTED] 34413.153

[GRAPHIC] [TIFF OMITTED] 34413.154

[GRAPHIC] [TIFF OMITTED] 34413.155

[GRAPHIC] [TIFF OMITTED] 34413.156

[GRAPHIC] [TIFF OMITTED] 34413.157

[GRAPHIC] [TIFF OMITTED] 34413.158

[GRAPHIC] [TIFF OMITTED] 34413.159

[GRAPHIC] [TIFF OMITTED] 34413.160

[GRAPHIC] [TIFF OMITTED] 34413.161

[GRAPHIC] [TIFF OMITTED] 34413.162

[GRAPHIC] [TIFF OMITTED] 34413.163

[GRAPHIC] [TIFF OMITTED] 34413.164

[GRAPHIC] [TIFF OMITTED] 34413.165

[GRAPHIC] [TIFF OMITTED] 34413.166

[GRAPHIC] [TIFF OMITTED] 34413.167

[GRAPHIC] [TIFF OMITTED] 34413.168

[GRAPHIC] [TIFF OMITTED] 34413.169

[GRAPHIC] [TIFF OMITTED] 34413.170

[GRAPHIC] [TIFF OMITTED] 34413.171

[GRAPHIC] [TIFF OMITTED] 34413.172

[GRAPHIC] [TIFF OMITTED] 34413.173

[GRAPHIC] [TIFF OMITTED] 34413.174

[GRAPHIC] [TIFF OMITTED] 34413.175

[GRAPHIC] [TIFF OMITTED] 34413.176

[GRAPHIC] [TIFF OMITTED] 34413.177

[GRAPHIC] [TIFF OMITTED] 34413.178

[GRAPHIC] [TIFF OMITTED] 34413.179

[GRAPHIC] [TIFF OMITTED] 34413.180

[GRAPHIC] [TIFF OMITTED] 34413.181

[GRAPHIC] [TIFF OMITTED] 34413.182

[GRAPHIC] [TIFF OMITTED] 34413.183

[GRAPHIC] [TIFF OMITTED] 34413.184

[GRAPHIC] [TIFF OMITTED] 34413.185

[GRAPHIC] [TIFF OMITTED] 34413.186

[GRAPHIC] [TIFF OMITTED] 34413.187

[GRAPHIC] [TIFF OMITTED] 34413.188

[GRAPHIC] [TIFF OMITTED] 34413.189

[GRAPHIC] [TIFF OMITTED] 34413.190

[GRAPHIC] [TIFF OMITTED] 34413.191

[GRAPHIC] [TIFF OMITTED] 34413.192

[GRAPHIC] [TIFF OMITTED] 34413.193

[GRAPHIC] [TIFF OMITTED] 34413.194

[GRAPHIC] [TIFF OMITTED] 34413.195

[GRAPHIC] [TIFF OMITTED] 34413.196

[GRAPHIC] [TIFF OMITTED] 34413.197

[GRAPHIC] [TIFF OMITTED] 34413.198

[GRAPHIC] [TIFF OMITTED] 34413.199

[GRAPHIC] [TIFF OMITTED] 34413.200

[GRAPHIC] [TIFF OMITTED] 34413.201

[GRAPHIC] [TIFF OMITTED] 34413.202

[GRAPHIC] [TIFF OMITTED] 34413.203

[GRAPHIC] [TIFF OMITTED] 34413.204

[GRAPHIC] [TIFF OMITTED] 34413.205

[GRAPHIC] [TIFF OMITTED] 34413.206

[GRAPHIC] [TIFF OMITTED] 34413.207

[GRAPHIC] [TIFF OMITTED] 34413.208

[GRAPHIC] [TIFF OMITTED] 34413.209

[GRAPHIC] [TIFF OMITTED] 34413.210

[GRAPHIC] [TIFF OMITTED] 34413.211

[GRAPHIC] [TIFF OMITTED] 34413.212

[GRAPHIC] [TIFF OMITTED] 34413.213

[GRAPHIC] [TIFF OMITTED] 34413.214

[GRAPHIC] [TIFF OMITTED] 34413.215

[GRAPHIC] [TIFF OMITTED] 34413.216

[GRAPHIC] [TIFF OMITTED] 34413.217

[GRAPHIC] [TIFF OMITTED] 34413.218

[GRAPHIC] [TIFF OMITTED] 34413.219

[GRAPHIC] [TIFF OMITTED] 34413.220

[GRAPHIC] [TIFF OMITTED] 34413.221

[GRAPHIC] [TIFF OMITTED] 34413.222

[GRAPHIC] [TIFF OMITTED] 34413.223

[GRAPHIC] [TIFF OMITTED] 34413.224

[GRAPHIC] [TIFF OMITTED] 34413.225

[GRAPHIC] [TIFF OMITTED] 34413.226

[GRAPHIC] [TIFF OMITTED] 34413.227

[GRAPHIC] [TIFF OMITTED] 34413.228

[GRAPHIC] [TIFF OMITTED] 34413.229

[GRAPHIC] [TIFF OMITTED] 34413.230

[GRAPHIC] [TIFF OMITTED] 34413.231

[GRAPHIC] [TIFF OMITTED] 34413.232

[GRAPHIC] [TIFF OMITTED] 34413.233

[GRAPHIC] [TIFF OMITTED] 34413.234

[GRAPHIC] [TIFF OMITTED] 34413.235

[GRAPHIC] [TIFF OMITTED] 34413.236

[GRAPHIC] [TIFF OMITTED] 34413.237

[GRAPHIC] [TIFF OMITTED] 34413.238

[GRAPHIC] [TIFF OMITTED] 34413.239

[GRAPHIC] [TIFF OMITTED] 34413.240

[GRAPHIC] [TIFF OMITTED] 34413.241

[GRAPHIC] [TIFF OMITTED] 34413.242

[GRAPHIC] [TIFF OMITTED] 34413.243

[GRAPHIC] [TIFF OMITTED] 34413.244

[GRAPHIC] [TIFF OMITTED] 34413.245

[GRAPHIC] [TIFF OMITTED] 34413.246

[GRAPHIC] [TIFF OMITTED] 34413.247

[GRAPHIC] [TIFF OMITTED] 34413.248

[GRAPHIC] [TIFF OMITTED] 34413.249

[GRAPHIC] [TIFF OMITTED] 34413.250

[GRAPHIC] [TIFF OMITTED] 34413.251

[GRAPHIC] [TIFF OMITTED] 34413.252

[GRAPHIC] [TIFF OMITTED] 34413.253

[GRAPHIC] [TIFF OMITTED] 34413.254

[GRAPHIC] [TIFF OMITTED] 34413.255

[GRAPHIC] [TIFF OMITTED] 34413.256

[GRAPHIC] [TIFF OMITTED] 34413.257

[GRAPHIC] [TIFF OMITTED] 34413.258

[GRAPHIC] [TIFF OMITTED] 34413.259

[GRAPHIC] [TIFF OMITTED] 34413.260

[GRAPHIC] [TIFF OMITTED] 34413.261

[GRAPHIC] [TIFF OMITTED] 34413.262

[GRAPHIC] [TIFF OMITTED] 34413.263

[GRAPHIC] [TIFF OMITTED] 34413.264

[GRAPHIC] [TIFF OMITTED] 34413.265

[GRAPHIC] [TIFF OMITTED] 34413.266

[GRAPHIC] [TIFF OMITTED] 34413.267

[GRAPHIC] [TIFF OMITTED] 34413.268

[GRAPHIC] [TIFF OMITTED] 34413.269

[GRAPHIC] [TIFF OMITTED] 34413.270

[GRAPHIC] [TIFF OMITTED] 34413.271

[GRAPHIC] [TIFF OMITTED] 34413.272

[GRAPHIC] [TIFF OMITTED] 34413.273

[GRAPHIC] [TIFF OMITTED] 34413.274

[GRAPHIC] [TIFF OMITTED] 34413.275

[GRAPHIC] [TIFF OMITTED] 34413.276

[GRAPHIC] [TIFF OMITTED] 34413.277

[GRAPHIC] [TIFF OMITTED] 34413.278

[GRAPHIC] [TIFF OMITTED] 34413.279

[GRAPHIC] [TIFF OMITTED] 34413.280

[GRAPHIC] [TIFF OMITTED] 34413.281

[GRAPHIC] [TIFF OMITTED] 34413.282

[GRAPHIC] [TIFF OMITTED] 34413.283

[GRAPHIC] [TIFF OMITTED] 34413.284

[GRAPHIC] [TIFF OMITTED] 34413.285

[GRAPHIC] [TIFF OMITTED] 34413.286

[GRAPHIC] [TIFF OMITTED] 34413.287

[GRAPHIC] [TIFF OMITTED] 34413.288

[GRAPHIC] [TIFF OMITTED] 34413.289

[GRAPHIC] [TIFF OMITTED] 34413.290

[GRAPHIC] [TIFF OMITTED] 34413.291

[GRAPHIC] [TIFF OMITTED] 34413.292

[GRAPHIC] [TIFF OMITTED] 34413.293

[GRAPHIC] [TIFF OMITTED] 34413.294

[GRAPHIC] [TIFF OMITTED] 34413.295

[GRAPHIC] [TIFF OMITTED] 34413.296

[GRAPHIC] [TIFF OMITTED] 34413.297

[GRAPHIC] [TIFF OMITTED] 34413.298

[GRAPHIC] [TIFF OMITTED] 34413.299

[GRAPHIC] [TIFF OMITTED] 34413.300

[GRAPHIC] [TIFF OMITTED] 34413.301

[GRAPHIC] [TIFF OMITTED] 34413.302

[GRAPHIC] [TIFF OMITTED] 34413.303

[GRAPHIC] [TIFF OMITTED] 34413.304

[GRAPHIC] [TIFF OMITTED] 34413.305

[GRAPHIC] [TIFF OMITTED] 34413.306

[GRAPHIC] [TIFF OMITTED] 34413.307

[GRAPHIC] [TIFF OMITTED] 34413.308

[GRAPHIC] [TIFF OMITTED] 34413.309

[GRAPHIC] [TIFF OMITTED] 34413.310

[GRAPHIC] [TIFF OMITTED] 34413.311

[GRAPHIC] [TIFF OMITTED] 34413.312

[GRAPHIC] [TIFF OMITTED] 34413.313

[GRAPHIC] [TIFF OMITTED] 34413.314

[GRAPHIC] [TIFF OMITTED] 34413.315

[GRAPHIC] [TIFF OMITTED] 34413.316

[GRAPHIC] [TIFF OMITTED] 34413.317

[GRAPHIC] [TIFF OMITTED] 34413.318

[GRAPHIC] [TIFF OMITTED] 34413.319

[GRAPHIC] [TIFF OMITTED] 34413.320

[GRAPHIC] [TIFF OMITTED] 34413.321

[GRAPHIC] [TIFF OMITTED] 34413.322

[GRAPHIC] [TIFF OMITTED] 34413.323

[GRAPHIC] [TIFF OMITTED] 34413.324

[GRAPHIC] [TIFF OMITTED] 34413.325

[GRAPHIC] [TIFF OMITTED] 34413.326

[GRAPHIC] [TIFF OMITTED] 34413.327

[GRAPHIC] [TIFF OMITTED] 34413.328

[GRAPHIC] [TIFF OMITTED] 34413.329

[GRAPHIC] [TIFF OMITTED] 34413.330

[GRAPHIC] [TIFF OMITTED] 34413.331

[GRAPHIC] [TIFF OMITTED] 34413.332

[GRAPHIC] [TIFF OMITTED] 34413.333

[GRAPHIC] [TIFF OMITTED] 34413.334

[GRAPHIC] [TIFF OMITTED] 34413.335

[GRAPHIC] [TIFF OMITTED] 34413.336

[GRAPHIC] [TIFF OMITTED] 34413.337

[GRAPHIC] [TIFF OMITTED] 34413.338

[GRAPHIC] [TIFF OMITTED] 34413.339

[GRAPHIC] [TIFF OMITTED] 34413.340

[GRAPHIC] [TIFF OMITTED] 34413.341

[GRAPHIC] [TIFF OMITTED] 34413.342

[GRAPHIC] [TIFF OMITTED] 34413.343

[GRAPHIC] [TIFF OMITTED] 34413.344

[GRAPHIC] [TIFF OMITTED] 34413.345

[GRAPHIC] [TIFF OMITTED] 34413.346

[GRAPHIC] [TIFF OMITTED] 34413.347

[GRAPHIC] [TIFF OMITTED] 34413.348

[GRAPHIC] [TIFF OMITTED] 34413.349

[GRAPHIC] [TIFF OMITTED] 34413.350

[GRAPHIC] [TIFF OMITTED] 34413.351

[GRAPHIC] [TIFF OMITTED] 34413.352

[GRAPHIC] [TIFF OMITTED] 34413.353

[GRAPHIC] [TIFF OMITTED] 34413.354

[GRAPHIC] [TIFF OMITTED] 34413.355

[GRAPHIC] [TIFF OMITTED] 34413.356

[GRAPHIC] [TIFF OMITTED] 34413.357

[GRAPHIC] [TIFF OMITTED] 34413.358

[GRAPHIC] [TIFF OMITTED] 34413.359

[GRAPHIC] [TIFF OMITTED] 34413.360

[GRAPHIC] [TIFF OMITTED] 34413.361

[GRAPHIC] [TIFF OMITTED] 34413.362

[GRAPHIC] [TIFF OMITTED] 34413.363

[GRAPHIC] [TIFF OMITTED] 34413.364

[GRAPHIC] [TIFF OMITTED] 34413.365

[GRAPHIC] [TIFF OMITTED] 34413.366

[GRAPHIC] [TIFF OMITTED] 34413.367

[GRAPHIC] [TIFF OMITTED] 34413.368

[GRAPHIC] [TIFF OMITTED] 34413.369

[GRAPHIC] [TIFF OMITTED] 34413.370

[GRAPHIC] [TIFF OMITTED] 34413.371

[GRAPHIC] [TIFF OMITTED] 34413.372

[GRAPHIC] [TIFF OMITTED] 34413.373

[GRAPHIC] [TIFF OMITTED] 34413.374

[GRAPHIC] [TIFF OMITTED] 34413.375

[GRAPHIC] [TIFF OMITTED] 34413.376

[GRAPHIC] [TIFF OMITTED] 34413.377

[GRAPHIC] [TIFF OMITTED] 34413.378

[GRAPHIC] [TIFF OMITTED] 34413.379

[GRAPHIC] [TIFF OMITTED] 34413.380

[GRAPHIC] [TIFF OMITTED] 34413.381

[GRAPHIC] [TIFF OMITTED] 34413.382

[GRAPHIC] [TIFF OMITTED] 34413.383

                                 
