[Senate Hearing 110-366]
[From the U.S. Government Publishing Office]
S. Hrg. 110-366
``URGENT REFORM REQUIRED: ARMY EXPEDITIONARY CONTRACTING,'' THE REPORT
OF THE COMMISSION ON ARMY ACQUISITION AND PROGRAM MANAGEMENT IN
EXPEDITIONARY OPERATIONS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON READINESS AND MANAGEMENT SUPPORT
of the
COMMITTEE ON ARMED SERVICES
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
DECEMBER 6, 2007
__________
Printed for the use of the Committee on Armed Services
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COMMITTEE ON ARMED SERVICES
CARL LEVIN, Michigan, Chairman
EDWARD M. KENNEDY, Massachusetts JOHN McCAIN, Arizona
ROBERT C. BYRD, West Virginia JOHN WARNER, Virginia,
JOSEPH I. LIEBERMAN, Connecticut JAMES M. INHOFE, Oklahoma
JACK REED, Rhode Island JEFF SESSIONS, Alabama
DANIEL K. AKAKA, Hawaii SUSAN M. COLLINS, Maine
BILL NELSON, Florida SAXBY CHAMBLISS, Georgia
E. BENJAMIN NELSON, Nebraska LINDSEY O. GRAHAM, South Carolina
EVAN BAYH, Indiana ELIZABETH DOLE, North Carolina
HILLARY RODHAM CLINTON, New York JOHN CORNYN, Texas
MARK L. PRYOR, Arkansas JOHN THUNE, South Dakota
JIM WEBB, Virginia MEL MARTINEZ, Florida
CLAIRE McCASKILL, Missouri ROGER F. WICKER, Mississippi
Richard D. DeBobes, Staff Director
Michael V. Kostiw, Republican Staff Director
______
Subcommittee on Readiness and Management Support
DANIEL K. AKAKA, Hawaii, Chairman
ROBERT C. BYRD, West Virginia JOHN THUNE, South Dakota
EVAN BAYH, Indiana JAMES M. INHOFE, Oklahoma
HILLARY RODHAM CLINTON, New York SAXBY CHAMBLISS, Georgia
MARK L. PRYOR, Arkansas ELIZABETH DOLE, North Carolina
CLAIRE McCASKILL, Missouri ROGER F. WICKER, Mississippi
(ii)
C O N T E N T S
__________
CHRONOLOGICAL LIST OF WITNESSES
``Urgent Reform Required: Army Expeditionary Contracting,'' The Report
of the Commission on Army Acquisition and Program Management in
Expeditionary Operations
december 6, 2007
Page
Gansler, Hon. Jacques S., Chairman, Commission on Army
Acquisition and Program Management in Expeditionary Operations. 4
Bolton, Hon. Claude M., Jr., Assistant Secretary of the Army for
Acquisition, Logistics, and Technology; Accompanied by LTG Ross
N. Thompson III, USA, Military Deputy to the Assistant
Secretary of the Army for Acquisition, Logistics, and
Technology; and Kathryn A. Condon, Executive Deputy to the
Commanding General, Army Materiel Command...................... 14
(iii)
``URGENT REFORM REQUIRED: ARMY EXPEDITIONARY CONTRACTING,'' THE REPORT
OF THE COMMISSION ON ARMY ACQUISITION AND PROGRAM MANAGEMENT IN
EXPEDITIONARY OPERATIONS
----------
THURSDAY, DECEMBER 6, 2007
U.S. Senate,
Subcommittee on Readiness
and Management Support,
Committee on Armed Services,
Washington, DC.
The subcommittee met, pursuant to notice, at 2:31 p.m. in
room SR-222, Russell Senate Office Building, Senator Daniel K.
Akaka (chairman of the subcommittee) presiding.
Committee members present: Senators Akaka, Levin,
McCaskill, Inhofe, and Thune.
Majority staff members present: Daniel J. Cox, Jr.,
professional staff member; Gerald J. Leeling, counsel; Peter K.
Levine, general counsel; Michael J. McCord, professional staff
member; and William K. Sutey, professional staff member.
Minority staff members present: Pablo E. Carrillo, minority
investigative counsel; David G. Collins, research assistant;
Gregory T. Kiley, professional staff member; Derek J. Maurer,
minority counsel; Lucian L. Niemeyer, professional staff
member; and Diana G. Tabler, professional staff member.
Staff assistants present: Kevin A. Cronin, Ali Z. Pasha,
and Benjamin L. Rubin.
Committee members' assistants present: Jay Maroney,
assistant to Senator Kennedy; Jon Davey, assistant to Senator
Bayh; Stephen C. Hedger, assistant to Senator McCaskill; Sandra
Luff, assistant to Senator Warner; Anthony J. Lazarski,
assistant to Senator Inhofe; and Stuart C. Mallory, assistant
to Senator Thune.
OPENING STATEMENT OF SENATOR DANIEL K. AKAKA, CHAIRMAN
Senator Akaka. The hearing of the Readiness and Management
Support Subcommittee will come to order.
The Readiness and Management Support Subcommittee meets
today to hear testimony about the report of the Gansler
Commission on Army Acquisition and Program Management in
Expeditionary Operations.
But, before we begin, I would like to note that today's
hearing is our first since Senator Thune succeeded Senator
Ensign as the ranking member of this subcommittee. Whether as
chairman and as ranking member, Senator Ensign always took a
bipartisan approach that put the interests of our men and our
women in uniform first. I also want to say that, when Senator
Inhofe was chairman, we also shared that, as well. Now, I'm
confident that Senator Thune will do the same.
So, Senator Thune, I want to personally welcome you as our
new ranking member.
Senator Thune. Thank you, Mr. Chairman.
Senator Akaka. I look forward to working with you, as I did
with Senator Inhofe and with Senator Ensign, and I really
enjoyed working with all of them.
This subcommittee has long been concerned about
shortcomings in the acquisition and contracting processes of
the Defense Department. We have expressed particular concern
about an acquisition workforce that simply has been stretched
too far and too thin to get the work done.
Last January, I opened our first meeting in Congress by
noting that we have fewer and fewer procurement officials
responsible for managing more and more contract dollars. In the
view of many, these trends long ago passed the point where our
acquisition force lost the capacity needed to perform essential
functions.
Last month, the Gansler Commission weighed in, reporting
that systemic failures in the Army acquisition system have left
the Department vulnerable to fraud, waste, and abuse. According
to the Gansler Commission, ``The cause is a culture that does
not sufficiently value or recognize the importance of
contracting, contract management, and contractors in
expeditionary operations. The Army has excellent, dedicated
people, but they are understaffed, overworked, undertrained,
undersupported, and, most important, undervalued.''
The question before us is not how we got where we are
today, but, what are we going to do about it? The Gansler
Commission has made a series of recommendations for far-
reaching changes in the Army acquisition system, including
significant improvements of the size, status, and training of
the acquisition workforce. Most dramatically, the Commission
says that we need 10 new general officers for contracting
positions, and 2,000 new contracting personnel, to meet the
needs of the Army alone. These recommendations have my full
support, but it will not be possible to implement without
strong support from the Army, the Department of Defense (DOD),
and Congress.
Fortunately, the initial reports that we have received
about the views of the Army and DOD are positive. I hope that
we'll be able to get these views on the record in the course of
today's hearing.
Senator Thune, it's time for your statement.
STATEMENT OF SENATOR JOHN THUNE
Senator Thune. Thank you, Mr. Chairman. I appreciate very
much the opportunity to serve as ranking member on this
subcommittee, and I look forward to working with you. You have
conducted this subcommittee's work in an exemplary way, and I
have great respect for your leadership; and so, I look forward
to working with you and the other members of the subcommittee
as we take on the important tasks at hand.
I want to thank you for convening the hearing on this very
important matter. I also want to thank Dr. Gansler, of the
Commission, and the members of the Commission, for their
valuable assistance, and, of course, Secretary Bolton, General
Thompson, and Ms. Condon for their service.
With the Commission's report, we've hit a critical
milestone in finally getting a handle on the scope of the
problem associated with expeditionary contracting, but much
work has yet to be done to analyze the report's findings and
recommendations, and, where warranted, see to the
recommendations' implementation.
Against that backdrop, I would just issue a note of
caution. Some of the Commission's recommendations are very
ambitious, calling for change throughout the Department of the
Army, and, in some cases, beyond, particularly with regard to
those recommendations requiring congressional assistance. For
those that may have an impact beyond the Army's contracting
corps, I would just ask that we measure twice before cutting
once. At least some of my questions for the witnesses will come
from that perspective.
Mr. Chairman, I cannot help but note an element of irony in
what we're discussing today. In the mid to late 1990s, it was
Congress that really went after the acquisition corps of the
Services. Incessant reference to a ``shopper corps'' supported
huge reductions into the conference reports during that period.
We are now at a point where only about 3 percent of the Army's
contracting personnel are Active Duty, where only about half of
those working in the Army in a contracting career field are
certified for their current position, and where the Army no
longer offers a general officer billet for career contracting
professionals. However, about half of the total force in Iraq,
Afghanistan, and Kuwait are contractors.
Without calling into question the integrity of our Army
contracting corps, there is little reason why, despite serving
as the executive agent for contracting in Iraq and Afghanistan,
the Army is relying largely on the Air Force to provide
contracting support to all ground forces in theater or that of
all the Services far-and-away most of the investigations into
contract fraud or abuse arise from the Army. Indeed, there now
appears to be broad consensus that, when coupled with our
having contracting out acquisition functions closely associated
with inherently governmental functions, the cuts that we saw in
the 1990s probably went too far.
That being said, I'm unsure about the congressional
appetite to implement some of the Commission's recommendations;
in particular, giving the Army more general officer slots to
address the problem. I suggest that the support of Army
leadership is going to be important here. Accordingly, at this
hearing I am interested in knowing what the Army's and the
Secretary of Defense's reactions are to the Commission's
recommendations, and to what extent each are implemented? I'm
interested in seeing how that support is manifested in the next
annual budget request when we review it in the readiness
posture hearing in the spring.
There can be no doubt that rebuilding the Army's
contracting corps so that it has the required contracting
capability is not going to happen overnight. I think that, at
the end of the day, the report stands for the broad proposition
that all options should be on the table, and, with this
hearing, we take the first big step to taking a good look at
many of those options.
Once again, I want to thank you, Mr. Chairman, for
conducting the hearing, and I want to thank the witnesses for
their time today, and I look forward to their testimony.
Senator Akaka. Thank you very much, Senator Thune.
I'd like to ask Senator Inhofe----
Senator Inhofe. Let me just briefly say why I'm here, Mr.
Chairman.
You'll remember that, during the time that Senator Thune
referred to, in the 1990s--I actually was chairing this
subcommittee, and you were the ranking member; and you and I
agreed, at that time, that we were critical of some of the cuts
that were taking place. So, I won't be able to stay very long,
but I wanted to hear the opening statement. I have a regular
communication with Secretary Bolton and some of the rest of
them here, but I'd like to hear about the report so I can get
an idea of where we're going and be familiar with that.
So, I appreciate your including me for this hearing.
Senator Akaka. Thank you very much, Senator Inhofe.
I'd like to say thank you to our witnesses.
First, let me mention the Honorable Dr. Gansler, who
appeared before this committee on numerous occasions in his
capacity as Under Secretary of Defense for Acquisition,
Technology, and Logistics.
Dr. Gansler, I want to welcome you back, and we thank you
and your fellow commissioners for the outstanding work that you
have done on this report.
Also, I want to welcome the Honorable Claude Bolton, who
has served as Assistant Secretary of the Army for Acquisition,
Logistics, and Technology, for the last 6 years. In that
capacity, he has testified before this committee on numerous
occasions also.
Secretary Bolton, I understand that you will be leaving the
Department next month, and we recognize the contribution that
you have made to the Army over the last 6 years, and we want to
thank you for your service.
Also, we have with us Lieutenant General Ross Thompson and
Ms. Kathryn Condon, and I also want to welcome both of you.
With that, Dr. Gansler please begin with your statement at
this time.
STATEMENT OF HON. JACQUES S. GANSLER, CHAIRMAN, COMMISSION ON
ARMY ACQUISITION AND PROGRAM MANAGEMENT IN EXPEDITIONARY
OPERATIONS
Dr. Gansler. Thank you, Mr. Chairman, and thank you for
your introductory remarks, they're very kind--and Senator
Thune, Senator Inhofe--it's good to see all of you.
The Secretary of the Army established an independent
commission titled the Commission on Army Acquisition and
Program Management in Expeditionary Operations. I would
emphasize the ``expeditionary'' aspect of it. Our objective was
to review the lessons learned in the recent operations, and
also to provide forward-looking recommendations to ensure that
future military operations would achieve far greater
effectiveness, efficiency, and, particularly, transparency.
I was honored to chair the Commission and to be joined by
five very distinguished commissioners with expertise and
insight into government acquisition, including program
management and contracting. I would like to note, the
commissioners included General (Retired) David Maddox, who
represented the Army's operational community; General (Retired)
Leon Salomon, who represented the Army's acquisition community;
Rear Admiral (Retired) David Oliver, who provided alternative
service representation, but, also, he had recent experience in
Iraq through his service with the Coalition Provisional
Authority; and then, two very senior very experienced DOD
civilians David Berteau and George Singley.
At the Secretary's direction, we conducted our efforts
within a very compressed 45-day timeframe that I think is
indicative of the immediate challenges facing the Army. Our
focus was on how to prevent any shortcomings in Army
acquisition and program management in expeditionary operations
for the next time. Our charter was forward-looking. We were
tasked to ensure that, institutionally, the Army is better
positioned for future operations, which will, in our opinion,
be expeditionary and also joint, and likely to be multi-agency,
political/military events.
At the outset, it's very important to note that other
concurrent activities were underway, focusing on different
aspects of today's challenges. Lieutenant General Ross Thompson
and Ms. Kathryn Condon are co-chairing the Army's Contract Task
Force that was, and still is, looking at the current fraud
issues. Separately, the DOD Inspector General (IG), Lieutenant
General (Retired) Claude Kicklighter has been looking at
equipment accountability issues. Outside of DOD, Ambassador
Kennedy of the State Department has an effort underway to
examine private security contracts; thus, current fraud,
equipment accountability, and private security contracts were
not within the purview of this Commission.
To address our forward-looking tasking, in September and
October the Commission engaged officials within all of the
relevant communities. We actually had over 122 interviews. The
individuals we heard from represented a wide range of
stakeholders, from senior military leadership to field
operators, to audit personnel, to contract support personnel,
and so forth. We spoke to people both stateside and deployed. I
might point out, our discussions with personnel inside the
continental United States (CONUS) were important, especially
since we defined expeditionary as not only outside of CONUS,
but also emergency conditions within CONUS, such as Hurricane
Katrina, given that there are very great similarities in terms
of the responsiveness of these two situations. We also heard
from people currently deployed in Iraq, Afghanistan, and
Kuwait; and, given the compact schedule, the Southwest Asia
interviews were conducted by video conference. However, we
separately interviewed the commander of the Joint Contracting
Command in Iraq and Afghanistan, then the next level of
military leadership, and then the working level, all in the
absence of their superiors so that we were able to get an
objective, independent assessment.
Despite this broad spectrum represented by our interviews,
we received almost universal agreement on what the issues are,
what changes are required, and the absolute need for change. As
a result, the Commission crafted a broad-based strategy for
addressing these shortcomings, which we published in this
independent report, dated October 31, titled, ``Urgent Reform
Required: Army Expeditionary Contracting.''
I would request that the executive summary from that report
be included in the record of today's proceedings.
Senator Akaka. Without objection, it will be.
Dr. Gansler. I appreciate the subcommittee's invitation to
highlight some of the key findings and recommendations from
that report.
Our key findings include the observation that the Army, and
far more broadly, as you pointed out, Mr. Chairman, the DOD
does have a problem, but it's not a problem with single
organizations or even a single individual or even a group of
individuals. Rather, the Army and the DOD are faced with a
systemic challenge in executing expeditionary operations, both
from an operational and an institutional vantage point.
The so-called ``Operational Army'' is expeditionary and on
a war footing, yet it has not fully recognized the impact of
the large number of contractors involved in expeditionary
operations and on their potential impact to mission success. In
fact, today, with approximately 160,000 private-sector
contractors in the Iraq/Afghanistan/Kuwait zone, they represent
about 50 percent--or half--of the total force in that zone.
Additionally, critical segments of the ``Institutional Army,''
which is the one supporting the ``Operational Army,'' have not
adapted in order to provide the responsiveness that is required
in the acquisition and sustainment operations for expeditionary
operations.
Let me give you four specific examples where we think
shortcomings exist:
First, financial management. On the Logistics Civil
Augmentation Program (LOGCAP) contract, which was the largest
one last year, there were 141 incremental funding contract
modifications. That means that the contract had to be modified
141 times in that 1 year just because the approved money was
not being adequately released by the OMB, by the OSD
comptroller and/or the Army comptroller. This is inconsistent
with wartime needs.
We have to be able to provide the money in a timely fashion
in order to run expedited operations effectively and
efficiently.
Second, in terms of civilian personnel, our government
civil servants do not qualify for the favored income tax
benefits that their military equivalents and the private-sector
contractors in the same situation receive. When they are
deployed in support of an expeditionary obligation, they don't
get those benefits. They do not have the benefit of long-term
medical coverage for injuries sustained in the theater, nor is
their life insurance coverage extended for acts of war. Yet,
they are asked to volunteer to go into the war zone.
Third, in terms of military personnel, there are no longer
any Army general officer positions for career contracting
professionals. In 1990, not that long ago, there were five. So,
there is little incentive, if you're a military personnel, to
go into this career field. Yet, for expeditionary operations
where there's warfighting going on, we need contracting people
who are in uniform in this critical area. We want them to be in
the lead in the war zone.
Fourth, contracting and contract management, itself. The
contracting process is very complicated. It involves multiple
stakeholders. This is not simply signing a piece of paper to
create a contract, nor is it simply shopping, as Senator Thune
mentioned.
The process ranges from defining the requirements all the
way through the, literally, 70-plus steps of post-award
contract management in order to ensure mission accomplishment.
When done properly, these important functions ensure efficient
use of our tax dollars, and they control waste, fraud, and
abuse. But we found that these functions were often not even
being done; and, when done at all, it was referred to as,
literally, a ``pickup game.''
Contracting should be a core capability of the Army, but it
is currently treated as an operational and institutional side
issue. We found that the DOD has an extremely dedicated core of
contracting people. The problem is, as you pointed out, Mr.
Chairman, they are understaffed, overworked, undertrained,
undersupported, and, I would argue, most important,
undervalued.
Let me give you some examples to illustrate the current
challenges. Only 3 percent of the Army contracting personnel
are Active Duty military, so the rest are government civilians.
Many more trained and experienced military personnel, officers,
and noncommissioned officers are required in an expeditionary
environment.
Next, the National Defense Authorization Act for Fiscal
Year 1996 required the DOD to reduce its acquisition workforce
by 25 percent by the end of fiscal year 2000. After those
reductions, the Department has not increased the acquisition
workforce, even though the DOD budget has gone up dramatically
since September 11, 2001. In fact, despite a sevenfold workload
increase and the greater complexity of contracting in this
intense environment, the government civilian and military
contracting workforce has been declining; and, of those
remaining, only 56 percent of the military officers and 53
percent of the civilians in the contracting career field are
certified for their current positions.
Based on the lessons learned, the Commission developed
recommendations that addressed the gravity of the situation and
the urgent need for reform. In short, the Commission identified
four key elements to future success.
First, contracting personnel. We must increase the stature,
the quantity, and the career development of contracting
personnel, military and civilian, especially for expeditionary
operations.
Second, organization and responsibility. We must
restructure the Army contracting organization and restore its
overall responsibility to facilitate high-quality contracting
in contract management, in both expeditionary and peacetime
operations.
Third, training and tools. We must provide the training and
the tools for the overall contracting activities that are
different in these expeditionary operations.
Last, in the legislative and regulatory and policy area, we
must obtain legislative, regulatory, and policy assistance to
enable contracting effectiveness in expeditionary operations.
Since our report covers the details of the first three
areas, I thought today I would like to focus on the fourth
category and ask for congressional assistance with the
legislative aspects of the Commission's recommendations.
First, we recommend that Congress authorize general officer
billets for Army contracting and for joint organization
contracting. Specifically, this Commission recommended five new
Army general officers, as well as one senior executive service
billet. This would essentially reestablish those five positions
for the general officers in the Army, and we would like those
fenced for the Secretary to assign them to meet this urgent
need, and not have them drawn off for other needs; and five
additional joint general officer or flag billets be
established; including a three-star position for the expanded
scope of the Defense Contract Management Agency (DCMA)--and
this expanded scope, which we strongly recommend and which we
think is important--requires service backfill authorizations
for the joint positions. These military officer billets should
not be created at the expense of existing civilian senior
executive service contracting authorizations in the Army
workforce. These have to be maintained, as well.
In the past decade and a half, we have witnessed the
elimination of general officers in the contracting field. As I
noted, in 1990 there were five Army general officers. Some of
these started as two-star positions; they were then reduced to
one-star; and then all five were eliminated. In the joint
commands, all four contracting flag and general officer
positions have similarly disappeared. Today, all that remains
is one temporary position, the Joint Contracting Command in
Iraq and Afghanistan, which is being filled by an Air Force
officer.
The Commission believes this backslide needs to be
remedied. We must at least get back to where we were in 1990.
General officers must lead the Army transformation to make
contracting an Army core competence. The Army needs general
officers who know contracting and can serve as functional
advocates for expeditionary operations and to avoid the
problems that are now being experienced in Iraq, Afghanistan,
and Kuwait. These general officers, who must be permanently
assigned to contracting, will initiate and sustain improvement
to Army acquisition. They will also grow future leaders, and
they will support leadership efforts. Our report identifies the
specific positions that these general officers will fill, as
well as the organizational changes required to achieve the
desired transformation in Army and joint contracting.
Second, the Commission recommends an increase in Army
contracting personnel; in fact, by almost 2,000 people. That
includes increased Army military by about 400, and civilian
government people by about 1,000, as well as about 600 billets,
military and civilian, for Army support to the DCMA, which is a
joint activity not under the Army.
The Army contracting personnel total increase is not that
significant relative to the total people currently in the Army
contracting career field, even including the DCMA fill-in. In
1990, the Army had approximately 10,000 people in contracting.
This has been reduced to approximately 5,500, where it has
largely remained, while the dollar value, as I noted earlier,
of Army contracts has increased, in fact, 331 percent, and the
number of Army contract actions increased 654 percent between
1992 and 2006.
The Army is the DOD executive agent for contracting in Iraq
and Afghanistan, but it is unable to fill military or civilian
contracting billets in either quantity or quality--in
qualifications. There are simply far too few Army contracting
personnel in the theater to meet the needs. The people who are
there are great, they're doing a terrific job, they're totally
dedicated, but there just are not enough of them, and they're
not adequately trained for the role or positions needed.
Congress has to help the Army meet its commitment to support
the troops on future expeditionary missions by authorizing
additional Army contracting personnel.
To meet the critical need for contract post-award
management, the Commission recommends that the DCMA become the
DOD worldwide contract management center of excellence. To do
this, DCMA needs additional resources. The House Appropriations
Committee has acknowledged the need for more DCMA personnel by
recently stating, ``It is clear that DOD currently lacks the
means to provide proper oversight of its service contracts, in
part because of an insufficient number of contract oversight
personnel.'' The Commission believes the 583 DCMA billets that
we asked for are needed for Army support alone. Of course, if
DCMA does not get this new mission, then the Services are going
to have to fill that responsibility and get additional
resources for it.
Third, the Commission recommends congressional action to
improve incentives for Army civilian contracting personnel who
volunteer to deploy for expeditionary contracting. Right now,
as I said, they are undervalued. They're undervalued in their
compensation, in their education and training, in their career
opportunities, and with the lack of other occupational
incentives. As a result, many approved contracting positions
simply go unfilled, especially in the theater. The Nation owes
this dedicated corps of government civilian patriots its
appreciation and far better treatment than they're getting.
Congress can help address this problem by providing
government civilians tax-free status when deployed, just as
their military and private-sector contractor counterparts are
receiving, and also provide them long-term medical care and
life insurance for in-theater injury or death. Our deployed
military are tax-free from the moment they hit the ground, and
they have long-term medical coverage and life insurance for
injuries or death sustained while deployed; yet, comparable
benefits are not accorded to deployed government civilians. If
DOD is to incentivize its civilian workforce to deploy to what
can be extremely hostile work environments, they must be
afforded tax treatment and benefits coverage comparable to that
of the military.
In addition, Congress should provide standby removal of the
pay cap for deployed civilians for any future expedition.
Although this has been done for Iraq, it is specific to the
current engagement and not available for the next time.
Fourth, the Commission recommends that Congress enable
funding flexibility through an adequately resourced contingency
operations transfer fund. This would be a defense transfer fund
without color-of-money or fiscal-year limitations, with the DOD
responsible, certainly, for providing Congress with insight by
reporting on the expenditures and on the savings. This
recommendation is based on what existed in the Balkans, called
an Overseas Contingency Operation Transfer Fund, which was
approved by Congress, and which actually currently exists for
AID. However, right now, such a fund does not exist for Iraq.
We believe that, not only should it be created for Iraq, but
also for any future expeditionary operations, on a legislative
standby basis.
Fifth, and finally, we recommend that Congress provide
standby legislation to waive many of the provisions, such as
small business and U.S. labor provisions, Buy American, Berry
Amendment, Specialty Metals, and other provisions to allow
rapid local buying whenever it's required in expeditionary
operations. In Iraq, a Buy America waiver does exist; but,
again, this is specific to the current operation, and,
therefore, not available to any future expedition.
What I've just gone through are just some of the highlights
of the many recommendations contained in the report, but these
are particularly relevant for today's purposes because they
require congressional action.
In addition, the report includes recommended actions for
the Secretary of the Army and the Secretary of Defense. The
Commission has briefed both Secretaries, concurrent with the
report's publication and release; in fact, the next day. Both
Secretaries have stated in public forums that they fully
support the Commission's report and have begun to move out
quickly on its recommendations. But they need congressional
help on key aspects of the report which I've highlighted here
today.
Additionally, the chairman of the House Armed Services
Committee released a statement on November 1, the day after our
report was out, saying that ``Congress will seriously consider
the Commission's recommendations, particularly those that
require legislative action.''
Given the importance and urgency of these actions in
support of our troops, the Commission is hopeful that Congress
will consider some perhaps out-of-cycle action to address the
recommendations that I've outlined here today.
In closing, I'd like to observe that, too often, it takes a
crisis to bring about a major change. We believe the Iraq/
Kuwait/Afghanistan contracting problems have, in fact, created
such a crisis. Changes are urgently required in the area of
Army contracting and across the DOD in related areas,
especially directed to future expeditionary operations. These
changes are essential to make the institutional Army the
generating force in both name and capability. It is up to the
military and to the secretarial leadership, both in the Army
and the overall DOD, to bring about these needed changes, but
they cannot make many of the necessary improvements without
congressional assistance. I hope you will agree and provide
that needed support. I believe our troops deserve it.
That concludes my prepared remarks.
[The prepared statement of Dr. Gansler follows:]
Prepared Statement by Hon. Jacques S. Gansler, Ph.D.
The Secretary of the Army established an independent ``Commission
on Army Acquisition and Program Management in Expeditionary
Operations'' to review the lessons learned in recent operations; and to
provide forward-looking recommendations to ensure that future military
operations achieve greater effectiveness, efficiency, and transparency.
I was honored to chair the Commission and be joined by five
distinguished Commissioners with expertise and insight into government
acquisition, including program management and contracting. The
Commissioners included General (Ret.) David Maddox, who represented the
Army's operational community; General (Ret.) Leon Salomon, who
represented the Army's acquisition community; Rear Admiral (Ret.) David
Oliver, who provided alternate Service representation and recent
experience in Iraq, through his service with the Coalition Provisional
Authority, and then two very senior, experienced Department of Defense
(DOD) civilians in David Berteau and George Singley.
At the Secretary's direction, we conducted our efforts within a
compressed 45-day timeframe, indicative of immediate challenges facing
the Army. Our focus was on how to prevent any shortcomings in Army
acquisition and program management in expeditionary operations for the
next time. Our charter was forward-looking: we were tasked to ensure
that, institutionally, the Army is best positioned for future
operations--which will be expeditionary, joint, and likely to be multi-
agency political/military events.
At the outset, it is important to note that other, concurrent
activities were underway, focusing on different aspects of today's
challenges. Lieutenant General Ross Thompson and Kathryn Condon are co-
chairing the Army Contracting Task Force that was--and still is--
looking at the current fraud issues. Separately, the DOD Inspector
General, Lieutenant General (Ret.) Claude Kicklighter, has been looking
at equipment accountability issues. Outside of DOD, Ambassador Kennedy
of the State Department has an effort underway to examine private
security contracts. Thus, current fraud, equipment accountability, and
private security contracts were not within the purview of this
Commission.
To address our forward-looking tasking, in September and October
2007, the Commission engaged officials within all of the the relevant
communities through 122 interviews. The individuals we heard from
represented a wide range of stakeholders, from senior military
leadership, to field operators, to audit personnel, to contractor-
support personnel, and so forth. We spoke to people both state-side and
deployed. Our discussions with personnel inside the continental United
States (CONUS) were important, especially since we defined
``expeditionary'' as not only outside of CONUS but also emergency
conditions within CONUS (like a Katrina incident); given that there are
very great similarities in terms of the responsiveness to both
situations. We also heard from people currently deployed in Iraq,
Afghanistan, and Kuwait. Given the compact schedule, the Southwest Asia
interviews were conducted by video teleconference. We separately
interviewed the commander of the Joint Contracting Command-Iraq/
Afghanistan, then the next level of military leadership, and then the
worker level; all in the absence of their supervisors, so that we were
able to get an objective, independent assessment.
Despite the broad spectrum represented by our interviews, we
received almost universal agreement on what the issues are; what
changes are required; and the absolute need for change. As a result,
the Commission crafted a broad-based strategy for addressing
shortcomings; which we published in an independent report dated October
31, 2007; and titled Urgent Reform Required: Army Expeditionary
Contracting. I would request that the Executive Summary from that
report be included in the record of today's proceedings. I appreciate
this subcommittee's invitation to highlight some key findings and
recommendations from that report.
Our key findings include the observation that the Army--and, more
broadly, DOD--does not have a problem with a single organization or a
group of individuals; rather, the Army and DOD are faced with a
systemic challenge in executing expeditionary operations, both from an
operational and an institutional vantage point. The ``Operational
Army'' is expeditionary and on a war footing. Yet, it has not fully
recognized the impact of the large number of contractors involved in
expeditionary operations and on their potential impact to mission
success. In fact, today, with approximately 160,000 contractors in the
Iraq/Afghanistan/Kuwait zone, they represent about 50 percent of the
``total force.'' Additionally, critical segments of the ``Institutional
Army''--which supports the ``Operational Army''--have not adapted in
order to provide responsive acquisitions and sustainment for
expeditionary operations. Some specific examples where shortcomings
exist include:
Financial management--On the Logistics Civil
Augmentation Program (LOGCAP) last year, there were 141
incremental funding contract modifications. That means that the
contract had to be modified 141 times, just because the
approved money was not being adequately released (by Office of
Management and Budget, Office of the Secretary of Defense
Comptroller, and/or Army Comptroller). This is inconsistent
with war-time needs. We have to be able to provide the money in
a timely fashion, in order to run expeditionary operations
effectively and efficiently.
Civilian personnel--Our Government civil servants do
not qualify for favored income tax benefits (comparable to
military personnel and contractors in the same situation) when
deployed in support of expeditionary operations; and do not
have the benefit of long-term medical coverage for injuries
sustained in-theater. Nor is their life insurance coverage
extended for ``acts of war;'' yet they are asked to
``volunteer'' to go into the war zone.
Military personnel--There are no longer any Army
General Officer positions for career contracting professionals.
In 1990, there were five. So there is little incentive to
pursue this career field. Yet, for expeditionary operations, we
need contracting people in uniform in this critical area to be
leading in the war zone.
Contracting and contract management--The contracting
process is very complicated and involves multiple stakeholders.
This is not simply signing a piece of paper to create a
contract. The process ranges from defining requirements all the
way through the 70-plus steps of post-award contract
management, to ensure mission accomplishment. When done
properly these important functions ensure efficient use of our
tax dollars and control waste, fraud, and abuse, but we found
they were often not done; and, when done at all, it was a
``pick-up game.''
Contracting should be a core capability of the Army, but it
currently is treated as an operational and institutional side issue.
We found that the DOD has an extremely dedicated corps of
contracting people. The problem is they are understaffed, overworked,
under-trained, under-supported, and, I would argue, most importantly,
under-valued. Some data points illustrate the current challenges:
Only 3 percent or so of Army contracting personnel are
active duty military. Many more trained and experienced
military personnel (officers and non-commissioned officers) are
required in an expeditionary environment.
The National Defense Authorization Act for Fiscal Year
1996 required DOD to reduce its acquisition workforce by 25
percent by the end of fiscal year 2000. After those reductions,
the Department has not increased the acquisition workforce,
even though the budget has gone up dramatically since September
11, 2001. In fact, despite about a seven-fold workload
increase, and the greater complexity of contracting in this
intense environment, the civilian and military contracting
workforce has been declining; and of those remaining, only 56
percent of the military officers and 53 percent of the
civilians in the contracting career field are certified for
their current positions.
Based on the valuable lessons learned, the Commission developed
recommendations that address the gravity of the situation, and the
urgent need for reform. In short, the Commission identified four key
elements to future success:
1. Contracting personnel--increase the stature, quantity, and
career development of contracting personnel, military and
civilian (especially for expeditionary operations);
2. Organization and responsibility--restructure the Army
contracting organization and restore its overall responsibility
to facilitate high-quality contracting and contract management
in both expeditionary and peacetime operations;
3. Training and tools--provide training and tools for overall
contracting activities in expeditionary operations; and
4. Legislative, regulatory, and policy--obtain legislative,
regulatory, and policy assistance to enable contracting
effectiveness in expeditionary operations.
Our report covers the details of the first three areas, so today I
would like to focus on the fourth category, and ask for Congressional
assistance with the legislative aspects of the Commission's
recommendations.
First, we recommend that Congress authorize General Officer billets
for Army contracting and Joint contracting. Specifically, this
Commission recommends that five new Army General Officers, as well as
one Senior Executive Service billet, be established and ``fenced,'' for
the Secretary to assign to meet this urgent need. Five additional joint
general or flag billets be established, including a three-star for the
expanded scope of the Defense Contract Management Agency (which we
strongly recommend), and with Service ``back-fill'' authorizations for
the joint positions. These military officer billets should not be
created at the expense of existing civilian Senior Executive Service
contracting authorizations in the Army workforce. These must be
maintained.
In the past decade and a half, we have witnessed the elimination of
General Officers in the contracting field. As I noted, in 1990, there
were five Army General Officers. Some started as two-star positions,
were reduced to one-star, and then all five were eliminated. In the
Joint commands, all four contracting Flag and General Officer positions
have similarly disappeared. Today, all that remains is one temporary
position: the Joint Contracting Command-Iraq/Afghanistan, which is
being filled now by an Air Force officer. The Commission believes this
backslide needs to be remedied. We must at least get back to where we
were in 1990.
General officers must lead an Army transformation to make
contracting an Army core competence. The Army needs general officers
who know contracting and can serve as functional advocates for
expeditionary operations; and to avoid the problems that are now being
experienced in Iraq, Afghanistan, and Kuwait. These general officers,
who must be permanently assigned to contracting, will initiate and
sustain improvement to Army acquisition, grow future leaders, and
support leadership efforts. Our report identifies the specific
positions the required general officers would fill, as well as the
organizational changes required to achieve the desired transformation
in Army and Joint contracting.
Second, the Commission recommends an increase in Army contracting
personnel authorizations by 1,983. That includes increasing Army
military by 400 and civilian by 1,000, as well as providing 583
billets, military and civilian, for Army support to DCMA. The Army
contracting personnel total increase is not that significant, relative
to the total people currently in the Army contracting career field,
even including the DCMA fill-in.
In 1990, the Army had approximately 10,000 people in contracting.
This was reduced to approximately 5,500, where it has largely remained;
while the dollar value of Army contracts has increased 331 percent, and
the number of Army contract actions increased 654 percent (from
approximately 52,900 to 398,700 between 1992 and 2006).
The Army is the DOD ``Executive Agent'' for contracting in Iraq and
Afghanistan, but is unable to fill military or civilian contracting
billets, in either quantity or qualifications. There are far too few
Army contracting personnel in-theater to meet their commitments.
Congress must help the Army meet its commitment to support the troops
on future expeditionary missions by authorizing additional Army
contracting personnel.
To meet the critical need for contract post-award management, the
Commission recommends that DCMA become DOD's ``worldwide, contract
management center of excellence.'' To do this, DCMA needs additional
resources. The House Appropriations Committee has acknowledged the need
for more DCMA personnel by recently saying, ``It is clear that DOD
currently lacks the means to provide proper oversight of its service
contracts, in part because of an insufficient number of contract
oversight personnel.'' The Commission believes 583 DCMA billets are
needed for Army support alone. Of course, if DCMA does not perform
worldwide contract management for DOD, the Services are going to have
to fulfill this responsibility, and will need to be resourced for it.
Third, the Commission recommends congressional action to improve
incentives for Army civilian contracting personnel who volunteer to
deploy for expeditionary contracting. Right now, they are undervalued--
in compensation; education and training; career opportunities; and
other occupational incentives. As a result, many approved contracting
positions go unfilled, especially in-theater. The DOD owes this
dedicated core of civilian patriots its appreciation and better
treatment. Congress can help address this problem by providing
government civilians tax-free status when deployed (like their military
and contractor counterparts), and long-term medical care and life
insurance for in-theater injury or death. Our deployed military are tax
free from the moment they hit the ground and have long-term medical
coverage and life insurance for any injuries or death sustained while
deployed. Yet comparable tax benefits are not accorded to deployed
government civilians. If DOD is to incentivize its civilian workforce
to deploy to what can be extreme and hostile work environments, they
must be afforded tax treatment and benefits coverage comparable to that
of the military. In addition, Congress should provide ``stand-by''
removal of the pay cap for deployed civilians, for any future
expedition. Although this has been done for Iraq, it is specific to the
current engagement and not available for the next time.
Fourth, the Commission recommends that Congress enable funding
flexibility through an adequately resourced ``contingency operations
transfer fund.'' This would be a defense transfer fund without ``color
of money'' or fiscal year limitations, with the DOD responsible for
providing Congress with insight via reporting on expenditures and
savings. This recommendation is based on the Balkans' ``Overseas
Contingency Operations Transfer Fund,'' which was approved by Congress,
and which currently exists for AID. However, right now, such a fund
does not exist for Iraq, and we believe that not only should it be
created for Iraq, but also for any future expeditionary operations, on
a legislative ``stand-by'' basis.
Fifth, and finally, we recommend that Congress provide ``stand-by''
legislation to waive small business and U.S. labor provisions, Buy
American, Berry Amendment, Specialty Metals and other such provisions
to allow rapid, local buying, if required, in expeditionary operations.
In Iraq, a "Buy America" waiver exists, but again this is specific to
the current operation and therefore not available to any future
expedition.
The preceding are just some highlights of the many recommendations
contained in the report, but which are particularly relevant for
today's purposes because they require Congressional action. In
addition, the report includes recommended actions for the Secretary of
the Army and the Secretary of Defense. The Commission has briefed both
Secretaries, concurrent with the report's publication and release. Both
Secretaries indicated that they fully support the committee's report
and have begun to move out quickly on its recommendations. But they
need congressional help on key aspects of the report, which I have
highlighted here today.
Additionally, the Chairman of the House Armed Services Committee
released a statement on November 1 saying that ``Congress will
seriously consider the Commission's recommendations, particularly those
that require legislative action.''
Given the importance and urgency of these actions in support of our
troops, the Commission is hopeful that Congress will consider some out-
of-cycle action to address the recommendations I have outlined today.
In closing, I would like to observe that too often it takes a
crisis to bring about major change. We believe the Iraq/Kuwait/
Afghanistan contracting problems have created such a crisis! Changes
are urgently required in the area of Army contracting--especially
directed to future expeditionary operations. These changes are
essential to make the Institutional Army the ``Generating Force'' in
both name and capability. It is up to the military and secretariat
leadership (both in the Army and the overall DOD) to bring about the
needed changes. They cannot make many of the necessary improvements
without congressional assistance.
I hope you will agree and provide that needed support. Our troops
deserve it.
This concludes my prepared statement.
Senator Akaka. Thank you very much for your statement.
Now let me call on Secretary Bolton for your statement.
STATEMENT OF HON. CLAUDE M. BOLTON, JR., ASSISTANT SECRETARY OF
THE ARMY FOR ACQUISITION, LOGISTICS, AND TECHNOLOGY;
ACCOMPANIED BY LTG ROSS N. THOMPSON III, USA, MILITARY DEPUTY
TO THE ASSISTANT SECRETARY OF THE ARMY FOR ACQUISITION,
LOGISTICS, AND TECHNOLOGY; AND KATHRYN A. CONDON, EXECUTIVE
DEPUTY TO THE COMMANDING GENERAL, ARMY MATERIEL COMMAND
General Bolton. Thank you, Mr. Chairman, and good
afternoon.
Mr. Chairman, Senator Thune, distinguished members of the
Subcommittee on Readiness and Management Support, first of all,
let me thank you, Mr. Chairman, for your kind words at the
beginning of this hearing, and those of Senator Inhofe. You're
correct, I will step down after 6 years--next month, 6 years to
the day--and I can tell you that it's been a joy, an honor
serving the men and women who are on point for us in the United
States Army. I want to take this time to thank you and the
other members of this subcommittee for your support to the Army
and to me over these last 6 years. The issues that we have
faced have been critical, and with your help, we were able to
get through all of them. We're about to discuss, in this
hearing this afternoon, another very important topic that, from
my confirmation hearing to today, I have always emphasized the
need for addressing what Jacques Gansler and his Commission has
already done.
I thank you for the opportunity to appear before you on the
Report of the Commission on Army Acquisition and Program
Management in Expeditionary Operations, chaired by Dr. Jacques
Gansler, and the complementary in-house Army Contracting Task
Force, co-chaired by my military deputy, Lieutenant General
Ross Thompson and Kathryn Condon, the Executive Deputy to the
Commanding General at the Army Materiel Command, both of whom
join me here today. We have a joint written statement that I
respectfully request be made a part of the record for today's
hearing.
Mr. Chairman, I would like to take this opportunity to
commend Dr. Gansler and his Commission members and staff on
their good work. I would also like to commend General Thompson
and Ms. Condon for their work.
If I may emphasize a point also made just moments ago by
Dr. Gansler, that his Commission looked at the long-term
strategic view of the Army's acquisition and contracting system
in support of expeditionary operations, the Army Contracting
Task Force reviewed current contracting operations and took
immediate actions, as warranted. The two efforts combined have
given the Army a clear way ahead.
Secretary of the Army Pete Geren has directed swift
implementation of specific recommendations of both the
Commission and the Task Force. For example, the Army is
accelerating plans to set up the military structure recommended
by the Commission. The Army has approved a two-star-level Army
Contracting Command organization under the Army Materiel
Command, including two subordinate commands, a one-star
Expeditionary Contracting Command and a restructured one-star-
level Installation Contracting Organization. The Army also
plans to grow the military contracting structure in line with
the Commission's recommendations by approximately 400 soldiers,
and our civilian contracting workforce by an additional 1,000
professionals.
A critically important issue, Mr. Chairman, is the size,
structure, and training of the contracting workforce, both
civilian and military. The acquisition workforce has declined
significantly in the last decade, while the number of dollars
that are executed by the Army has increased by more than 80
percent. The United States Army has never fought an extended
conflict that required such reliance on contractor support.
We are currently addressing the need to expand, train,
structure, and empower our contracting personnel to support a
full range of military operations. We're also initiating
discussions with leaders of the contracting communities in the
Navy, Air Force, and the Defense Logistics Agency to explore
increased collaboration and workload distribution.
Expeditionary operations in Iraq/Afghanistan have placed
extraordinary demands on the contracting system and our
contracting support personnel. The Army has deployed more than
550,000 soldiers through Kuwait. We went from supporting one
Kuwait base camp in 2002 to supporting eight in 2007, which
required increased capacity in billeting, feeding, and general
support. In Kuwait alone, the annual value of contract support
increased from $150 million in 2002 to nearly $1 billion in
2006.
Mr. Chairman, the vast majority of our military and
civilian contracting personnel perform well in tough and
austere conditions. The Army is working hard to ensure that
policies/procedures are in place for all joint expeditionary
contracting operations. The success of our warfighters is
linked directly to the success of the contracting workforce.
One of the things that you asked me, Mr. Chairman--when we
met last April--relates to what we're going to talk about
today, and that's the size of the acquisition workforce and the
adequacy of that workforce. I mentioned to you then, I
paraphrased when I said in my confirmation testimony, that, in
my view--and this was in 2001, when I appeared before the
committee--that, during my tenure, nearly 50 percent of the
acquisition workforce was eligible to retire. A lot of that has
come to pass.
Last Friday, for example, I retired the most experienced
program executive officer that the Army has--33\1/2\ years, 10
years in that position. While the officer who replaced him is
well qualified and experienced, he does not have 33\1/2\ years
of experience. That is something you cannot do overnight. Every
testimony that I've given in every hearing on this Hill, the
last paragraph has always addressed the need to look at the
workforce--contracting, engineers, program managers--because we
have allowed that valuable workforce, talented workforce, to
atrophy over the last 10 to 15 years, and we must get that
back.
We have the world's finest Army--the most powerful, the
most capable, the most respected the world has ever known. It's
that way because of the leadership, the men and women who
occupy the ranks, the training, and the equipment. The
equipment is world-class, and the equipment is because of the
acquisition workforce contracting a big part of that. If we do
not get that right, I submit that our military of the future
will suffer greatly.
Mr. Chairman, I thank you for allowing the opportunity to
appear here this afternoon. I welcome this opportunity. That
concludes my remarks, and I look forward to your questions.
[The joint prepared statement of Secretary Bolton, General
Thompson, and Ms. Condon follows:]
Joint Prepared Statement by Hon. Claude M. Bolton, Jr., LTG N. Ross
Thompson III, USA, and Kathryn A. Condon
INTRODUCTION
Chairman Akaka, Senator Thune, and distinguished members of the
Armed Services Committee: We thank you for the opportunity to report to
you on the U.S. Army's comprehensive, ongoing efforts to ensure
policies and procedures are in place for all joint, expeditionary
contracting operations in Iraq, Afghanistan, and Kuwait, and to better
prepare the Army for acquisition and logistical support of combat
operations in the future.
The candid and comprehensive report, by Dr. Jacques Gansler and the
Members of his Commission on Army Acquisition and Program Management in
Expeditionary Operations on the U.S. Army's acquisition and contracting
system, has given us insights for the way ahead. The Commission made
four overarching recommendations to ensure the success of future
expeditionary operations:
(1) Increase the stature, quantity, and career development of
military and civilian contracting personnel, particularly for
expeditionary operations;
(2) Restructure organization and restore responsibility to
facilitate contracting and contract management;
(3) Provide training and tools for overall contracting
activities in expeditionary operations; and
(4) Obtain legislative, regulatory, and policy assistance to
enable contracting effectiveness in expeditionary operations.
The Commission's four key recommendations for improvement are
consistent with the issues identified by the Army Contracting Study
completed in 2005 and the Army Contracting Task Force, which was Co-
Chaired by LTG N. Ross Thompson III, USA, and Kathryn A. Condon, the
Executive Deputy to the Commanding General at the U.S. Army Materiel
Command. The Army is aggressively addressing the structural weaknesses
and shortcomings identified in order to improve current and future
expeditionary contracting activities. Our actions stretch across the
Army and include an ongoing, comprehensive review of doctrine,
organization, training, materiel, leader development, personnel and
facilities.
It is important to emphasize that Dr. Gansler's Commission was
chartered to look at the long-term, strategic view of the Army's
acquisition and contracting system in support of expeditionary
operations. To complement the Commission's strategic review, the Army
Contracting Task Force was formed to review current contracting
operations and take immediate action where appropriate. The Secretary
of the Army has directed the Commanding General of the Army Materiel
Command, General Benjamin Griffin, to report to him, through the acting
Under Secretary of the Army, Nelson M. Ford, to implement specific
recommendations of both the Gansler Commission and the Army Contracting
Task Force as expeditiously as possible. For example, the Army is
accelerating plans to set-up the military structure recommended by the
Commission.
The Army has approved a two star-level Army Contracting Command
organization under Army Materiel Command, including two subordinate
commands; a one-star expeditionary contracting command and a
restructured one-star level installation contracting organization. The
Army is in the process of identifying the individuals by name to lead
these organizations. We plan to grow our military contracting structure
in the Active Force in line with the Commission recommendations by
approximately 400 soldiers and our civilian contracting workforce by an
additional 1,000 members.
U.S. ARMY ACTIONS
As a result of the ongoing operations in Southwest Asia, the Army
has increased the focus on contingency contracting. Up until just a
year ago, we did not have a defined contingency contracting structure
to support expeditionary operations or support a modular Army. We
recently established a contingency contracting structure that consists
of contracting support brigades, contingency contracting battalions,
and four-person contingency contracting teams. Each contracting support
brigade is commanded by a colonel, who assists the Army Service
Component Commander (ASCC), a three star commander, in his contracting
support--planning and coordinating contracting operations in a theater
of operations. The brigades oversee contingency contracting battalions
and teams--Active, Reserve, and National Guard--in executing the ASCC's
contracting support plan. The Contracting Support Brigades' battalions
and teams are just now being activated, and they will coordinate and
integrate their plans with Army Field Support Brigades. These two new
brigade designs are designed to support the Army modular force by
developing a single, seamless, fully integrated planning cell to
provide quick response and command and control of acquisition,
logistics, and technology capabilities across the spectrum of conflict.
As a result of the work of the Gansler Commission and the Army
Contracting Task Force, we are planning to increase the number of
brigades, battalions, and teams to better posture the Army to support
contingency operations.
As the scope and scale of contracting in Southwest Asia evolved,
the Army recognized the need to assess its contract management
capacity. The Army conducted audits and investigations into the
oversight, execution, and management of contracting in the theater of
operations, and these audits and investigations are ongoing. While the
vast majority of our military and civilian contracting personnel who
award and manage these contracts perform well in extreme conditions,
auditors and investigators discovered cases of potential fraud in
contracting operations with the worst cases originating in Kuwait.
Currently, there are 80 ongoing criminal investigations involving
contract fraud committed against the U.S. military in the Iraq,
Afghanistan, and Kuwait theater of operations. The Army acted
decisively to correct deficiencies specifically identified in Kuwait
with the following agencies involved in corrective actions: the U.S.
Army Audit Agency (AAA); the U.S. Army Criminal Investigation Command
(CID); the U.S. Army Contracting Agency; the U.S. Army Materiel Command
(AMC); and the U.S. Army Sustainment Command, all working in
cooperation with the Defense Contract Management Agency.
In 2005, the Army began audits and CID increased investigative
activity into allegations of corrupt contracting in Southwest Asia.
Deployed commanders also expressed their concerns and requested the
Army to send in additional CID Special Agents and auditors from AAA and
from CID. In 2005, CID established the Iraq Fraud Detachment and in
2006, CID established the Kuwait Fraud Office--both staffed with
specially trained CID Special Agents. Throughout these investigations,
the Army has updated Congress and taken corrective actions as
warranted.
In February 2007, after then-Secretary of the Army, Dr. Francis
Harvey, was briefed on the matter, he directed further action to
correct deficiencies, including an assessment of contracting activities
throughout Central Command and implementation of a Corrective Action
Plan to address issues.
As a result, in March 2007, a senior Contracting Operations Review
Team was deployed to review all contract operations in theater. In
April 2007, the Army began implementing a Contracting Action Plan that
reorganized the Kuwait Contracting Office, installed new leadership,
established a Joint Logistics Procurement Support Board, increased
staffing, deployed senior contracting professionals and attorneys to
Kuwait, and provided additional ethics training and assigned legal
support.
In addition, the Army published the following guidance designed to
improve management of service acquisitions and to strengthen oversight,
surveillance and documentation of contractor's performance.
(1) The Army's Source Selection Manual was revised and
incorporated into our acquisition supplement. It is a
comprehensive source selection tool designed to provide
flexibility in the source selection process while enabling Army
contracting officers to design and execute their source
selection plans and Requests for Proposal (RFPs) to provide
optimum solutions to meet their customers needs. Source
selection training is now required for every source selection
team member to ensure they understand their roles and
responsibilities.
(2) In response to section 812 of the National Defense
Authorization Act for Fiscal Year 2006, we adjusted our
management framework for review and approval of service
contracts at both the strategic and tactical levels. Since
2003, the Deputy Assistant Secretary of the Army for Policy and
Procurement, along with other key senior Army leaders, has
reviewed and approved service strategies with a combined total
value greater than $231 billion.
(3) Contracting officers have been directed to appoint a
trained contracting officer's representative (COR) for every
service contract awarded with an estimated value greater than
$2,500. To ensure that systematic quality assurance methods are
used during contract administration, quality assurance
surveillance plans must also be prepared and implemented.
(4) A standard, minimum training requirement has been
established for Army CORs. They must complete the Defense
Acquisition University on-line continuous learning module,
``COR with a Mission Focus,'' prior to appointment. As of
November 1, 2007, over 4,500 Army personnel have completed this
course.
(5) Acquisition leadership reiterated the requirement for
contractor performance to be adequately documented and
performance reports prepared, entered, and maintained in our
performance assessment systems. We will not allow poor
performers to be rewarded with more work.
(6) A reminder was sent to the entire Army Acquisition
workforce addressing their responsibilities as public servants
and stewards of the taxpayer's investment and exhorting them to
ensure that their actions remain above reproach, both in
reality and appearance.
Written guidance is of no benefit, unless it is executed by a
capable, trained workforce. Recognizing this need, the Army convened
the first Army Procuring Contracting Officer (PCO) Training symposium.
Over 500 PCOs were trained in critical areas now demanding increased
proficiency. A wide range of topics were covered, including cost and
pricing and source selection requirements as well as contracting
integrity. The Army has also initiated training for our Heads of
Contracting Activities to heighten their awareness of roles and
responsibilities associated with supporting the mission of their
command in the contracting arena.
Upholding the highest ethical standards while discharging our
duties is of paramount concern and while we have confidence in the
talent and professionalism of the Army's acquisition workforce, we must
remain vigilant to potential compromises of integrity. We are actively
engaged in the DOD efforts to eliminate areas of vulnerability within
Defense contracting. The ASA(ALT) staff is leading a subcommittee
effort looking at Sustained Senior Leadership issues and other
personnel from the organization are reviewing areas associated with
proper contract surveillance. To obtain an Army-wide perspective on
procurement operations we recently chartered a corresponding Army
Contracting Integrity Panel. We've requested membership from each Army
functional area involved with contracting. The panel will examine
contracting integrity drivers that have the greatest impact on
vulnerabilities relating to fraud, waste and abuse in our contracting
system.
As previously mentioned, the Army Contracting Task Force mission
was to examine current Army operations and future plans for providing
contracting support to contingency or other military operations. The
Task Force looked at contracting activities across the Army. There is
contract authority in many of the commands in the Army, and that
contract authority is delegated from the Assistant Secretary position
to the head of contracting activities in different organizations and
commands within the Army. In addition, the Task Force studied actions
of AAA and CID for both insight and lessons learned.
In the short-term, the Army augmented the staff in Kuwait with
additional individuals to assist the warfighter in translating their
requirements into statements of work and additional contract
specialists and contracting officers to facilitate contract execution
of those requirements. This augmentation is short-term, about 90 days,
and is designed to make sure that the commander there has the resources
needed to deal with the present workload. Part of that additional
workload is the orderly transfer of existing and any future major
contract actions to the acquisition center at Rock Island, Illinois,
that supports the Army Sustainment Command under AMC. By the end of the
90-day period, we expect the staff level to number around 50 people
manning the contracting office in Kuwait.
The Acquisition Center at Rock Island established a dedicated team
of nine contracting experts with the support of legal experts focused
solely on large dollar contracts in support of Kuwait operations. This
team is ensuring all past and future contract actions associated with
these large dollar contracts are executed in accordance with all laws
and regulations. The team is resolving a number of claim actions,
definitizing unpriced actions, and issuing new solicitations for
requirements such as non-tactical vehicles. We expect to keep this team
in place for the duration of the conflict.
The Army is systematically reviewing all of the Kuwait contract
files from fiscal year 2003 to fiscal year 2006 to identify any issues
that haven't otherwise been addressed by an ongoing investigation by
either AAA or CID. During this time period there were approximately
6,000 contracts awarded (totaling about 18,000 contract actions) by the
Kuwait contracting office, so we are initially using a sampling
technique to determine if there are any additional indications of
fraudulent activity. So, this is quite an undertaking, but it is
important to ensure we have reviewed the files thoroughly. The review
of contract actions is taking place both in Kuwait where contracts
under $25,000 are being examined and at AMC's Acquisition Center in
Warren, Michigan, where the review team is looking at contracts over
$25,000 with the assistance of U.S. Air Force and U.S. Navy contracting
experts. We are also working with the AAA, CID, and the Assistant
Secretary of the Army for Financial Management and Comptroller in
reviewing financial data to determine if appropriate disbursement and
accounting of payments have been made. Initial and ongoing review of
all contracts and contract actions has revealed no additional
fraudulent activities to date.
We are increasing Contracting Operation Reviews in both scope and
frequency. The Army periodically conducts Contract Operations Reviews
looking at contracting organizations to make sure that contracting
activities are following the regulations and procedures and
appropriately addressing emerging issues. These reviews are part of the
routine examination of contracting activities along with internal
review audits by the AAA and the Army and Department of Defense
Inspectors General.
A critically important issue is the size, structure, and training
of the contracting workforce--both military and civilian. The
acquisition workforce has declined significantly in the last decade
while the number of dollars that we are executing in the Army has
increased by more than 80 percent. The U.S. Army has never fought an
extended conflict that required such reliance on contractor support. We
are currently addressing the need to expand, train, structure, and
empower our contracting personnel to support the full range of military
operations. We have increased the number of contracting interns and are
pursuing associated increases in training funds. We are partnering with
the Defense Acquisition University and state and local universities to
incorporate contracting courses into their curriculums. Our goal is to
bring more qualified, trained individuals into the workforce at an
accelerated pace and ultimately perform at the jouneyman level in a
shorter period. We are also initiating discussions with leaders of the
contracting communities in the U.S. Navy, U.S. Air Force, and the
Defense Logistics Agency to explore increased collaboration and
workload distribution.
CONCLUSION
As stewards of the taxpayers' dollars, the Army must do a better
job of managing and documenting contractor performance. Service and
construction contracts, whether in Iraq, Afghanistan, the United
States, or elsewhere in the world, represent an ever-increasing
percentage of our overall contract dollars--now surpassing the dollars
awarded under major weapon systems programs. Greater emphasis must be
placed on the management and oversight of all types of service and
construction contracts. This includes documenting the contractor's
performance in accordance with policy.
Expeditionary military operations in Iraq and Afghanistan have
placed extraordinary demands on the contracting system and our
contracting support personnel. As stated before, the vast majority of
our military and civilian contracting personnel perform well in tough,
austere conditions. Their customers are the warfighters--the men and
women who depend on them to do their jobs. In the end, the success of
our warfighters is linked directly to the success of the contracting
workforce. We are working hard to ensure that policies and procedures
are in place for all joint, expeditionary contracting operations in
Iraq, Afghanistan, and Kuwait or anywhere else we deploy. The objective
is to better prepare the Army for acquisition and logistical support of
combat operations in the future.
We look forward to your questions and thank you for the opportunity
to address the members of the committee.
Senator Akaka. Thank you. Thank you very much, Secretary
Bolton.
We have been joined by the chairman of the Senate Armed
Services Committee, Senator Levin, and I would like to ask
Senator Levin whether he has any remarks to make before we
begin any questions.
Senator Levin. I'll wait until my questions. Thank you, Mr.
Chairman.
Senator Akaka. All right. Thank you very much.
I want to thank you again, Secretary Bolton, for your
testimony and I'd like to ask a question of both you and
General Thompson. The Gansler Commission report states that the
Army's difficulty in adjusting to the singular problem of
Kuwait, Iraq, and Afghanistan, is in large part due to the fact
that there are no generals assigned to contracting
responsibilities. The Commission recommends that Congress
authorize, ``a core set of 10 additional general officers for
contracting positions.'' My question to you, Secretary Bolton
and General Thompson, does the Secretary of the Army and Office
of the Secretary of Defense concur with this recommendation?
Secretary Bolton. Mr. Chairman, I cannot speak for the DOD;
however, Secretary Geren has reviewed the recommendations, and
supports them. He has asked the Task Force, co-chaired by
General Thompson and Ms. Condon, to review those
recommendations and give him a plan for implementing those, and
that includes looking at the general officers. That's five. I
cannot comment on what the Department will do on that.
General Thompson. Mr. Chairman, I have a meeting next week
with the head of our General Officer Management Office, and one
of the topics of conversation is the support of those five
positions. I do agree, personally--and Ms. Condon and I, on the
Task Force, agree with the Gansler Commission recommendations,
that there is a need for general officers at the top of the
contracting structure. That gives a clear signal to the people
that--our military people--their service is valued, and that
there is an opportunity at the top of the structure, should
they stick with us and perform throughout their careers. I
think you will see the Army reflect its support of that in the
very near term, here, as we pick officers for the next set of
brigadier generals and then the assignment of the officers off
of that selection list, subject to confirmation by the Senate.
Senator Akaka. I heard the recommendations by Secretary
Bolton. Let me ask you this question. Can we expect to see a
legislative proposal from the Department in this regard?
Second, how long do you think it will take for the Army to
staff these new positions you are recommending?
Secretary Bolton. I think on the positions, in terms of the
flag officers, we're working that as we speak. General Thompson
just alluded to what we're going to be doing over the next few
days. So, that's in the work, and we're working that.
With regard to legislative proposals, as we go through and
look at what Dr. Gansler has offered us, there will be
opportunities, I'm sure, to make proposals. Of course, the
Commission has already recommended some of those.
My view is--and I agree with a number of those--I would
love to work within the laws that we currently have, within the
rules and regulations we currently have. It is clear we'll need
some legislative support, but my view is, we have enough
flexibility now to do some things that need to be done that are
recommended by the Gansler report, and we ought to do those, as
well.
Senator Akaka. Secretary Bolton and General Thompson, the
Gansler Commission report states that, ``The number and
expertise of military contracting professionals must be
significantly increased,'' to address the problems we have
experienced in theater. Consequently, the Commission recommends
that the Army hire, as was mentioned, 2,000 new contracting
personnel.
Secretary Bolton, you have told this committee, on many
occasions, that the Army does not have the acquisition
workforce it needs. Most recently, you told us last April that
the Army does not have a sufficient number of contracting
officers and contract administrators, and that you were working
on the problem.
Secretary Bolton and General Thompson, do you believe that
you now have the support you need within the Department of the
Army to address this problem, including the support of the
Secretary of the Army and the support of the Secretary of
Defense?
Secretary Bolton. I believe we have won the attention of
the DOD, as well as the Army. I believe we have the support of
both. I know that's true for Secretary Geren. It's regrettable
that it took a crisis such as this to really highlight that for
everyone, but my discussions with the Secretary clearly
indicate that we have his support, and his energetic support,
in making sure that we not only fix this in the short-term, but
fix it for the long-term.
Senator Akaka. General Thompson, would you comment on that?
General Thompson. Mr. Chairman, I agree with what Secretary
Bolton stated, that we do have the strong support of Secretary
Geren, and I think that strong support is reflected in the
statement for the record today, where you'll see us endorsing
the Gansler Commission recommendation to grow the military
contracting workforce by 400 and to grow the civilian
contracting workforce in the Army by about 1,000.
Ms. Condon and I, over the same period of time that Dr.
Gansler's Commission was working, have done the analytical work
to justify those positions from a workload perspective. As a
matter of fact, next week the military contracting structure
will be formally submitted to the Army's force structure
process, which is the way we go through to document the
positions and to begin to do the necessary actions to stand up
the units and to begin the recruitment action.
So, I do strongly believe that the Army is fully behind
this. The remaining 600 positions that Dr. Gansler referred to
in his report are positions in support of the Army that would
be part of the DCMA. This morning, as a matter of fact, there
was a joint meeting between the Army and the DCMA to get to the
analytical details about the workload justification for that so
we could also make the case before the resourcing process and
the force structure process, in the Army and in the Defense
Department, that those positions are both necessary and will be
supported.
Senator Akaka. Before I pass on to Senator Thune, let me
ask this question of both of you. How long do you think it will
take the Army to fill the new contracting positions recommended
by the Commission? Do you have plans to establish interim
milestones so that we can monitor your progress?
Secretary Bolton. I'll let General Thompson talk about the
details. I think, at the top level, over the next year we'll
have a good handle on that. I mean that sincerely, even though
I won't be there. I know the Army will press forward on that.
The real question, Mr. Chairman, is, how long does it take
to get experienced contract personnel? That's about a 5-year
period, to get them recruited, trained, moved through the
various offices, and enough experience that I would feel
comfortable putting them in the field, particularly in a place
like Kuwait or Iraq.
But, in terms of moving out immediately, we're going out
and finding as many people as we can.
General Thompson. Sir, once we document the positions, you
begin the recruitment process, both with the civilians and the
military. I believe it's going to take us 2 to 3 years to fill
that number of positions. I do agree with Secretary Bolton that
it's probably about 5 to 10 years before you get those people
to the level of training and certification and experience that
they need to be able to operate somewhat independently. So, my
answer would be, probably, 2 to 3 years to fill that structure,
beginning immediately, and part of that is just a reflection of
the demographics on the military recruiting; then, in a very
low unemployment market, we have to make sure that we get the
message across to the civilian workforce that we want to bring
in as interns and make contracting professionals for the Army
and DOD, that this is a viable and a lucrative career field,
and that we value their service, and we have to put the right
recruiting incentives, and pay and bonus incentives there to be
able to bring them in, and then retain them once we bring them
in.
Senator Akaka. Thank you.
Senator Thune.
Senator Thune. Thank you, Mr. Chairman.
Again, thank you all for your testimony. Thank you, Dr.
Gansler and members of your Commission, for a very complete and
thorough report.
You've all, I think, answered this already in your
testimony in response to Senator Akaka's questions, but the
Army and the Defense Department seem to support and embrace
many of the report's recommendations. My understanding is that
the Under Secretary of Defense for Acquisitions, Technology,
and Logistics, John Young, was going to issue a Department-wide
directive on the report. Do you know if that's been done?
Secretary Bolton. I don't know.
General Thompson. Sir, to my knowledge, that's not been
done. I do know that there's a number of actions that are
ongoing between the Office of Secretary of Defense and the
Services. One of those, in particular, that I am actively
participating in as a senior member for the Army is the
response to the section 854 that addresses contingency
contracting. I was at a meeting just 10 days ago with the
senior representatives from all the Services and also the
Secretary of Defense. I do know, because I have talked, not
directly to Mr. Young, but to his executive assistant, that he
embraces the recommendations of the Gansler Commission--``he,''
Dr. Young--and is going to work with his staff in order to make
sure that there's consistency across the OSD staff and across
the DOD to implement the recommendations.
Senator Thune. Dr. Gansler, the Army has been actively
engaged in trying to better use its Senior Executive Service
(SES) in support missions. It seems to me that contracting
capability could be an area in which the total force,
especially civilian employees, could help take some of the
pressure off the uniformed force. But you call for the
establishment of only one SES billet, five general-officer Army
billets--some will argue that uniformed personnel simply cannot
be looked to, in the current force structure, to perform and
oversee combat support missions that can be undertaken by a
civilian workforce. Why are they wrong on that?
Dr. Gansler. Let me begin by pointing out that 97 percent
of the contracting personnel in the Army are civilians, and
it's the 3 percent we're trying to increase. In addition, we
feel that in a war zone it's very important to have military
leadership and to represent the function at the highest levels
in the planning functions, in the requirements definition
functions, and, of course, in the implementation and the
management functions. So, we think that we want to emphasize--
not that the civilians aren't doing their job and that they're
very, very dedicated--that we also emphasize we need more of
them. You notice the numbers we asked for were 400 of the
military and 1,000 of the civilian, so we also feel the
civilians need to be increased. But we feel that this is a
function--in a war zone--in which the military clearly needs to
play a role.
Now, the DCMA is a joint agency which has both military and
civilians in it, and that's one that does fit under the Under
Secretary of Defense for Acquisition, Technology, and
Logistics--John Young's role. The changing of that function is
one of his responsibilities. The staffing of that, the
additional 580 or 600 people that we talked about for the Army
will also have to be people contributed by the Navy and the Air
Force into that organization, and their role increased, in
terms of the DCMA. I do know that Secretary Gates has been
concerned to make sure that the Air Force and Navy step up to
this responsibility of our overall recommendations. It's not
just the Army that fits into this. It's OSD because of the
DCMA. It's also OSD because they establish broad policy in the
overall DOD contracting activities. The other Services have
somewhat downgraded their contracting responsibilities and need
to step back up to that, as well.
Senator Thune. Secretary Bolton, do you agree with Dr.
Gansler's response?
Secretary Bolton. Yes.
Senator Thune. Dr. Gansler, assume, for the sake of
argument, that the Army can't obtain relief from legal
constraints on the number of general officers and cannot
overcome practical limits on the ability to train and reassign
more soldiers into the contracting career field. What other
steps can and should be taken quickly to improve the Army's
contracting capability?
Dr. Gansler. The reorganization that we suggested can be
done without waiting until you get the full complement of
general officers; they can be filled by senior civilians in
those positions. That can be done immediately. As Secretary
Bolton pointed out--they've already started moving out on some
of those organizational changes. Since there are no Army
general officers to fill those positions, they're going to have
to fill them, initially, with senior civilians, and that will
at least recognize the structure. They can also start
immediately, as General Thompson said, to promote one or two of
the key people into the contracting field to give out a signal
to the overall contracting corps from the military side that
this is a career path.
From the civilian side, I think Congress can do something
about recognizing the fact that you're asking these people to
volunteer to go into a war zone and not compensating them
appropriately. I think that's not supporting the troops
adequately, and I think that's something that can be done, as
well.
So, there are actions that can be taken, even though you
can't instantly go out with a chicken hook and bring in all
these experienced contracting people--they're just not there,
and they're very much in demand--but you can create incentives,
both for the military and the civilians, to start actions
immediately.
Senator Thune. The report rightly makes the point that, in
the future, the Defense Department will be conducting more
joint and expeditionary operations, but the report's focus was
largely on shoring up the Army's expeditionary contracting
capability. What do your Commission's findings mean for joint
expeditionary contracting capability? If there are problems on
this broader level, given the likelihood that expeditionary
operations will be more joint in the future, why should
recommended solutions not be more joint in nature than was
proposed by your Commission?
Dr. Gansler. We actually do emphasize the jointness. In
fact, the DCMA is a joint agency. That will be--the post-award
period--doing all of the implementation, military and
civilians, from that organization. We did hear from people in
the Air Force and Navy that they have a need to step up more to
the contracting world as well, and to the whole acquisition
arena. In a wartime environment, that has not received the
attention that it needs, and we do believe that future
operations will not only be joint, but will be expeditionary
and, therefore, of the type we addressed explicitly.
I would even go a little further and say, because they're
going to be political/military operations, that we're going to
have to work out with the State Department and AID in these
environments, as well.
General Thompson. Senator, if I could just add a couple of
points on that. The Joint Contracting Command in Iraq today,
currently headed by an Air Force major general to be replaced
by a Navy admiral, here, in January, but the previous two
commanders of that organization were Army general officers. The
first commander was Brigadier General Steve Seay, and the
second commander of the Joint Contracting Command was Major
General John Urias. The individuals performing the contracting
function underneath that joint command were from all Services.
Because of the small number of military officers, and before--
no noncommissioned officers, and I'll get to that in a minute--
the preponderance of the staff in that Joint Contracting
Command are Air Force, because there's about 2,000 military
contracting officers in the Air Force, both officer and
noncommissioned officer.
I do know as part of this group that I'm part of, on the
cost of DOD, we are putting dedicated planners with each
combatant command to plan for, in the war plans, contracting,
and support with contracting, and the plan for that in the
exercises, so to make sure that linkage is there. There's also
going to be some emphasis on putting the right planning cell
with the Joint Forces Command as they have their global force
management responsibilities, and also look at exercises across
DOD.
No different than the normal way the military brings forces
together, you plan for it, you have that structure there, but,
when it's time to execute a mission--be it Iraq or someplace
else, in the future--you would bring in the members of the
Service--all Services, that have contracting expertise, fall
them into a joint structure that you define ahead of time, and
that you planned for ahead of time. Arguably, that didn't
happen over the last few years. It was really a pickup game,
and we've evolved to where we are today. The clear recognition
across DOD right now is, we can't let that happen in the
future.
Senator Thune. Good. Thank you.
Thank you, Mr. Chairman.
Senator Akaka. Thank you very much, Senator Thune.
Let me call on Senator McCaskill.
Senator McCaskill. Thank you, Mr. Chairman.
First, I want to thank all of you for being here, and
Secretary Bolton, for your service. I have visited with several
of you before, as you are, maybe, painfully aware. [Laughter.]
I am deeply concerned about this area of our competency
within our military, and I spent my trip to Iraq looking at
these issues. I am now aware that there are approximately 300
different reports that have been issued by someone, surrounding
the issue of contracting problems in Iraq, whether it is
military support or reconstruction.
The reports that you referenced--in fact, the Commission
that you all worked on, Ms. Condon and General Thompson--that
was over 2 years ago. I see the word ``urgent'' on this report.
I hear the word ``crisis.'' I have to tell you, when we decided
to move thousands of people into harm's way in the surge plan,
that's how our military normally reacts to a crisis in the
mission. Can someone explain to me how in the world this has
gone on year after year after year, committee hearing after
committee hearing, report after report after report, and yet we
still don't have anyone who is saying, ``This is getting
fixed.''
How many of you have read the ``Lessons Learned'' in Bosnia
on contracting? Okay. Now, it is a really scary thing to read,
because--guess what?--it's everything you're saying. These were
lessons learned in Bosnia, and now we have tens of billions of
dollars that have gone down the drain. The bottom line is, I
think we all acknowledge, contracting is here to stay in the
active military. Would any of you disagree with that?
Do any of you think we're ever going to go back to the time
where a soldier is peeling a potato, cleaning a latrine, or
driving supply trucks? So, if that's the case--now, when they
were, when my dad was peeling potatoes in World War II, there
was somebody in a uniform he was answerable to. He knew if he
did a good job, he had a chance to move up; and, if he didn't,
there was big trouble.
Meanwhile, we gave KBR all their performance bonuses, when
their performance was terrible under the LOGCAP contract.
Frankly, Secretary Bolton, you defended that in April in our
exchange, and you said you trusted the people in the field.
Then this report says we can't trust the people in the field,
because they don't have the core competency of contracting.
Now, when you say you're moving into getting 400 more
people, how quickly will there be sufficient contracting
oversight in Iraq over the LOGCAP contract? How soon?
Secretary Bolton. I think, with regard to LOGCAP--and let's
understand the differences between the operation in Kuwait,
which does not have LOGCAP----
Senator McCaskill. Correct.
Secretary Bolton.--which also does not have DCMA. Within
Iraq, we have DCMA to monitor the actual performance of the
contract, along with a number of other folks, to include the
special IG, the regular IG, the audit folks, the triple-A, as
well as CID, all to look at that. Because you pointed it out,
there have been many, many reports on that, and you and I have
discussed those. So, I think, in terms of the immediacy of
oversight, there is a lot of oversight, plus the Joint
Contracting Command.
Senator McCaskill. I'm talking about the core competency,
though, Secretary. I'm talking about the contracting officer
representatives (CORs), I'm talking about the people on the
ground that are seeing whether those trucks are being burned--
--
Secretary Bolton. Yes.
Senator McCaskill.--for profit or whether those people are
actually working when we're paying them to work. When will we
have that training and that core competency with those CORs?
Secretary Bolton. I think, within Iraq and Afghanistan,
compared to Kuwait, you've had that. In fact, that's what we
did, was to focus our experienced people in the war zone
itself, within Iraq and within Afghanistan. That's why we put
all the oversight there, to also look at that. Were we perfect?
Absolutely not. Did we learn some lessons? Yes, we have. Have
we put more people in there? Yes. The Joint Contracting Command
has grown in the number of people over there, who are
experienced, to look at that.
Down in Kuwait, as we went from the LOGCAP after the Gulf
War the first time, by charter, DCNA no longer looks at those
contracts. We lost all that oversight, and we relied upon 20 to
30 folks to do that, as it was escalating, in terms of the
amount of work. Lesson learned. We can't allow that to happen.
What have we done? We've put more people over in that office,
experienced people. The folks who were there, we replaced, we
put in a new commander. I personally went there and talked to
every one of the folks there. I talked to the Command, I looked
at what they were doing. I went out to the CONEXes to see all
the contracts. We reviewed all of those with experienced people
there and experienced people back here. What's wrong with that?
If you're taking experienced people from here to do that work,
they're not doing the work that we asked them to do back here.
That gets back to what Dr. Gansler has talked about, ``You need
more people.''
The long way of answering your question is, we're putting
the best people we have available today to take care of the
problems as we see it today. We're robbing Peter to pay Paul
right now, until we get additional folks in there. But I
clearly agree with you that we have to do more. In fact, what I
would urge, and have urged our folks to do--we've talked about
the operators, great people doing great work; they train the
way they fight. I have to tell you, the support community needs
to do the same thing. When we go on a deployment, when we go
out to NTC, we ought to take the support element, to include
the contracting folks, and put them out there. We ought to
exercise those folks the same way they're being exercised in
the war zone right now. They ought to be part of the war plan,
so we know exactly what is going to go on there.
If you're going to audit or do an IG or something like a
red hat, we ought to go out there and make sure, doing the
exercise, that we pull something on them, just the way we do
with the warfighter, to see whether or not they're going to
react properly, and then build around that. We're a long ways
from doing it, but if I could wave a magic wand, I would do
exactly that.
Senator McCaskill. I don't understand why we're a long way
from doing it. If we can put thousands of men and women in
harm's way in a matter of weeks, why can't we watch taxpayers'
money before taking a decade and noodling it around with 14
commissions making the same recommendations over and over
again?
Why does it take so long?
Secretary Bolton. I don't think we took so long, in terms
of putting people in Iraq and Afghanistan. I did that. In 2003,
when we went into Baghdad, I couldn't find a contracting
officer. I had to send one over there. Why? Because we didn't
expect to be there that long. I sent a colonel over there. He
came back after a month, and I had to drag him back, because
folks began to realize how important he was. I then put a
lieutenant colonel over there who was only supposed to be there
6 months. He was there 12 months, got promoted to colonel while
he was there, and we started to build that capability as we
realized the enormity of the task ahead of us and the need for
that type of expertise. I think that's an important lesson
learned, that if you're going to go into an operation like
that, and particularly one that goes from contingency
operation--and ``contingency,'' by its very nature, is short-
term--to one that is nation-building and long-term, you'd
better have the support folks there to take care of it, both in
theater and reachback.
Secretary Bolton. That's the lesson that we learned. Also,
starting in 2004, we actually started to build units that would
deploy with our commanders over there. They're in place now to
do just that, focused on Iraq and Afghanistan. Not perfect. It
was a pickup. We fell behind in a number of areas, but we did
focus as best we could, with the best expertise we had
available at the time.
The last point I'll make, and that is getting the people
long-term. That will be tough, tough because they're just not
there. Just within this area, within the Beltway, just for the
Federal Government, we're short nearly 2,000, what I call
1102s, contracting officers, not just for the DOD, for
everybody. They're difficult to get, and then, when you get
them, you have to train them, and you know this. You have to
train them, they have to be experienced, have to be warranted
and then put out there, and that just takes time.
Senator McCaskill. Hopefully, I'll get a chance to follow
up with you, Dr. Gansler, in another round of questions. Thank
you.
Thank you, Mr. Chairman.
Senator Akaka. Thank you. We will have another round of
questions.
I'd like to call now on the chairman of the Armed Services
Committee of the Senate, Senator Levin.
Senator Levin. Thank you. Thank you, Senator Akaka.
First let me join you and the other members of the
subcommittee in thanking Dr. Gansler and the members of the
Commission for the great work of that Commission. The central
finding that the Army acquisition workforce is ``understaffed,
overworked, undertrained, undersupported, and undervalued,'' is
consistent with the view that a number of us have expressed in
this committee and in this Congress, in the Senate. I hope that
the Army's general endorsement of the Commission's findings and
recommendations will create some momentum to address this
serious problem, Secretary Bolton, and that the general
rhetorical support will be translated promptly into action.
Seven months ago, Secretary Bolton, I asked you some
questions at a hearing of the Senate Armed Services Committee
about the LOGCAP contract. At that hearing I asked a series of
questions about a KBR subcontract for living containers, which
is a type of trailer that the Defense Contract Audit Agency
(DCAA) found to be overpriced by $100 million. I asked you,
Secretary Bolton, why the Army decided to pay KBR the full $100
million by which those subcontracts were overpriced, and you
referred the question to a General Jerome Johnson, who joined
you in representing the Army at that hearing.
General Johnson denied that the Army had paid KBR the extra
money, then I read from an Army document stating that, ``The
parties have agreed to recognize the costs of the containers
acquired.'' So, I read from a document saying that, in fact,
the Army had agreed to pay the extra money. General Johnson
testified that the document was inaccurate that I was reading
from.
Subsequent to the hearing, the Army provided additional
information to the committee that, in fact, showed that that
document was correct, that, as a matter of fact, the extra $100
million was paid, that should not have been paid.
The acknowledgment from the Army after the hearing was that
the procuring contracting officer, Valiant Duhart, resolved the
issue by allowing the costs for the containers.
So, in other words, Secretary, the Army has acknowledged
that the memorandum that I read at the hearing was correct,
that the Army had accepted KBR's arguments for which the DCAA
could find no factual support and paid the full extra $100
million by which the subcontracts were overpriced.
So, now that the Army has acknowledged that KBR was paid
the extra $100 million, the overpricing, despite repeated
audits in which the DCAA rebutted every argument that KBR made
in support of the overpayments, my question to you is, why was
that $100 million paid?
Secretary Bolton. General Johnson is no longer within the
Army Materiel Command who has that contract. Ms. Condon is
actually representing headquarters, and she can answer that
question. But before she does, you are absolutely correct, we
made a mistake; General Johnson made a mistake. It may have
gotten confused--I won't talk for him because I'm not sure what
was going on in his mind. We offered you an answer. I read that
answer later and I sent you a letter this morning, which I hope
you will get shortly. On behalf of the Army, we apologize for
not providing you the right answer. That is certainly not the
Army's style, certainly not my style.
So, let me let Ms. Condon give you a better answer.
Senator Levin. All right, thank you. So, why was the $100
million paid?
Ms. Condon. Sir, that was part of a larger settlement on
that task order for that contract.
Senator Levin. I don't know what that means, $100 million
was not supposed to be paid. We have said it was not proper.
So, why would we pay--we mean--they dropped some claim, if we
paid the $100 million?
Ms. Condon. There were other claims on that contract that--
--
Senator Levin. Well----
Ms. Condon.--that were part of the settlement, sir.
Senator Levin. Will you give this subcommittee two things--
give us the entire settlement, what was paid, what we objected
to that we did pay, what the contractor--where did they concede
things and give up claims, and--give us the whole deal, if you
would.
Ms. Condon. Sir, if I could take that one and get the
information back to you, I will do that.
[The information referred to follows:]
Enclosed is a copy of the Post Negotiation Memorandum (enclosure 3)
[deleted] that provides a summary of the negotiations resulting in the
definitization of Task Order 59. The costs in question were part of
this definitization. Task Order 59 authorized KBR to provide life
support to troops deployed in Iraq for the period of time between June
13, 2003, and April 30, 2005. This task order was initially issued on
an undefinitized basis which meant the terms, conditions, and pricing
were not agreed to at the time KBR was authorized to begin work.
Unfortunately, due to tempo of operations, changing conditions, and
fluctuating requirements, AMC did not reach a settlement on the task
order until March 31, 2005. The total amount of the settlement was
approximately $6.3 billion.
The $99 million in questioned costs for containers is specifically
addressed at pages 10 and 11 of the Post Negotiation Memorandum
(enclosure 3) [deleted]. Defense Contract Audit Agency (DCAA) had
questioned these costs in their proposal audit (enclosure 1) [deleted]
as they identified other sources where the living containers could have
been purchased at a lower cost. Much discussion took place during the
negotiations with KBR and it was clear there were differing opinions on
whether the less expensive containers could have been acquired and
delivered in the needed time frame and whether the less expensive
containers included the same amenities as the more expensive
containers.
The container costs, while significant in and of themselves, were
part of a $6.3 billion settlement where many costs were of issue. As
the Senator may recall, there were a lot of questions regarding the
cost of meals which represented a much larger portion of the $6.3
billion settlement. In a perfect world, the container costs in question
would have been negotiated before KBR was authorized to proceed, but
KBR was given the go ahead to begin incurring costs prior to reaching
an agreement on terms and conditions and pricing. As a result, KBR had
already incurred costs questioned by DCAA and these living containers
were being used to house troops.
In order to reach an agreement on the larger settlement, the
contracting officer agreed to recognize these container costs in the
total estimated cost of the task order, but did not include them in the
baseline costs for fee purposes. KBR was told that in order to earn a
fee against these costs, they would need to produce additional facts to
better support the reasonableness of these costs. The DCAA memorandum
at enclosure 2 [deleted] was provided to the contracting officer to
support his negotiations with KBR in the event KBR elected to provide
additional information justifying the cost of the containers in
question. To date they have not done so.
After reviewing these costs and actions in detail, the conclusion
of the contracting officer was that given the conditions at the time
the living containers were being purchased by KBR, the contracting
officer believed KBR actions were reasonable. Furthermore, the
contracting officer considered the fact that U.S. troops were already
being housed in the containers, thus the Government had benefited from
their use. As a result, the contracting officer recognized the costs in
the larger settlement of the task order.
The enclosed Post Negotiation Memorandum [deleted] demonstrates
that there were many issues surrounding the negotiations. Other costs
proposed by KBR that were also questioned by DCAA were not recognized
in the settlement, to include over $55 million in dining facility
costs.
In the end, the contracting officer used his professional judgment
in reaching what he believed to be a fair and reasonable price for the
effort performed by KBR. In reaching this settlement, there were no
discussions outside of the Army with the exception of DCAA and Defense
Contract Management Agency, who were part of the Army negotiation team.
AMC does not believe there were any outside influences in the
settlement of these negotiations.
Senator Levin. Yes, but in addition, I want to know whether
there were any conversations between anybody outside of the
Army relating to that settlement.
Ms. Condon. I personally do not know that, but I will find
that out as well and get that back to you.
[The information referred to follows:]
In reaching this settlement, there were no discussions outside of
the Army with the exception of the Defense Contracts Audit Agency and
Defense Contract Management Agency, who were part of the Army
negotiation team. AMC does not believe there were any outside
influences in the settlement of these negotiations.
Senator Levin. All right. That's a huge amount of money to
pay which we don't owe. Do you know what the whole settlement
was that was involving hundreds of millions, billions, half-
billions?
Ms. Condon. No, sir, I don't. As I said, I'll take that for
the record and get the exact amount back to you.
[The information referred to follows:]
Task Order 59 authorized KBR to provide life support to troops
deployed in Iraq for the period of time between June 13, 2003, and
April 30, 2005. This task order was initially issued on an
undefinitized basis which meant the terms, conditions, and pricing were
not agreed to at the time KBR was authorized to begin work.
Unfortunately, due to tempo of operations, changing conditions, and
fluctuating requirements, AMC did not reach a settlement on the task
order until March 31, 2005. The total amount of the settlement was
approximately $6.3 billion.
Senator Levin. All right. As well as any conversations that
took place?
Ms. Condon. Certainly, sir.
Senator Levin. Okay. Thank you.
Again, my thanks to the subcommittee for taking up this
issue. We have not taken the time for adequate oversight of
much of the contracting operations. We, just today, finished
our defense authorization bill, which takes up an incredible
amount of time every year, and the members of the committee and
the staff put huge amounts of time into that bill. There is no
other committee that has the responsibility, annually, to
produce an authorization bill, that I know of. There may be one
that's required by law, to have an authorization bill every
year, but I don't know of it, and there's no bill this big, in
any event. So, it does take up a huge amount of time, and we're
going to continue to look for ways when we can allocate more of
our committee time and subcommittee time for these kind of
oversight efforts, which are so critically important. So, I
want to thank you and the other members of the subcommittee,
Mr. Chairman--Senator Thune and Senator McCaskill, who bring
such a welcome experience and background to issues which are
extraordinarily dry. [Laughter.]
But so essential to the taxpayers.
When we get that answer, Ms. Condon, I can assure you I
will try to understand it, and that Senator McCaskill will
understand it. [Laughter.]
Ms. Condon. Noted, sir.
Senator Levin. Thank you.
Thank you, Mr. Chairman.
Senator Akaka. Thank you very much, Senator Levin.
I have a question here for Dr. Gansler. The Gansler
Commission was asked to review the Army acquisition system for
expeditionary operations; however, a number of the Commission's
findings appear to extend beyond the Army and beyond
expeditionary contractors. For example, the report states,
``Contracting, from requirements definition to contract
management, is not an Army core competence. The Army has
excellent dedicated people, but they are understaffed,
overworked, undertrained, and undersupported, and, most
importantly, undervalued.''
Dr. Gansler, would you agree that many of the problems that
you have identified extend beyond the Army and beyond
expeditionary contracting?
Dr. Gansler. Very definitely. In fact, when I briefed
Secretary Gates and his staff, including the Deputy Secretary,
the Under Secretary (AT&L), and the Vice Chairman of the Joint
Chiefs, Secretary Gates did say, ``Clearly this reflects a need
much broader than just the Army.'' Our recommendation, in terms
of the DCMA, is outside of the Army, although the Army does
contribute personnel to that. This is a general area that the
DOD, and, particularly as we go more towards joint activities,
will have to get involved with other areas, but I think our
intent was clearly to look at the overall DOD needs. The Army
is the responsible party here in Iraq/Afghanistan, and the Army
has, I think, the immediate crying need. So, a lot of our
recommendations were focused on the Army. But I think Secretary
Gates intends to have this more broadly looked at by the Air
Force and Navy, as well, and by OSD, as Senator Thune said, by
the Under Secretary for Acquisition, Technology, and Logistics,
for those areas related to him. This would include contracting
policy, it would include the DCMA, and other cross-DOD
activities, not just the Army.
Senator Akaka. Secretary Bolton and General Thompson, would
you agree with Dr. Gansler's assessment?
Secretary Bolton. I do agree, and I would also add that
we've been looking at the Services, and obviously concentrating
on the Army that this lack of expertise also extends to the
oversight agencies. They are not immune. We depend upon the
oversight, whether it's an IG or an audit, to have that
expertise. I will tell you that in the 30 years that I've been
in this business, I've watched those organizations--and I
worked very closely with them, and I admire the work that they
do--we don't always agree--that they, too, are lacking some
expertise. Also, the defense finance folks, you need to look
there, as well. We're asking them to do a heck of a lot of
work, and they're under the same constraints, in terms of
numbers of people and so forth--not necessarily in contracting,
but just people able to process the paperwork. Why is that
important to me? Because my contract team personnel do business
with them to get money on contracts and to move things around.
Without the people there to get the job done, it's hard for us
to do our work, as well.
So, I would extend Dr. Gansler's comments to look at the
oversight, as well.
Senator Akaka. General Thompson?
General Thompson. Sir, I also agree with Dr. Gansler's
statements. Like he mentioned in his testimony, contracting is
a process. It's not just the people that write the contracts,
it's a process that goes from the requirement all the way to
the contract management, into the payment of the contractor,
ultimately. So you have to value that entire process, because
it is that entire process, if done right, that gets you the
product or service that meets the requirement, and gets it at a
fair price, which is what we all want to have happen, because
we're spending the taxpayers' dollars.
Senator Akaka. Secretary Bolton and General Thompson, the
Gansler Commission report states that most civilians working on
contracting issues in Iraq were volunteers often with
inadequate or wrong skill sets for the job at hand, and often
getting their required contracting experience on the job as
part of their deployment. The Commission recommends that
qualified civilians who agree to deploy be provided enhanced
career and job incentives. These include the elimination of an
existing pay cap, tax-free status, and long-term medical care
for injuries incurred in theater.
To your knowledge, does the Secretary of the Army concur
with this recommendation? Also, can we expect to see a
legislative proposal from the DOD along these lines?
Secretary Bolton. With regard to the DOD, I'm not in a
position to speak for DOD. For the Army, in our written
testimony and what I've indicated thus far, the Secretary of
the Army does support the recommendations. It's now a question
of how best to implement those, and then, of course, as I said
earlier, how many of those will result in the request for
legislation. That's what we're going through right now, and
that's what the Task Force is charged to do.
Senator Akaka. General Thompson?
General Thompson. Sir, one of the things that we're looking
at is the specific recommendations made by Dr. Gansler that
require legislative change. The Army has legislative change
proposals that it has proposed, that it needs to work now with
the Office of the Secretary of Defense, and then work with the
administration, before they submit them as administration
proposals to change the current law.
Senator Akaka. Thank you.
Senator Thune.
Senator Thune. Thank you, Mr. Chairman.
I just want to follow up on your question, because, Dr.
Gansler, the Commission recommends, among other things,
congressional action to improve incentives for Army civilian
contracting personnel who volunteer to deploy for expeditionary
contracting. In furtherance of that recommendation, the
Commission recommends that the statutory caps on civilian
compensation associated with contingency operations be waived
completely.
Beginning in 2006, Congress raised the statutory limit on
overtime pay for civilian employees who work overseas in
support of CENTCOM contingency operations. That current cap is
$212,100. I guess I'd like to have you explain exactly what was
intended by the Commission's recommendation here, and if there
was data or analysis that supports lifting all the applicable
caps on civilian compensation in Title V.
Dr. Gansler. First let me comment on the cap point, which
you properly pointed out has been lifted for Iraq. What we were
proposing there on that particular issue was that there be some
standby legislation so that the next expeditionary operation,
we don't have to wait to find out if Congress is going to waive
it or not. When we ask for volunteers to go, will they know
that, if they do what benefits they will receive. These people
put in incredible hours. That was one of the things we heard
from everybody, that they're working two or three shifts, 7
days a week, individually, and they need to be compensated for
that. We did hear, from a lot of the people, this point about
the tax waiver, that the people--the military there, and the
contractors--150,000-160,000 of them, all have their taxes
waived, and these government civilians, who are also in harm's
way, are not getting that waiver. That just seemed to us wrong,
from an ethics as well as a national security perspective,
because you want your best people to be there--as the Senator
pointed out earlier, you want to have the very best people
onsite, and you're not going to get people to volunteer if you
don't recognize that this is a special situation--putting your
life at stake. You clearly could be harmed. At least Congress
ought to do things like make sure their life insurance is
covered, make sure, if they have a need for long-term medical
coverage, it has to be provided for, that if they, in fact, are
putting themself at risk like that, they get proper
compensation for it, because people on each side of them--the
military and the contractors--are getting it. It just doesn't
seem fair to me.
Senator Thune. I understand, too, Dr. Gansler, that the
Commission is calling for Congress to address some of these
recommendations for out-of-cycle action. I guess my question
would be, can you give the subcommittee some guidance on which
of the Commission's recommendations are of the sense of urgency
that we may want to undertake them out of cycle, and maybe to
put more plainly--can you help us prioritize your
recommendations for out-of-cycle action?
Dr. Gansler. We could certainly try to do that and come
back to you with it.
[The information referred to follows:]
In preparing my introductory remarks, I tried to highlight the five
most critical actions by Congress:
1. Increased general officer billets for the Army and the
Joint Organizations, in the contracting area;
2. An increase in the contracting personnel, military and
civilian; including those required for the increased role of
DCMA;
3. Increased incentives and rewards for civilian government
contracting personnel who volunteer to go into the dangerous
expeditionary operations;
4. Funding flexibility for future operations; and
5. Waiver of many special buying provisions when in an
emergency environment.
While all five of these are critical, I would suggest that the
first three are the most urgent.
Dr. Gansler. We actually thought all of them were
important, and that's the reason----
Senator Thune. Right.
Dr. Gansler.--we made those recommendations to you. I think
the sooner that you can respond to these, the better. I think
it's important to recognize that the Department has to stand up
for these first. They have to make the request, as you pointed
out, to make the legislative requests, and recognize that they
make some internal changes, and then Congress responds to
those, as well. But I think the sooner that both the DOD and
Congress can respond to this, the more it will show that, in
fact, the overall organization, Congress and the DOD, care
about this, that this is important, that it needs to be done,
that we need to send the right message to the people. We have a
lot of very hardworking people putting their lives at stake and
not getting recognized for it--and not getting adequately
supported. I think that's wrong.
Senator Thune. Thank you, Mr. Chairman.
Senator Akaka. Thank you, Senator Thune.
Senator McCaskill.
Senator McCaskill. Dr. Gansler, first let me recognize, and
all the people at the table are some of these, that there are
thousands of people trying to do this work well under very,
very difficult circumstances, and there have been massive
amounts of mistakes made, but not because there aren't people
out there trying. They just were completely overwhelmed.
I know what my perspective is as to how this happened--a
lack of recognition of the importance of this part of the
mission, as opposed to the military mission; but what's one of
the things that is of concern to me is that 70 percent of the
contracting personnel in Iraq and Kuwait are, in fact, Air
Force, only 28 percent are Army, but yet, almost every open
fraud investigation involves the Army. What is it within the
training and culture in the Army that has caused this
lopsidedness, in terms of that issue? What is it that we need
to go back to the Service Academies, to--frankly, one of the
things that I'm most concerned about is qualifications for
promotion and whether or not you get demoted. I'm not aware of
anyone who has lost a rank for failures under their watch that
they weren't directly responsible for, and that's a problem.
I've now spent enough time around people in uniform that what
rank you hold and what rank you are trying to hold is, in some
ways, the key to the kingdom, in terms of promotion and
demotion, and yet, I don't see any kind of accountability
within the Army in that regard.
Dr. Gansler. Let me mention three points. I think the most
important one of all, I would say, is that when you have a
systemic problem, it's often a question of, are you getting
adequate leadership? Are the people who are in charge of this
area getting the proper authority, getting the proper
recognition? As I mentioned in my prepared remarks, that we
went from five general officers with contracting experience in
the Army to zero. We went, in the joint activities, also down
from four positions to zero, and then one temporary one. I
think there's a clear need for, in the case here, of military
leadership, and that's the reason we emphasized that.
We also recognize that there's an important message that
gets sent out here when the people look around and say, ``Well,
they've just eliminated all the general officers from
contracting. I guess I'd better go into a different career
path.''
Senator McCaskill. Right.
Dr. Gansler. So, now the second point I guess I would make
is the fact that one of the reasons I think the Air Force model
is more successful in the case of contracting is, they start
their people as second lieutenants in the contracting field.
Secretary Bolton mentioned before, the number of years of
experience matters. It clearly does. In the case of the Army,
historically they have begun people in the career field after 7
or 8 years, so half of their career, in a sense, is gone before
they begin to specialize in contracting. We recommended that
the Army change that, that they begin as second lieutenants,
but that they spend 2 or 3 years in a combat position so they
understand the real Army, what the objectives are, how it
works, get mud on their shoes, and so forth. So when they read
or when they learn in classes that they're contracting people
for their whole career, they have a much greater cumulative
experience in the contracting field.
I think, in general, these are the reasons that I can look
at answering your question, the Air Force has this long-term
career, and they have had, in the past, more senior people in
the contracting and acquisition field. They've been reducing
that, too, though, so I don't want to give them too much credit
for that. But, on the other hand, I think that they recognize
they need to make some improvements, themselves; but, I think
if you look across--to answer your specific question, if you
had people who were adequately trained and prepared, you
probably wouldn't see the number of cases of waste, fraud, and
abuse.
Now, what Secretary Bolton mentioned that I think is
equally important, and that's the third point I wanted to
make--we should train as we fight. The majority of the people
in the contracting field have not been trained to go into an
expeditionary operation; they haven't been trained to go out
into a battlefield. They've been trained to worry about buying
a tank or buying an airplane in the United States. When we do
the exercises from the military combatant commander's
perspective, they should be worrying about the fact that 50
percent of their force are contractors, and they should be
trained that way, as well. So, we have to change the whole
Army, or the whole DOD, in this case, not just the contracting
community, to recognize the importance of this career field to
the overall effectiveness of our forces.
Senator McCaskill. Do we need to begin having a Reserve
corps? We've relied on the Reserves, we've relied on the
National Guard in this conflict in Iraq at unprecedented
levels, in terms of how we have utilized them in the field. Do
we need to begin to have a special Reserve contract component
of people who are trained and ready within the Reserves and
within the National Guard to step into contracting oversight?
General Thompson. Ma'am, let me take that question, and
I'll answer that one specifically. If I could, I'd like to come
back to a couple of the points that Dr. Gansler made.
The Army did not just begin to stand up a military
contracting structure. We recognized the problem and began to
put that structure in place back in 2005. About 70 percent of
the structure that we've stood up, to date, is currently
filled. That includes establishing noncommissioned officers--
``51 Charlies'' is the specialty area. There are 70 of those
noncommissioned officers today, because we looked at the
success that the Air Force has had with noncommissioned
officers involved in contracting, and they're world class in
what they do.
Part of the structure that we've stood up--it's not just
Active component structure, it's also National Guard and
Reserve. I'm taking a very hard look right now--and one of my
responsibilities as the acquisition career manager for the Army
at the senior level--can we develop the expertise in
contracting in the National Guard and the Reserves? Because of
the skill set there, you almost have to do it on a full-time
basis, and you can't just do it part-time. So, what we're
looking very hard right now, with the structure that we've
stood up already, is--how much of that Reserve component
structure is full-time? I would not argue that it can be all in
the Reserves. Like with most of our specialties, it's a
combination. But you can't be level-2 certified in contracting
unless you have certain coursework and education, but you also
have to have 2 years of on-hand, real-world experience doing
contracting, and you can't get that 38 days a year, or being
mobilized a couple of months at a time.
In the National Guard, for example, one of the things
they're looking at--and I think it's pretty much the way
they're going to go--is, each one of these four-person
contingency contracting teams will have a member on that team
that's a full-time employee that does contracting in that State
that's represented, but the other three members of that team
will have to come from some other part of the Guard structure.
So I have asked the Reserve components, both the U.S. Army
Reserve and the National Guard, to look at how many of those
positions in contracting need to be full time. Not all of them,
but you need enough of those positions as full-time positions
so they can get the expertise. Once they're certified to a
certain level, then they can go back to the part-time status
and be mobilized when necessary.
You mentioned a couple of points about the individuals--in
the Army, in particular--involved in a lot of these
investigations. A point I would make is, it's not just people
that do contracting, it's contracting officer representatives,
which, in many cases, are members of the operational force;
it's not just military, it's civilian; so, it's not just the
contracting workforce. For those people that took advantage of
opportunities because the proper internal controls weren't
there, the Criminal Investigation Command for the Army, and the
audit agency is boring into those. There's been about 20 people
indicted already, and I'm fairly confident--and, although I
can't speak for the investigative agencies, I'm just keeping
track of what they're doing--those people that violated their
values and took advantage of the situation are being
investigated, and where the investigation leads, they'll be
indicted and, I'm sure, prosecuted, and proper punishment given
to them.
We are looking at the point that Dr. Gansler made about
earlier accessions. I do agree 100 percent that you can't bring
somebody in at the 8-year point as an officer, expect to get
them world class in contracting, because then, all of a sudden,
they're at the 20- to 25-year point. One of the things that
we're going to move out on is to move the accession point to
earlier. Dr. Gansler's recommendation about designating
somebody as contracting, and then branch detailing them to an
operational assignment, I think, is a good one. We're looking
at that. The other one we're looking at is just to move the
accession point from 8 years back to 4 or 5 years, because we,
in the Army, believe strongly that it's important to have that
operational experience and that--get your boots muddy, as they
say, because when you talk to the senior-level folks involved
in contracting, the best ones involved in contracting have a
lot of operational experience. But bringing that accession
point back earlier will give us another 4 or 5 years to get
those officers, and now noncommissioned officers, properly
trained so we can use them.
That's the last point I would want to make.
Dr. Gansler. Actually, I'd point out that only about 20
percent of the cases that have been looked at for the fraud
examples are of the contracting people; the rest--the 80
percent--come from other areas.
Senator McCaskill. Right, and I'm aware of that. I also
think that if you talk to the people on the ground, there's no
question that these CORs many times feel like they're the ones
that got the short straw. There's no sense that the CORs in
these units have the kind of pride and passion they need to
have for that job, because it's almost seen as, ``It's a short-
term duty. If you're lucky, you won't have to do it long. If
you're lucky, it's pro forma, you just have to sign off on some
forms.'' Clearly, there has not been the training about the
need for being aggressive and being committed in that vital,
vital--because most of this is, in fact--and you have the
problem with the definitization at the front end, and in the
competitiveness at the front end--but so much of this is day-
to-day oversight of that contract, and if you don't get those
CORs to the point that they are fully trained and passionate
about their work, and not that they're there for a short stop
along the way, and, if they're lucky, they'll only have to do
it for 9 months until the other sucker has to come in and be
the COR. This is not a position that is looked up to within
these units. I know you all know this. But it's something the
Army really needs to grasp.
General Thompson. Those people that are CORs have to be
valued, because it's a very important function.
Senator McCaskill. They are big deals. They need to be
treated that way.
General Thompson. Right. They are watching after taxpayers'
dollars, and the simple missive I give to everybody I talk to
about taxpayers' dollars is: it would be kind of like you're
writing it out of your checkbook. We've trained about 4,500
CORs here over the last few months, but it's not just training
them. You have to train them, they have to value that
assignment, and, once you train them, they have to be the ones
actually doing it when they get over there. You can't designate
somebody as a COR when they're getting ready to deploy, and
then change that person out when they get over there. There has
to be a consistency.
Senator McCaskill. That's happening all the time.
General Thompson. Yes, ma'am. We recognize that.
Senator Akaka. Thank you, Senator McCaskill.
Let me ask this of Dr. Gansler. Last February, I understand
that the Army awarded a $225 million planning and support
contract for the LOGCAP IV contract. Under that contract, the
support contractor will be responsible for developing scopes of
work, preparing independent cost estimates, analyzing the
performance of contractor costs, and measuring contractor
performance.
Dr. Gansler, in your view, should these functions be
performed by a contractor or by government personnel?
Dr. Gansler. My impression of that--some of those functions
could be done by the government, and maybe even should be done.
On the other hand, what we found was--for example, you
mentioned the pricing of contracts. There was not a single
person in theater who was doing pricing. So, if you have no
current people that you can assign to it, having contractors do
it on a third-party basis, which is what this planning contract
is, it's an independent third party looking at pricing, for
example, they will estimate the price, and then the contractor
would estimate the price. The combination of that and what they
had planned for the LOGCAP IV, of having competition on each of
these tasks--I think the combination of those two would be a
lot better than what we now have. A lot of the functions that
you listed could be done, and maybe should be done, by
government employees; but, if there aren't any--and if we don't
get permission to increase the numbers, we're not going to have
any--and if we keep it as a volunteer basis, you're not going
to get many to volunteer under the current conditions, either--
then we are going to have to use this third-party contractor
operation, and I think that's far preferable than not having
it.
Senator Akaka. Secretary Bolton and General Thompson, I
would like your comment on Dr. Gansler's comments here, and
also, I want to ask you, do you believe the Army should have
the capability of planning these functions itself? If they do,
how long do you think it will take for the Army to develop this
capability?
Secretary Bolton. First of all, I do agree with Dr.
Gansler's comments. The LOGCAP, and now we're into LOGCAP IV--
the current contract is LOGCAP III, and as soon as we move on
to LOGCAP IV, we'll do that, which offers more competition, it
does have a planning part to it, and a contractor to do that.
We must remember how we got into this boat. This is not
new. We go back to the 1980s and look at what the military was
asked to do, which is basically to take a look at the things
that you are doing in the military--some of those, I think,
Senator McCaskill mentioned earlier, with your father peeling
potatoes--can somebody else do that? Can somebody in the
commercial or civilian contracting parts of our country do that
for us--services-type contracts? So, throughout the 1980s and
then in the 1990s, that's what we did. Right now, if we were to
replace all of the LOGCAP folks over there, we'd need three
times the number of folks. You have about 50,000 or so LOGCAP
contractors over there. I'd need about 120,000 to 150,000
soldiers. Why? Because you would need about 50,000 on the
ground to do the work; you would need 50,000 who were training
to go there, and you have 50,000 coming out on a rotation. So,
throughout the 1980s and 1990s, it was our task to give to the
civilian sector all the work that we could, and this was part
of it.
We did not expect a war such as this, this particular
LOGCAP. The previous LOGCAP, I think we did $50-some-odd-
million on it, total. This one obviously is into the billions,
because it expanded so quickly. Then, when we finally had an
opportunity to compete it, we did.
So, I agree with the comments that Dr. Gansler has on this.
I would love to be able to do this all ourselves. Right now, I
don't see that as being a near-term possibility.
Senator Akaka. General Thompson?
General Thompson. Senator, I agree with the comments that
have been made. The one thing that I would add to that is, to
develop that expertise, again, it's going to take about 5 years
to get the pricing piece, because it's part of the contracting
process, because the people we have today that do pricing are
very, very few. The pricing is, for the most part, not done
overseas, because there aren't the people overseas to do that.
So, again, it's one of those: You're going to have to grow the
expertise, and it's going to take us 5 years or more to be able
to build that expertise to a sufficient level.
Senator Akaka. Senator Thune.
Senator Thune. Thank you, Mr. Chairman.
Just by way of wrap-up--I don't have any more questions to
ask, but I do want to thank you all for your service. Secretary
Bolton, best of luck to you in your future endeavors
I would say, the bottom line, I think, in all this is
making sure that the warfighter obtains the necessary required
expeditionary contract capability in a timely way. I appreciate
the work that you, Dr. Gansler, and the Commission have done.
It was necessarily Army-centric, because that was your mission,
as, I think, chartered by Secretary Geren.
But, I would simply add that--and then come back to a point
I made earlier, and I know you contemplated some of this in
your report--but the report also establishes that the Army
doesn't have an organic core competency in contracting, and
some of the other Services are better at it. Since much of what
we're going to be doing in the future is joint and
expeditionary, it seems to me at least that cultivating
contracting core competencies in a joint way makes a lot of
sense. So, I would just urge you all, as you move forward, to
look at how that might be incorporated.
Again, I thank you very much for your testimony and for
your work.
Senator Akaka. Thank you so much, Senator Thune.
Senator Thune. Thank you, Mr. Chairman.
Senator Akaka. Senator McCaskill.
Senator McCaskill. I certainly agree with Senator Thune's
comments about the jointness of this and the necessity for
jointness, and how important that is, moving forward. I know
sometimes that's a challenge.
I also want to close with thanking all of you for your
commitment, and certainly your service, Secretary Bolton.
I also want to just make one comment about the culture. I
think it's so important that, at the very top of the Army,
there is a culture that this is really important. I think we
have to be honest that that's part of the problem.
In Kuwait, when I was visiting with the people there that
were involved in contracting, one of the generals actually said
to me, ``I don't care whether it costs $10 billion or $15
billion, I wanted the ice cream in the mess hall yesterday.''
Now, no wonder the CORs don't think their job is that
important. If that's the kind of messaging that's going on at
the very top, it is very hard for it to filter down to where it
matters that this is really important.
So, to whatever extent--your service, Dr. Gansler, on this
Commission, obviously your service, Secretary Bolton, and I
have a feeling that the War Contracting Commission is part of
the National Defense Authorization Act Conference Report, I
believe it will become active next year. I think you'll
probably spend some time in front of that Commission over the
next 2 years. As we move forward, I think we have to recognize
that if the generals at the top don't communicate clearly--
because when he said that to me, there were a room full of
soldiers in the room that did this work--that is not the
message we need to be sending, and that is, in fact, the
message that brings about the kind of abuses that we've seen. I
think we need to be honest about that and continue to work on
it, as I know all of you will, as committed professionals in
this area.
Thank you very much.
Senator Akaka. Thank you, Senator McCaskill.
Let me close by saying thank you to all of you, Dr.
Gansler, Secretary Bolton, General Thompson, and Ms. Condon.
Thank you also for your service to our country. I want to
particularly wish Secretary Bolton well and thank you, again,
for your service to our country.
What we've heard today and what we've been inquiring about
really points out great, in a way, misconnection in our work
here in trying to provide what our troops need. For me, I'm
looking down the road to a point where we will have--whether
it's jointly--a command that could be calling this, could be
called, in this case--in our case today--the Army Contracting
Command, but a group of people who would be dedicated to
contracting and working in contracting both with the Active
Duty people, as well as civilians. We need to structure it so
that we can do this as a whole and not be splintered, as we are
now.
I want you to know that this subcommittee is looking at
this as a problem that our country needs to correct. We've
heard from you to say that it will take years for us to try to
correct this. I hope that that's not true, I hope we can do it
sooner than that. We'll certainly press for that effort and
look forward to your cooperation, as well, and the committee's
cooperation in doing that.
So, thank you very much for your testimony, and we wish you
all well.
The hearing is adjourned.
[The report ``Urgent Reform Required: Army Expeditionary
Contracting'' follows:]
[Question for the record with answer supplied follows:]
Question Submitted by Senator Daniel K. Akaka
ARMY CONTRACTORS
1. Senator Akaka. Secretary Bolton, General Thompson, and Ms.
Condon, I asked Dr. Gansler during the hearing if the Army should be
using contractors to develop scopes of work, preparing independent
government cost estimates, analyzing the performance of contractor
costs, and measuring contractor performance. He indicated that he
thought it was appropriate, even necessary, given that there was nobody
available in theater to do the work.
The Federal Acquisition Regulations (FAR) state that ``The agency
head or a designee shall prescribe procedures for . . . ensuring that
no purchase request is initiated or contract entered into that would
result in the performance of an inherently governmental function by a
contractor and that all contracts or orders are adequately managed so
as to ensure effective official control over contract or order
performance.'' The FAR further states that ``Inherently governmental
function'' means, as a matter of policy, a function that is so
intimately related to the public interest as to mandate performance by
government employees. This definition is a policy determination, not a
legal determination. An inherently governmental function includes
activities that require either the exercise of discretion in applying
government authority, or the making of value judgments in making
decisions for the Government.
Please explain how the Army is ensuring that it is meeting the
requirements of the FAR when using contractors to perform the above
functions, which appear to be ``inherently governmental functions.''
How long would it take to replace the contractor with government staff
to perform these functions, and is it the Army's plan to do so?
Secretary Bolton, General Thompson, and Ms. Condon. The functions
identified in your question (i.e., developing scopes of work, preparing
independent government cost estimate, analyzing the performance of
contractor costs, and measuring contractor performance) are normally
not inherently governmental functions. If it is necessary to contract
for these functions, safeguards are used to address any potential
organizational conflicts of interest. We recognize that in certain
circumstances these tasks may, however, approach being inherently
governmental because of the nature of the function, the manner in which
the contractor performs the contract, or the manner in which the
Government administers contractor performance. This analysis is best
performed by the requiring activity since they have knowledge of how
the contract will be performed and administered.
Since February 23, 2006, the Secretary of the Army has required
senior leaders to be responsible for the review of contract
requirements. Since February 2, 2007, the Secretary of the Army has
encouraged in-sourcing these kinds of tasks where appropriate,
especially when necessary to maintain proper command and control of
Army core competencies. The Secretary of the Army further clarified on
September 4, 2007, that we must transform to meet enduring requirements
in our core competencies with military and civilian employees, and only
use contractors for surge and specialized needs.
Finally, effective January 2008, the Department of Defense (DOD)
Federal Acquisition Regulation (FAR) Supplement was amended to address
procedures for the preparation of the written determination required by
FAR 7.503(e), that none of the functions to be performed by contract
are inherently governmental. The new rule requires DOD personnel to
prepare the determination using DOD Instruction 1100.22, Guidance for
Determining Workforce Mix, and to also include a determination that
none of the functions to be performed are exempt from private sector
performance, as addressed in DOD Instruction 1100.22. Determining the
length of time needed to rebalance the mix between contractors
performing these tasks and an organic workforce requires an assessment
of the scope of such tasks performed by contractors in comparison to
existing in-house capability. The Army is starting to use a contractor
inventory similar to that which would be required by the pending
National Defense Authorization Bill for Fiscal Year 2008 to support
this ongoing analysis.
[Whereupon, at 4:25 p.m., the subcommittee adjourned.]