[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]
COMMISSION ON WARTIME CONTRACTING: INTERIM FINDINGS AND PATH FORWARD
=======================================================================
HEARING
before the
SUBCOMMITTEE ON NATIONAL SECURITY
AND FOREIGN AFFAIRS
of the
COMMITTEE ON OVERSIGHT
AND GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED ELEVENTH CONGRESS
FIRST SESSION
__________
JUNE 10, 2009
__________
Serial No. 111-13
__________
Printed for the use of the Committee on Oversight and Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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51-899 WASHINGTON : 2009
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COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM
EDOLPHUS TOWNS, New York, Chairman
PAUL E. KANJORSKI, Pennsylvania DARRELL E. ISSA, California
CAROLYN B. MALONEY, New York DAN BURTON, Indiana
ELIJAH E. CUMMINGS, Maryland JOHN M. McHUGH, New York
DENNIS J. KUCINICH, Ohio JOHN L. MICA, Florida
JOHN F. TIERNEY, Massachusetts MARK E. SOUDER, Indiana
WM. LACY CLAY, Missouri TODD RUSSELL PLATTS, Pennsylvania
DIANE E. WATSON, California JOHN J. DUNCAN, Jr., Tennessee
STEPHEN F. LYNCH, Massachusetts MICHAEL R. TURNER, Ohio
JIM COOPER, Tennessee LYNN A. WESTMORELAND, Georgia
GERRY E. CONNOLLY, Virginia PATRICK T. McHENRY, North Carolina
MIKE QUIGLEY, Illinois BRIAN P. BILBRAY, California
MARCY KAPTUR, Ohio JIM JORDAN, Ohio
ELEANOR HOLMES NORTON, District of JEFF FLAKE, Arizona
Columbia JEFF FORTENBERRY, Nebraska
PATRICK J. KENNEDY, Rhode Island JASON CHAFFETZ, Utah
DANNY K. DAVIS, Illinois AARON SCHOCK, Illinois
CHRIS VAN HOLLEN, Maryland
HENRY CUELLAR, Texas
PAUL W. HODES, New Hampshire
CHRISTOPHER S. MURPHY, Connecticut
PETER WELCH, Vermont
BILL FOSTER, Illinois
JACKIE SPEIER, California
STEVE DRIEHAUS, Ohio
------ ------
Ron Stroman, Staff Director
Michael McCarthy, Deputy Staff Director
Carla Hultberg, Chief Clerk
Larry Brady, Minority Staff Director
Subcommittee on National Security and Foreign Affairs
JOHN F. TIERNEY, Massachusetts, Chairman
CAROLYN B. MALONEY, New York JEFF FLAKE, Arizona
PATRICK J. KENNEDY, Rhode Island TODD RUSSELL PLATTS, Pennsylvania
CHRIS VAN HOLLEN, Maryland DAN BURTON, Indiana
PAUL W. HODES, New Hampshire JOHN L. MICA, Florida
CHRISTOPHER S. MURPHY, Connecticut JOHN J. DUNCAN, Jr., Tennessee
PETER WELCH, Vermont MICHAEL R. TURNER, Ohio
BILL FOSTER, Illinois LYNN A. WESTMORELAND, Georgia
STEVE DRIEHAUS, Ohio PATRICK T. McHENRY, North Carolina
STEPHEN F. LYNCH, Massachusetts JIM JORDAN, Ohio
HENRY CUELLAR, Texas JEFF FORTENBERRY, Nebraska
DENNIS J. KUCINICH, Ohio
William Miles, Staff Director
C O N T E N T S
----------
Page
Hearing held on June 10, 2009.................................... 1
Statement of:
Chvotkin, Alan, executive vice president and counsel,
Professional Services Council, former vice president, AT&T
Government Services........................................ 167
Thibault, Michael J., Commissioner and co-chair, Commission
on Wartime Contracting, accompanied by Hon. Christopher
Shays, Commissioner and co-chair, Commission on Wartime
Contracting; Charles Tiefer, Commissioner, Commission on
Wartime Contracting; and Colonel Grant S. Green,
Commissioner, Commission on Wartime Contracting............ 8
Letters, statements, etc., submitted for the record by:
Chvotkin, Alan, executive vice president and counsel,
Professional Services Council, former vice president, AT&T
Government Services, prepared statement of................. 170
Thibault, Michael J., Commissioner and co-chair, Commission
on Wartime Contracting, and Hon. Christopher Shays,
Commissioner and co-chair, Commission on Wartime
Contracting:
Interim Report........................................... 10
Joint prepared statement................................. 137
Tierney, Hon. John F., a Representative in Congress from the
State of Massachusetts, prepared statement of.............. 5
COMMISSION ON WARTIME CONTRACTING: INTERIM FINDINGS AND PATH FORWARD
----------
WEDNESDAY, JUNE 10, 2009
House of Representatives,
Subcommittee on National Security and Foreign
Affairs,
Committee on Oversight and Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2154, Rayburn House Office Building, Hon. John F. Tierney
(chairman of the subcommittee) presiding.
Present: Representatives Tierney, Flake, Foster, Lynch,
Quigley, and Duncan.
Staff present: Catherine Ribeiro, Mariana Osorio, and Cal
Garner, staff members; Anne Bodine and Brendan Culley, fellows;
Andy Wright, staff director; Elliot Gillerman, clerk; Scott
Linday, counsel; Adam Hodge, deputy press secretary; Jennifer
Safavian, minority chief counsel for oversight and
investigations; Dan Blankenburg, minority director of outreach
and senior advisor; Adam Fromm, minority chief clerk and Member
liaison; Tom Alexander and Stephen Castor, minority senior
counsels; Ashley Callen, minority counsel; Dr. Christopher
Bright, minority senior professional staff member; and Glenn
Sanders, minority Defense fellow.
Mr. Tierney. A quorum being present, the Subcommittee on
National Security and Foreign Affairs hearing entitled,
``Commission on Wartime Contracting: Interim Findings and Path
Forward,'' will come to order.
I ask unanimous consent that only the chairman and ranking
member of the subcommittee be allowed to make opening
statements. Without objection, so ordered.
I ask unanimous consent that the hearing record be kept
open for 5 business days so that all members of the
subcommittee will be allowed to submit a written statement for
the record. Without objection, so ordered.
Good morning. I want to thank all of you for being with us
here today. As I promised you, you are there, and I am here,
but I did have to restrain Mr. Shays from trying to get into
the big chair. [Laughter.]
So today the Subcommittee on National Security and Foreign
Affairs is going to continue its oversight of defense spending
issues with a hearing to discuss what has become an all too
familiar issue in recent years, waste, fraud, abuse, and a lack
of accountability in wartime contracting in both Iraq and
Afghanistan.
With hundreds of billions of dollars of U.S. taxpayer
dollars invested in these two theaters since 2001, and more to
come, it is critical that we continue to strengthen our
oversight of the contracting in these areas.
Now, before I begin my substantive remarks, I just want to
address a procedural issue for the benefit of our subcommittee
members and the public. We did have an arrangement with the
Commission earlier on that we would have the report released to
us and not by the press until the evening of this hearing, or
on the hearing. That didn't occur. As I apologize to the other
Members on that, we are about to find out why it is that didn't
occur. On that basis, we wanted to give the Members an
opportunity to be prepared to ask questions of the committee
and to work on that. So, we are going to find out what happened
there, and do that. I still suspect that Members have had an
opportunity to prepare themselves notwithstanding.
The U.S. reliance on contractors has reached unprecedented
levels over the last 8 years, reaching upwards of a quarter of
a million contractors on the ground in Iraq and Afghanistan
from the Department of Defense alone. That doesn't even include
those that are working for the Department of State in the U.S.
Agency for International Development, or other agencies.
It is an extraordinary number by all accounts of civilian
contractors in a combat environment. Unfortunately, while
numbers of contracted personnel and related expenditures has
ballooned, the opposite trend occurred with respect to
oversight.
The U.S. National Security departments allowed their
program oversight staff and expertise to dwindle to the point
that in many circumstances contractors have been hired to
oversee other contractors' work. Report after report have
identified the acute need to rebuild executive branch oversight
capacity, but as yet we have seen little to show for it.
We need to fix our broken contracting and oversight
function in the executive branch and add to it a proper mix of
oversight from independent sources and from Congress. In that
light, the creation of the Commission on Wartime Contracting in
2008 was the product of efforts by several of us in Congress
dating back to 2005.
At that time, it became clear to us that we needed an
entity that could provide sustained oversight of wartime
contracts similar to the efforts of the Truman committee during
the 1940's. Waste, fraud, and abuse of wartime contracts
transcends politics. Oversight should not be the luxury of a
divided government and languish when congressional majorities
and the President share a common political party.
We saw the disastrous result of that approach as we
initiated and prosecuted action in Iraq. I have high
expectations for what the Commission on Wartime Contracting can
accomplish, and we are here this morning to assess its progress
to date. The Commission's Interim Report highlights a number of
issues related to management and accountability, logistics,
security, and reconstruction efforts in Iraq and Afghanistan.
One interesting case described in the report shows the
costly construction of a duplicative dining facility at the
cost of $30 million. And that is certainly representative of
such issues, but it is also important that the Commission break
new ground. There is no sense in creating an oversight entity
that merely duplicates the work that is going on by Inspectors
General, or the Government Accountability Office. We already
received those reports, although we do expect that you will
review those, and synthesize them, and use them to inform your
work.
I look forward to hearing what the commissioners find out
that we don't already know about. In short, I expect that our
witnesses this morning will ensure us that the investment in
their activities was a worthwhile decision.
We, in Congress, as the sponsors of the Commission, need to
hear about any challenges or hindrances the Commission faces in
conducting its work. For example, I am concerned that the
Commission will not be able to fulfill its mandate without a
semi-permanent presence in theater. And, perhaps, we will hear
a little bit about that today.
I would note that according to the report, the Commissioner
has only taken two trips to date to Iraq and Afghanistan. I am
also concerned that the current 1-year mandate of the
Commission might allow responsible government officials and
culpable contractors to sort of wait it out.
The Commission's charge is too important to suffer defeat
at the hands of obstruction or delay, and I don't want to see a
lack of subpoena power to deter the Commission from going after
recalcitrant parties, if that is a problem. This subcommittee
stands ready to assist the Commission in regard to whatever is
appropriate in conducting their official duties.
The dynamic in Iraq and Afghanistan is changing
significantly, specifically as we are moving to drawdown
activities in Iraq while at the same time increasing resources
in Afghanistan. Within this frame work, we must look at the
mistakes of our hurried decisionmaking with respect to
contracts in Iraq and avoid a repeat of those mistakes in
Afghanistan. As we said before, lessons learned must be lessons
followed. We will need every bit of experience, judgment, and
resolve at our disposal to get this right.
As such, it is imperative that the Commission has every
opportunity and capacity to perform its work without hindrance.
So, I want to take this opportunity to thank the Commissioners,
the four that are here, and the rest of your members, if you
would be good enough to exchange that with them, and the staff,
for undertaking this critical public service assignment.
Over a month ago, when I appeared before the Commission at
its first hearing, hosted by the House of Representatives, we
noted that we would be looking forward to this date when we
would switch seats and have the opportunity to hear from you on
your progress. Done right, your help will safeguard the lives
of our civilian and military personnel in Iraq and Afghanistan.
Done right, your work will help rebuild the trust of the U.S.
taxpayers to put in their government to wisely spend their
dollars under difficult circumstances. Those twin goals--
benefiting our people in harm's way and rebuilding the trust of
those here at home--represent the bedrock intention behind the
creation of the Commission.
So, thank you for being here. At this point, I defer to Mr.
Flake for his opening remarks.
[The prepared statement of Hon. John F. Tierney follows:]
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Mr. Flake. I thank the chairman. I am pleased to be here,
pleased to hear from the testimony, particularly from former
Congressman Shays. I know that he traveled to Iraq and
Afghanistan a couple of times, right, more than a few. And I
just am pleased that we are doing more oversight here.
Obviously, there is never too much oversight that can be done,
and in particular in this area.
The U.S. Military Base budget for the current fiscal year
is more than $500 billion. Congress has appropriated roughly
$830 billion for the wars in Afghanistan and Iraq. I can
commiserate with the Commission on how tough it has to be to
get access to information that you need to do your work. I have
been waiting for more than 2 months for competitive bidding
information just on a small subset of 2008 defense contracts.
Details appear to be shrouded in mystery here.
In fact, I look forward to the possibility of having
someone who is knowledgeable about the Pentagon's contracting
process appear under oath so that we can get answers to some of
these questions that we have wanted answers to for a long time
on the competitive bidding process. And to that end, I look
forward to the witnesses' testimony, and thank the chairman
again for holding this hearing.
Mr. Tierney. Thank you, Mr. Flake.
So now the subcommittee will receive testimony from the
witnesses on our first panel. And I would first like to
introduce you, if I may, Mr. Shays.
Let me introduce the panel, if I could. I understand you
are going to deliver the remarks, is that what you are
signaling?
[Remarks off mic.]
Mr. Tierney. Oh, I will. I definitely will. [Laughter.]
It never goes away, does it, Chris? [Laughter.]
When Chris was in there, and he used to sit here, he would
always be buzzing over, sharing, so it is good. [Laughter.]
Mr. Michael J. Thibault serves as the Commission's co-chair
and was appointed by House Speaker Nancy Pelosi and Senate
Majority Leader Harry Reid.
From 2007 to 2008, Mr. Thibault worked as the director of
Navigant Consulting. And prior to that, he was the chief
compliance officer at Unisys Federal Systems.
Mr. Thibault also previously served as the Deputy Director
of the Defense Contract Audit Agency, where he worked from 1973
to 2005. Mr. Thibault holds a B.A. from Southern Oregon
University, and a Masters of Art from Central Michigan
University. Thank you, sir.
The Honorable Christopher H. Shays also serves as co-chair
of the Commission on Wartime Contracting and was appointed by
House Minority Leader John Boehner.
From 1987 to 2009, Mr. Shays served in the U.S. House of
Representatives, where he represented the 4th District in
Connecticut.
During his time in Congress, Mr. Shays served as ranking
member of the Subcommittee on National Security and Foreign
Affairs, as well as chairman of its predecessor committee.
Mr. Shays holds a Bachelor of Arts from Principia College,
as well as an M.B.A. and an M.P.A. from New York University.
Mr. Charles Tiefer serves as a member of the Commission on
Wartime Contracting and was appointed by Senate Majority Leader
Harry Reid. He is a professor at the University of Baltimore
School of Law, where he specializes in government contracts and
contract legislation.
From 1993 to 1994, Mr. Tiefer served as acting general
counsel in the House of Representatives.
From 1984 to 1995, he was the solicitor and deputy general
counsel in the U.S. Senate.
Mr. Tiefer holds a Bachelor of Arts from Columbia
University and a J.D. from Harvard Law School.
Colonel Grant S. Green is a member of the Commission on
Wartime Contracting and was appointed by President George W.
Bush. He currently serves as the chairman of Global Marketing
and Development Solutions, Inc. He has held a number of senior
positions in the government, including Under Secretary of State
for Management, Assistant Secretary of Defense, and Executive
Secretary for the National Security Council.
Colonel Green is retired from the U.S. Army and previously
served on the Commission as an acting Co-Chair. He holds a
Bachelor of Arts from the University of Arkansas and an M.S.
from George Washington University.
So, thank you all for making yourselves available to
testify here today and for the work that you are doing on the
Commission, as well as your substantial expertise.
And now, it is the policy of this subcommittee to swear in
the witnesses, so if you would kindly stand and raise your
right hands. If there are any persons that are going to be
sharing testimony with you today, you might ask them to stand
as well.
[Witnesses sworn.]
Mr. Tierney. Thank you. The record will please reflect that
all of the witnesses answered in the affirmative.
As all of you know, already, your written testimony will be
placed on the record and accepted by the committee. At this
time, we would like to give you the opportunity to make opening
remarks for a 5-minute period. And it will be followed by
questions and answers. So, Mr. Thibault, if you care to start.
STATEMENT OF MICHAEL J. THIBAULT, COMMISSIONER AND CO-CHAIR,
COMMISSION ON WARTIME CONTRACTING, ACCOMPANIED BY HON.
CHRISTOPHER SHAYS, COMMISSIONER AND CO-CHAIR, COMMISSION ON
WARTIME CONTRACTING; CHARLES TIEFER, COMMISSIONER, COMMISSION
ON WARTIME CONTRACTING; AND COLONEL GRANT S. GREEN,
COMMISSIONER, COMMISSION ON WARTIME CONTRACTING
Mr. Thibault. Thank you, Mr. Chairman, ranking member, and
members of the subcommittee. Thank you for inviting us to speak
with you today about our Interim Report. We will keep our
opening statements brief to allow maximum time for discussions
and questions.
The Commission has four other members. They are Clark
Ervin, Linda Gustitus, Robert Henke, and Dov Sakheim.
The precipitating event for Chairman Tierney's inviting us
here today is the official release of the interim report to
Congress entitled, ``At What Cost? Contingency Contracting in
Iraq and Afghanistan.''
[The information referred to follows:]
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Mr. Thibault. Our report identifies many longstanding
issues for awarding, managing, and auditing the vital contracts
that support logistics, security, and reconstruction missions.
These include shortages in the Federal acquisition work force,
poorly defined and executed contracts, inadequate planning,
weak provisions for accountability, unnecessary work and costly
rework, problems that are undermining attainment of national
objectives and wasting billions of taxpayer dollars. We will
describe some of our preliminary observations.
As Congress intended, the Interim Report is preliminary and
tentative. ``At What Cost?'' provides an interim statement on
key focus areas and results, which are listed in the report.
Since 2001, Congress has appropriated, as was stated here
over, $830 billion to fund U.S. operations in Iraq and
Afghanistan. Over that period, America's reliance on
contractors has grown to unprecedented proportions to support
logistics, security, and reconstruction efforts. More than
240,000 contractor employees, about 80 percent of which are
foreign nationals, now work in Iraq and Afghanistan, supporting
the Department of Defense. Additional contractor employees
support the Department of State and U.S. Agency for
International Development.
These 240,000-plus contractor employees actually outnumber
U.S. military personnel in the two theaters. They provide
critical support, and like our military personnel, many have
paid a personal price. As of May 27, 2009, 4,973 men and women
of America's military and at least 13 civilian employees of the
Department of Defense have died in Iraq and Afghanistan. It is
less well known that more than 1,360 contractor employees have
also died. Criticisms of the contingency contracting system and
suggestions for reform in no way diminish the sacrifice of the
military and those contractors that gave their lives.
In discussing the major subject areas of ``At What Cost?''
we will specifically address several issues of immediate
concern. Such issues matter now, right now. They are so
important that the Commission is urging corrective action well
ahead of our Final Report.
First, Management and Accountability. The report's first
chapter on Management and Accountability addresses a number of
cross-cutting themes. The linchpin of contingency contracting
is human capital. Acquisition, especially in contingencies,
depends on its' government work force. The contracting
officer's representatives [CORs], serve a critical role. They
are the individuals on the front line of contractor
performance. They are in charge of making sure that the
contractor does what it is supposed to do. They monitor, for
instance, whether a construction contractor works soundly, or
defectively. ``At What Cost?'' identifies the process for
designating and training CORs as an issue of immediate concern.
There are too few CORs. They are inadequately trained. War
fighters often learn of their added duty of contractor
supervision only after arriving in theater. On one of our field
trips, we were briefed by the 10th Mountain Division, technical
oversight, and they arrived in January to fight a war and at
the same time they were named to this corollary duty and simply
were not trained at all in support of that.
As to the subject of financial accountability, the
Commission has found a large number of ineffective contractor
business systems, including management of subcontractors, with
a large number of unresolved audit findings.
The Commission analyzed $43 billion in awards to 15 of the
largest contractors in Iraq and Afghanistan. Fifty percent of
the contractor billing systems, the basis for requesting
payment from the work for billing the government and 42 percent
of estimating systems, used in the pre-award for contract
proposals, contain significant deficiencies.
Since the Interim Report was prepared for printing a month
ago, DCAA, Defense Contract Audit Agency, has further
identified three more business systems at DynCorp International
as inadequate, to include the labor and billing systems that
are absolutely essential to document and review costs.
The Commission's May 2009 hearing heard that through fiscal
year 2008, the DCAA has taken exception to over $13 billion in
questioned and unsupported costs. In short, the environment in
Iraq and Afghanistan has been and continues to be susceptible
to waste, fraud, and abuse.
Additionally, there is an immediate need for greater
accountability in the use of subcontractors. Subcontractors
account for about 70 percent of contract work, but the
government has very little visibility into their operations.
The Commission has surveyed all the reports by the
Inspectors General and other oversight entities. It is
interesting that there are 11 such organizations that have
issued reports since the outset of the two wars. We have looked
at a total of 537, and cross-referenced those reports, and
derived 1,287 different recommendations over that period. Many
of these recommendations have not been fully implemented, and a
major focus of our near-term activity will be to try to
understand why they haven't been implemented, and those
organizations that said they would take action, why they have
not taken action.
The U.S. Government uses, as its key logistics program in
theater, what is referred to as LOGCAP, the Army Logistics
Civil Augmentation Program. This is a multi-billion dollar
contract, over $30 billion to date, that covers a myriad of
services from vehicle maintenance to dining-hall operation.
The third iteration of this contract, LOGCAP III was
awarded to KBR as a sole vendor. The LOGCAP IV contract awarded
in 2008 requires task-order competition, competition among
three vendors, KBR, Fluor, and DynCorp International. But, at
the present, LOGCAP III still predominates and dwarfs in terms
of contract value.
DCAA Director April Stephenson stated at the Commission's
May 2009 hearing, I don't think we're aware of another program,
contract, or contractor that has had the significant number of
suspensions or referrals.
In its recent response to that DCAA testimony, the LOGCAP
III contractor, KBR, implied that most referrals for possible
fraud, called ``suspected irregular conduct'' by DCAA, have
been resolved by contracting officers. However, DCAA has
advised us that as of our May 4th hearing date, none of its
referrals for possible fraud had been resolved. The total of
3,232 were still open. And that resolution of suspected
irregular conduct referrals would be performed by Department of
Defense Criminal Investigative Service, or by the Department of
Justice, not by contracting officers.
Both the Iraq drawdown and the Afghanistan buildup raise
serious questions about logistics contracting issues. For
example, the Commission has learned that American bases, during
this drawdown, hold more than 600,000 line items of property,
trucks, generators, spare parts, clothing, tools, and much
more.
Because of the poor documentation in the early days of Iraq
operations and a shortage of property management officers, base
commanders often do not know what property is on the base. And,
as a point of reference, of those 600,000 line items, there are
3 certified and trained property managers that have that
responsibility and another 12 that are part of the property
management process that have not been fully trained and vetted
to look out 600,000 line items, as we draw down in Iraq.
Billions of dollars must be moved elsewhere in the region,
returned for stateside use, handed over to the government of
Iraq, sold, or scrapped, but the lack of information,
resources, and planning have set the stage for massive
confusion and loss.
As an issue of immediate concern, the drawdown of U.S.
forces in Iraq risks incurring enormous waste. The Commission
identified more than $2 billion in new projects in Iraq that
are now being analyzed by us. A number of the projects in the
pipeline may be unnecessary.
For example, during an April 2009 visit to Camp Delta in
Iraq, the Commission identified a $30 million construction
contract to build a new dining facility being built near a
recently expanded and upgraded facility. The new facility is
due to be completed in December 2009, somewhere between a year
and 2 years where U.S. troops are required to be out of Iraq.
Prompt review of such projects in the pipeline could save
taxpayers many billions of dollars in unnecessary spending.
Chapter 3 of ``At What Cost?'' addresses the subject of
private security contractors, one of the major subjects set
forth specifically in the Commission's statutory mandate. The
report traces the significant events that shaped the subject,
from the beginning of outsourcing of security in the 1980's and
1990's to the incident of the killing of Iraqi citizens by
Blackwater employees in Nisur Square.
After that incident, the Secretaries of Defense and State,
as well as Congress, through their continuous oversight,
implemented significant reforms. I think it is important to
note that the reforms appear to have worked in this case. The
State Department reported 11 deadly force, discharge of weapons
incidents in the month of July 2007 alone. There were another
nine deadly force incidents in the month of September 2007. For
the full year ending, due to the increased controls visibility,
over security, for the full year ending in May 2009, there have
been only two for that year incidents of use of force. So, with
proper attention, improvements can be made. And our point is
that there is an awful lot that is not getting proper
attention.
The Commission identified a number of specific concerns
related to private security contractors, as a result of our
visit to Afghanistan. In Afghanistan, the Armed Contractor
Oversight Division [ACOD], is the office that oversees private
security contractors' licenses and makes sure they are
compliant with contract terms and conditions and such, and it
is a very large role.
At the present, there is such a large role for a security
contractor to support that that raises issues about conflicts
of interests. The post of Deputy Director, the No. 2 person,
the person that briefed us when we were there, is occupied by a
senior Aegis private security contractor official. The Director
position, an 06 military level, equivalent to a Colonel, while
it has been approved to date, it has not been filled,
identified, and authorized, and so, even in contract terms, for
example, sir, if there is a use of force incident and there is
mandatory coordination with the government of Afghanistan, it
is identified that the contractor, Aegis, will do that
representative for the U.S. Government. That is the current
process.
The Commission's trip to Afghanistan in 2009 underlined
already-acute contracting problems in reconstruction, another
area where we are going to be focused intensely during the next
year. Serious shortages of U.S. Government civilians are all
too likely to trigger heavy reliance on contractors, for
example, the vital Provincial Reconstruction Teams.
Mr. Shays. Thank you, Mr. Chairman.
Mr. Tierney. I can't imagine that. So you must have 1
minute and 30 seconds for Mr. Tiefer and Mr. Green. [Laughter.]
Go ahead.
Mr. Thibault. Actually, it is just the two of us, sir.
Mr. Tierney. Oh, really.
Mr. Thibault. Yes, we have joint statements and we split it
up. There are experts that are going to answer your questions.
Mr. Tierney. You are going to make them answer the tough
questions.
Mr. Shays. They are here for the tough questions.
Mr. Tierney. It is like being back in the service, right?
Mr. Shays. Just continuing on, Chapter 5, entitled, ``On
the Agenda,'' provides a summary of activities the Commission
has in progress or slated for study in the near future. There
are over 30 bullet items, including a number of complex and
far-reaching studies. The Commission encourages examination of
the full list, on pages 92 to 94, and we would just like to
highlight a few.
Assess methods of remedying under-staffing of contract
oversight and audit functions, and assess the effectiveness of
current efforts to estimate the optimum numbers and types of
acquisition personnel.
Assess what shortcomings in government knowledge and
information systems undermine the accomplishment of the Iraq
drawdown and the buildup in Afghanistan.
Consider what processes and controls should be in place to
manage decisions and assess risks of outsourcing logistic and
security support services that may be considered inherently
governmental functions.
Consider how best to improve the accountability in
contingency contractor performance, including affirmative
consideration of performance in source selection, award fee
determinations, and contractor performance evaluation.
That was under Management.
Under Logistics, assess potential alternatives to current
logistics-contractor support, including the possible
establishment of an installation-management command to manage
facilities once a contingency operation stabilizes.
Identify reasons for the slow transition from LOGCAP III to
IV.
Under Security, examine the sufficiency of current
recruitment processes, background checks, and training to
ensure the employment of possible PSC personnel, private
security personnel.
Examine the potential use of civilian employees of the
Departments of Defense and State in lieu of contract personnel
in security roles, including the use of temporary appointments
and Reserve components.
Under Reconstruction, evaluate the effectiveness of
capacity-building reconstruction projects, and determine the
extent to which stakeholder collaboration is an integral part
of acquisition planning, contract performance, and project
sustainability.
Assess the feasibility of establishing an interdepartmental
entity for planning and coordination reconstruction projects in
contingency operations.
And let me just end by talking about a few activities. A
full description of the Commission's milestones is in the
Report's Appendix B. In brief, the Commission members were
named by July 2008. The Commission selected a professional
administrative staff approaching 40 by January 2009. During
September and October 2008, Commissioners received briefings
from more than 25 key organizations and programs. They also met
with leading scholars and writers on contracting issues and
with contractors.
On February 2, 2009, the Commission held its first public
hearing. The hearing featured testimony from the Inspector
General for Iraq Reconstruction, SIGIR, including SIGIR's 2-
year, book-length study released that day, ``Hard Lessons: The
Iraq Reconstruction Experience.''
On May 4, 2009, the Commission's second hearing focused on
the multi-billion dollar LOGCAP contract for logistic support
services.
Commissioners and staff have made two trips to Iraq and
Afghanistan to inspect work sites, review documents, conduct
interviews, and receive briefings from officials on the ground.
The first trip took place in early December 2008, with an
itinerary that included agency briefings in Baghdad and Kabul,
as well as reviews of construction of the Baghdad Police
College and task orders for construction and repair of the
Bagram Air Base in Afghanistan.
A 10-day investigative study in early April 2009 comprised
a 15-person group of Commissioners and staff that broke into
three teams. One team worked in Iraq, the other two in
Afghanistan. They conducted more than 125 meetings with
employees of the Departments of Defense and State, USAID, the
military, and employees of contractors working on a range of
projects.
The Commission continues to develop tasks for research and
investigation to extend and deepen its knowledge and to cope
with new or changing issues. Our plans include many more trips
to theaters of operation, additional hearings involving
government agencies, non-governmental organizations, academics,
and members of the contracting community, and continued liaison
with Congress.
Before we conclude, we would like to say a few words about
the Commission staff. Virtually all of the Commission's staff
are Federal employees. Some are detailed from agencies and
services including the Army, the Air Force, the Departments of
State and Defense, the U.S. Agency for International
Development, the Defense Contract Management Agency, the
Defense Contract Audit Agency, and the U.S. Army Corps of
Engineers.
Some have served one or more tours in duty in theater,
including working for the Special Inspector General for Iraq
Reconstruction or as senior contracting officers supporting the
Joint Contracting Command in Afghanistan. Others have served on
congressional staff, worked in GAO, State and Defense, and held
important positions on the commercial industries, which are the
focus of our study. They bring hundreds of years of combined
experience and education in many fields to bear on our mission
and have performed valuable work for their country.
In conclusion, the Commission and staff of the Commission
on Wartime Contracting in Iraq and Afghanistan take very
seriously the tasks that Congress has assigned to us. We
appreciate how important these tasks are to improve support for
our war fighters and our diplomatic employees.
We sincerely thank you for the opportunity to describe our
work to you today, and pledge our best efforts to provide
information and recommendations that will help you make good
decisions on contingency operations.
Mr. Chairman, we thank you for your support of this
Commission, but also as well your critical review. We know that
this committee, as will the Senate, be looking at everything we
do to help us do a better job and to make sure we do a good
job.
[The prepared joint statement of Mr. Thibault and Hon.
Christopher Shays follows:]
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Mr. Tierney. Thank you. I thank both of you and the other
witnesses as well. You are right, Mr. Shays, I mean this is all
about working together. It isn't about criticism. Obviously,
you have been at this only a few months and you have developed
your staff, have your office space, tried to get your plan
together, and I think that you have done a remarkable job in
many respects and appreciate the Interim Report.
I have a number of questions. I am going to start with some
procedural things, as we go around a couple of rounds here, we
will get to some of the other issues on that, but one comment
that Mr. Thibault made was that there were a significant number
of reports and recommendations coming from those reports, many
of which have not been implemented. Now, that should disturb us
all.
And you also said later on, however, that there were a lot
of issues outstanding that weren't getting enough attention.
You indicated that in the context of oversight was working in
some respects with the security incidents being significantly
down. So, in the context of your plan, are you planning on
reporting to Congress at some point how we might best utilize
those investigative sources that are at there, the Government
Accountability Office, the Inspectors General from the various
departments, or how that ought best be coordinated so that all
the issues are covered?
And then I know you already said that on the second part of
that, you do intend to investigate why some of these
suggestions are not being implemented, the recommendations.
That will be important for us to know whether it is an
executive inaction, legislative inaction, whether we are just
not having enough hearings tuned in and up on that, or whether
it is all departmental and they just don't know the processes
there.
Mr. Thibault. Yes, sir. You know we intend to take those
1,200 plus recommendations out of those 537 reports, and we
intend to trace each one to find out the status. We are aware
that there are significant issues now on key recommendations.
There is a direct tie-in to correcting problems that we also
have observed and others have reported in the past.
It is interesting to note, one thing I might share and it
is something that we are going to talk about and try to
evaluate, when we are out in the field at four bases, and Camp
Victory and Afghanistan, and Joint Task Force 101, universally
they were supportive. But universally, they said, if there is
anything this Commission can do relative to the fact that we
have so many, I cited 11 organizations so that it can be
coordinated better, because it seems like we are collecting
information and then turning around and collecting the same
information 2 months later, it is just 2 months updated for a
different organization.
Each of these oversight organizations has a vital job to
do, but contingency environment is unique from an oversight
because it is so distance oriented and you have to place some
people onsite, and people going back and forth, but that is a
worthy area to look at.
Mr. Tierney. And I will ask some questions later on about
just how we go about doing that in the personnel shortages. I
think some of the capacity issues are serious, but does the
Commission feel that it has enough in-country presence over in
the theaters that you are investigating?
Mr. Shays. The Commission is debating right now whether we
should have a permanent representation in Afghanistan and Iraq
and then obviously our Commissioners and our staff will be
going repeatedly. And so, that is something we will be able to
get back to you very quickly on, but we know that we need to be
there in both countries.
Mr. Tierney. Thank you. Mr. Flake.
Mr. Flake. Thank you, Mr. Chairman. I have some of the same
concerns about if you have so many recommendations. You had
1,200 recommendations you said that have been put forward. Is
that from your group, or from all over?
Mr. Thibault. No, sir. We went through all 537. We sorted
them. We cross-referenced them, because we were tasked to
buildupon that work, not to recreate that work.
Mr. Flake. Right. So, some of those 1,200 come from the
other investigative bodies that have put forward
recommendations.
Mr. Thibault. All of the 1,200 that I referenced, sir, come
from those organizations.
Mr. Flake. And what remedy is there if these aren't
implemented? What are we to do, or what are other bodies to do,
if they aren't implemented?
Mr. Thibault. I think that point is spot-on in terms of the
emphasis and it fits this subject of accountability. You know,
if someone says they are going to correct a major problem, and
they are going to correct it within a certain time period, and
they don't, one of the things we run into, for example, because
a turnover of staff and the aging, and so, I really didn't
understand that. I have just picked up that responsibility, but
there is an absence of first of all recording what is being
done with that.
Some of the IG organizations do a good followup, but the
actions just aren't getting accomplished to the extent that
government organizations have agreed to do.
Mr. Flake. In talking with a lot of the agencies on some
other issues, we are often told we have a process by which we
can offer sole source contracts. We have to bid every contract
out. Yet, you mention KBR here had a sole source contract for
certain activities there, could that contract have been bid
out? Isn't there a process that the Department of Defense has
to go through if they don't bid a contract out? There is a J&A
that has to be issued, or something. Why are they able to still
have these contracts sole-sourced? Mr. Tiefer, do you want to
take that one?
Mr. Tiefer. Mr. Flake, that is an excellent question. It
has been some years that the Department of Defense has tried to
have a later contract, a later version, a later iteration of
LOGCAP, in which there would be three competitors. And I think
the talk about that goes back at least 2 years.
They are now slowly phasing-in that successor arrangement
that would have competition among three companies. And that is
an activity we are going to be following in-theater, but it is
still not being activated in Iraq, that is each task order
under the LOGCAP contract still has only one vendor, KBR. And
there has been some concern voiced that phasing-in of a
competitive arrangement is going too slowly.
Mr. Flake. I know that your jurisdiction covers just
wartime, in theater, but it seems that problem goes beyond. As
I mentioned, I have been trying for months to get access to
some of these J&As to justify why some of these contracts
aren't bid out, and I haven't been able to get them yet. And
so, are some of these problems that you see in theater, do you
think that they go beyond that, or is just because of the
circumstances inherent in wartime?
Mr. Tiefer. I am not at all surprised that you are seeing
similar problems back in the United States and in domestic
context. There is no special exception in the competition
contracting act for wartime sole sourcing. And the same
exceptions that have been used in the past and used to date in
Iraq have been used in the domestic United States. So, you
would run into the same problems.
Mr. Flake. Are you as part of your activities asking for
these J&As to see what justification was given for sole source?
Mr. Tiefer. We do look not just at the justification and
authority, the J&A, for these contracts, but at the subsequent
documentation and we have been going through following up. The
J&A is often very superficial, just well, it is the exception
for exigent circumstances, or it is the exception for this is
the only available contractor, and we have followed those up to
see whether it really has to be done without competition.
Mr. Thibault. I might, sir, add a point that this was a
very unique contract in the sense, and you could maybe think
about whether it was dysfunctional in terms of the way it was
established, but there was competition, but it is a 10-year
contract, cost-type, dollar-for-dollar 10-year contract. Once a
year, it can be rolled over.
So, you are talking about a contracting action with a sole
supplier that dates back to the 2003, I believe, timeframe, and
it is still in place because 10 years haven't passed. So, there
is no competition anymore. And that is why we are encouraged by
the action to go to LOGCAP IV, where there is at least three
vendors that will bid on every task order, but discouraged by
the pace that is being implemented. There are tremendous
opportunities.
We saw an example where the same type of work that was bid
in Kuwait, using LOGCAP III, had priced out at $120 million. It
was $55 million less after competition came in. So, competition
is a good thing in the environment, and there is nothing unique
about a wartime zone where you can't usually employ
competition.
Mr. Shays. If I could, Mr. Flake--excuse me, go ahead. I am
sorry.
Mr. Green. If I might add to what Commissioner Thibault
said earlier, and some of your concerns about the 1,200
recommendations that have come from other oversight
organizations to which we will certainly add a number of our
own observations and recommendations.
Where we have a challenge, I believe, and that is, when we
go away, have we come up with procedures which will encourage
followup? All of you have seen dozens and dozens and dozens of
studies, as I have, with some very valid recommendations that
collect dust. So, one of the challenges we have, and a
challenge that you may have, is how do we force some of these
actionable recommendations forward, as we turn out the lights?
And that is a problem that we face, or a challenge that we
face, which is not much different than every other commission
and oversight organization faces.
Mr. Tierney. Well, I think you have hit right on something
that the three of us now, if I look at the panel collectively,
it honed right in on this. So, we are really going to rely on
the Commission to give us some direction, at least to that at
which you think ought to be done, whose responsibility would it
be to followup? Would it be the executive? Would it be the
Department? Would it be Congress, or whatever? And then, it is
going to become upon us to work with you to try to put that
legislation, if necessary, and if it is not legislation, then
set up some series of hearings, wherever we put the spotlight
on, whoever is responsible, and keep moving on that to get it
done because it is ridiculous. You keep having all of these
hearings go out there.
Mr. Green. Precisely.
Mr. Tierney. Thank you. Mr. Foster, you are recognized for
5 minutes.
Mr. Foster. I was interested in whether you think that we
will be in a position to make some sort of retrospective
analysis of the sort of make-versus-buy decision, the decision
to contract stuff out, the decision to sole-source or multi-
source the contracts, whether at the end of this, we will be
able to step back and then set up the general principles that
will tell us whether it is a good idea to contract out a class
of work, or not?
Mr. Shays. I would love to just make a comment that when we
talk about LOGCAP III that was a contract that was given to KBR
before we went into Iraq. No one anticipated that we would be
spending incredible, over $30 billion, to one contractor. When
we went to LOGCAP IV, which we bid out, three contractors have
it, and then they will bid internally among the three, none of
them getting more than, I believe, $5 billion a year. And so,
we are talking over 10 years, $150 billion potentially. So, the
government has introduced a forum of competition there, but,
when we went into Iraq, there was one company that had in a
sense won the contract.
In terms of the whole, the number of recommendations that
have been made and the 500 reports and so on, our task is to
categorize every one of them, to be able to come back and tell
you which ones have been implemented, which ones haven't, why
we think they have been implemented, why they haven't, and our
recommendations of what could and should be done. So, when you
see us looking at those past reports, it is not to re-work
them, it is just to know what is done and to make sure you know
what has been done and hasn't been done.
Mr. Thibault. And sir, to your point about, are we going to
look at the contracting mechanisms, there is an absolute
obligation to look at it, and the type of contracts, whether
competition has been used and makes sense. I will make a couple
of observations in fairness to the record.
There are significant efforts to use competition in certain
parts of contracting by the military and by State, but one of
the areas we highlighted that we are really going to focus on
in terms of the type of contracts is subcontracting.
For example, in the LOGCAP program, it is a cost-type
contract. It is dollar for dollar. All of the subcontracts are
fixed-price, so the prime gets dollar for dollar on the fixed
price and all of their labor, but it is a fixed price. So, it
kind of begs the question, how good of a job is being done with
that? There are foreign firms that are involved with that. What
kind of data analysis and records are going to be evaluated?
That is the frustration you see in the report and that is the
obligation of the prime contractor, but we are going to be
looking at the prime contractor's system to be sure that they
are fulfilling their contractual requirements.
Mr. Foster. Will that sort of analysis also look at the in-
house versus contractor approach? I mean once upon a time there
were mess sergeants, right, and so the question is whether you
know ultimately that would have actually been a better deal for
the taxpayer, to go the traditional route, turn up the
soldier's salaries, if necessary.
And similarly, are there rules of thumb evolving, or maybe
already existing, in terms of the amount of contracting
oversight per dollar spent, as a rule of thumb, you want one
person on the ground overseeing every $20 million of money
spent, or something like that?
Mr. Thibault. Well, what I saw in Afghanistan personally,
is the Defense Contract Management Agency went through and
identified several thousands of tasks that needed to be done
and drew it down to 537 individuals, theater-wide, that needed
to go out and look at that work being done. The unfortunate
part was, the number was either 160-something or 180-something,
but it was only 36 percent of those positions were filled. So,
in about two out of three positions, there is nobody looking at
the contractor. So, they'd done a good analysis. They just
hadn't done the work.
Mr. Foster. So, what is the nature of the training that is
missing?
Mr. Thibault. That is also a very good question because
Defense Acquisition University has developed a couple of
courses, but I would tell you, my example of 10th Mountain
Division, when we brought these individuals in, these military,
these great Americans, and said, so, what about training? They
had none.
So, there is a course at Fort Belvoir, and then they told
them, they said, well, we have this on-line 8-hour, 16-hour
course, and one of them looked at me and said, right. And he
said, because of cone-activity problems, I spent 30 days trying
to take this 8-hour course, and off and on, off and on, because
I kept getting caught off, and I finally said, the heck with
it. I can't finish this course, so I am going to do the best
job I can. They are out there trying to do the best job they
can, but they are not equipped with the training. So, there is
training that has been developed, but if they don't get it
before they go----
Mr. Green. And another point is, as Chairman Thibault
mentioned, in addition to the shortage of oversight personnel,
whether it is 160 or 180, many of them are mis-cast, and we
referenced a few examples in the report, where you've got a
combat medic overseeing the security operations at a forward
operating base. We have other instances where one contract
officer representative is overseeing 15 different contracts, in
addition to performing their principal duty, which is unrelated
to any of the contracts that person is overseeing. So, there is
a shortage. There is a training problem. And there is a casting
problem of applying the right kind of skills to the contract
oversight. And in many cases, we don't have those skills within
the Army.
Mr. Shays. And, if I could just add one other quick point,
a number of these, say the contracting officer representatives
[CORs], they may come in and leave and the contractor is still
there, so they don't have the institutional knowledge and they
don't stay long enough. So, that is another part of the
problem.
Mr. Tierney. Thank you, Mr. Foster. Mr. Duncan, you are
recognized for 5 minutes.
Mr. Duncan. Well, thank you very much, Mr. Chairman. And
let me first of all say that I think the work you are doing is
very, very important, and I hope that it doesn't just gather
dust, and I am very pleased that our former colleague,
Congressman Shays, is on the panel because I always thought
that Chairman Shays was one of the finest Members that this
committee ever had.
Mr. Tierney. Jim, could you pull that mic a little closer
to you? Thank you.
Mr. Duncan. I have been tremendously concerned about the
horrendous waste that has been going on in the Defense
Department, and especially so after a year or a year and a half
ago when the GAO came out with a report that said that we had
$295 billion in cost overruns in just our 72 largest weapon
systems. And it seems to me that anybody who considers himself
or herself to be fiscally conservative should have been
extremely upset or horrified by that, yet it didn't seem that
many people were.
And it looks as though both parties are trying to prove how
patriotic they are, or are concerned that somebody might feel
that they are not patriotic because they don't just give the
Defense Department every penny that they want and then some.
And now, we are ramping up in Afghanistan and spending
unbelievable amounts of money there.
And then, I read in your testimony, Mr. Thibault, that you
are talking about massive confusion and loss, enormous waste,
you say billions of dollars in wasteful spending has occurred
and may still be occurring, and it looks to me like, it really
would be unpatriotic if we didn't question these things and do
everything possible to stop all this waste, yet a very few
people are willing to vote against anything the Defense
Department wants, so apparently nothing is being done, and I
sometimes wonder if there are any fiscal conservatives at the
Pentagon.
According to the Congressional Research Service, we are now
spending, when we add in the regular budget, the supplemental
Bills, and we are getting ready to vote on another supplemental
Bill here within either this week, or a few days from now, and
yet in the emergency appropriations, and then all of the money
that they throw into the Omnibus, according to the CRS, we are
spending more on defense than all of the other nations in the
world combined.
And it seems to me that a lot of it is generated because
the defense contractors hire all the retired Admirals and
Generals, and then they call it the revolving door at the
Pentagon, but I don't think that we can just keep on wasting
and blowing money in the way that we are doing.
But the only question I have--you say, Mr. Thibault, at one
point in your testimony, you say that there are a number of new
projects in the pipeline, and you mention this $30 million
dining facility--how many, rough guess, how many other new
projects are going on or are we talking about?
Mr. Thibault. I can't answer that question because that is
our immediate action. We are doing the analysis. We know it is
$2 billion. What we want to do is go out and touch those
projects to look at them to see if they make sense. That is
where you need people in theater. It just happened that this
was shared with us when we happened to visit that base. And,
there are a couple of hundred bases in Iraq. We visited three
or four of them. And there is obviously a need to one, do the
analysis, and then two, go out and look at the high dollar
items and asks those questions--does this make sense with the
drawdown of Iraq?
Mr. Duncan. So, do you mean by saying that, that you have
only visited three or four, and there are hundreds of bases, so
is the $2 billion just the tip of the iceberg estimate, or is
that----
Mr. Thibault. No, that is what is in the pipeline as
approved construction projects, and it is kind of interesting,
this project, this example, of the dining facility right next
to it. And they needed to feed 4,000 individuals. They upgraded
it because they had a lot of problems with it, the existing
one. They spent $3.6 million, while that had just occurred.
And what happened is the paperwork that showed all of the
problems that led to this upgrading the cafeteria and being
sure it could serve the proper number never made it over into
the planning documents for the new construction. So, they still
thought they had this dilapidated dining facility. And, the
only thing I can think of, and it is the importance of the
chairman, you have to go out and look at it. You have to spend
the time in the country because if we hadn't none of that would
have come forward. You can't just do an analysis of paperwork
because it would have said ``dilapidated facility, need to
build it,'' the paperwork would say, ``makes sense. Well, it
had just been renovated, so we are going to have two great
dining facilities.''
Mr. Green. Well, and then it was also done at a time before
the agreement between Iraq and the United States when we would
depart. So, as it turns out, we will have this new wonderful
dining facility for about 2 years.
Mr. Tierney. Is it the same contractor doing both the
repair work and the new facility?
Mr. Thibault. Yes, sir, in this case.
Mr. Tierney. And so, they never spoke up, of course, and
said, what are we doing here? Mr. Lynch.
Mr. Lynch. Thank you, Mr. Chairman. Mr. Shays, I want to
welcome you back before the committee.
Mr. Shays. Thank you.
Mr. Lynch. Great to see you. And I thank you all for your
great work.
I haven't been over to Iraq as many times as Mr. Shays has,
but I am up to around a dozen now. One of my jobs before I came
to Congress, I spent a lot of time on constructionsites. I have
a construction engineering degree, and I am surprised that we
get as much work done in Iraq and Afghanistan given the
contract arrangements that we have. I have seen just horror
shows.
I have visited a lot of constructionsites in Iraq and
Afghanistan, and I frankly think that Stuart Bowen, the former
Special Inspector General for Iraq Reconstruction, did a
fantastic job, but from my visits to Afghanistan, I think that
the situation there, and the Inspector General in Afghanistan,
is far less able.
Voice. He is newer?
Mr. Lynch. His team is newer, but far less able to police
the contracting situation there, so I am very apprehensive
about our ability to lose money in Afghanistan and to waste it
just through incompetence, as well as through fraud.
One of the earliest hearings we had in here back in 2003
and 2004, on Iraq, I asked the Director for the DCAA, the
Defense Contracting Audit Agency, I said, how many auditors do
you have in Iraq? And he said, we don't have any. And at this
point, we are spending billions of dollars there, billions. And
I said, well, how does that work then? And he said, well, we
are auditing our work and our contracts in Iraq from
Alexandria, VA, which explains why--it is reflected in your own
report--but explains why we are having such a problem here.
And now, I read, again from the committee's memo, that we
have four folks, four individuals, in Afghanistan, and the
whole country. We are spending billions of dollars there. We
have two at Bagram Air Force Base, and we have two down in
Kandahar. And that is it. And if we don't get a handle on that,
with boots on the ground, people competent enough to review
these contracts, this is criminal. It is criminal. There is
nobody who would operate like this in a private basis. If we
were spending private corporate dollars, this wouldn't be
happening. And I think it is happening only because we are
spending taxpayer dollars and people feel that it doesn't have
to be audited to that great degree. We are terribly sloppy in
Iraq and Afghanistan. We have to tighten up our act.
What do you see is the greatest need in terms of getting
some accountability on the ground? We can't continue to operate
this way in terms of the contracts going out without tight
enough accountability standards, or recognizable standards.
You know, I go on to jobs in Iraq where, just from walking
on the job sight, you can see substandard materials. I try to
talk to the workers there. I had an Iraqi interpreter with me.
It turns out they are all from India. Now, you've got 60
percent unemployment in Iraq. Why the heck are we bringing in
foreign workers? God Bless the folks from India, but you ought
to put some people from Iraq to work, and it just seems there
are no requirements in the contracts that would help the
overall cause of putting people to work and stabilizing that
country.
But from your own attendance there, and your own
observations on the ground, what do you think needs to be done
first, and fastest?
Mr. Shays. I think the first thing we need to do is to
encourage the Department of Defense to make this one of their
highest priorities. We have spent in contracting $103 billion.
In Afghanistan, $20 billion. In Kuwait, $18 billion. And in the
other countries supporting Iraq and Afghanistan, $12.7 billion.
$154 billion. And, what we know is, we don't have enough
contract office representatives. We don't have enough quality
assurance representatives. We don't have enough LOGCAP support
officers. We don't have enough people watching the contractors.
We have 70 percent of our contracts go to subcontractors.
Our law in this country makes it a requirement that we can
only oversee the subcontractor by going through the prime. And
so, we have to get the information second hand. I think we need
to reexamine that, if 70 percent of the dollars I mentioned are
actually going to the subs.
We have another issue and that is if it is Afghan employees
or Iraqi employees, we have to deal with those governments. And
there are certain protections and hoops that we have to jump.
And it would strike me that if we are going to spend our
dollars there, that we should have greater ability to oversee
the contracts that are done by the indigenous folks paid for by
us.
Mr. Tierney. Thank you. Thank you, Mr. Lynch. I do note in
your report, at one point, you showed an example of cutting
right through the prime and going straight to the subcontractor
making that person the prime. I mean that is just having a
better capacity on our own stand and not have to rely on a
contractor, so they don't take a cut. And I think your report
indicated in one of the instances the subcontractor had jacked
the prices up, and then the prime went out and just doubled it,
and then passed it along, so they took all of that off the top.
So, I think you are exactly right and I hope that you do
continue to look at that aspect and share it with us.
On page 9 of your report, you have a little sidebar that
you talk about cracks in Kabul. You have a new Kabul compound,
where supposedly the U.S. forces in Afghanistan and
headquarters are going to be, where General McChrystal will be
sitting, except that he won't because there are structural
cracks, improper plumbing, and thus unusable bathrooms,
incorrectly sized sewage systems, broken and leaking pipes,
sinking sidewalks, and other construction defects.
How does that happen that somebody signs off on a project
like that and we end up getting tagged for the bill and having
an unusable building on that?
Mr. Thibault. One of the recurring themes is
accountability. How does that happen? In this particular
instance, the U.S. Corps of Engineers, signs off----
Mr. Tierney. I am sorry. I can't hear you.
Mr. Thibault. In this particular instance, the U.S. Corps
of Engineers signed off that this $18 million contract by a
Turkish construction company was adequate. And it is
interesting because it talks a little bit to our methodology.
When we were over there, we interviewed the senior. He happened
to be a Major individual that inherited this building.
Well, actually, you talk about rework. A great example of
rework because as these repairs are ongoing, the logistics
contractor, and it is essential to do it so they can habitate
this, KBR is doing much of the work that this Turkish company,
and they came in and voided the warranty because they came in
and approved everything.
Now, the only way you could physically approve it, is to
not be physically there because in just this list where we
asked for an information paper from the responsible personnel,
major issues, septic, electrical, ceiling tiles falling down,
250 missing, fire alarm systems, I mean these are big deals,
power generators, kitchen exhausts----
Mr. Tierney. Was KBR responsible for managing the work of
that Turkish outfit?
Mr. Thibault. No, that was a separate contractor.
Mr. Tierney. So, the Turkish outfit was the contractor,
prime?
Mr. Thibault. It was the contractor. Yes, sir. KBR came to
the rescue, but that is all rework.
Mr. Tierney. So, now do we know whether or not the Army
Corps of Engineer official who was responsible for that was
ever disciplined?
Mr. Thibault. No, we don't, and that is the accountability
issue. Somewhere, and that is Commissioner Shay's point I
think, we have to start identifying who is responsible.
Mr. Tierney. Absolutely.
Mr. Thibault. And not just that individual but someone is
reviewing and training his workload. And so, I think it goes up
a little higher. My suggestion in this process is we have seen
military accountability in situations, but we just have not yet
seen where these situations occur, someone said why, and if
they are inept.
Mr. Tierney. I mean I would think that company no longer
does business with us, but I fear that they probably do?
Mr. Thibault. Oh, they do, sir.
Mr. Tierney. And so, that is one of the things you will be
investigating as well, is what kind of a process we put in
place to make sure that when that happens, they don't do
anymore business with us, and that people be held accountable
for it.
Are you getting enough access to the information of the
people that you need as a Commission, or do you feel that you
need the assistance of any committee in Congress? Are people
being responsive? Are they being helpful, or are they being
obstructionists?
Mr. Thibault. I would say that we have had the need to
explain in detail sometimes why we need information, but, by
and large, the Department of Defense and Department of State
have supported us. Where we really are straining is your point
about getting into country.
Our first two trips were delayed about a month because of
conflicts and schedule. They did it. The trips went off very
well, and they supported it, US CENTCOM, but we have a need for
four other trips and they are saying, ``whoa.'' And so, we are
going to have to find that out. Will they allow us to go in and
do this job? Because if we can't go out there and look at the
records there, we will fail.
Mr. Tierney. Well, it speaks again of your presence in-
country, if necessary, but you will work with our committees,
and this committee of the Senate, and we will try to help you
with that.
Mr. Thibault. As soon as we have a delay, yes sir.
Mr. Shays. And Mr. Chairman, I would like to say it is very
helpful for your encouragement that we be in Iraq and
Afghanistan. I remember that the Inspector General of DOD said
he didn't need to be there, and your committee made him go. And
we benefited from it.
Mr. Tierney. But we benefit from it when we go. It is not
like we are going there for a vacation. It certainly is not
some place we want to be, but you do, I believe, as I think
Chairman Thibault mentioned a couple of times, you get to see
things that on paper might present themselves entirely
differently, and work on that. So, we are conscious of that and
we want to work with you to make that happen.
Would you talk a little bit about the challenges where the
contractors or the subcontractors are third-country nationals,
or host-country nationals, and the problems those present, and
what we are going to look into in terms of trying to resolve
those issues, those challenges.
Mr. Tiefer. There have been audits which we followed up, as
noted, the prime contractor may be KBR, but the work, or the
dining facilities that are being run, or the other work that is
being done, is done by a third-country company, like First
Kuwaiti Trading Co., or Tameme, and the audits there show that
those subcontractors may well get away with overcharging
because it is not that much in KBR's interest, and it doesn't
even have the business systems to create competition under it.
The overcharges from the subcontractor then get passed up
with the factor for award fees and the factor for overhead
until it comes to the Treasury. The Commission is trying to
figure out the legal challenge, and it is a new one. You don't
find this as a problem in the domestic United States, but it is
a big one in theater where we are and we are trying to look at
what could be done to increase the ability to, say, audit such
third-country companies.
Mr. Shays. Could I just emphasize, so we have the
government that is supposed to oversee the contractors, and we
have less than half of what we need. They aren't specialists.
They have to be taught. And then they are asked to leave sooner
than the contractor who is still there. And then we have DCAA
point out that most of the technology that the contractors use
is outdated, inaccurate, and not helpful, and doesn't provide
the right information.
So then, when we want to get the information, we are
getting it from the company itself that can't provide really
well documented information.
Mr. Tierney. Do our contracts not require these contractors
to have updated technology with certain specifications that
would service our needs?
Mr. Shays. They are required to have it, but they don't
have it.
Mr. Tierney. OK, I just want to make sure, so that is
something we will be chasing down. Mr. Flake.
Mr. Flake. Thank you. Mr. Thibault, can you cite specific
examples of services that can be provided under a different
contractor under LOGCAP IV, and why you believe that switching
contractors might be able to yield better results?
Mr. Thibault. Well, yes, the way the contract is structured
now, sir, every task order now is theoretically supposed to be
bid out and evaluated for those three contractors, DynCorp
International, Fluor, and KBR. The early results are that is a
very good thing for the government in terms of price and costs,
that competition. Those are the three organizations now, that
is a long-running contract also. The problem is 90-plus percent
of the current charges are with the old contract, which is the
sole supplier and one of our emphasis. And I will point out
that I think it was General Odierno who identified the same
issue, which is get on with the competition part of LOGCAP IV,
lots of planning, lots of effort, and it is not happening to
the extent that it should.
Mr. Flake. Thank you. The pace of withdrawal in Iraq, you
mentioned in the report some of the challenges that presents us
with, what are some of those challenges, the rapid pace of
withdrawal that we have? Somebody else want to take that?
Mr. Green. Sure. I think that there are a number of factors
and CENTCOM is planning for this, whether they have done enough
planning, whether that planning is moving at a pace that is
going to accommodate the downsizing and the ramp up, we don't
know yet.
Mr. Flake. But specifically, what opportunities are there
for abuse, or fraud, or waste, with rapid withdrawal. What do
we have to look after?
Mr. Green. Well, I think, as troops are withdrawn from
Iraq, as an example, we are probably going to have to rely on
contractors to remain there to close down those bases, or to
pass them on to the Iraqis.
And one difficulty that was brought to our attention, for
example, just shows a lack of planning and a forethought on
this is they pulled out the air conditioning units in buildings
that were going to be passed to the Iraqis and then had to go
back and reinstall them again because they just didn't think
enough about when they took the equipment out that it would
still be needed because the Iraqis were going to take over
that.
But all the decisions on reset, which equipment gets sent
back here for rehab, which is going to go to the reserve
components, which will be scrapped, which will be turned over
to the Iraqis, all of those planning decisions are currently
being made by CENTCOM. But again, I am not yet comfortable that
there aren't a lot of holes in that planning process.
Mr. Thibault. And, I might add, as an example, when we were
on one of the bases, the military enlisted person that is going
to be involved in some of that support activity kind of pointed
over and said look at all of those containers. You know what, I
have an open amount. I don't know what is in there. And that is
this point, that we accumulated material and now we are going
to have to inventory it while the military, it is dwell time,
if they are given 90 days to get out of there, they are going
to leave in 90 days, but the outcome is contractors are going
to go out there and figure out because there could be some very
sensitive equipment, so you can't just give it to them.
And so, the important point is, as we see a decline in the
military, there is not going to be a proportional decline in
the contractors. In fact, it might go the over way depending on
the activity. Six hundred thousand line items have to be
tracked.
Mr. Shays. We all know that we need contractors. We had one
contractor for every six military in the Revolutionary War.
Now, it is a one for one. The irony is that as we get out of
Iraq, we may actually have more contractors than we have
military. And we have to dispose of what we call ``white
property,'' that is, property in the hands of the contractors,
but owned by the U.S. Government. And then, we have items on
base that no one knows who is responsible for.
But I would just love to reiterate, to review the list that
Commissioner Grant talked about. We can donate it to the Iraqi
government. We can return it to the United States, use it
elsewhere in Iraq, or move it to Afghanistan, transfer it to
other U.S. Government agencies, sell it, and if it has no
commercial value, scrap it.
We are asking people to make those decisions, and they may
not know what is needed in another base. So, they may decide
that we should give away when we are going to still purchase it
somewhere else, or bring it from the United States to
Afghanistan when it was in Iraq, and we could have gotten it
from there.
Mr. Flake. So, it just speaks to the need for more
coordination and cooperation.
Mr. Green. And is it worth it to ship it home. It is simple
to say, well, we will give it to the Iraqis. Well, maybe that
is the right decision.
To followup on Commissioner Shay's first point, I think we
need to think hard, as does this subcommittee, there is an
inherent implied concern that we have too many contractors.
Whether we do or not, I am not prepared to answer that, and the
Joint Staff has, in fact, got a task force looking at what
things are appropriate to be contracted out. And it goes to
inherently governmental, and those things, but how did we get
to this point? And then, what decisions were made by the
Services, what decisions were made by OSD, by OMB, and by the
Congress that get us to this one to one ratio, or whatever it
may be.
But I think more important is what are the options? Do we
increase force structure within DOD and State, so that we have
not just the contracting oversight expertise, but we have folks
to do some of these jobs that are now being done by
contractors. Do we change the emphasis within the Services to
push more things into the sustainment force, out of the
operational force? Do we provide just less services, or less
quality services, or do we just accept the fact that this is
the way we are going to go to war? And I think those questions
we need to focus on, in addition to waste, fraud, and abuse.
Mr. Tierney. That was a large part of the formation of
this. You know from reading your own charge in the legislation
that is a piece of the work that we really very seriously want
to have done. Mr. Duncan.
Mr. Duncan. Mr. Chairman, just one last comment. I think we
have far too many contractors. When I read that we have 240,000
contractors in the two arenas, Afghanistan and Iraq put
together, and that 80 percent of them are foreign nationals, it
seems to me that this is just a gravy train of money for these
defense contractors, No. 1, and for all these contractors, and
I think almost anybody in this country, almost any average
American, would say that it is ridiculous, that we are still
spending all of this money, hiring all of these foreign
nationals, and committing all of the waste, fraud, and abuse,
or allowing it to go on over there. And I think it is really
sad and it is really shameful, really. Thank you.
Mr. Tierney. I think the other question that we asked, or
part of that question that we asked, was what is inherently a
governmental responsibility and what is not? That is the nub.
All right. What are we doing with some of these people? Are
they really doing a job that should only be entrusted to
somebody that is a U.S. citizen, or a member of the Armed
Services, or in some respect responsible up the chain here?
Security strikes me as one of those things. It is very much
who is protecting whom within these countries, and that has
been something we have had hearings on in the past, but we are
looking forward to your in-depth work on that issue to help us
inform what are the many definitions of inherently governmental
responsibility? Which is the one that we are going to settle
on? And then, how are we going to make that determination.
Colonel Green, I agree, nobody has really discussed what is
the proper number of contractors out there, and Chris, what you
mentioned, the different ratios over time, one to one went up,
and then it went down again, and now it is where it is, but the
fact of the matter is, at some point the argument that we have
heard, when it wasn't really anything we could do about it at
this time when different people were running the military in
the White House before our day was that it was just cheaper to
contract it out. I don't think there is any evidence of that at
all, and it certainly would be helpful to have somebody explore
that aspect of it, how it could possibly be cheaper when we
look at these numbers, and this degree of difficulty that has
been going on, the other part of that.
So, we have to get the numbers right. We have to get the
assignment of who should be doing what correct. We need to have
the right management and oversight in place that gets back to
the capacity issue that you are talking about, and report in
there, and that will be critical, if you could help us with
that?
But in that vein we have people stationed in over a
thousand bases all over the world. That is not counting
Afghanistan, Iraq, and Kuwait, and all the places servicing
those two theaters right now. Over a thousand bases elsewhere
that for some reason, we seem just incapable of reviewing and
deciding whether in the hell they deserve to be there, they
should be there, what is their function, are they really adding
on something of value to our national security interests, and
what are all of the people that are there doing? Can't you take
some of them and train them? Some of them may have technical
expertise. Some of them may have the ability to be trained to
do certain aspects of it, or whether instead of sitting at some
base for a reason that was valid maybe 25 or 30 years ago, but
may not be valid today. We will be looking into that issue
separately, but I think it is something to note here,
prioritize.
The other is the National Guard and the reservists do have
expertise, particularly in security and other areas where maybe
a better identification of who is in these forces and their
deployment will put them in the proper position. They will be
easier to train, police officers, and things of that nature for
security on that basis. So, somebody in the management
structure of the Department of Defense and State has to be
looking at these issues on a much more sophisticated and better
way on that. Even the civilian core that we are now developing
hopefully will be a help although that is not going to happen
as quickly as we want.
Let me just wrap up my questioning on this with the Defense
Acquisition University aspect of it. Did anybody think of
putting it on a disk, so that you didn't necessarily have to
connect when you were doing that, or was it just beyond the
Defense University's capacity to conjure?
Mr. Thibault. Well, I would propose they probably have it
on a disk, but they told the individual to take it on-line, so
it is kind of silly if you don't have a set of disks, you can't
give them a disk.
Mr. Tierney. I mean that would seem a way to get it done
and that university to ramp up and get people through on that
basis. I am concerned that our contractors are not using the
kind of technology that they need to use. It seems to me that a
contract enforcement issue, and for all that we are going to
hear for apologies for the contractors coming in here and
telling us, oh, they are the good guys, all of the stuff about
your bad management, they are partially right. These
organizations owe it to their own people, the people who are
over there giving their lives and being injured as Chairman
Thibault said, and to the taxpayers of this country, to do what
the contract says, to put the kind of technology in there that
has to be put in, so that we can track these things and follow
through.
They owe it to us to speak up when they are building a $30
million place for people to eat, or whatever, and they are also
repairing another place and know, or should know, probably
better than anybody that is it. That is not funny. It may be
profitable, but it is not good. They owe it to the taxpayers of
this country to not just double the number coming from somebody
else and pass it along, without making note of it. So, there is
enough criticism to go around here on that, and they certainly
have a portion of it, and that is why we need management
oversight.
If we could trust them to do everything on the up and up,
we wouldn't be so concerned about it, but when I look at the
examples that you have stated, and the others in previous
reports, we have a capacity issue. We have to get the
management oversight in there, and we have to move forward on
that basis.
We have lots that we want to talk to you about over the
coming period of time, and we credit you for the work that you
have done. The Aegis situation is one, I think is serious
import on your report that we will look forward to expanding
that out, as you say that you will in your report. But the work
that you are doing is, I think, going to be very helpful to us.
It is going to help us focus on what we need to do in terms of
legislation, or probably more in line with oversight to hold
the feet to the fire of the people that are not doing the
management work that they should do, and not organizing and
planning as they should, or what we need to do to help them do
that, if they are not getting that capacity.
Mr. Flake, do you have anything you would like to add
before we let this panel go?
Mr. Flake. No.
Mr. Tierney. OK. We just thank you for your testimony and
for your service and the offer remains to work with you, if we
can be helpful in having your responsibilities fulfilled. We
will take about a 5-minute break before the second panel
starts.
[Recess.]
Mr. Tierney. The subcommittee will now receive testimony
from the second panel before us today. Mr. Alan Chvotkin serves
as executive vice president and counsel for the Professional
Services Council, where he is responsible for the Association's
Federal acquisition, legislative and regulatory policy. Prior
to this, Mr. Chvotkin was the vice president of AT&T Government
Services. He has held a number of staff positions in the U.S.
Senate, including both counsel and staff director on the
Senate's Small Business Committee, as well as counsel on the
Armed Services Committee.
Mr. Chvotkin holds a J.D. from American University's School
of Law.
As you saw from the first panel, Mr. Chvotkin, it is the
policy of the committee to swear you in before you testify.
[Witnesses sworn.]
Mr. Tierney. Thank you very much. Your full written
statement, as noted to the earlier panel as well, will be
placed upon the record. We would like to afford you 5 minutes
to make your opening remarks before we start the questioning,
and I invite you to do so at this time.
STATEMENT OF ALAN CHVOTKIN, EXECUTIVE VICE PRESIDENT AND
COUNSEL, PROFESSIONAL SERVICES COUNCIL, FORMER VICE PRESIDENT,
AT&T GOVERNMENT SERVICES
Mr. Chvotkin. Mr. Chairman, Congressman Flake, members of
the subcommittee, thank you for your invitation to appear
before the subcommittee today.
The Professional Services Council is the leading national
trade association of government professional and technical
services firms. Our more than 330 member companies represent
small, medium, and large businesses that provide Federal
agencies with services of all kinds.
Our members employ hundreds of thousands of Americans in
all 50 States.
We have been actively engaged in the policy issues relating
to the Federal Government's contracting in Iraq since the first
days of shock and awe. We testified before the Senate, in fact,
before this committee on three separate occasions during the
past 4 years, twice at hearings which were chaired by the
distinguished vice chairman of the Commission, Mr. Shays, when
he was in the House of Representatives.
We submitted comments on relevant legislation, participated
extensively in the comprehensive lessons-learned projects
conducted by the Special Inspector General for Iraq
Reconstruction and the Government Accountability Office, and,
in 2005, conducted a formal joint lessons-learned review with
the Commanding General of the Army Materiel Command.
We know the commissioners appointed to conduct this review
and have had the opportunity to work professionally with many
of them during the past. We have worked professionally with
many of the senior commission staff, and each and every
individual brings an expertise and a perspective to these
important tasks.
We have also had the opportunity to work professionally
with many of the key Federal agencies involved in developing
the requirements, including the oversight activities and the
Special Inspector General for Iraq Reconstruction. We
appreciate the challenges that they have faced and the
commitments that they have shown to fulfill the government's
mission.
We have also been privileged to work with dozens of
companies and hundreds of executives from across our membership
and our industry that put their companies and their employees
on the line every day to further the U.S. Government's missions
and objectives. Regrettably, too many members of the military,
government civilian employees, and contractor employees, both
U.S. citizens, as well as third country nationals, have given
their lives in that support.
Mr. Chairman, I can say without fear of contradiction that
the issues in Iraq and Afghanistan contracting are among the
most complex ever experienced and are interrelated and
interdependent among numerous, and often changing, government-
directed missions, activities and priorities. While it is
possible, and certainly easier, to be selective in the issues
chosen for review, the value of any analysis of the current or
past government or contractor activities, in Iraq in
particular, must take into account several sets of realities.
First, Iraq contracting is not one activity at all. It is
really three different subsets: the support of the military and
military related activities, second, the reconstruction of
Iraq, and third, the economic and developmental assistance
provided in Iraq and Afghanistan.
Second, we must look at the timeframes for our nation's
efforts in Iraq. The initial military actions through the fall
of the Saddam regime presented a very different set of on-the-
ground actions from the work undertaken by the Coalition
Provisional Authority, and different still from the more
recent, rapidly changing, physical security environment and new
sets of contracting directives and policies, some initiated by
Congress, and undertaken by the Defense Department, the State,
CENTCOM, and the Joint Contracting Command for Iraq and
Afghanistan.
The final set of realities is what I refer to as
situational contracting. To truly understand the nature of the
contracting activities in Iraq, it is essential to understand
the differences between emergency contracting during heightened
military action, contingency contracting during heightened
physical security challenges, and the longer-term sustainment
contracting that could characterize the situation today. It
would be a mistake to select any subset of acquisition
regulations that are written for normal contracting and expect
procedural perfection when they are applied in a wartime
environment.
We have known from almost the outset of the conflict that
there were too few trained government acquisition professionals
assigned to support the rapidly escalating U.S. operations in
Iraq, the significant growth in the number of contracts, and
the number of contractor employees deployed into theater. We
have known from almost the outset of the conflict that many of
the contractors that were awarded business in that theater of
operation were overwhelmed by the rapidly changing magnitude of
the work and the pressures put on their standard business
operations while responding to wartime requirements.
But it comes as no surprise to many of us in the private
sector, who have been watching and commenting on these
activities, and I would hope it would not be a surprise to
anyone in government who had responsibility for any part of
these, that the lack of contracting officers deployed into the
theater, the lack of qualified contracting officer
representatives assigned to supervise contractors, the lack of
State Department diplomatic security billets, or the lack of
government program management or technical skills, that had an
impact on the government's ability to execute, manage, and
oversee these capabilities.
As we reviewed those elements of the Interim Report that
found their way to the public domain prior to today, we were
struck by the fact that these examples cited did not, in fact,
speak to abuse or fraud. Rather, they spoke to some of the
structural challenges that are all too well known. For example,
the building of a dining facility at significant cost to the
government despite questions as to the need for that base is
not a case of contractor or government fraud or misconduct. It
may be inefficient. It may be waste, but it is not fraud or
misconduct.
Similarly, as the Commission continues its work, we hope
that it will use its unique opportunity to set the public
record straight on highly publicized, and often tragic events,
and to demystify the perceptions that at times overwhelm the
facts.
Finally, the Commission has held only two public hearings,
and in both cases only government officials were invited to
testify. There are, however, numerous other perspectives that
must be heard from in order to ensure a balanced and objective
review.
The Professional Services Council stands ready to
contribute further to the Commission in any way appropriate, as
they do that outreach. In the meantime, the Interim Report
should not be treated as a final or conclusive document.
Indeed, the need for additional input and discussion for the
Final Report is clear and essential.
In addition, we hope the Commission's future hearings, and
its Final Report, would address the root cause for these
issues, explain the reasons and the implications for such
activities, and develop action plans to minimize future
occurrences.
Congress should expect no less. The men and women who have
already served in Iraq and Afghanistan, and those who will
serve there or elsewhere in the future supporting the U.S.
Government, deserve no less.
Thank you for the invitation to provide these views. I
would be happy to try to answer any questions you may have.
[The prepared statement of Mr. Chvotkin follows:]
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Mr. Tierney. Thank you, Mr. Chvotkin. Mr. Flake, you are
recognized.
Mr. Flake. Thank you, Mr. Chvotkin. I appreciate the
testimony. You heard the last panel. You were present for that.
What, if any, areas do you disagree with the recommendations of
the panel?
Mr. Chvotkin. Well, Mr. Flake, thank you. I have had a
chance to look at the report quickly last night. The panel's
focus on oversight is appropriate, but I think it misses an
important part of the front-end of the process, making sure
that there are the resources available to execute the work
correctly in the first instance. I support oversight. I think
it is an important element of the overall acquisition system,
but if we don't have the right people doing the right things at
the beginning of the process, we can be assured that the
oversight function will find errors and mistakes.
And so, we have been strong proponents for increasing the
number of contracting officers and contracting officers'
representatives, increasing the amount of program management,
bringing the work in Iraq and Afghanistan closer to the theater
of operations rather than from Alexandria, or from Rock Island,
Illinois. And we think with more resources on the ground at the
front end, we will address those issues, some of the issues
that the Commission identified as failures in management
deficiencies.
Mr. Flake. Are there other cases, where fraud is alleged
among contractors, but never proven, and if that is the case,
what damage is done to the contractor?
Mr. Chvotkin. Well, there are many allegations of fraud,
certainly allegations of contractor over-billing or mis-
charging. Many of them do not prove out to be the case. There,
of course, some litigation issues. The Justice Department does
not pursue every allegation of fraud. Sometimes, the cases are
there. Sometimes, the prosecutorial discretion isn't there.
But, every one of those damages the reputation of the
company and, I think, calls into question the functioning of
the entire acquisition system. If there is no credibility in
the system from the requirements generation, to the contract
award, to the oversight, to the contractor's responsibility, if
allegations are made that are not sustained simply for the sake
of making allegations, then that damage is not only the
contractor itself, but the entire acquisition system.
Mr. Flake. You mentioned the dining hall facility, and the
controversy surrounding that. Apparently, it was the same
contractor that was doing the refurbishment, the one who got
the same contract for $30 million to rebuild the facility, or
to build the new facility. And the Commission pointed to the
lack of coordination and that nobody knew, the contractor, or
those overseeing the contract didn't know that any
refurbishment had been done, is there some responsibility that
falls on the contractor there to say, hey, we are being asked
to build the new facility when we have been doing work on the
old one? Is there a code of conduct that the contracting
community abides by in this case?
Perhaps it is not fraud, but there would seem to be some
responsibility there that lies with the contractor who had both
contracts.
Mr. Chvotkin. Well, I'm not familiar with the specifics of
the case. I have read about it for the first time in the
Commission's report last night. If it was the same contractor,
I would be very surprised, if during the course of that work,
the contractor did not at least raise to their supervisor, to
the contracting officer, that I am doing similar work. I mean
they are on the same base, as I understand it. So, whether they
did or not, I would hope that the contractor would take that
obligation and initiative to do that.
Many times, because of the rotation assignments, and
because of the resources, it is the contractors who have the
visibility into the activities of that facility, and I hope
they would take that initiative. I intend to ask around and see
what I can find out about the contractor. I don't know who it
was and the work that they have done, so I don't have any
comments about the specifics.
Mr. Flake. That would be great if you could forward
anything you find to the committee.
Mr. Chvotkin. I would be happy to share anything I learn.
Mr. Flake. One last question. I know we have votes coming
on. I am certain that in many of these cases, where these
contracts are not bid out, where they are self-source
contracts, that members of your association and community are
upset because they would like to bid on these contracts, do you
sometimes ask for these J&As, or can you review the material,
and in what forum do you have to go to the agency and say, why
wasn't this bid out? I am sure those types of situations come
up. What kind of remedy do you have to make sure that the
agencies abide by their own rules in terms of contracting
things out, or bidding things out?
Mr. Chvotkin. That is a very important question. In fact,
we hear a lot, where there is a lack of competition, our
members tell us about that because, as you said, they do
welcome the opportunity to compete for work and do compete
aggressively. They would much prefer to have sole-source work,
but they understand the importance of competition and the
importance of a predictable procurement process.
So, when those issues are raised, it is not raised
frequently to us, but when they are, we ask that question.
Congress, last year, required the Defense Department, when
issuing sole-source awards over $100 million, to make those
justifications publicly available, so that process will soon
start. The regulations have been recently put into place.
On the history, we don't have access to a lot of the
government's decisionmaking, but we do ask the question
frequently, why wasn't competition appropriate? Why wasn't it
able to be undertaken? And certainly, there are national
security reasons. And certainly, there are exigencies in the
wartime environment that might prohibit it.
But even dating back to the original U.S. involvement in
Iraq, we were strong proponents of phasing-in. If there was a
need for a sole source award, because of an emergency situation
or to support the troops, that didn't necessarily need to have
a 9-year or 10-year, or even a 5-year contract. There could
have been a better plan for the competition process. Some of it
is resources. Some of it is the changing environment in Iraq
and Afghanistan, in particular, but we have been strong
proponents of competition and that should be the standard that
is applied.
Mr. Flake. Thank you, Mr. Chairman.
Mr. Tierney. Thank you. Mr. Chvotkin, thank you very much
for joining us today and for giving your perspective on this.
We are going to close the meeting in time to let the Members
vote. We thank you for your time. Thank you for your patience
waiting for the first panel. This meeting is adjourned.
[Whereupon, at 11:48 a.m., the subcommittee was adjourned.]