[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/
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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.]

                                 
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