[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
 REWARDING BAD ACTORS: WHY DO POOR PERFORMING CONTRACTORS CONTINUE TO 
                        GET GOVERNMENT BUSINESS?

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


                                HEARING

                               before the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             MARCH 18, 2010

                               __________

                           Serial No. 111-78

                               __________

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


  Available via the World Wide Web: http://www.gpoaccess.gov/congress/
                               index.html
                      http://www.house.gov/reform



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              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 L. MICA, Florida
DENNIS J. KUCINICH, Ohio             MARK E. SOUDER, Indiana
JOHN F. TIERNEY, Massachusetts       JOHN J. DUNCAN, Jr., Tennessee
WM. LACY CLAY, Missouri              MICHAEL R. TURNER, Ohio
DIANE E. WATSON, California          LYNN A. WESTMORELAND, Georgia
STEPHEN F. LYNCH, Massachusetts      PATRICK T. McHENRY, North Carolina
JIM COOPER, Tennessee                BRIAN P. BILBRAY, California
GERALD E. CONNOLLY, Virginia         JIM JORDAN, Ohio
MIKE QUIGLEY, Illinois               JEFF FLAKE, Arizona
MARCY KAPTUR, Ohio                   JEFF FORTENBERRY, Nebraska
ELEANOR HOLMES NORTON, District of   JASON CHAFFETZ, Utah
    Columbia                         AARON SCHOCK, Illinois
PATRICK J. KENNEDY, Rhode Island     BLAINE LUETKEMEYER, Missouri
DANNY K. DAVIS, Illinois             ANH ``JOSEPH'' CAO, Louisiana
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
JUDY CHU, California

                      Ron Stroman, Staff Director
                Michael McCarthy, Deputy Staff Director
                      Carla Hultberg, Chief Clerk
                  Larry Brady, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on March 18, 2010...................................     1
Statement of:
    Scovel, Calvin L., III, Inspector General, U.S. Department of 
      Transportation; Richard L. Skinner, Inspector General, U.S. 
      Department of Homeland Security; Donald A. Gambatesa, 
      Inspector General, U.S. Agency for International 
      Development; Gregory H. Woods, Deputy General Counsel, U.S. 
      Department of Transportation; Elaine C. Duke, Under 
      Secretary for Management, U.S. Department of Homeland 
      Security; and Drew W. Luten III, Acting Assistant 
      Administrator for Management, U.S. Agency for International 
      Development................................................    13
        Duke, Elaine C...........................................    53
        Gambatesa, Donald A......................................    35
        Luten, Drew W., III......................................    60
        Scovel, Calvin L., III...................................    13
        Skinner, Richard L.......................................    27
        Woods, Gregory H.........................................    47
Letters, statements, etc., submitted for the record by:
    Duke, Elaine C., Under Secretary for Management, U.S. 
      Department of Homeland Security, prepared statement of.....    55
    Gambatesa, Donald A., Inspector General, U.S. Agency for 
      International Development, prepared statement of...........    37
    Issa, Hon. Darrell E., a Representative in Congress from the 
      State of California, prepared statement of.................    10
    Kucinich, Hon. Dennis J., a Representative in Congress from 
      the State of Ohio, article dated October 10, 2005..........    83
    Luetkemeyer, Hon. Blaine, a Representative in Congress from 
      the State of Missouri, letter dated December 9, 2009.......    80
    Luten, Drew W., III, Acting Assistant Administrator for 
      Management, U.S. Agency for International Development, 
      prepared statement of......................................    62
    Mica, Hon. John L., a Representative in Congress from the 
      State of Florida, followup question and response...........    77
    Scovel, Calvin L., III, Inspector General, U.S. Department of 
      Transportation, prepared statement of......................    16
    Skinner, Richard L., Inspector General, U.S. Department of 
      Homeland Security, prepared statement of...................    29
    Towns, Chairman Edolphus, a Representative in Congress from 
      the State of New York, prepared statement of...............     4
    Woods, Gregory H., Deputy General Counsel, U.S. Department of 
      Transportation, prepared statement of......................    49


 REWARDING BAD ACTORS: WHY DO POOR PERFORMING CONTRACTORS CONTINUE TO 
                        GET GOVERNMENT BUSINESS?

                              ----------                              


                        THURSDAY, MARCH 18, 2010

                          House of Representatives,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The committee met, pursuant to notice, at 10:09 a.m., in 
room 2154, Rayburn House Office Building, Hon. Edolphus Towns 
(chairman of the committee) presiding.
    Present: Representatives Towns, Cummings, Kucinich, 
Tierney, Watson, Quigley, Norton, Speier, Driehaus, Chu, Issa, 
Mica, Bilbray, Jordan, Chaffetz, and Luetkemeyer.
    Staff present: John Arlington, chief counsel, 
investigations; Aaron Ellias, staff assistant; Craig Fischer, 
investigator; Neema Guliana, investigative counsel; Adam Hodge, 
deputy press secretary; Carla Hultberg, chief clerk; Marc 
Johnson and Ophelia Rivas, assistant clerks; James Latoff, 
counsel; Leneal Scott, IT specialist; Mark Stephenson, senior 
policy advisor; Ron Stroman, staff director; Gerri Willis, 
special assistant; Alex Wolf, professional staff member; 
Lawrence Brady, minority staff director; John Cuaderes, 
minority deputy staff director; Frederick Hill, minority 
director of communications; Adam Fromm, minority chief clerk 
and Member liaison; Stephanie Genco, minority press secretary 
and communication liaison; Seamus Kraft, minority deputy press 
secretary; Stephen Castor, minority senior counsel; and Ashley 
Callen, minority counsel.
    Chairman Towns. Good morning and thank you all for being 
here.
    Today the committee continues its oversight of the Federal 
Government's use of suspension and debarment, a process that is 
supposed to prevent taxpayer money from going to the bad apples 
of the contracting world.
    Suspension and debarment can be an effective tool for 
Federal agencies to ensure contractor performance. 
Unfortunately, as we will hear today, the suspension and 
debarment tool often goes unused, quietly rusting away in the 
procurement tool box.
    More than $500 billion of the taxpayers' money goes to 
Federal contractors each year. It is a massive job to ensure 
that billions of dollars in taxpayer money is spent effectively 
and wisely, and that Federal dollars do not go to the 
incompetent and the unproductive, the con men and the con 
women.
    Suspension and debarment is the last line of defense 
against such abuse, and should only be used in the most 
seriously cases. But suspension and debarment only protects our 
Government if agencies use it.
    In February of last year, we held a hearing on the 
operation and use of the Excluded Parties List System. We found 
that some Government agencies were ignoring Federal regulations 
by awarding funds to businesses that had been suspended or 
debarred. We also found that Federal agencies took far too long 
to suspend or debar, if they did it at all.
    Now, a year later, it seems little has changed.
    In three separate reports, the Inspectors General of the 
Department of Homeland Security, the Department of 
Transportation, and the U.S. Agency for International 
Development found that their respective agencies have failed to 
use the suspension and debarment system or have been so slow in 
using it that the poor performers raked in millions and 
millions and millions in the time period.
    For example, the DOT IG found that, on average, it took DOT 
300 days to reach a suspension decision and 415 days to process 
a debarment decision. These decisions are supposed to be made 
within 45 days.
    In one such delay, the IG found that one Kentucky company 
committed contract fraud by bribing an official to receive bid 
information. During the 10-months it took DOT to suspend this 
company, they received $24 million in Recovery Act funds.
    Similarly, at DHS, the IG found that DHS had only 10 
debarment cases in 4 years, an incredibly low number for an 
agency that spends an enormous percentage of its budget through 
contracting. In one glaring example, there were no debarment 
actions by FEMA, an agency that had well-publicized problems 
with contractors during Hurricane Katrina. That, to me, is very 
interesting.
    Unfortunately, the news isn't much better at USAID. The IG 
found that GA Paper International and Ramtech Overseas, Inc. 
admitted that they had submitted more than 100 false claims for 
reimbursement. Though they agreed to pay $1.31 million to the 
Government, USAID never initiated a suspension or debarment 
action.
    If you aren't going to suspend or debar contractors for 
fraud, what does it take?
    As the old saying goes, ``Fool me once shame on you, but 
fool me twice, shame on me.'' In this case, shame on our 
Government for being fooled over and over and over again by the 
same contractors.
    It is way past time for agencies to suspend and debar bad 
actors and for agency managers to aggressively enforce this 
process.
    As I have said before and I want to emphasize today, I am 
not against contracting or contractors. I am against weak 
management and poor contractor performance. I know that 
responsible contractors and the witnesses today share this view 
as well.
    The failure to enforce the law against bad actors is unfair 
to responsible companies and it is unfair to the taxpayers 
whose money we are using.
    I look forward to hearing from both management and the IGs 
about what can be done to address this problem.
    I will now yield to the ranking member of the committee 
from California, Congressman Issa, for his opening statement.
    [The prepared statement of Chairman Edolphus Towns 
follows:]
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[GRAPHIC] [TIFF OMITTED] 58347.004

    Mr. Issa. Thank you, Mr. Chairman, and thank you for 
holding this hearing. As you recall, the first hearing held by 
this committee after you became chairman was on substantially 
the same subject. I will ask today that you join me in a letter 
asking for the GAO to update their findings so that we can look 
forward to not only having new facts, but, in all likelihood, 
new enforcement.
    Chairman Towns. Without objection, I will join you on that.
    Mr. Issa. Thank you, Mr. Chairman.
    The goal of today's hearing is not just to shed light on an 
ongoing issue, but to make sure that the industry of both 
contractors and the Government agencies that oversee those 
contractors realize that the time, as the chairman said, is 
long overdue to bring about quick and predictable debarment and 
suspension.
    Each of us may have different examples of those entities 
which should be suspended or debarred. The truth is all of the 
chairman's likely candidates should be scrutinized and either 
cleared or taken off the rolls, and all of my candidates, I 
suspect, should be either evaluated and cleared or taken off 
the rolls. It is, in fact, in my opinion, every single 
contractor's responsibility to live up to a high standard, and 
if there is any question from any quarter as to their conduct, 
it should be thoroughly investigated.
    Just yesterday, at the chairman's directive, we reviewed 
the question of both contractors and private individuals 
either, employees or Government contractors, who were seriously 
delinquent in their taxes, whether they should also be 
ineligible for contract or even employment.
    Although there is not bipartisan support on how to achieve 
this, there is bipartisan recognition that bad actors make for 
bad government.
    Mr. Chairman, I will delve slightly into one partisan 
example, but I do so for a reason. We in the Congress voted on 
a bipartisan and overwhelming basis in the House and the Senate 
to defund ACORN. Whether we agree with Federal court decisions 
now pending or not, it is clear that some members of the court 
believe that the Association of Community Organizations for 
Reform Now [ACORN], in their opinion, cannot be defunded by 
congressional fiat. That begs the real question: Why is there 
were people repeatedly breaking laws, being indicted and even 
convicted, and still operating within that organization? In 
fact, funds still being received even after it was shown that 
funds of the Federal Government had been embezzled and covered 
up.
    This is an example where, from this dais, we cannot bring 
about effective enforcement. We should not, on a regular basis, 
take up the question of any company or any organization. But in 
order to live to that expectation that I think the chairman and 
I want us to do, which is to never again have a House floor 
vote or a Senate vote related to defunding an organization, we 
must call on our agencies to do their job not only better, but 
much quicker.
    So, Mr. Chairman, my apologies for something which has 
often been considered to be partisan, but I believe that 
partisanship would have been completely unnecessary and tough 
votes for people on both sides would have been unnecessary if 
in fact the use of these tools had been aggressive. None of us 
would have questioned if an organization or an individual had 
been reviewed and properly cleared. But to not be reviewed, to 
go on receiving additional funds by any organization, including 
contractors and, quite frankly, even the continuation of 
Federal employees, must in fact reach a higher standard, one 
that the chairman made clear by having his first hearing on 
this subject and is making clear today by having an additional 
hearing.
    So I join with the chairman in all of his remarks and yield 
back the balance of my time.
    [The prepared statement of Hon. Darrell E. Issa follows:]
    [GRAPHIC] [TIFF OMITTED] 58347.005
    
    [GRAPHIC] [TIFF OMITTED] 58347.006
    
    Chairman Towns. Thank you very much. I thank the gentleman 
from California for his statement and also thank him for the 
work that he has done on this issue as well. Thank you.
    Let me first check if anyone else has an opening statement. 
I yield to the gentleman from Florida for a 5-minute opening 
statement.
    Mr. Mica. Thank you very much, Mr. Chairman, for yielding. 
As the Republican leader of the Transportation and 
Infrastructure Committee, I take particular interest in today's 
hearing, and thank you for holding it. I wish we were doing an 
even better job in our committee, Transportation and 
Infrastructure. We do have a lot of responsibility as the 
largest committee in Congress and a lot of oversight. But I am 
particularly interested in what you have found here, and it 
does give me great concern. We have tried to conduct regular 
overview of stimulus dollars, and I think that is very 
important because it was a huge amount of money. I think now it 
is scored at somewhere around $862 billion.
    Today, the President is going to sign a so-called jobs bill 
of $17 billion or $18 billion, however you figure it, and it 
also has a high emphasis on infrastructure and T&I projects.
    First of all, I am deeply concerned about getting that 
money out. To date, as of March 3rd, the last report I had from 
our committee staff, $48 billion in stimulus money that went 
through the Department of Transportation of those $862 billion, 
the $48 billion, only 18 percent had gotten out, which gives me 
great angst about what the President is going to sign today, a 
much smaller amount, even getting that money out and people not 
having jobs. My State rose in unemployment in the January 
report to one of the top 10.
    But the difficulty in getting money out is one thing. 
Oversight is another thing. But then to find out that the 
Department of Transportation is not being a good overseer of 
those contractors and those vendors who are getting some of 
this money. And if you read the report--and, again, this is a 
very shocking report that has come out by the Inspector General 
of DOT--it takes so long to debar someone or find them 
ineligible that we may have in fact already given--and I have 
some reports and I am having our staff investigate it--we may 
have given money to people who should not be participating in 
this process.
    So we aren't getting the money out. We are possibly giving 
the money to people who shouldn't be eligible players in this, 
and, again, it is deeply concerning and frustrating from our 
standpoint.
    But I thank you for conducting this hearing. We are going 
to dedicate some of our investigative staff to going after 
folks who, now we are learning, again possibly should have been 
debarred or disallowed in this process from receiving money who 
may have received that money; and we intend to also bring this 
report to our DOT and T&I Committee, and we will continue to 
follow this. But appreciate again your work, both the Inspector 
General and this committee. Thank you.
    Chairman Towns. I thank the gentleman from Florida for his 
statement.
    Now, at this time, we will introduce our panel of 
witnesses: Mr. Calvin Scovel III, Inspector General of the U.S. 
Department of Transportation. Welcome.
    Mr. Richard L. Skinner, Inspector General for the U.S. 
Department of Homeland Security. Welcome.
    Mr. Donald A. Gambatesa, Inspector General for the U.S. 
Agency for International Development. Welcome.
    Mr. Gregory H. Woods, Deputy General Counsel for the U.S. 
Department of Transportation.
    Ms. Elaine C. Duke, Under Secretary for Management of the 
U.S. Department of Homeland Security. Welcome.
    And Mr. Drew W. Luten III, Acting Assistant Administrator 
for Management, U.S. Agency for International Development.
    Let me welcome all of you to the committee.
    It is a longstanding policy that we swear all of our 
witnesses in, so if you would stand and raise your right hands.
    [Witnesses sworn.]
    Chairman Towns. You may be seated.
    Let the record reflect that the witnesses all answered in 
the affirmative.
    I would like to just go right down the line. As you know, 
the procedure is that the light starts out on green; then it 
goes to yellow, which means start winding down; then it goes to 
red. Everywhere in America red means stop.
    So, Mr. Scovel, why don't we start with you? Then we will 
come right down the line, keeping that in mind.

  STATEMENTS OF CALVIN L. SCOVEL III, INSPECTOR GENERAL, U.S. 
  DEPARTMENT OF TRANSPORTATION; RICHARD L. SKINNER, INSPECTOR 
   GENERAL, U.S. DEPARTMENT OF HOMELAND SECURITY; DONALD A. 
  GAMBATESA, INSPECTOR GENERAL, U.S. AGENCY FOR INTERNATIONAL 
  DEVELOPMENT; GREGORY H. WOODS, DEPUTY GENERAL COUNSEL, U.S. 
 DEPARTMENT OF TRANSPORTATION; ELAINE C. DUKE, UNDER SECRETARY 
FOR MANAGEMENT, U.S. DEPARTMENT OF HOMELAND SECURITY; AND DREW 
 W. LUTEN III, ACTING ASSISTANT ADMINISTRATOR FOR MANAGEMENT, 
           U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

               STATEMENT OF CALVIN L. SCOVEL III

    Mr. Scovel. Mr. Chairman, Ranking Member Issa, members of 
the committee, thank you for inviting me here today to testify 
on DOT's Suspension and Debarment Program.
    Over the last 4 years, the Department contract and grant 
obligations averaged $56 billion annually. Given the 
significant dollars at stake, plus an additional $48 billion in 
ARRA funds, it is imperative that parties who should be 
suspended or debarred not receive Federal contracts and grants. 
However, weaknesses in DOT's S&D program make these funds 
vulnerable to unethical, dishonest, or otherwise irresponsible 
parties.
    Today I will focus on two major weaknesses: first, delays 
in DOT's S&D decisions and reporting; and, second, the lack of 
effective management controls and oversight. These weaknesses 
were found at the Federal Highway Administration, Federal 
Aviation Administration, and Federal Transit Administration, 
which together represented more than 90 percent of DOT's S&D 
activity over a recent 3-year period.
    Over the past 2 years, we have reported on major delays in 
DOT's S&D decisions and reporting. Our work found that, on 
average, the operating administrations we reviewed took over 
300 days to reach a suspension decision and over 400 days to 
reach a debarment decision.
    In one recent case, Federal Highways took 10 months after 
receipt of our suspension referral to suspend individuals 
charged with bribery, conspiracy, theft, and obstruction of 
justice. Federal Highways' delay in making a suspension 
decision resulted in the Commonwealth of Kentucky awarding $24 
million in ARRA-funded contracts to companies that we believe 
met the legal test to be considered affiliates of these 
individuals.
    Several factors contribute to these delays. First, 
operating administrations generally do not rely on indictments 
or convictions to establish the evidentiary basis for 
suspension or debarment. Instead, they often perform extra, 
time-consuming tasks such as researching additional information 
on the case and analyzing the competitive impact of the case on 
Federal aid programs. Such tasks are not required by 
regulations.
    Second, operating administrations have not assigned 
sufficient priority to their S&D workload. Instead, staff 
typically performs this work as a collateral duty. Attorneys, 
for example, may be pulled from their S&D duties to perform 
litigation and other assignments their administrations 
determine to be a higher priority.
    We also found that DOT does not support its S&D decisions 
within timeframes required by regulation. Nearly half of the 
S&D decisions we reviewed were not entered into the 
Government's Excluded Party Listing System within 5 days of 
making a decision. DOT's procurement office exceeded the 5-day 
requirement by as much as 864 days and 14 cases took over 100 
days. Such time gaps allow unscrupulous contractors to go 
undetected by officials seeking to identify excluded parties 
before awarding new contracts or grants.
    The Department's lack of effective controls and oversight 
exacerbates these weaknesses. For example, DOT S&D policy 
requires officials to complete all necessary tasks for making a 
suspension decision or proposing a debarment within 45 days. 
Yet, the policy has been subject to interpretation and 
operating administrations exceed the 45-day limit.
    DOT's policy also assigns responsibility for monitoring its 
S&D program to the Office of the Secretary and the Department's 
nine operating administrations. Without clear accountability, 
the Office of the Secretary is unaware of the many S&D-related 
problems within the Department and cannot take appropriate 
corrective action.
    Finally, DOT lacks controls to ensure that data in the EPLS 
are accurate. Unreliable data not only weakens contracting 
officers' ability to confidently identify excluding parties, it 
also weakens the usefulness of DOT's annual S&D reports as an 
oversight tool. In fiscal year 2008 alone, the annual report 
excluded 53 pending S&D cases, leaving the Department without 
knowledge of those cases that most merited immediate attention.
    Since we issued our January report, DOT officials have 
stepped up their efforts to address our concerns. Specifically, 
the Office of the Secretary and the administrations are working 
to increase priority in handling S&D cases and clearly 
identified responsibilities and timeframes. Continued vigilance 
in these efforts will be critical to close oversight gaps.
    I would like to take this opportunity to thank the 
Department for its recent efforts to finalize its S&D order. 
However, until our formal recommendation followup process is 
completed, we don't feel it would be appropriate for me to 
comment on the proposed order at this time.
    This concludes my statement, Mr. Chairman. I would be happy 
to answer any questions you or other members of the committee 
may have.
    [The prepared statement of Mr. Scovel follows:]
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    Chairman Towns. Thank you very much for your statement.
    Mr. Skinner.

                STATEMENT OF RICHARD L. SKINNER

    Mr. Skinner. Good morning, Chairman Towns, Ranking Member 
Issa, members of the committee. Thank you for having me here 
today to talk about the Department of Homeland Security's 
Suspension and Debarment Program.
    I think we can all agree that the private sector plays an 
important role in assisting Federal agencies in the performance 
of their basic missions. I also think that we can agree, for 
the most part, contractors doing business with the Federal 
Government are honest, ethical, and responsible companies and 
persons. Unfortunately, there are those unscrupulous few who 
choose to take advantage of its commercial or contractual 
relationship with the Federal Government by behaving 
dishonestly, unethically, or irresponsibly.
    To protect itself from such unscrupulous people, the 
Federal Government has implemented a Government-wide Suspension 
and Debarment Program. This is perhaps the most effective tool 
in the Government's arsenal of enforcement devices. 
Unfortunately, it is not always being used effectively or, in 
some cases, not being used at all.
    The under-utilization of suspension and debarment action is 
by no means just a DHS problem, but appears to be a Government-
wide problem. Both the Department of Justice-led National 
Procurement Fraud Task Force and the Council of Inspectors 
General on Integrity and Efficiency have concerns that Federal 
Suspension and Debarment Programs are not being fully utilized.
    In particular, we believe that there may be a lack of 
coordination between Federal prosecutors and investigators and 
those officials charged with implementing Federal Suspension 
and Debarment Programs. We believe the significant cause of the 
ineffectiveness is the tendency of investigators and 
prosecutors to not alert suspension and debarment officials 
about a matter until the case is completed, and the reluctance 
of many agency officials to take action in the absence of an 
indictment or conviction.
    A robust and transparent Suspension and Debarment Program 
is needed at the Department of Homeland Security and other 
Federal agencies. Contractors who have failed to perform or who 
have willfully violated Federal criminal and civil statutes 
should not be allowed to do business as usual with the Federal 
Government.
    Acquisition management is just not a matter of awarding a 
contract, but an entire process that begins with identifying a 
mission need and developing a strategy to fulfill that need 
through a thoughtful, balanced approach that considers cost, 
schedule, and performance. The intent of the process is to 
ensure that the Government acquires goods and services that 
represent a best value for taxpayer dollars.
    As our recent audit report points out, although the 
Department of Homeland Security has suspension and debarment 
policies and procedures, it has been reluctant to apply them 
against poorly performing contractors. We identified 23 
instances where contracts were terminated for default or cause, 
but were not reviewed to determine whether a suspension or 
debarment referral was warranted. In fact, between 2004 and 
2008, the Department initiated only one debarment case for 
contractor performance, and only did so at the urging of the 
Defense Contract Management Agency.
    When asked to explain the absence of performance-based 
suspension and debarment actions, senior procurement officials 
throughout the Department said that they were reluctant to 
initiate such actions because they were either too resource-
intensive or too punitive in nature, or they would have too 
negative an impact on the contractor pool. Instead, Department 
procurement officials said that they preferred to use other 
administrative remedies, such as cure notices, not exercising 
option years, and, in the most severe cases, termination for 
convenience or cause or default.
    The Department's components also were not always reporting 
pertinent contract performance data for poorly performing 
contractors in either DHS's contractor performance tracking 
system or the Government-wide past performance information 
retrieval system. The Department terminated 23 contracts for 
cause between 2004 and 2008, yet only two were recorded in a 
Government-wide Past Performance Information Retrieval System. 
As a result, critical contract performance information has not 
been disseminated to procurement officials within the 
Department or across Government for use in making future source 
selection decisions.
    The Department recognizes these shortcomings and, as you 
will hear, has taken positive steps over the past 6 to 9 months 
to prove both its performance reporting in its review of poorly 
performing contractors. Policies and procedures intended to 
increase the Department's awareness of poorly performing 
contractors are or will be in place in the near future and 
steps are being taken to ensure that all pertinent contract 
performance information is recorded in appropriate agency and 
government-wide data bases.
    Finally, the Department has advised us that it intends to 
conduct an oversight review during the fourth quarter of this 
year. Because we commend the Department for these actions and 
because contracting is such a large part of the Department's 
budget, my office also intends to continue to provide oversight 
of the Department's acquisition management function, including 
the Suspension and Debarment Program, over the months and years 
to come.
    Mr. Chairman, members of the committee, this concludes my 
prepared remarks. At the appropriate time, I would be pleased 
to answer any of your questions.
    [The prepared statement of Mr. Skinner follows:]
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    Chairman Towns. Thank you very much for your opening 
statement.
    Mr. Gambatesa.

                STATEMENT OF DONALD A. GAMBATESA

    Mr. Gambatesa. Good morning, Chairman Towns, Ranking Member 
Issa, members of the committee. I am pleased to appear before 
you today to testify on behalf of the Office of the Inspector 
General for the U.S. Agency for International Development and 
to be joined by my colleagues from other oversight 
organizations and representatives of agencies with whom we 
work. Today I would like to share our assessment of USAID's 
activities related to suspension and debarment.
    In October 2009, we concluded an audit of USAID's 
suspension and debarment practices. We found that suspension or 
debarment had not been considered in all cases in which those 
exclusions might have been warranted. Consideration of 
suspension and debarment was limited to cases investigated by 
our office that included criminal or civil prosecution, and 
action was not always taken in response to other types of 
referrals. This limited approach to suspensions and debarments 
resulted in actions in only nine cases during the period 
covered by our audit, which was approximately 4 fiscal years.
    When USAID took suspension and debarment actions, it did 
not always do so properly. Some debarred entities were not 
entered into the Excluded Parties List System and others were 
listed late. Moreover, USAID sometimes failed to document that 
it had checked the Excluded Parties List System to determine 
whether firms were precluded from receiving Federal funds. The 
agency could not establish that it had performed these checks 
in 20 of the 54 contracts we examined. However, our audit did 
not identify any instance in which USAID issued contracts or 
grants to entities listed in the System.
    We believe that USAID's organizational approach to 
suspension and debarment reduces its ability to use these 
exclusions effectively. At the time of the audit, the review, 
approval, and implementation of suspensions and debarments were 
managed by offices and individuals with many varied 
responsibilities. Other Federal agencies we surveyed had 
established units specifically dedicated to suspension and 
debarment activities. We recommended that USAID consider 
adopting a similar approach.
    Overall, our report made 12 recommendations. We recommended 
corrective measures to strengthen documentation related to 
suspensions and debarments, as well as improvements in 
policies, procedures, and guidance. We also recommended that 
USAID consider alternative organizational approaches and take 
steps to identify best practices. USAID managers agreed with 
nine recommendations and planned steps to address them.
    The agency is still considering recommendations to enhance 
its organizational approach and identify best practices. As of 
earlier this week, action had not been taken to close any of 
the audit recommendations; however, I understand that 
significant progress is being made in that effort.
    Many skilled and capable employees are committed to USAID's 
mission and the agency works with a host of implementing 
partners that demonstrate a similar dedication to their work 
and prove high-quality services. By excluding ineligible 
entities, the suspension and debarment process reinforces the 
credibility and effectiveness of the agency's efforts and those 
of its implementing partners, and helps protect taxpayers' 
dollars.
    We look forward to continuing to work with USAID to 
strengthen its suspension and debarment efforts.
    Mr. Chairman, I thank you for the opportunity to address 
the committee, and I appreciate your interest in our work. I 
would be happy to answer any questions.
    [The prepared statement of Mr. Gambatesa follows:]
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    Chairman Towns. Thank you very much, Mr. Gambatesa.
    Mr. Woods.

                 STATEMENT OF GREGORY H. WOODS

    Mr. Woods. Thank you, Mr. Chairman. Chairman Towns, Ranking 
Member Issa, members of the committee, thank you for the 
opportunity to appear before you with Inspector General Scovel 
to discuss the suspension and debarment procedures of the 
Department of Transportation. My name is Greg Woods. I am the 
Deputy General Counsel of the Department.
    In the early years of my career, I prosecuted civil fraud 
cases at the Department of Justice, and I know that fraud is a 
real threat; it is not a hypothetical. The thousands of 
contracts and billions of dollars funded by the Department of 
Transportation annually are a tempting target, and I want to 
assure you that the Department recognizes that threat and takes 
seriously its responsibility to protect the public's funds.
    Inspector General Scovel has identified real concerns 
regarding the structure and implementation of our Suspension 
and Debarment Program. The Department has taken too long to 
process many suspension and debarment referrals. We are 
fortunate that the Department has not identified any instances 
where funds went to criminals who should have been suspended or 
debarred. The Inspector General rightly observes, however, that 
flaws in our procedure created opportunities that too readily 
could have been exploited. We would much rather trust in good 
systems than in good luck. The problems that he has identified 
must be fixed and fixed fast.
    Over the past year, the Department has implemented changes 
that we believe will dramatically improve our suspension and 
debarment process. In response to the Inspector General's first 
advisory regarding this area in May 2009 in an ARRA advisory, 
we met with suspension and debarment officials throughout the 
Department to communicate the Department's heightened 
expectations in this area. Our suspension and debarment 
processes within the Federal Highway Administration, which is 
highlighted in the Inspector General's report, have been 
reconfigured to assign responsibility for tracking and managing 
suspension and debarment cases to their Office of Chief 
Counsel.
    That change in management structure has already yielded 
results. We created a new centralized, electronic tracking 
system for suspension and debarment matters and, most recently, 
as Inspector General Scovel notes, we finalized a new order 
that will govern the Department's handling of suspension and 
debarment matters.
    That order puts in place a framework that will address the 
concerns that we have identified in our program. It clearly 
defines the role of our senior procurement executive to monitor 
the Department's performance in this area; it clarifies the 
responsibility of our operating administrations to take action 
within 45 days of notification of an action that would justify 
or warrant possible suspension or debarment; and it implements 
a new data collection system that will help the senior 
management of the Department monitor the performance of 
suspension and debarment officials.
    The Department is very thankful for the work of Inspector 
General Scovel in this area. His examination identified issues 
that should be and will be addressed promptly. We are.
    I would be happy to answer any questions that you have, and 
I ask that my written comments be placed in the record. Thank 
you, sir.
    [The prepared statement of Mr. Woods follows:]
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    Chairman Towns. Without objection, so ordered. Thank you 
for your statement.
    Ms. Duke.

                  STATEMENT OF ELAINE C. DUKE

    Ms. Duke. Good morning, Chairman Towns, Ranking Member 
Issa, and members of the committee. Thank you for hosting this 
hearing this morning. I am Elaine Duke, the Under Secretary for 
Management and Chief Acquisition Officer for the Department of 
Homeland Security.
    Successful contractor performance is important in terms of 
both mission success and sound business practices. As we seek 
to use contracts to provide critical mission capability, we 
must ensure that we are being good stewards of the taxpayers' 
dollars. Contract oversight in the Department is a 
collaborative effort between our program managers, contracting 
officers, and contracting officer technical representatives. We 
measure this contract performance in terms of cost, schedule, 
and performance; and when a contractor fails to meet the terms 
of the contract, we must take appropriate action based on the 
specific circumstances which give us different remedies to 
address the performance.
    When failing to perform a contract results in termination 
for default, the next step is evaluating whether the contractor 
should be referred for suspension and/or debarment. Suspension 
and debarment are intended to protect the Government from 
continuing to contract with an irresponsible contractor. The 
Federal Acquisition Regulation sets forth the criteria that may 
result in suspension or debarment, including fraud, violating 
antitrust statutes, bribery, falsification of records, 
violation of Federal tax laws, violation of Federal equal 
opportunity provisions, and other Federal statutes. Further, a 
contractor's willing failure to perform, history of failure to 
perform, or unsatisfactory performance may require a suspension 
or debarment.
    Since 2007, DHS has initiated suspension or debarment 
actions against more than 240 contractors or individuals. The 
majority of DHS actions are for immigration statute violations. 
In addition, DHS has recently put additional procedures in 
place to improve our execution of existing policies regarding 
terminations, suspensions, and debarments.
    Some of the recent actions we have taken include requiring 
contracting officers to assess all contract terminations for 
default or suspension possibility; a mandatory review by the 
senior component suspending and debarring official of every 
contractor that is terminated for default or cause to determine 
if suspension and/or debarment is appropriate; notifying our 
DHS chief procurement officer of any termination exceeding $1 
million to ensure the Department reviews the components 
decision on these terminations; and requiring all DHS 
contracting personnel to input performance reviews into the 
contract performance data base.
    I look forward to working with our Inspector General, Mr. 
Richard Skinner, in going forward to continue to improve our 
administrative controls over the termination, suspension, and 
debarment process, and I look forward to answering questions 
from this committee this morning.
    [The prepared statement of Ms. Duke follows:]
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    Chairman Towns. Thank you very much, Ms. Duke, for your 
statement.
    Mr. Luten.

                 STATEMENT OF DREW W. LUTEN III

    Mr. Luten. Chairman Towns, Ranking Member Issa--when he 
returns--and esteemed members of this committee, thank you for 
extending the invitation to appear before you today. I am 
pleased to provide you with an update on USAID's progress to 
strengthen processes and procedures related to suspension and 
debarment, and to report on our implementation of the 
recommendations from our Inspector General.
    We found the October 2009 report from the USAID Inspector 
General to be very timely. While we had made some progress 
since the period covered by the report, which went up to 2007, 
we recognized that there were a number of things that we needed 
to do to improve our capacity and our processes for handling 
suspensions and debarments. We need to do this in order to put 
USAID in a better position to be more proactive in overseeing 
contractor performance and compliance, and taking action as and 
when appropriate.
    We take very seriously our duty to suspend and debar those 
parties who seek to defraud the Government or abuse the 
privilege of receiving taxpayer funds. We have taken steps to 
address all of the IG's recommendations. Corrective action on 
six has been completed and will be formally reported back to 
the IG shortly, and the rest are in process, in varying stages 
of completion.
    The biggest change that we have made was to approve the 
establishment of a separate division within our Office of 
Acquisition and Assistance that will be responsible for partner 
compliance and oversight. We made this decision after surveying 
several Federal agencies. This division will be separate from 
the units that are responsible for soliciting and awarding and 
administering Federal contracts and grants. It will report 
directly to the senior procurement executive, who is the 
suspension and debarment official.
    The new division will have a dedicated staff to focus on 
suspension, debarment, and other oversight matters. It will 
develop case files, evaluate facts, make recommendations for 
action, as well as track the overall status and progress of its 
case load. An experienced procurement officer was assigned to 
build the division, and recruitment of staff will occur over 
the coming months.
    One of the other things that we have done is increase our 
interagency engagement on suspension, debarment, and compliance 
matters, looking for information about firms and organizations, 
as well as lessons learned from other agencies. We now have 
regular representation at the Interagency Suspension and 
Debarment Council and also serve on the EPLS Committee at GSA.
    In the meantime, we are managing an expanding workload of 
compliance matters. We are finding that the new Federal 
Acquisition Regulation provision on contractor business, 
ethics, and conduct which became effective in December 2008, is 
expanding our reach in the area of compliance oversight. This 
clause provides for contractor self-reporting of potential 
criminal violations, false claims, overpayments, and other 
misconduct. We have developed standard procedures for reviewing 
and making decisions with regard to such disclosures from 
contractors. Each case is vetted by a panel of specialists from 
multiple disciplines who review the reported information and 
the severity of the wrongdoing.
    Each potential suspension and debarment or other compliance 
action, however it is identified--by IG referral, through 
contractor self-reporting, through interagency collaboration, 
or other sources--is considered on its own merits under the 
criteria set forth in the Federal Acquisition Regulation and 
our agency's own non-procurement regulation with respect to 
suspension and debarment.
    As an agency, in appropriate situations, in addition to 
seeking suspension and debarment, as appropriate, we also find 
that there are appropriate situations where an administrative 
compliance agreement is the best practice to be applied under 
particular circumstances, considering the nature of the 
wrongdoing and, very importantly, considering the response of 
the contractor or grantee. All of these are taken into 
consideration.
    In pursuing our foreign affairs mission, USAID works in 
more than 80 developing countries around the world, often in 
difficult conditions or in environments with underdeveloped 
financial and governance systems. In appropriate circumstances, 
the compliance agreement is a tool that allows us to help 
willing organizations, both U.S. organizations and non-U.S. 
organizations, deal with problems, improve their capacity to 
operate effectively, and become accountable and recipients of 
U.S. funding.
    In closing, I will just say again that our IG's report was 
very timely and has focused us on taking actions that we know 
that we need to take. With improved policies, with a dedicated 
unit, with better interagency collaboration, we are putting 
ourselves in a much better position to proactively protect the 
taxpayer dollars that are entrusted to us.
    Thanks for the invitation to be here today. I would be 
happy to take questions that you may have.
    [The prepared statement of Mr. Luten follows:]
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    Chairman Towns. Thank you very much.
    Let me begin by first thanking all of you for your 
statements.
    This would be to you, Mr. Woods, and to Ms. Duke and to Mr. 
Luten. All of you, I am sure, know what is happening in your 
agencies. Why aren't bad actors being suspended or debarred, is 
it the red tape? What is the problem? Because you seem to know 
what is going on.
    We can start with you, Mr. Woods, and come right down the 
line.
    Mr. Woods. Thank you, Chairman Towns. Respectfully, what 
the Inspector General identified in his report was that the 
Department was taking too long in dealing with referrals that 
were made primarily by his office regarding people who had been 
indicted of crimes, and, sir, we agree with the findings in his 
report that in many instances we simply took too long, and 
thanks to his advisory in May 2009 and his recent report, we 
have been taking steps to try to speed up the processing of 
those suspension and debarment procedures.
    For us, thankfully, we haven't yet seen instances where 
people have gotten our money who should have been suspended or 
debarred, but as I said in my introductory remarks, sir, that, 
I think, in some ways is due to some luck. We have taken too 
long from the referral to suspension or debarment, but so far 
we have been fortunate to not find instances where somebody got 
money, a bad actor got our money that should not have. We need 
to improve our systems to make sure that doesn't happen.
    Chairman Towns. But that is too much money to leave up to 
luck.
    Mr. Woods. I completely agree, sir. Our systems have to be 
improved and the Inspector General's advice and advisories have 
been taken well to heart.
    Chairman Towns. Ms. Duke.
    Ms. Duke. I believe within DHS, and the data shows, it is 
part of our startup. When the Department started, we merged 22 
agencies and struggled with the administrative stand-up of the 
Department. Our contracting workload doubled early on in the 
Department, and this was one of the programs in the contract 
management acquisition management that we needed to put the 
building block in place.
    Now, the good news is our data does show the building 
blocks are starting to work. For instance, as an IG report is a 
report of the past, the data is correct in the IG's report, but 
our data does show we are increasing our suspension and 
debarments. In fact, we doubled in 2009 the debarments we did 
in 2008, and this year, in fiscal year 2010, so far, just in 
the first half of the year, we have nearly double what we have 
done in fiscal year 2009. We do have to still make more 
systemic administrative controls, but I think our data shows we 
are getting this situation administratively under control.
    Mr. Luten. I think our issues have been similar to other 
agencies. In our case, expansion of mission and expansion of 
program without adequate building of the infrastructure for 
stewardship, of which this is a part, is part of the cause.
    Part of it, as our IG has pointed out in his report, was 
lack of focus and lack of organizational focus on this, which 
we are remedying. In fact, since the period covered by the 
report, but even before the issuance of the report, we were 
devoting more attention to this. I think the report indicated 
that there were only nine actions taken.
    We now have 26 actions, suspension and debarment actions 
that we have taken since 2003. We have 18 more active cases 
that are under various stages of review. So it was increase in 
the program, need to have the stewardship infrastructure catch 
up with the increase in the program. We are increasing the 
number of suspension and debarment actions really since the 
period of the report that was covered, and the new 
organizational changes will help us do this more effectively.
    Chairman Towns. The restructuring, when did that take 
place?
    Mr. Luten. It has been approved and it is in the process of 
being staffed now, so we approved it in January. I approved it 
in January and we moved an officer to build the division. And 
even before that we are just devoting more attention to 
suspension and debarment.
    Chairman Towns. Thank you very much.
    I yield 5 minutes to the gentleman from California, the 
ranking member, Congressman Issa.
    Mr. Issa. Thank you, Mr. Chairman.
    Where to begin sometimes is hard on these, but, Ms. Duke, 
do you need additional tools in order to hold FEMA or any other 
part of Homeland Security accountable?
    Ms. Duke. Two things. One is at the Federal level there is 
a new system that is being deployed next week, it is the 
Federal Awardee Performance and Integrity Information System. 
This is going to be very helpful to DHS and all the other 
departments. What it does is brings past performance and 
integrity and debarment information all together in one data 
base. This is a Federal initiative that will be helpful.
    Within DHS, I think the additional tool we need--and Mr. 
Skinner and I have talked about this--is just a better system 
to control and bring visibility. We do not have a single 
authority in DHS right now, and that is something we gained 
from the IG report and are looking at, is how can we bring the 
administrative processes together under one leader. But in 
terms of authorities, I think we have the appropriate 
authorities; we just need to fine-tune the administrative 
controls.
    Mr. Issa. Let me ask an old businessman's question. I will 
just run down each of you. In business, if I have a contractor 
who performs poorly, if I have a contractor who is under 
indictment, if I have a contractor who has had three people 
arrested for selling coke on the premises and I become aware of 
it, I look at my purchasing agent and I say this all scores, 
this all scores into the question of this company or this 
vendor.
    If I have a contractor who fails their, in our industry, 
ISO 9000 or 9001, the actual quality, it scores. Do we have to 
give you authority to use scoring like that so that at least 
while somebody has these documentable events--not tried in 
every court and appealed all the way through the men and women 
here across the street in black robes, but at least these are 
legitimate markers. Do we need to give you the authority to say 
we are going to score that so these individuals fall lower on 
their success rate of getting new contracts and renewals?
    Mr. Scovel, start right down.
    Mr. Scovel. Good morning, sir. Sir, we think the Department 
of Transportation has every tool that they need and every----
    Mr. Issa. Well, clearly you are not using the tools. So 
that is the question, if in fact we gave you an overt tool that 
said these analyticals, maybe unproven, may be weighted in a 
renewal? Let's face it, at DOD, one of the biggest problems is 
you have a contractor who does a bad job and they get an 
automatic renewal. They get to do a bad job on what they are 
doing and they often say, well, but he met the minimums.
    So I ask you again do you have that tool? Do you want that 
tool, the tool to be able to use these kinds of performances--
some extraneous, but in the consideration not of debarment, but 
of the question basically--it is more of a suspension 
question--of do they win the new grant, do they win the new 
aware?
    And I am thinking in my mind of ACORN, and I am thinking of 
ACORN because I can understand why somebody would say, look, 
they already have the grant, they have already hired the 
people. While they are going on their appeal on voter fraud, 
maybe we won't do it. But the question of new money. And we 
switch to Lockheed Martin, we could switch to Boeing. We could 
switch to any company; fill in the blank. Do you have that 
tool? I think the answer is no, you don't.
    Mr. Scovel. No, we do not.
    Mr. Issa. Would you like to have that tool? And if not, why 
not? That is the entire question and I just want those 
questions answered by each of you, if I could, please.
    Mr. Scovel. Sir, from the point of view of my office, the 
Inspector General----
    Mr. Issa. I am talking about the agency each oversees more 
than anything else.
    Mr. Scovel. From the Department's point of view you are 
asking.
    Mr. Issa. Yes.
    Mr. Scovel. I must leave that question officially to the 
Department. From my point of view, sir, to the extent that 
discretion, unfettered discretion enters into the analysis, we 
would probably find that problematical. And I am sure our work 
would result in findings of disparate treatment from case to 
case.
    Mr. Issa. OK. Mr. Skinner.
    Mr. Skinner. Yes, I agree.
    Mr. Issa. And obviously I am not suggesting that we invent 
discretion, but, rather, we document criteria that would allow 
for that, such as indictment, such as adverse reporting. There 
would have to be a list. But right now it appears as though 
groups that would fail under that don't meet the threshold for 
400 days to get suspended or debarred.
    Mr. Skinner. And my time is up, so if we could just be as 
quick as possible.
    Mr. Skinner. Yes, I agree with Mr. Scovel. Right now, it is 
very, very subjective. However, there are certain bars or 
parameters that should be established. Indictments, arrests 
should weigh in very, very heavily into your decision as to 
whether you want to proceed. Right now, if you are convicted, 
you are prohibited unless there is a waiver, and it has to be 
justified. But there are performance measures below that. You 
may not be convicted, you may not be indicted; you may be 
terminated for cause. Those things I think should have a 
greater weight than some of the other factors.
    Mr. Issa. They currently do. Yes, sir.
    Mr. Gambatesa. Yes, sir, I agree with Mr. Skinner that the 
convictions and indictments are obviously something that has 
more weight. But in areas where there is an agreement or some 
sort of settlement agreement to avoid prosecution, I think 
those should be scored in some way, or under-performance should 
be scored in some way.
    Mr. Issa. Mr. Woods.
    Mr. Woods. Sir, quickly, just to note, the majority of our 
funds are passed through grants to the States, so the States 
are entering into contracts with the direct contractors. I do 
believe that States use information of that sort in order to 
determine the present responsibility of contractors using our 
funds.
    Mr. Issa. Ms. Duke, the person I really wanted to start 
with.
    Ms. Duke. Within DHS, I think the biggest tool we have is 
our people. Recording past performance information is time-
consuming, but it is absolutely important. So, as we seek to 
buildup our contracting and our program management staff, I 
think the biggest thing we could use is support in the budget. 
I know that is difficult in such a tight year, but this is an 
important function, but it is time-consuming to do this well; 
and I think throughout the Federal Government that type of 
information is not recorded appropriately, so it is not 
available for use----
    Mr. Issa. Yes, but I am only speaking--and I apologize, we 
have really gone over--the tool of selectively not granting 
extensions or new contracts or grants to individuals who have 
adverse reporting, allowing that to be formally weighted in the 
process. And the reason I think the chairman and I probably are 
both interested in this is we clearly want to get a tool that 
is easier to use than the 400-day that we seem to never be able 
to get down, or the 300-some day. That tool is all I wanted an 
answer on.
    Ms Duke. Yes, I believe the tool is there, and we need to 
use it.
    Mr. Issa. Mr. Luten.
    Mr. Luten. We absolutely need to use the tools that are 
currently available and keep doing what we are doing to focus 
on staffing and paying more attention. But the idea of 
additional criteria and criteria that are differentiated 
depending on which each one is would be welcome, I think. I 
mean, I am not sure how it would work, but it is a discussion 
that is probably worth having.
    Mr. Issa. Thank you.
    Thank you, Mr. Chairman.
    Chairman Towns. The gentleman's time has expired.
    I now yield 5 minutes to the gentleman from Illinois, Mr. 
Quigley.
    Mr. Quigley. Thank you, Mr. Chairman.
    Lady and gentlemen, I guess I am inclined to ask about 
specific issues such as once an entity has been suspended or 
debarred, they must be entered into the EPLS system within 5 
days. That doesn't include those that are terminated, which 
seems to be a shortcoming here.
    But listening to you and the fact that we are here the 
second in a year going over the exact same things, I guess I 
wonder, to an extent, if you were in my place, what difference 
does it make? You begin to get the impression that the 
agencies, if they don't like something, they are not going to 
do it anyway; they are not going to file data within the 
prescribed period, they are not going to pursue issues on a 
timely basis.
    And here is my personal favorite: Department procurement 
officials characterize the process as being too resource-
intensive, punitive, and negatively impact the size of the 
contractor pool. That is my favorite. We want a large pool so 
even if we have inept, corrupt people, we will have a larger 
pool. It is exactly what we are dealing with in SELPA. So if 
someone could help me here explain, if you are in my shoes, why 
bother if the agencies are going to act as independent victims 
anyway?
    Mr. Skinner, if you want to jump in.
    Mr. Skinner. May I respond? Yes, the responses that we 
received--and this was from procurement officials throughout 
the Department--concerning the procurement pool or being too 
punitive or we just don't have the resources, it is too 
resource-intensive is something I think cannot be explained.
    First of all, and I agree, if you are not performing and 
you have a history of not performing, then you should be 
eliminated from the pool. What I would suggest is, when I hear 
those types of responses and I look at these contracts, I think 
the problem lies in the contracting officer or the contracting 
rep is not comfortable with the way the contract was written to 
begin with, so they feel that they may be vulnerable. That is, 
if we are going to terminate you for lack of performance and a 
continued lack of performance, then we have to demonstrate that 
we clearly articulated in the terms of that contract that this 
is what we wanted as an end result. Unfortunately, we cannot 
always do that, so, therefore, they feel we may be partially at 
blame for not clearly articulating the terms of the contract 
and what goods and services we wanted at the end of the road; 
and I think therein lies part of the problem.
    The other thing I think is in fact a resource issue. The 
Department, at least in the Department of Homeland Security, we 
had to dig the Office of Procurement throughout the Department 
and all the components had to dig themselves out of a hole. 
They were grossly understaffed. The urgency of the mission 
trumped good business practice in the early days. That is 
starting to change and we are starting to see evidence of that 
now as we buildup and have a better training program, increased 
staffing, more experienced staffing to address these other 
issues.
    The third point that I would like to make is we have to 
hold these people accountable. Like you said, why bother if you 
are not going to be held accountable? And one of the ways of 
doing that I would suggest is that--and we have discussed this 
throughout the Department--is to start putting these types of 
performance indicators in your performance evaluation plan for 
the individual contracting officer, for the individual 
contracting technical rep, for the project manager. Hold them 
accountable for their actions when things cannot be explained.
    Mr. Quigley. Just with yourself, sir, the issue of whether 
the entity has been suspended or debarred has to be entered 
into the data base, would you add terminated as well?
    Mr. Skinner. In the----
    Mr. Quigley. Into the EPLS.
    Mr. Skinner. Oh, that is a separate data base. I think that 
data base should be held exclusively for those that have been 
in fact suspended or debarred. I think there are other ways 
through the Government-wide tracking system and through the new 
system--well, the new system will capture this, but through 
Past Performance Tracking Retrieval System, that information 
should be clearly articulated in that system.
    Mr. Quigley. But we have already heard and read that 
agencies aren't even reading what is on this system, EPLS, in 
evaluating and going forward with these entities. Is a separate 
system now just going to confuse the issue; it is one more 
thing to check?
    Mr. Skinner. No, I don't think--and I have yet to take a 
very close look at it. I am sure my cohorts that are involved 
in the procurement acquisition or those in the community have. 
This is not a new system. Well, it is a new system, but what it 
does, it collects all the information from the various systems. 
So this new tracking performance and integrity system will--it 
is one-stop shopping, so to speak, is my understanding. So when 
you go in and put in a DUNS number or a company name or an 
individual name, you should be able to extract information that 
are in all these other systems that are being maintained.
    Mr. Quigley. Thank you.
    Mr. Tierney [presiding]. Thank you, Mr. Quigley.
    Mr. Mica, you are recognized for 5 minutes.
    Mr. Mica. Thank you.
    You know, one of the things we have been trying to do is 
get the stimulus money out. I am thinking maybe it is good we 
aren't getting it out, because we probably are giving it to as 
many bad actors, since the system doesn't seem to work to catch 
or stop them.
    In the Kentucky case it took 300 days, Mr. Scovel, to reach 
a suspension, and then a debarment was 400 days, is that 
correct?
    Mr. Scovel. Almost, Mr. Mica. It took about 10 months from 
the time of my office's referral of the indictment of 
individuals to the Federal Highways Administration for Federal 
Highways to make the suspension decision.
    Mr. Mica. In the meantime, they had given $24 million in 
contract to a firm that had been indicted, I guess, or charges 
against some of the principals.
    Mr. Scovel. Twenty-four million dollars in recovery funds 
were awarded to three companies. Well, a couple of the 
contracts were awarded before the suspension decision was made 
and one after.
    Mr. Mica. Well, there is obviously not a system to alert 
people when prosecutorial action is taken, but when the 
suspension or debarment takes place, do we notify the States 
immediately? Is there a State alert? Since most of these folks 
we heard a lot of the money is passed through, like the 
stimulus, to the States. There is an alert system?
    Mr. Scovel. Yes. The have access as well to the Excluded 
Party Listing Service.
    Mr. Mica. OK.
    Mr. Woods. That is correct, sir. In fact, our systems 
require that each of the States, before they award a contract, 
check the EPLS system and certify they haven't been excluded.
    Mr. Mica. But the problem we have is getting the money out 
in a hurry, which we want to do. Mr. Oberstar and I tried to 
get it out in a year. If it is 365 days and it takes 400 days 
for this process, we could be in fact awarding and people could 
have contracts that really are bad actors. So we do have a 
problem. And some of the remedial action may not cure the 
problem that has been mentioned today.
    Ms. Duke, Homeland Security. OK, I have a bad actor 
question for you. We are talking about contractors. I want to 
talk about employees. I notified your agency when one of my 
sheriffs got me, when I was back home some months ago, and said 
what the hell is going on in Washington? TSA is hiring people 
that we fired as bad employees.
    One sheriff told me three employees, one was a good guy and 
two were bad guys. Two shouldn't be working anywhere for the 
misconduct that they found them guilty of. They were hired by 
TSA, working in TSA at one of the airports; he got information 
back. And none of the three were ever checked or vetted. He 
went back to his personnel office and they checked; they never 
had a call, a comment from TSA or Homeland Security. We are 
hiring people in sensitive security positions in your agency 
who are bad actors. What is the problem?
    Ms. Duke. Well, we do do suitability checks on our 
employees from a security standpoint. I will check----
    Mr. Mica. How about just checking the previous employer? I 
mean, that is the first thing I would do. I don't have the 
biggest personnel human resources operation in the world, but 
that is the first thing we do. And I still don't even know the 
resolution, because I am not sure if you even responded to my 
question yet.
    Ms. Duke. I do agree with you, Mr. Mica, that reference 
checks in employment are very valuable, and I will look into 
that.
    Mr. Mica. OK.
    Finally, Mr. Luten, you were talking about additional 
criteria there and all that, but it has been brought to my 
attention that one of your contractors or guarantees is engaged 
in false claims at litigation with your agency and the 
Department of Justice. The Department of Justice and USAID, 
according to court filings, believe that a company called 
Disaster Relief Construction, Inc. submitted approximately $40 
million in false claims. Has USAID taken any action to suspend 
or debar that company?
    Mr. Luten. I must say that I am not specifically familiar 
with that case.
    Mr. Mica. I don't think they have. And if they haven't, why 
not, if that is the case?
    Mr. Luten. Could we respond to you after this hearing?
    Mr. Mica. Yes, I would like to see a response.
    Mr. Luten. We will answer that.
    Mr. Mica. And I will ask unanimous consent that his 
response be made part of the record.
    Chairman Towns [presiding]. Without objection, so ordered.
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    Mr. Mica. Thank you.
    Chairman Towns. I thank the gentleman from Florida.
    Ms. Chu.
    Ms. Chu. Mr. Gambatesa, in your testimony you stated that 
your department had surveyed six other Federal agencies with 
active suspension and debarment programs, and that four out of 
six had established divisions or offices that were especially 
dedicated to these activities. What are these six Federal 
agencies and what were the respective agency track records with 
regard to S&D before establishing these special divisions and 
afterwards, and should all agencies have divisions or offices 
that are separate, just concentrating on this?
    Mr. Gambatesa. Well, we surveyed a large group in the 
Government, pretty much all agencies, and the six that 
responded were I believe the Department of the Navy--I have 
them here somewhere--the U.S. Air Force, the Defense Logistics 
Agency, GSA, and EPA all responded back to us.
    And, I am sorry, the second part of your question?
    Ms. Chu. The second part of my question is whether there 
should be separate offices that handle suspension and 
debarment, and whether that would make the process more 
efficient.
    Mr. Gambatesa. Obviously so. Our report recommended just 
that, that USAID establish such an office, and my understanding 
from Mr. Luten is that they are in the process of doing just 
that.
    Ms. Chu. OK. And I am wondering, with the other agencies, 
are you in the process of establishing a separate office?
    Ms. Duke. Within DHS, we are looking at it. We have three 
separate, very separate ways we have to consider debarment: one 
is under grants or financial assistance, the second is under 
procurements; and the third is under immigration law. We 
believe now, to be efficient and make sure that this is done 
quickly, that a decentralized look at it--because they are done 
by very separate groups in DHS--is important, but we are 
looking at where in DHS, under a centralized authority, should 
the three pieces come together. So we are working with our 
Inspector General on seeing what is best for our Department.
    Mr. Woods. Like DHS, we have a number of operating 
administrations within the Department of Transportation, each 
of which has both procurement, buying things, and non-
procurement grant authority; and for each of those there is a 
separate suspension and debarment official. What we have 
implemented now, and are strengthening, have been strengthening 
over the course of the last year, is centralizing 
responsibility for oversight of all of the suspension and 
debarment activities within the Office of the Secretary, which 
sits astride the operating administrations and we have 
designated our Office of Senior Procurement Executive to fit 
that function.
    Ms. Chu. Well, let me then concentrate on transportation, 
Mr. Woods. The Inspector General found that your annual report 
is intended to be an oversight tool, but that the annual report 
was riddled with incomplete and inaccurate information, such as 
excluding open cases from prior years, incorrect action dates, 
and duplicate entries. How do you anticipate moving the agency 
forward and having annual reports that really close this 
oversight gap, and do you have the resources to do this 
overhaul and piece together information going back to 2005?
    Mr. Woods. Thank you. The Inspector General did identify 
deficiencies in the annual reports that were submitted for 
those years. What we are doing in order to correct that is we 
are implementing a new electronic system that will allow each 
of those operating administrations to input information to a 
centralized data base.
    The system that we are putting in place will ultimately 
allow the Inspector General to input the initiation of a 
suspension or debarment proceeding or a referral into that 
system, and that will allow the Office of Senior Procurement 
Executive that I mentioned earlier to have direct visibility on 
a real-time basis to what each of the operating administrations 
is doing.
    So we are hoping we are both going to have more 
transparency regularly and, because we are going to have more 
regular visibility into the information that is being placed 
into the system, it will be easier for them to compile the 
annual report, rather than going back to the operating 
administrations and asking them to deliver up the components 
that would comprise it. And I think that was a big source of 
the failures in the reports that General Scovel pointed to.
    Ms. Chu. And you----
    Mr. Woods. Sorry, in response to the second part of your 
question, a lot of this, again, as General Scovel pointed to, 
is really a question of management and a need to focus the 
people that we have working on this area more on their 
responsibilities and educating them in what those are. We are 
working on the process of that and we are hoping that with the 
resources we currently have, with enhanced management oversight 
and clearer procedures, we will be able to get that done.
    Ms. Chu. And you think you will be able to go back to 2005 
and correct the mistakes of the past?
    Mr. Woods. I believe that we can, yes, ma'am.
    Chairman Towns. The gentlewoman's time has expired.
    I now yield to the gentleman from Missouri, Mr. 
Luetkemeyer.
    Mr. Luetkemeyer. Thank you, Mr. Chairman. If there is no 
objection, I would like to add to the record a copy of the 
letter that Mr. Mica was referring to during his questioning of 
Ms. Duke with regards to the two sheriff's employees.
    Chairman Towns. I am sorry, I didn't hear that.
    Mr. Luetkemeyer. Mr. Mica referred to a letter that he was 
talking about with Ms. Duke. He would like to just add that to 
the record, if there is no objection to that.
    Chairman Towns. Without objection.
    Mr. Luetkemeyer. Thank you, sir.
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    Mr. Luetkemeyer. Thank you, Mr. Chairman.
    As I have been listening to the comments this morning and 
going through the testimony and some of the summaries, it is 
very troubling to see what is going on here. One of the 
comments was, additionally, the DHS IG reported that on at 
least 21 occasions the agency failed to record a termination 
for default or cause in Government-wide past performance data 
bases. DOT: The staff, with responsibility for suspension and 
debarment, viewed it a secondary to their duties. Debarment and 
suspension decisions were not timely. USAID: The actions the 
agency did take were poorly executed.
    As I have sat here on this committee over the past several 
months, it seems as though--and this morning is symptomatic of 
this--that we have an almost blatant disregard sometimes for 
the rules; we have a lack of will to enforce the rules that are 
there; and if not just totally incompetent. And it is very 
disturbing to me because there should be oversight over all of 
this. I mean, when you get moneys to be distributed, there 
should be a process in place for oversight immediately. That 
should be a part of the process of distribution of the money.
    And this morning we talk about now we are going to take 
action here, now we are going to take action here, now we are 
going to do this. Where were you? Why didn't we do something 
before? Why did we have to come here? This should have been 
done months, if not years, ago in all of these situations. This 
is ridiculous. You guys are the first caretakers of the 
dollars, not us. We are the secondary group here. You are the 
first caretakers.
    I would like to ask how many of you are taxpayers? Show of 
hands, anybody a taxpayer? All of you?
    Chairman Towns. If not, we are going to invite IRS to our 
next hearing. [Laughter.]
    Mr. Luetkemeyer. Remember, you all are under oath now. How 
many of you are outraged about what is going on by a show of 
hands? Any of you outraged about what is going on? Some of you 
no? You are not upset that there are taxpayers' dollars being 
wasted here, that people are getting contracts that shouldn't 
be given contracts? There are some of you that are not 
outraged? I didn't see six hands. So you don't really care, Ms. 
Duke, is that right?
    Ms. Duke. I very much care, yes.
    Mr. Luetkemeyer. You are not outraged by what is going on?
    Ms. Duke. I am outraged if a company that should be 
debarred is getting Federal dollars, yes.
    Mr. Luetkemeyer. Why hasn't something been done before? Why 
is it not? Why does it take a hearing like this to raise this 
issue?
    Ms. Duke. In DHS, in both the IG review and our review, we 
have no records of a company that should have been debarred 
not--or contract dollars going to a company that has been 
debarred or is proposed for debarment. So I do agree that there 
are more things that need to be done.
    Mr. Luetkemeyer. Well, in one of these descriptions here, a 
summary of the report indicates that some individuals in the 
Department or the staff felt that the suspension or debarment 
was viewed as secondary to their duties. Now, I have served in 
the private sector and I have served as a division director in 
the public sector as well, and I can tell you that whenever you 
have this sort of attitude, it tells you one of two things: 
either you don't care or you have way too much money and they 
are willing to waste it; and that has to stop.
    Mr. Chairman, I yield back the balance of time.
    Chairman Towns. The gentleman from Missouri yields back.
    I now recognize the gentleman from Ohio, Mr. Kucinich.
    Mr. Kucinich. Mr. Chairman, thank you very much for holding 
this hearing. I would like to ask some questions of Ms. Duke. 
And I would ask you if you would pull the mic close so that we 
can hear your responses.
    You expressed in your testimony the importance of 
contractor performance and mission success and sound business 
contractors. Yet, the DHS IG found that between 2004 and 2008, 
a time period that includes Hurricane Katrina and the well-
publicized contractor malfeasance that ensued, DHS had only 10 
debarment cases. An article in The Nation magazine, which, 
without objection, I would like to submit for the record----
    Chairman Towns. Without objection, so ordered.
    Mr. Kucinich [continuing]. Reported that the number of 
private security companies registered in Louisiana jumped from 
185 to 235 within 2 weeks of the hurricane. Former Department 
of Homeland Security Spokesperson Russ Knock told the 
Washington Post, he ``knew of no Federal plans to hire 
Blackwater or other private security firms that worked for New 
Orleans.'' Yet, days later Blackwater announced they were hired 
by DHS to guard reconstruction projects in Louisiana.
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    Mr. Kucinich. When asked by Mr. Scahill, the reporter, on 
what authority Blackwater employees were operating in New 
Orleans, they replied, ``they were under contract with the 
Department of Homeland Security. We can make arrests and use 
legal force if we deem necessary.''
    Now, does Blackwater still have a contract with Homeland 
Security, or their predecessor renamed company known as ``Xe?''
    Ms. Duke. I would have to check to see if any, but I do 
know that they are on the list, so they wouldn't have any new 
contracts. I would have to check and get back to you for the 
record.
    Mr. Kucinich. So you don't really know. I mean, this 
company is infamous, but you really don't know if they are 
working for you or not.
    Ms. Duke. I would have to check to see if there are any 
residual contracts before I gave you a precise answer.
    Mr. Kucinich. Well, we know that they were awarded a 
contract with DHS, despite their reputation for complete 
disregard for lives of people in Afghanistan and Iraq. I mean, 
it was so bad that they ended up having to change their name to 
``Xe.'' What I would like you to find out if they are still 
working for DHS.
    What would a contractor have to do, what kind of conduct or 
behavior would rise to the level of debarment?
    Ms. Duke. Well, there are several criteria. One is willful 
nonperformance; violations of integrity; violations of statute, 
such as immigration law, drug-free workplace, environmental 
law. So there are many different areas. The predominance 
throughout the Federal Government debarments are for violations 
of key statutes, not for nonperformance.
    Mr. Kucinich. One of the things that the Inspector 
General's report says, ``The Department is reluctant to apply 
the policies and procedures against poorly performing 
contractors. Department procurement officials characterize the 
suspension and debarment process as being too resource-
intensive, punitive, and as negatively impacting the size of 
the contractor pool, and that the agency prefers to use what 
the Inspector General called other administrative remedies.''
    Now, would you agree that the suspension and debarment 
procedure is intended to be punitive and that there are cases 
in which contractors ought to be punished for egregious 
violations of law?
    Ms. Duke. The suspension and debarment system is to protect 
the Government, and that is what I think it is----
    Mr. Kucinich. Is what?
    Ms. Duke. Is to protect the Government and the taxpayers' 
dollars.
    Mr. Kucinich. Well, I know that, but I am trying to get 
some response from you about do you feel you have enough 
resources to pursue debarment, or are you not able to do it 
because you just can't get into debarment cases because they 
are so costly? What is your philosophy on that? Would you 
rather not get into debarment issues and just use 
administrative discipline?
    Ms. Duke. No, that is not true. In terms of--I think what 
Mr. Skinner said earlier about the startup of the Department of 
Homeland Security and the shortage of the resources did 
contribute significantly. It is very time-consuming to record 
past performance and to do the full complement of contract 
administration, and I think we are working toward two things: 
one is getting resources on the management side. I think the 
second area we are looking for is focusing not just on speed, 
but doing business well, as Mr. Skinner said.
    Chairman Towns. The gentleman's time has expired.
    Mr. Kucinich. Mr. Chairman, my time has expired, but I 
would ask the Chair this, that if the Chair would join me in a 
request for information about the status of Blackwater and/or 
Xe with respect to Homeland Security.
    Chairman Towns. Without objection, I would be delighted to 
do so.
    I now yield 5 minutes to the gentlewoman from California, 
Congresswoman Speier.
    Ms. Speier. Thank you, Mr. Chairman. And I want to applaud 
you for holding this hearing today. I think if this committee 
dedicated the next 6 months to really improving the response by 
these agencies, we would have done a great service to the 
American people.
    I believe that this is simply scandalous. To think that a 
company that actually pled guilty in 2005, pled guilty in 2005, 
continued to receive payments by the Federal Government for 2 
additional years before any action was taken to debar it is 
absolutely unacceptable. There is no way that you can justify 
that under any set of circumstances.
    Now, I believe that part of the problem is that the 
Inspector Generals don't have any teeth. I think, based on what 
I have heard today, you make recommendations and the various 
agencies can take you up on those recommendations or not take 
you up on those recommendations. For instance, Mr. Luten said 
that he agreed with most of the recommendations by the 
Inspector General, but not all of them.
    So I have a question for you, Mr. Gambatesa. What 
recommendations did they not embrace and do you think that 
those recommendations should be embraced and, if so, what 
should we do about it?
    Mr. Gambatesa. Thank you. Obviously, we think all the 
recommendations should be embraced or we wouldn't have made 
them. The three that they hadn't reached management decision on 
so far had to do with the restructuring of the office, 
establishing a permanent office and consultation with the 
oversight board. To say that the IGs don't have teeth, our 
teeth, I think, is our ability to press the agency and forward 
our reports to the Congress if the agencies don't respond to 
final action within the allotted period of time that is 
required by the Inspector General Act. So I think in that way 
we do. We also have the ability to elevate recommendations to 
the head of the agency if they are not responded to.
    Ms. Speier. Well, with all due respect, this is a very busy 
place, and we will hold a hearing and we will kind of flush it 
out, and we will put a spotlight on it, and then we go about 
working on any number of other issues; and another year passes 
by and then maybe there is another hearing.
    So I really believe that this committee needs to, one, 
introduce a bill that requires that each of these agencies have 
an office of compliance, debarment, and suspension so that they 
are solely focused on looking at these contractors to see if in 
fact they have complied with the law, complied with their 
contracts. I don't think that is going to happen otherwise.
    There will be some effort made by some of these agencies to 
do a little bit, but unless you have someone dedicated to this 
function, it is not going to take place. And based on your 
comments, it sounds like USAID is not all that interested in 
complying with that recommendation.
    And to you, Mr. Luten, I was just in Pakistan and I met 
with one of your representatives there who was bemoaning the 
fact that one of the contractors, a U.S. contractor, who had a 
large sum of money was expected to build X number of schools 
and--I think the number was 30, but don't hold me to it--and, 
in fact, over the course of the contract they had only built 5. 
Now, I don't know how you rank that. Is that nonperformance or 
is that circumstances beyond their control? But, to me, that is 
nonperformance. That person should no longer be a contractor 
with the United States of America.
    If this excluded party system is not even observed by the 
agencies, then it is not working, and we have to come up with a 
better system; and that is why I think it is going to require 
Congress to do some of the heavy lifting here in order to have 
some accountability, because the Inspector Generals can 
recommend, but you can choose not to take them up on their 
recommendations, and you might get a slap on the hand here, but 
that may be the end of it. So to you, Mr. Luten, if you would 
just comment on whether or not you think building 5 schools 
instead of 30 schools has met the performance requirements.
    Mr. Luten. I would like to comment on the comments earlier 
to Mr. Gambatesa. We accepted all of the recommendations that 
they have provided. What the issue was that at the time the 
report was issued, we immediately agreed to take nine 
recommendations and needed to go make some management decisions 
on how to implement the remaining three. So we have completed 
action on six and the action on the remaining six are in 
process.
    Ms. Speier. Well, let me interrupt you. In your testimony 
you said, as such, management agreed with the majority of OIG's 
12 recommendations offered through the audit process. That is 
what you said in your testimony, your sworn testimony this 
morning.
    Mr. Luten. OK, then that is in error. That was the written 
testimony.
    Ms. Speier. That is what you also said.
    Mr. Luten. I did? OK. We are acting on all of them and six 
have been completed. We have taken the steps to establish a 
separate unit to focus specifically on contractor and grantee 
compliance and oversight that will improve our work with the 
EPLS system, as well as engage better with the interagency to 
gather more information and do compliance oversight better, and 
we take this very seriously.
    On Pakistan, I would have to go and get specific 
information. The security conditions in Pakistan and 
Afghanistan are big factors that may be an issue in that 
matter; I just don't know the details of that. But 5 out of 30 
does sound----
    Chairman Towns. The gentlewoman's time has expired.
    Mr. Luten [continuing]. Does sound like it is clearly 
something that needs to be looked at from a performance 
perspective.
    Chairman Towns. I yield now 5 minutes to the gentleman from 
California, Congressman Bilbray.
    Mr. Bilbray. Thank you, Mr. Chairman.
    Lady, gentlemen, let me just say, as a former mayor and 
chairman of a county of over a million, I take a look at this 
and I just can't fathom how we would ever allow this in local 
government. I mean, this is almost like the government version 
of too big to fail is too big to be effective or even decent. I 
mean, some of this stuff at a local level would just be nailed 
down really quick. There is not a city manager that would 
survive with this kind of lack of response to a problem. There 
is not a building inspector or a public works director that 
would survive 6 months with this kind of thing. And I hate to 
say it, it sort of really reinforces the argument of a lot of 
people in this town that Washington spending money has a built-
in inefficiency that we should avoid like the plague.
    Now, Ms. Duke, when we got into Katrina--and I am going to 
let you work on this because I am going to shift over to the 
gentleman next to you. But I looked at Katrina. I was down 
there. My wife's family is from New Orleans and we have a place 
in Mississippi, and I saw the way that was handled. How many 
people that were in that fiasco of abuse and money switching 
and everything else, how many of them have been debarred and 
restricted from access? I mean, I understand when you work with 
Louisiana you have a State half under indictment and half under 
water, but this thing is the Federal Government's 
responsibility, not Louisiana's responsibility.
    Ms. Duke. The DOJ Procurement Fraud Task Force has indicted 
and convicted several contractors and individuals. FEMA has not 
debarred anyone, to my knowledge; it has been handled through 
the DOJ Procurement Fraud Task Force to this point.
    Mr. Bilbray. So, in other words, you have to be convicted 
before FEMA is going to restrict your access to any more 
contracts?
    Ms. Duke. You do not have to be convicted. I mean, there 
has been a conservatism that----
    Mr. Bilbray. Well, who has been restricted who hasn't been 
convicted by FEMA?
    Ms. Duke. No one to this point.
    Mr. Bilbray. OK. That is what I mean. You may say that, but 
in results----
    USAID, one of the untold stories, in my opinion, after 
going to Afghanistan and talking with people, is one of the 
great untold stories. Everybody has talked about the for-profit 
abuses in Iraq under the Bush administration. No one seems to 
be talking about the so-called non-profits and their abuses and 
their corruption in the system in Afghanistan during the Bush 
administration.
    And I think if there is one place that this committee 
should be able to find bipartisan effort is to find out why 
have we totally ignored the abuses of the non-profits in 
Afghanistan at a time when we all are very aware of the for-
profit violations in Iraq?
    Do you have any comments about the handling of those grants 
and those programs in Afghanistan with the non-profits?
    Mr. Luten. They are subject to the same basic set of rules 
and approaches. I would have to get back to you separately on 
what actions have been taken with respect to non-profits. Some 
of our suspension and debarment actions are with respect to 
non-profits, but I don't have the data specifically for 
Afghanistan. We also work with organizations on compliance 
agreements. Sometimes compliance agreements are done in 
conjunction with investigations by the Department of Justice or 
actions by the Department of Justice and entered into in 
settlement cases; in some cases they are done apart from a 
legal setting.
    Mr. Bilbray. OK. And let me just take--all of us should be 
responsible for this, but wouldn't you admit that Congress, the 
oversight agencies, the media have not given the same attention 
to corruption or abuses in the non-profits, especially 
Afghanistan, that has been focused on the for-profits in other 
countries? Wouldn't you agree that, culturally, at least the 
major appearance is that the same hard standard is not being 
applied to the non-profits as it has been, at least from the 
media and the attention by Congress, if not by the agencies 
themselves, that we have done with the for-profits?
    Mr. Luten. I am doing sort of a quick mental scan of news 
articles and so on, and there may be that impression, but that 
is not our approach with respect to--we should be treating them 
the same. It is Federal dollars----
    Mr. Issa. Would the gentleman yield?
    Mr. Bilbray. Yes, I would yield.
    Mr. Issa. Just a quick followup. Ms. Duke, if I understood 
you correctly, as of 2007, 768 people were convicted, far more 
were charged, and yet, related to Katrina, FEMA has zero 
debarments.
    Ms. Duke. That is correct, Mr. Issa.
    Mr. Issa. OK. Then on behalf of the committee, why wouldn't 
we author a bill that created immediate and automatic debarment 
at the time of a conviction? You have discretion at the time of 
an accusation; you have discretion at the time of the 
indictment.
    But why would the chairman and I not author a bill that 
would simply create automatic debarment so that your failure of 
your agency years later, and I have 2007, but you have made it 
clear that you haven't done anything as of 2010. This is not 
400 days, this is zero response. Do you have any answer for why 
the chairman and I shouldn't simply author a bill and take it 
out of your hands at least as to criminal convictions?
    Ms. Duke. It has to be dealt with either way. It is 
something we will deal with. Such a bill would not be--no, I 
can't say anything about why----
    Mr. Issa. You wouldn't oppose it, since obviously FEMA 
hasn't done anything about these 768 people that have been 
convicted?
    Ms. Duke. No, I would not oppose it at this point.
    Mr. Bilbray. To reclaim my time, it would sure be 
convenient not to have our contracts being administered out of 
a Federal penitentiary cell, right?
    Chairman Towns. The gentleman's time has expired.
    I now yield 5 minutes to the gentlewoman from California.
    Ms. Watson. Thank you so much, Mr. Chairman. Since I am 
just now getting here, I don't know if some of these questions 
have been asked, but I will go over them too.
    Since 1975, USAID has experienced a gradual downsizing of 
its staff. For instance, in 1990, USAID had nearly 3,500 people 
administering $5 billion a year in aid, but as of 2009 there 
were only 2,200 people overseeing more than $8 billion 
annually. And during the Secretary's confirmation hearings, 
Secretary of State Hillary Clinton, she highlighted this issue, 
stating that USAID has half the staff it used to have, while 
foreign aid and reconstruction efforts have been increasingly 
privatized.
    How would you say the decrease in staff has affected 
USAID's ability to optimally implement Federal acquisition 
regulations? And let me ask Mr. Gambatesa if you can respond.
    Mr. Gambatesa. Yes, thank you. In other audits also that we 
have performed over the last few years, we found that there was 
a lack of staffing in the contracting area and we have made 
recommendations to the agency for that improvement, and they 
have taken action to hire contracting officers and contracting 
officer technical representatives and others to oversee 
contracting problems. There was also a problem with training of 
contracting officers, we found in a previous audit report--not 
this one with suspension and debarment--and they have taken 
action on a number of those issues.
    I won't speak for Mr. Luten, but in this specific audit of 
suspension and debarment, it wasn't specifically brought out 
that the problem was lack of staffing; however, the way the 
office is structured with a small number of individuals doing a 
number of different jobs, one would have to say that they need 
more people to do the job more effectively. Even though we 
didn't really look at that specifically in the audit, one could 
draw that conclusion.
    Ms. Watson. Mr. Luten.
    Mr. Luten. Yes. We have, in recent years, received the 
funding and focused our attention on hiring additional staff, 
particularly foreign service officers. This will include a 
substantial number of foreign service officers in what you 
might call the stewardship backstops, contracting officers, 
financial controllers, administrative managers, as well as in 
technical specialties, because they are involved in procurement 
and grant making as well. This is going to put us in a better 
position to manage the process of planning and executing 
programs, engage more directly, provide better oversight.
    There are a number of components to oversight in Federal 
procurement and grant making. Suspension and debarment is part 
of it, but the rest of it is really important too, and we are 
putting ourselves in a better position to manage the increase 
in program resources that have been provided in recent years. 
So it is something that has received attention in the last 3 
fiscal years and we are acting on that to build the capacity 
back toward where it should be.
    Ms. Watson. The developing work that USAID undertakes in 
Afghanistan is critical to this administration's mission in the 
region, and the military alone cannot achieve long-term 
stability for the Afghan people. One important USAID program is 
the Accelerating Sustainable Agriculture Program to combat the 
cultivation of opium poppies and to provide long-term economic 
opportunities to Afghans. The program was started in November 
2006 under a $102 million contract for Chemonics International. 
Unfortunately, a 2008 audit reported by USAID's Inspector 
General revealed that, 2 years into the program's 
implementation, the contractor could not prove that it had 
fulfilled any of the program's eight project goals.
    Mr. Luten, again, after the release of the IG's audit 
report, did USAID increase their oversight of the program and 
is there documented proof that this contractor has since 
improved their performance? And has Chemonics received any 
additional USAID contracts?
    Mr. Luten. If you would permit, I would like to respond 
separately on the Chemonics contract. I will comment that the 
challenges in Afghanistan are significant, particularly 
security-related. But if it is acceptable, we will provide you 
a separate response on that contract in Afghanistan and your 
questions.
    Ms. Watson. I would like to have it in writing.
    Let me ask Mr. Gambatesa has the Office of the Inspector 
General continued to review USAID's Accelerating Sustainable 
Agriculture Program and their contractor?
    Mr. Gambatesa. Yes, we continue to do a number of oversight 
activities in Afghanistan. I would have to get back to you with 
the specifics on that program after the 2008 audit. I know we 
have done some other work, but I don't have it right here with 
me, but I certainly can get that to you.
    Ms. Watson. Do you think----
    Chairman Towns. The gentlewoman's time has expired. Would 
you like an additional minute?
    Ms. Watson. Just 30 seconds. I just wanted to----
    Chairman Towns. All right. I would be delighted to yield an 
additional 30 seconds.
    Ms. Watson. OK.
    Do you believe that USAID has the resources it needs to 
adequately monitor this contractor's performance and the grant 
recipients? That was the basis of my original question.
    Mr. Gambatesa. In most of our audits we will look at 
reasons why something isn't working satisfactorily and, as I 
said earlier, oftentimes we come up with lack of oversight by 
contracting officers or those responsible. There could be a lot 
of reasons for this, but to say they do or don't at this point 
is very difficult to say.
    We have to attribute these things to something, and it is 
easy to say they don't have enough people to do it, but is that 
always the reason? Sometimes it is lack of training; sometimes 
it is lack of oversight of the contractors or grantees; or 
sometimes it is lack of oversight by the contractors or 
grantees of their subs. And without getting into a specific 
audit, it is difficult to generally say what the problem is, 
but those problems all exist in many of the audits that we have 
done in Afghanistan.
    Chairman Towns. Thank you very much.
    Before we close, the ranking member asked a question or 
raised an issue that I think I want to sort of explore a little 
further. He asked what do we need to do from a congressional 
standpoint; do you need additional tools in order to make this 
work? And the reason I want to stay with this is that I 
remember a couple of years ago a gentleman at the airport, who 
indicated that he had been in Washington working in Government 
for 40 years--he went back to the Carter administration--he 
went on to tell me, in terms of how long he had been involved, 
and he said that there is something that we do not look at when 
we come to these kinds of settings and talk about waste and 
fraud and all of that. He said that some contracts require the 
contractor purchasing special kinds of things. He says maybe it 
is a kitchen, he used the example.
    And he said you buy all this equipment for this particular 
company, which is paid for out of government dollars in many 
instances, and then they do not perform. And rather than go to 
somebody else, the fact that you have invested all this money 
in this particular item, you say, well, we will ignore their 
behavior because it will cost us too much to move to somebody 
else at this particular time.
    Is this an issue? Let me go right down the line. Is this a 
problem in any way? Does this kind of thinking go into it as a 
reason why sometimes there is not movement?
    Unidentified Speaker. The cost-benefit of debarment.
    Chairman Towns. Yes, the cost-benefit of debarment. That is 
what we are really talking about.
    Ms. Duke. There are provisions that if you suspend or debar 
a contractor, that you can re-procure and actually charge those 
costs back. So if it is happening, it should not be happening 
that way because we do have the ability to both deal with that 
contractor terminate, that contract for default and recoup the 
taxpayers' dollars in an effective way.
    Chairman Towns. But the fact that it is a long process, 
does that come into play as to why you don't do certain--I am 
trying to get a picture here why certain things are not 
happening.
    Ms. Duke. Mr. Chairman, I will have to say that I think 
that the acquisition work force Federal-wide is under-resourced 
and there was an indication or a question earlier that I didn't 
get a chance to answer--is it incompetence? I believe we have 
an extremely competent acquisition work force in DHS.
    There is a shortage of people. In the 1980's and 1990's we 
cut the acquisition work force and increased contracting 
dollars, and we are suffering from that. The Department and our 
appropriators have helped us to start to recover, but I think 
we and the Federal Government are digging themselves out of a 
hole in that whole area and not just on suspension and 
debarment, but about effectively managing contractor 
performance in general.
    Chairman Towns. Anyone?
    Mr. Woods. Mr. Chairman, as you said, suspension and 
debarment is the last line of defense. I think within the 
Department of Transportation, we are actively trying to keep 
fraud from happening before you get to this. From my 
information, for example, we only had 24 suspension or 
debarments during the course of 2008, but that doesn't mean 
that we are not focused on stopping fraud before people enter 
into contracts.
    So 24 of the number of contracting actions that we are 
involved in is a relatively small part of our activity. What we 
need to do is focus more attention on that last line of defense 
in addition to all the steps that we have been taking up to 
that point.
    And to answer your question, I think that your involvement 
in this process, along with the effective oversight of our 
Inspector Generals, has been very helpful in helping us to 
sustain management oversight of the program.
    Chairman Towns. Mr. Luten.
    Mr. Luten. Sorry, out of order here. I don't think that the 
concerns about taking action and then needing to reprogram or 
re-procure are behind the delays or behind the weaknesses in 
the approach to suspension or debarment; I think it has been a 
lack of focus. I think it has been a lack of resources devoted 
specifically to suspension and debarment, and that is why we 
are in the process of refocusing and resourcing the effort.
    I do absolutely agree with Ms. Duke's comments that the 
Federal procurement work force is solid, but the volume of 
dollars that have gone through Federal contracts and grants in 
recent years has escalated dramatically, and the 
infrastructure, the human infrastructure and the system's 
infrastructure to keep up with that has not caught up yet. So 
that is the overarching issue. Suspension and debarment is a 
portion of that and, specific to this hearing, we are going to 
do our part to focus our efforts on better suspension and 
debarment activities.
    Chairman Towns. Well, let me thank you for your testimony 
this morning and to say to you that we really need to do 
better, and we are willing to work with you to do better. If 
there is something that we need to do, I know a couple Members 
mentioned possible legislation, and I am not there yet, but the 
point of the matter is that we have to make certain that tax 
dollars are not wasted. We have an obligation and 
responsibility to make certain that the money goes to do the 
kinds of things that we are saying they are going to do.
    So I want to thank you again for your testimony and let you 
know that we will be following up on this, because we see it as 
being very, very serious; and the fact that not too much is 
happening. So when you have a situation where not too much is 
happening, people continue to do whatever it is, and without 
any corrections. So the point is that we need your help in that 
regard and, of course, the inspectors, when they make 
recommendations, I think we should take them very, very 
seriously.
    So thank you again for your testimony.
    The committee will adjourn for 2 minutes.
    [Whereupon, at 11:53 a.m., the committee proceeded to other 
business.]
    [Additional information submitted for the hearing record 
follows:]
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