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




 
  INVESTIGATION OF PROTECTION PAYMENTS FOR SAFE PASSAGE ALONG AFGHAN 
                              SUPPLY CHAIN

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY
                          AND FOREIGN AFFAIRS

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                             JUNE 22, 2010

                               __________

                           Serial No. 111-144

                               __________

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


         Available via the World Wide Web: http://www.fdsys.gov
                      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             JOHN J. DUNCAN, Jr., Tennessee
JOHN F. TIERNEY, Massachusetts       MICHAEL R. TURNER, Ohio
WM. LACY CLAY, Missouri              LYNN A. WESTMORELAND, Georgia
DIANE E. WATSON, California          PATRICK T. McHENRY, North Carolina
STEPHEN F. LYNCH, Massachusetts      BRIAN P. BILBRAY, California
JIM COOPER, Tennessee                JIM JORDAN, Ohio
GERALD E. CONNOLLY, Virginia         JEFF FLAKE, Arizona
MIKE QUIGLEY, Illinois               JEFF FORTENBERRY, Nebraska
MARCY KAPTUR, Ohio                   JASON CHAFFETZ, Utah
ELEANOR HOLMES NORTON, District of   AARON SCHOCK, Illinois
    Columbia                         BLAINE LUETKEMEYER, Missouri
PATRICK J. KENNEDY, Rhode Island     ANH ``JOSEPH'' CAO, Louisiana
DANNY K. DAVIS, Illinois             BILL SHUSTER, Pennsylvania
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

         Subcommittee on National Security and Foreign Affairs

                JOHN F. TIERNEY, Massachusetts, Chairman
CAROLYN B. MALONEY, New York         JEFF FLAKE, Arizona
PATRICK J. KENNEDY, Rhode Island     DAN BURTON, Indiana
CHRIS VAN HOLLEN, Maryland           JOHN L. MICA, Florida
PAUL W. HODES, New Hampshire         JOHN J. DUNCAN, Jr., Tennessee
CHRISTOPHER S. MURPHY, Connecticut   MICHAEL R. TURNER, Ohio
PETER WELCH, Vermont                 LYNN A. WESTMORELAND, Georgia
BILL FOSTER, Illinois                PATRICK T. McHENRY, North Carolina
STEVE DRIEHAUS, Ohio                 JIM JORDAN, Ohio
STEPHEN F. LYNCH, Massachusetts      JEFF FORTENBERRY, Nebraska
MIKE QUIGLEY, Illinois               BLAINE LUETKEMEYER, Missouri
JUDY CHU, California
                     Andrew Wright, Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on June 22, 2010....................................     1
Statement of:
    Phillips, Lieutenant General William, Principal Military 
      Deputy to the Assistant Secretary of the Army for 
      Acquisition, Logistics, and Technology, Office of the 
      Assistant Secretary of the Army for Acquisition, Logistics, 
      and Technology, U.S. Army; Gary Motsek, Assistant Deputy 
      Under Secretary of Defense for Program Support, Office of 
      the Under Secretary of Defense for Acquisition, Technology 
      and Logistics, Department of Defense; and Brigadier General 
      John Nicholson, Director of the Pakistan/Afghanistan 
      Coordination Cell, the Joint Staff, Department of Defense..    95
        Motsek, Gary.............................................   102
        Nicholson, Brigadier General John........................   112
        Phillips, Lieutenant General William.....................    95
    Schwartz, Moshe, Specialist in Defense Acquisition, 
      Congressional Research Service; Carl Forsberg, Research 
      Analyst, Institute for the Study of War; Colonel T.X. 
      Hammes, senior research fellow, Institute for National 
      Strategic Studies, National Defense University; and S. 
      Frederick Starr, Ph.D., the Paul H. Nitze School of 
      Advanced International Studies, John Hopkins University....   148
        Forsberg, Carl...........................................   167
        Hammes, Colonel T.X......................................   179
        Schwartz, Moshe..........................................   148
        Starr, S. Frederick......................................   201
Letters, statements, etc., submitted for the record by:
    Forsberg, Carl, Research Analyst, Institute for the Study of 
      War, prepared statement of.................................   169
    Hammes, Colonel T.X., senior research fellow, Institute for 
      National Strategic Studies, National Defense University, 
      prepared statement of......................................   181
    Issa, Hon. Darrell E., a Representative in Congress from the 
      State of California, followup question and response........   127
    Motsek, Gary, Assistant Deputy Under Secretary of Defense for 
      Program Support, Office of the Under Secretary of Defense 
      for Acquisition, Technology and Logistics, Department of 
      Defense, prepared statement of.............................   104
    Nicholson, Brigadier General John, Director of the Pakistan/
      Afghanistan Coordination Cell, the Joint Staff, Department 
      of Defense, prepared statement of..........................   114
    Phillips, Lieutenant General William, Principal Military 
      Deputy to the Assistant Secretary of the Army for 
      Acquisition, Logistics, and Technology, Office of the 
      Assistant Secretary of the Army for Acquisition, Logistics, 
      and Technology, U.S. Army:
        Followup questions and responses...................... 120, 137
        Prepared statement of....................................    98
    Schwartz, Moshe, Specialist in Defense Acquisition, 
      Congressional Research Service, prepared statement of......   151
    Starr, S. Frederick, Ph.D., the Paul H. Nitze School of 
      Advanced International Studies, John Hopkins University, 
      prepared statement of......................................   203
    Tierney, Hon. John F., a Representative in Congress from the 
      State of Massachusetts, prepared statement of..............     5


  INVESTIGATION OF PROTECTION PAYMENTS FOR SAFE PASSAGE ALONG AFGHAN 
                              SUPPLY CHAIN

                              ----------                              


                         TUESDAY, JUNE 22, 2010

                  House of Representatives,
     Subcommittee on National Security and Foreign 
                                           Affairs,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 2:30 p.m., in 
room 2154, Rayburn House Office Building, Hon. John F. Tierney 
(chairman of the subcommittee) presiding.
    Present: Representatives Tierney, Murphy, Foster, Quigley, 
Welch, Issa, and Flake.
    Staff present: Andrew Wright, staff director; Talia Dubovi 
and Scott Lindsay, counsels; Boris Maguire, Aaron Blacksberg, 
Brendon Olson, Victoria Din, and Alexandra Mahler-Haug, 
interns; John Cuaderes, minority deputy staff director; Rob 
Borden, minority general counsel; Jennifer Safavian, minority 
chief counsel for oversight and investigations; Adam Fromm, 
minority chief clerk and Member liaison; Seamus Kraft, minority 
director of new media and press secretary; Justin LoFranco, 
minority press assistant and clerk; Tom Alexander, minority 
senior counsel; and Christopher Bright and Mark Marin, minority 
senior professional staff members.
    Mr. Tierney. A quorum being present, the Subcommittee on 
National Security and Foreign Affairs hearing entitled, 
``Investigation of Protection Payments for Safe Passage Along 
the Afghan Supply Chain'' will come to order.
    I ask unanimous consent that only the chairman and ranking 
member of the subcommittee be allowed to make opening 
statements up to 10 minutes each. Without objection, so 
ordered.
    I ask unanimous consent that the hearing record be kept 
open for 5 business days so that all members of the 
subcommittee will be allowed to submit a written statement for 
the record. Without objection, so ordered.
    In our constitutional democracy, Congress is charged with 
overseeing that the executive branch executes its 
responsibilities in accordance with the law. Toward that end, 
this Congress has invested the Subcommittee on National 
Security and Foreign Affairs with a clear mandate to root out 
waste, fraud and abuse wherever we may find it. Real oversight 
is a powerful tool for transparency and accountability, not for 
political grandstanding.
    Today's report by the majority staff represents the best 
tradition of constructive oversight. After 6 months, 31 
witnesses, 25,000 documents, hundreds of hours of work, and, 
yes, even meeting with one of the warlords at the heart of the 
investigation, the report provides the subcommittee, the 
Congress, and the American people with significant insight into 
how the Department of Defense has managed the supply chain for 
the U.S. troops in Afghanistan.
    An investigation of this nature is akin to a puzzle. We 
have laboriously gathered the pieces on the table, fit together 
the edges, and filled in enough sections for us to understand 
what the picture will look like, but there are still portions 
to be completed. Though the puzzle is unfinished and important 
questions remain, the portrait that emerges is of the 
Department of Defense's systematic failure of management and 
oversight of contractors along the Afghan supply chain.
    In the past 8 years the United States has placed an 
enormous burden on our brave men and women in uniform. The 
military has been asked to fight two grueling conflicts in some 
of the most difficult and hostile conditions imaginable. The 
challenge of supplying our troops in the field is simply 
staggering.
    To absorb the strain of these burdens the Department of 
Defense has increasingly looked to civilian contractors. In 
some cases using contractors rather than military personnel 
makes sense. What initially was a cost effective expediency, 
however, has morphed into an institutionalized reliance and wht 
can be a dangerous shortcut.
    As the Congressional Budget Office put it, the recent 
increase in the size and scope of contractor support in the 
battlefield has been unprecedented in U.S. history. In 
Afghanistan today we have roughly 90,000 troops but reportedly 
use almost 110,000 contractors. As the Department of Defense 
has increased its reliance on contractors in conflict zones, it 
has not sufficiently increased its capability and expertise to 
manage and oversee those contractors.
    At the Defense Contract Management Agency, for example, the 
civilian work force fell by 60 percent between 1990 and 2006. 
The combination of a massive increase in contracting and 
insufficient management and oversight capability is a recipe 
for disaster. In the case before us today we have just such a 
disaster. The Department of Defense outsourced almost all 
operational components of the supply chain that provides our 
troops with the food, water, fuel, and equipment they need to 
do their job.
    Critically, despite laws and regulations mandating strict 
oversight of armed private security guards in conflict areas, 
the Department outsourced management responsibility for those 
hired gunmen to other contractors. The Department put trucking 
contractors, many of which only had two or three employees in 
theater, in charge of procurement, management, and oversight of 
small armies of private security contractors. The trucking 
companies were then directed to send their subcontracted trucks 
and subcontracted security through many of the most dangerous 
locations on Earth while carrying millions of dollars of 
critical supplies for our troops.
    According to the report, many in the Department of Defense 
apparently took comfort in these arrangements. The 
responsibility for security and risk of loss was on the 
contractors and their subcontractors. The prevailing attitudes 
seemed to be that as long as the trucks got to their 
destination, don't rock the boat. When problems did arise, the 
response was to rap the prime contractors on the knuckle and 
remind them to follow the terms of the contract.
    To their credit, many of the contractors immediately 
recognized that they could not adequately procure, manage, or 
oversee mass scale security services in Afghanistan and they 
raised red flags. They told the military that they were being 
extorted, making massive protection payments for safe passage 
and possibly, ``funding the insurgency.''
    These extraordinary warnings appear to have fallen on deaf 
ears. The contracting officers, contract managers, and relevant 
regulators consistently responded that the companies just 
needed to get the trucks to their destination. Contractors 
raised serious concerns about extortion payments funding 
warlords within 2 days of the contract performance beginning, 
and here we are 14 months later and nothing has changed. 
Nothing has changed.
    The benefits of outsourcing trucking and security in the 
supply chain are clear: No U.S. troops are put in harm's way 
and they can instead focus their energies on higher priority 
missions.
    This report, however, must also weigh the cost of 
contracting out the supply chain. In short, this contract 
appears to have fueled warlordism, extortion, corruption, and 
maybe even funded the enemy. U.S. taxpayer dollars are feeding 
a protection racket in Afghanistan that would make Tony Soprano 
proud.
    Further consideration must now be given to determine 
whether the Department of Defense's failure to provide 
management, or properly manage or oversee its supply chain 
logistics contracts has undermined the overall U.S. mission.
    In January of this year, Major General Michael Flynn, our 
principal military intelligence officer in Afghanistan, wrote a 
public report saying that the United States is largely blind, 
deaf, and dumb when it comes to understanding local politics, 
power dynamics and economic structures within Afghanistan. I 
would add that the United States is also largely blind, 
sometimes willfully so, to the corrupting influences of our own 
contracting and development work. We must be self-aware of how 
our massive footprint in Afghanistan could affect such a 
sensitive environment.
    Before I close, I want to address a recurring retort to 
this investigation. Some say this is just the way things are 
done in Afghanistan. Others have compared the funding of 
warlords and possibly insurgents in Afghanistan to the Anbar 
Awakening in Iraq. There, General Petraeus used cash and other 
incentives to strategically co-opt insurgents. Blindly funding 
warlords by extortion and corruption in Afghanistan through 
multiple layers of invisible subcontracting is no Anbar 
Awakening. If the Department of Defense wants to co-op warlords 
or strongmen or insurgents with U.S. taxpayer dollars, military 
commanders in the field need to take direct responsibility for 
those relationships in order to ensure absolute accountability.
    This oversight committee is charged by Congress with the 
stewardship of American taxpayer dollars, and rooting out 
waste, fraud and abuse wherever we may find it. With this 
report in hand, we intend to hold the Department of Defense 
accountable to the subcommittee, to Congress, and to the 
American people.
    With that, I defer to Mr. Flake for his opening remarks.
    [The prepared statement of Hon. John F. Tierney follows:]

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    Mr. Flake. I thank the chairman for holding this hearing 
and I thank the chairman for initiating this very thorough, 
enlightening, and very sobering investigation.
    The chairman has already summarized the report, so I won't 
go into detail. Let me just make a couple of broad 
observations.
    The counterinsurgency plan that we are employing in 
Afghanistan is dependent on a central government in Kabul that 
will extend its writ beyond Kabul. This report presents strong 
evidence that this is not occurring. The counterinsurgency plan 
we are employing in Afghanistan is dependent on our ability, 
the ability of our military and those of our NATO partners, to 
provide security to the Afghan citizenry. This report presents 
strong evidence that this is not occurring. In fact, it seems 
that security in any meaningful sense does not extend beyond 
the security gates of our military bases.
    I hope that the Department of Defense takes the 
recommendations contained in this report seriously. But let's 
face it, even if the recommendations are implemented in their 
entirety, we are just tinkering at the margins here. In my 
view, the real value of this report is that it presents more 
irrefutable evidence that our overall strategy in Afghanistan 
needs to be examined and overhauled. It is not something that 
can be salvaged with time and troop levels. I look forward to 
the witnesses' statements.
    Mr. Tierney. Thank you very much, Mr. Flake. The 
subcommittee will now receive testimony from the first panel 
before us here today. I will take a moment to just introduce 
all three before we start the testimony.
    Lieutenant General William Phillips is the Principal 
Military Deputy to the Assistant Secretary of the Army for 
Acquisition, Logistics and Technology, as well as the Director 
for Acquisition Career Management. He served previously as the 
commanding general of the Joint Contracting Command in Iraq and 
Afghanistan and the program executive officer for ammunition. 
Lieutenant General Phillips holds a BS from Middle Tennessee 
State University, an MS in procurement and materials management 
from Webster University, and a Master's of Personnel Management 
from Troy State University. In 2001, he was named the Army's 
Acquisition Commander of the Year.
    Mr. Gary Motsek is the Assistant Deputy Under Secretary of 
Defense for Program Support. In his current capacity Mr. Motsek 
is the principal adviser to the Office of the Secretary of 
Defense leadership on policy and program support to the 
Geographic Combatant Commands. Previously, he served as the 
Deputy G3 for Support Operations, the Assistant Deputy Chief of 
Staff for Ammunition in the U.S. Army Material Command, among 
other positions within the U.S. Army and NATO. Mr. Motsek 
received a BS in environmental engineering from Syracuse 
University, an MS in management from Troy State University and 
a level three certification from the Defense Acquisition 
University.
    Brigadier General John Nicholson is the Director of the 
Pakistan/Afghanistan Coordination Cell on the Joint Staff, 
where he is responsible for synchronizing the military 
activities of the services and combatant commands in the 
region. Previously, he served in Afghanistan as the Deputy 
Commanding General for Regional Command South as part of the 
International Security Assistance Force and Deputy Director for 
Operations for the National Military Command Center. General 
Nicholson has a Bachelor's Degree from the U.S. Military 
Academy and Georgetown University, a Master's in Military Arts 
and Science from the School for Advanced Military Studies, and 
an MA in National Security Studies from the National Defense 
University.
    I want to thank all of you for making yourselves available 
today and for sharing your substantial expertise. It is the 
policy of this committee to swear in the witnesses before you 
testify, so I ask you to please stand and raise your right 
hands.
    [Witnesses sworn.]
    Mr. Tierney. Thank you. The record will please reflect that 
all the witnesses answered in the affirmative.
    I think, as you gentlemen know, that your full written 
statement will be entered into the record by previous agreement 
of the committee. I would ask you to summarize it if you could 
within as close to 5 minutes as possible. You will be able to 
determine that from the lights before you. When it is green you 
go, when it is amber you have about a minute left, and when it 
is red if you would please start to wind up and bring it to a 
conclusion so we can have time for people to ask questions as 
well.
    General Phillips, if you would.

 STATEMENTS OF LIEUTENANT GENERAL WILLIAM PHILLIPS, PRINCIPAL 
  MILITARY DEPUTY TO THE ASSISTANT SECRETARY OF THE ARMY FOR 
ACQUISITION, LOGISTICS, AND TECHNOLOGY, OFFICE OF THE ASSISTANT 
     SECRETARY OF THE ARMY FOR ACQUISITION, LOGISTICS, AND 
  TECHNOLOGY, U.S. ARMY; GARY MOTSEK, ASSISTANT DEPUTY UNDER 
 SECRETARY OF DEFENSE FOR PROGRAM SUPPORT, OFFICE OF THE UNDER 
SECRETARY OF DEFENSE FOR ACQUISITION, TECHNOLOGY AND LOGISTICS, 
 DEPARTMENT OF DEFENSE; AND BRIGADIER GENERAL JOHN NICHOLSON, 
  DIRECTOR OF THE PAKISTAN/AFGHANISTAN COORDINATION CELL, THE 
               JOINT STAFF, DEPARTMENT OF DEFENSE

        STATEMENT OF LIEUTENANT GENERAL WILLIAM PHILLIPS

    General Phillips. Chairman Tierney, Congressman Flake, 
distinguished members of the Subcommittee on National Security 
and Foreign Affairs, thank you for this opportunity to discuss 
the role of the U.S. Army in the Department of Defense's 
management and oversight of the Host Nation Trucking contract 
in Afghanistan. I am pleased to represent the Army leadership 
and the over 40,000 members of the Army acquisition work force, 
to include contracting, and the more than 1 million soldiers 
over 8\1/2\ years who have served in combat in support of our 
country in Iraq and Afghanistan.
    Most importantly, I have worked with the Host Nation 
contract as the Commander of Joint Contracting Command in Iraq 
and Afghanistan where we have served greatly to provide 
supplies, services, and equipment at the right place and right 
time for our soldiers and all our service members.
    As I mentioned, Mr. Chairman, I had the privilege of 
serving as Commanding General of Joint Contracting Command Iraq 
and Afghanistan [JCCIA]. Although my duties and my office was 
in Baghdad, I traveled frequently throughout Iraq and to 
Afghanistan.
    Let me state from the outset that the Host Nation Trucking 
contract is absolutely vital to the sustainment of our forces 
in Afghanistan. Contracting for, obtaining, and overseeing 
services in an austere environment and a fragile economy with a 
poor financial system, limited rule of law and during 
hostilities is a dangerous and difficult task that is being 
performed daily throughout Afghanistan. Through the Host Nation 
Trucking contract, more than 90 percent of our forces in 
Afghanistan receive food, water, equipment, ammunition, 
construction materials, and other badly needed supplies.
    In the last year, or since May 2009, there have been more 
than 60,000 trucking missions performed by Host Nation 
Trucking. Each mission is a critical and effective means to 
meet the needs of our warfighters, whose numbers today will 
soon reach about 90,000 in Afghanistan.
    Mr. Chairman, in all Army contracting operations worldwide 
we strive to be responsive to our warfighters while ensuring 
proper physical stewardship of taxpayer dollars. Our progress 
in these areas has been steady, even though expeditionary 
military operations have placed extraordinary demands on the 
contracting system and our contracting professionals. Upholding 
the highest ethical standards of discipline in contracting is 
of paramount importance, sir, as you indicated in your opening 
comments. And even though we have confidence in the talent and 
professionalism of our Army's contracting work force, we remain 
vigilant at all times. We are working continually throughout 
the Army to actively engage with the Department of Defense to 
eliminate areas of vulnerability in contracting.
    During my time in JCCIA, I was deeply committed to 
maintaining high standards of ethics and discipline in all 
contracting operations. My team and I conducted over 11 
internal procurement management reviews of regional contracting 
center operations, and we have identified some of the hard 
lessons and deficiencies and we have worked hard to 
institutionalize those processes inside everything that we do 
by applying lessons learned.
    I often refer to my contracting work force that served in 
Iraq and Afghanistan as contracting warriors because they serve 
beside our warfighters in areas throughout Iraq and throughout 
Afghanistan.
    Last March, another comprehensive procurement management 
review was undertaken in Afghanistan. The final report is 
nearly complete, and the findings indicate strongly that 
contracting officers continue to maintain the highest ethical 
standards and discipline in their daily work. These positive 
findings are attributed to the extraordinary talent of our 
contracting officers. Again, I call them contracting warriors.
    Sir, there really are five elements that I implemented as 
JCCIA to work on ethics and discipline in everything that we 
do. Briefly, first, before they enter theater they have to 
complete the Defense Acquisition University ethics training.
    Second, all personnel upon arrival must attend a newcomers 
ethics briefing.
    Third, all personnel must complete the Department of 
Defense's standards of conduct annual ethics training.
    Fourth, our judge advocate generals as they go around 
theater also provide ethics training twice a year to every 
contracting officer.
    And fifth, during weekly meetings we focus on ethics.
    Mr. Chairman, we are working constantly to improve our 
contracting operations, our educational training ethics and 
discipline in everything that we do. Our progress is 
significant.
    The Host Nation Trucking contract is a prime example. We 
adhere to the statutes under the Federal acquisition 
regulations for open and fair competition while ensuring that 
our warfighters receive badly needed material and supplies.
    Mr. Chairman, I assure you that we take the allegations 
that you have outlined in your opening statement very seriously 
within the Department of Defense and we will work hard to fix 
the areas of concern.
    Sir, thanks to you and this subcommittee for this 
opportunity to appear before you. I look forward to your 
questions.
    [The prepared statement of General Phillips follows:]

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    Mr. Tierney. Thank you, General. We appreciate your 
comments.
    Mr. Motsek, if you would please.

                    STATEMENT OF GARY MOTSEK

    Mr. Motsek. Chairman Tierney, Ranking Member Flake, and 
members of the committee, thank you for this opportunity to 
appear before you today to discuss the program management and 
oversight of private security contracts.
    As the Quadrennial Defense Review acknowledged, contractors 
are part of the total force along with military forces and 
government civilians and, as the chairman noted, provide an 
adaptable mix of unique skill sets, local knowledge, and 
flexibility that a strictly military force cannot cultivate or 
resource for all scenarios. Contractors provide a broad range 
of supplies, services, and critical logistics support in many 
capability areas, while reducing the military footprint and 
increasing the availability and readiness of resources. 
Typically, there's a higher reliance on contracted support 
during the post-conflict phases of an operation. This is 
especially true in this current operation where we are 
conducting multiple phases of the operation simultaneously and 
not sequentially.
    Current operations in the U.S. Central Command Area of 
Operations require private security contractors to fulfill a 
variety of important security functions for the Department of 
Defense, Department of State, and other U.S. Government 
entities supporting both Iraqi Freedom and Operation Enduring 
Freedom. Relief, recovery and reconstruction of a post-conflict 
region are traditionally civilian functions, and thus it is 
entirely appropriate for civilian resources to be used to 
protect them. By using civilian resources to accomplish these 
selected civilian tasks, military forces can focus on the 
military mission.
    DOD's use of local nationals to perform private security 
functions support the U.S. CENTCOM Commander's 
counterinsurgency strategy. These local national jobs are 
central to the COIN operations. In Afghanistan today 93 percent 
of DOD contracted PSC employees are local nationals. Many have 
assumed risk and have sacrificed protecting key movements and 
facilities and freeing up key combat capability.
    However, even as the COIN strategy is enhanced by employing 
local nationals as armed contractors, security and reliability 
concerns must be considered, especially in countries where 
there are no reliable data bases for traditional vetting and 
where personnel and company records are limited or 
nonconsistent.
    As required by statute and noted in this committee's 
report, DOD's policies on armed PSCs apply to all employees at 
any contract tier. With impetus from senior DOD leadership, 
there has been a concerted effort now to improve the compliance 
with these policies. A number of significant challenges impact 
this effort, and DOD is working to address these challenges to 
facilitate compliance. However, we do acknowledge there are 
risks and we must address them.
    In spite of these challenges DOD policy requires all 
contract personnel regardless of nationality to comply with our 
DOD regulations, as well as the applicable laws of the United 
States and the host country. There is no immunity clause to 
protect contractors from local law. U.S. Government PSCs, 
again, at any tier are required to comply with host nation 
registration and be properly licensed to carry arms in 
accordance with host nation law. DOD employees are also 
required, consistent with their terms of contract, to obey the 
orders of the commander in the area which they are operating.
    Finally, individual companies have their own standards of 
conduct, and DOD contractors have generally demonstrated a 
consistent pattern of terminating employment of individuals who 
violate these standards. On a whole U.S. PSCs are operating in 
accordance with host nation laws and support the overall COIN 
objectives.
    The intent of the Ministry of Interior in Afghan is to 
transition in the future most of the security functions 
presently performed by PSCs to the Afghan National Police as it 
matures. We take any allegations of corruption seriously, and 
to my knowledge we have several organizations charged with 
investigation, and we will take action on those that can be 
legally documented with the appropriate level of forensic 
evidence.
    Contractors employed to perform security functions for DOD 
are only a fraction of the total private sector security, 
public-private and international forces in the CENTCOM Area of 
Responsibility. Many of the same contractors the United States 
employs also perform for other countries, the host nation, 
nongovernment organizations and private organizations. This is 
one of the principal reasons that OSD is supporting the 
initiative to move beyond the Montreux document and implement 
an industry-led, government supported, international 
accountability regime that will apply to all PSCs in all 
operational environments. This will change the present paradigm 
of primarily relying on the MOI, Ministry of Interior, license 
with an independent third party to assess compliance with the 
standards. I believe the committee's efforts have been 
instrumental in getting into the House version of the 2011 NDAA 
language that requires this third-party certification in the 
future, and I welcome it and I thank you for that.
    Whether or not the U.S. Government employs PSCs there will 
always be PSCs in the contingency area. The draft standard that 
I've just referred to has been developed and is being refined 
by a working group drawn primarily from the United States, the 
U.K. And the Swiss governments with participation from the 
private security industry and nongovernmental organizations 
active in human rights and the law of armed conflict. The aim 
of this is to standardize the principles and to attain an 
accountability mechanism later this year.
    I thank you and would be happy to answer any of your 
questions.
    [The prepared statement of Mr. Motsek follows:]

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    Mr. Tierney. Thank you, Mr. Motsek. And General Nicholson, 
if you would please.

         STATEMENT OF BRIGADIER GENERAL JOHN NICHOLSON

    General Nicholson. Chairman Tierney, Ranking Member Flake, 
and other members of the committee, thank you for the 
opportunity to appear before you today to discuss how we can 
better link contracting and the flow of U.S. Government 
contracting funds to a winning counterinsurgency strategy in 
Afghanistan.
    The focus of our COIN strategy in Afghanistan is the Afghan 
people. This population-centric counterterrorism operation 
rests on a couple of principles. One, enabling and expanding an 
effective Afghan National Security Force, securing the 
population in key areas, and then connecting the government of 
Afghanistan to its people through improved governance and 
economic development. So optimizing the effects of our 
contracting dollars in support of this approach is crucial to 
our success.
    In order to do that, in order to more effectively link U.S. 
contracting to desired operational effects in a winning COIN 
strategy, the chairman of the Joint Chiefs of Staff directed 
the establishment of Task Force 2010. It has been chartered by 
the Commander of U.S. Forces in Afghanistan. Task Force 2010 
will improve visibility of U.S. contracting flows in 
Afghanistan in order to ensure that U.S. dollars can complement 
the COIN campaign more effectively. This improved visibility of 
the contract funds will provide awareness on how money flows 
from contractors to subcontractors to tribes, factions, 
individuals.
    This is no easy task, and it involves and integrated effort 
at all levels to gain visibility of the money flow, understand 
and shape perceptions of the Afghan people, correct the 
behavior of some Afghan contractors, and gaining awareness and 
a level of control over the second order effects of U.S. 
contract spending on the environment.
    Task Force 2010 is led by Rear Admiral Kathleen Dussault, 
U.S. Navy, a former Commander of the Joint Contracting Command 
Iraq and Afghanistan. She is in the country now. She is leading 
an experienced forward deployed task force of about 25 
planners, intelligence analysts, auditors, contracting experts, 
law enforcement personnel, and strategic communication 
specialists. They will integrate with other efforts in theater, 
including the threat finance cell and the anticorruption task 
force. We've established working groups in the Pentagon to 
provide reach-back support for her task force in the areas of 
financial intelligence, contracting policy, and in COIN 
effects.
    Contracting provides--and I speak now, sir, as a customer 
of contracting as a former commander in Afghan. Contracting 
provides much needed products and services to our soldiers, 
sailors, airmen and marines. Contracting for products and 
services such as Host Nation Trucking reduces the risk for our 
service men and women. Given that 60 percent of our casualties 
in Afghanistan are caused by IEDs, it is logical that the fewer 
service members who are on the road, the fewer service members 
are exposed to the threat of IEDs and then ideally the fewer 
will become casualties.
    Contracting in the ``Afghan first'' policy has the great 
potential to produce very positive COIN effects: job creation, 
capacity building, providing for business growth. All are 
necessary to create a self-sustaining Afghan economy, an 
economy that's been racked by 30 years of war. The key here 
from our perspective is optimizing the positive effects of our 
contracting investment while sustaining the positive effects 
for our service members.
    And, Sir, we look forward to working with the committee to 
achieve this improved capability and optimizing effects of 
those contracting dollars in country. Thank you.
    [The prepared statement of General Nicholson follows:]

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    Mr. Tierney. Well, thank you. Thank all of you for your 
testimony. I want to set a tone of respectfulness here, because 
we do respect all the service that you gentlemen have given to 
your country. And we do that very sincerely, and I want to make 
sure that we do that today.
    I listened to some of the testimony with a little bit of 
incredulity, not because I doubt anybody's intention or the 
hard work that went into a lot of the systems that were set up. 
I do have an issue with how anybody could think that it is 
actually being carried out on the ground that way, and I'm 
going to talk about that a little bit.
    General Nicholson, I think you get it. Listening to your 
testimony, the idea here is you have two choices. One is either 
we have the wrong strategy and we have to look at that. If 
that's the case, how are we going to do this other than the way 
we are doing it now. And the other is if you're going to 
continue on with the strategy, the other option is how do you 
get better management and better oversight involved, which 
clearly from this report is not there. So I thought that your 
comments most directly addressed the situation that we have.
    But General Phillips, let me start with you if I can on a 
question. And I'm going to try--I think on page 12 of the 
report I recall a little chart to sort of see where you 
gentlemen fit in on this because it gets to be a little 
convoluted. But, General Phillips, you are the Army Acquisition 
Executive. You are right now the principal military deputy to 
the Army Acquisition Executive, right?
    General Phillips. Yes, sir.
    Mr. Tierney. So you directly meet with the Secretary of the 
Army's Office. You were the Joint Contracting Command for Iraq/
Afghanistan, which would be--now reports to you, I guess would 
be the case on that.
    General Phillips. Sir, not directly to me. I am not in the 
chain of command for the Commanding General of JCCIA. It would 
flow through CENTCOM. But the contracting authority actually 
flows through Mr. Ed Herrington, who works for Dr. O'Neill, the 
Army Acquisition Executive. I am not in that chain of command.
    Mr. Tierney. So let me talk to you as the former JCCIA, as 
you say. Under the terms of the Host Nation contract there are 
eight prime contractors and they're required to provide 
security for their trucks and the supplies that are carried in 
those trucks. The security provisions in the contract specify 
about 6 security vehicles and 24 guards as armed security for 
every 20 trucks. The Host Nation Trucking companies run up to 
about 8,000 truck missions per month that require the 
procurement, management and oversight of a small army of 
thousands of Afghan security guards.
    So my question to you is, do you believe it is appropriate 
to have trucking contractors, many of which only have two or 
three at most of their employees in theater and they have never 
been on the road, do you believe it is appropriate to have them 
managing and overseeing thousands of armed security guards in a 
war zone?
    General Phillips. Sir, under the Host Nation contract that 
we have with those eight vendors, part of that, as you just 
described, is that they provide their own private security. And 
then they go out and subcontract for that, which is allowable 
under the terms and conditions of the contract that we put into 
place.
    Mr. Tierney. But I guess my question is how appropriate 
is--once you do that, I know sort of the suave thing to say is 
like, all right, that's done, you know, give it to them and it 
is all on their shoulders now, but when we know that there's 
only two or three people in their company that are in country 
and that they have never been out on the road, do we think 
that's the appropriate oversight and management here?
    General Phillips. Sir, it is important that when we vetted 
each of those contractors up front, before we actually signed 
the Host Nation contract, it was important that we made sure 
that they had the right management in place.
    Mr. Tierney. So you thought that two or three was 
sufficient or you didn't know that two or three were all that 
they had?
    General Phillips. Sir, to make the award we clearly 
considered the management structure of each one of those eight 
contractors sufficient in terms of being able to oversee the 
contract.
    Mr. Tierney. I want to pin you down a little bit here if I 
can. So you thought the two or three were sufficient to oversee 
those thousands of Afghan security guards, because that's all 
they had? Did you not know that's all they had or did you think 
that would be just fine, two or three is fine?
    General Phillips. Sir, at that time I had no visibility 
into how many people, at my level how many people actually were 
involved in the day-to-day management of the contract.
    Mr. Tierney. And I guess my other problem is nobody seems 
to have visibility into that, because if you read the report, 
you get down that even people between you and those contractors 
could never tell you who was doing it?
    General Phillips. Sir, I can assure you that the principal 
assistant responsible for contracting in Afghanistan, that's 
PARC-A, the colonel that ran it, as well as the contracting 
officer, used a very rigorous source selection evaluation 
criteria. When they looked at--there were 35 initial vendors 
who submitted proposals for the Host Nation Trucking contract. 
When we looked at it initially we narrowed that down to 10 
vendors. And we looked at technical capability, managerial 
experience, they looked at past performance as well as past 
experience, security, how they planned to execute security, and 
price, price was a key factor. But all those factors went into 
the final decision to select them.
    Mr. Tierney. So I guess I'm still unclear whether the 
criteria of two or three people in that company to manage the 
whole thing was OK with them or they didn't know that. Did they 
not know that they were paying warlords to do some of it or did 
they think that was OK, it is the cost of doing business? Those 
are the things I think we need to ask.
    General Phillips. Sir, I can't answer your question. I 
would have to go back and look at the actual decision that was 
made for the source selection and determine based upon the bids 
of those contractors the exact management structure of each one 
of them. I personally can't recall a discussion, whether there 
were two, three or more within a management structure of the 
eight prime vendors to manage Host Nation Trucking.
    Mr. Tierney. Well, when you were the JCCIA, the Joint 
Contracting Command for Iraq and Afghanistan, were you aware 
that prime contractors were regularly complaining that they 
were making protection payments for safe passage, or ``possibly 
funding the insurgency?'' Did that ever get to your attention?
    General Phillips. Sir, I was personally not aware of that.
    Mr. Tierney. Mr. Flake.
    Mr. Flake. Thank you. General Phillips, can you tell me how 
many times the Department of Defense has gone outside of the 
gates to actually ride with some of these convoys or these 
shipments going from base to base?
    General Phillips. Sir, the contracting officer 
representatives that work for the 419th Movement Control 
Battalion, very rarely will they go outside the fence line in 
terms of monitoring the operations. But what they do that 
through is through the in transit and visibility that's on 
board about 84 percent of the vehicles that operate in and out 
of Afghanistan.
    Now, beyond that, if they are transporting things like 
MRAPs, we will have government military that will accompany 
those convoys for items like MRAP or high visibility items.
    Mr. Flake. How often is that?
    General Phillips. Sir, I don't know. I would have to take 
that for the record and get you an answer. Whenever they are 
moving heavy equipment like MRAPs or MATVs in or out of theater 
they will normally put a military convoy with that. I don't 
know exactly how often, sir.
    [The information referred to follows:]

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    Mr. Flake. If you could get back to us on that, that would 
be helpful.
    General Phillips. Sir, will do.
    Mr. Flake. In the times that you have been off base, any 
Department of Defense officials, have you witnessed any of the 
activities that have been detailed in the report?
    General Phillips. No, sir, I do not have any personal 
knowledge, nor has it been presented to me, of those 
allegations occurring. I do know there's an ongoing 
investigation that General Nicholson mentioned up front that 
continues to try to determine what the facts are associated 
with the allegations that were discussed earlier. So the 
investigation is ongoing by CID, I've had discussions with 
them, and I know they continue to pursue it very aggressively.
    Mr. Flake. Mr. Motsek, you mentioned that people at all 
levels of the contracting process have to abide by the 
regulations of DOD, which includes no up-armored convoys, 
nothing more than an AK-47, I believe, is supposed to be 
carried along. Are you aware of or do you dispute the findings 
in this report that indicate that virtually every convoy that 
goes out is guarded by subcontractors who carry things far in 
excess of what the Department of Defense allows?
    Mr. Motsek. Sir, let me answer that part of the question 
first. Generally speaking, PSCs by the fragmentation order, 
fragmentary orders issued by the commander in field, are 
restricted to what you and I would consider small arms; 
however, it is not a unilateral stop. When I read the report, I 
hadn't had a chance to research this, but when I read the 
report there is a process to go to the Army office that the 
commander has in the field, the four star commanders in the 
field, to be authorized to carry weapons beyond a 762 or a 556 
or a 9mm small arm. So that's one part of it.
    So generally speaking, the vast majority of our PSCs in 
Afghanistan and Iraq, quite frankly, carry small arms, as you 
correctly mentioned.
    Mr. Flake. So that picture there of that truck with the 
armor, sir, that would be in violation?
    Mr. Motsek. I can't tell you--I saw that picture this 
morning. I cannot tell you specifically if that's a violation, 
because there is a possibility that contractor had the 
authority--requested and received authority--to carry 
additional weapons.
    Mr. Flake. Can you tell me how many people, if anybody, at 
DOD has interviewed beyond the prime contractor level, under 
the prime contractor level? As we know from the report, the 
prime contractors rarely know who even provides the security of 
the subcontractors below them. Has DOD interviewed anyone 
beyond the prime contractors?
    Mr. Motsek. At the DOD level, sir, I am not aware of anyone 
that did that. And it also brings up the second question that 
you brought up earlier. The challenge I think we have had is 
that we have relied on the licensing process that the Minister 
of the Interior had. Minister Atmar, the previous Minister of 
Interior, was very aggressive in trying to make that the 
standard to the extent we were restricted to the number of 
companies we could operate with, the numbers of contractors 
they could have. As I told you in my opening testimony, 
however, I feel that is insufficient. We need this third party.
    Mr. Flake. In my remaining seconds I just want to say, if 
you haven't ridden along with the convoys, very, very rarely, 
if ever, and if you haven't interviewed anybody beyond the 
prime contractor, then it is tough to know what's really going 
on. And beyond that it seems that we--I would feel a lot better 
to hear somebody say, hey, this is the price of business in 
Afghanistan, this is all we can do. We can't be like the 
Soviets who devoted three-quarters of their force structure to 
protecting supply routes. That is not the most efficient way. 
We understand that. But just to say, it is not occurring, we 
don't see it so it must not be occurring, that just seems a 
little too much to hear.
    Mr. Tierney. Thank you, Mr. Flake. Mr. Foster.
    Mr. Foster. I would like to start, if I may, by yielding 
back such time as the chairman may consume for followup.
    Mr. Tierney. Thank you. I appreciate that. I just wanted to 
make one point if I could. Mr. Motsek, the fact of the matter 
is that the record indicates that the request was sought for 
authorization of heavy up-armor and denied. But that truck that 
you see over there, the emblem on the front of it is Watan Risk 
Management, and that in the back is a DSHK 50-caliber rifle, 
which is certainly not authorized. And Commander Ruhullah, when 
asked about whether or not he is in compliance with the 
regulations, his response was what regulations.
    And if I might, I yield back to Mr. Foster.
    Mr. Foster. Thank you. First, do contractor truck convoys 
receive any level of tactical support, air support, this sort 
of thing? And could you contrast what a contractor truck convoy 
looks like compared to a military one, you know, with U.S. 
troops, in terms of the support it gets and the procedures?
    Mr. Motsek. So with the exception of MediVac, medical 
evacuation, generally speaking there is no additional support 
provided to a private or commercial shipment as it transits. 
They don't have the capability of calling close air support or 
something of that nature. Depending upon where you are in the 
country, if there is an issue you can request support, but it 
is not normally part of the package.
    Part of our challenge and part of our responsibilities as 
the U.S. forces is to make a threat assessment each and every 
time that you're going to authorize a convoy to go out. And the 
commander on the ground has to weigh whether or not the risk 
assessment, the force protection requirements, are such that he 
will permit the movement or not permit the movement. And that's 
generally the process that they use to maintain an overall 
security package around the convoy.
    A military convoy is clearly, clearly that. Its forces are 
indigenous. They are military forces operating under rules of 
engagement, not on the rules of use of force. The primary 
difference is that if a military convoy is attacked--let me 
step back. Generally speaking, if a civilian convoy is attacked 
their mission is to leave, their mission is to protect 
themselves and to egress the area as rapidly as possible. A 
military convoy, because it is a military operation operating 
under rules of engagement may elect to close with the enemy and 
engage them in combat. So there is a profound difference in 
what could happen after the attack.
    But there are infrequent times, as General Phillips noted, 
when we have mixed convoys out there where the military and a 
civilian convoy are mixed. And in those instances, to my 
knowledge, they are clearly under pure military control. The 
military exerts the authority over the whole convoy, movements 
and stoppages. Again, the PSCs are not to operate in an 
offensive mode.
    Mr. Foster. So what I am fishing for maybe more explicitly 
is whether a higher level of support for the civilian 
contractors might teach the bad guys a lesson, so to speak, 
that it is not a good idea to go and attack the non-U.S. 
military convoy. Has that been tried? Do you have any comments 
on whether or not that's a useful strategy?
    General Nicholson. Yes, sir. Generally we have not done 
that with ISAF forces. However, the Afghan forces, Afghan 
police and Afghan army, might be the first responders in the 
case of a Host Nation truck or convoy that would encounter 
problems. And as Mr. Motsek mentioned, in cases of medical 
evacuation being required and then if we received a call from 
an Afghan police unit or military unit that there were injured 
civilians, then we might respond to that based on the specific 
conditions of the incident.
    Mr. Foster. For example, do we even monitor the roads for 
unauthorized checkpoints, things like that, which I presume 
could be done from the air?
    General Nicholson. Yes, sir. The military for ISAF and 
Afghan forces are doing partnered operations across Afghanistan 
now. And part of that is the police and the army enforcing the 
rules, laws of the state. As you're probably aware, the MOI has 
been seeking to certify these private security companies. So 
Afghan police or military would certainly question--if they see 
weapons and they didn't know who they were, they would 
typically try to ascertain if is this an authorized force with 
these weapons, you know, do they have that kind of 
authorization.
    I would also mention President Karzai has indicated a 
desire to reduce the number of private security contractors. 
And given that the Congress has funded the growth of the Afghan 
security forces, military and police to 300,000 by the end of 
2011, he set that rough target date as a time to legitimize 
these private security companies. So there has been an 
expression of will on the part of the Afghan Government to 
reduce the number of private security contractors on the 
battlefield commensurate with the growth that we are enabling 
in their own security forces so they can exercise their 
sovereign responsibility as a nation to provide security within 
their own borders.
    Mr. Foster. Thank you. I see the red light is on.
    Mr. Tierney. Thank you. Mr. Issa.
    Mr. Issa. Thank you, Mr. Chairman. Mr. Chairman, I will ask 
the best questions I can. I would note that if the majority 
report had come out before 10:30 last night it would have been 
easier for our committee to have all questions available.
    Additionally, Mr. Chairman, there appears to continue to be 
an absence of any written transcription of many of the 
interviews. Are there written transcriptions that can be made 
available to us or only the notes from oral testimony?
    Mr. Tierney. Are you yielding for that?
    Mr. Issa. Yes, sir.
    Mr. Tierney. As you know, Mr. Flake and I discussed the 
issue of transcriptions at the outset. And, Mr. Flake and I, 
the ranking member, were in agreement that we would proceed and 
take notes at those interviews. All of the interviews were 
attended by both the majority and minority staff. Notes were 
produced of each interview and sent to both majority and 
minority staff. And in 6 months we have not heard back any 
comments on the notes about whether they were not inclusive or 
whether there was an error or whether there was an edit or 
anything of that basis and we proceeded, of course, with the 
assumption that everything was acceptable. And so the report 
may not have come out until last night, although we gave 
minority an opportunity to work with us on the report and 
assumed that they were doing their own. That turns out not to 
be the case.
    Mr. Issa. I thank the chairman. Reclaiming my time, General 
Phillips, if there were transcriptions and they showed any 
level of criminal activity, would that aid in the Department of 
Defense making such changes, including criminal prosecutions, 
and if not, are you able to work with written notes from oral 
testimonies equally well?
    General Phillips. Sir, again, we take the allegations very, 
very seriously. And I think if that information----
    Mr. Issa. Would you take them as seriously when they're 
notes as you would if they were verbatim transcription?
    General Phillips. Yes, sir. If there were facts and 
evidence that was made available to CID or to us that there was 
criminal activity or bribery or those kinds of things that are 
ongoing within the Host Nation Trucking contract, I would 
assure you that under my command the contracting officers would 
have taken quick action to address the situation.
    And during my--if I could add real quickly, during my 1 
year in Iraq we took numerous actions to do show cause notices, 
cure notices and letters of concern to contractors when they 
would step out of line and violate the rules and regulations, 
terms and conditions of our contracts.
    Mr. Issa. Thank you. General Nicholson, you're the lucky 
man here today. It appears as though making sure that our two 
allies, Pakistan and Afghanistan, do their job in the war on 
terror falls to you, is that correct, the coordination of that?
    General Nicholson. Yes, sir, it is my responsibility to 
synchronize the activities of the Joint Staff and the services 
in execution of this campaign strategy, yes, sir.
    Mr. Issa. Now, in World War II, Korea, and Vietnam, there 
were civilian contracts for transport of military goods and 
military support goods just as there are in Afghanistan, 
correct?
    General Nicholson. Yes, sir, I believe so.
    Mr. Issa. Did we ever pay tribute to the enemy, like the 
Vietcong in order to move our goods safely to our troops?
    General Nicholson. If that occurred I'm not aware of it, 
sir.
    Mr. Issa. So would it be reasonable to say that you have 
communicated to both our allies, Pakistan and Afghanistan, zero 
tolerance for any moneys being skimmed off or paid in order to 
provide safe transport?
    General Nicholson. Sir, our intent to not provide any aid 
or assistance to the enemies are very clear to our allies.
    Mr. Issa. No, I was more specific. The Pakistan government 
and military--the Afghan government and military, are they 
aware of that expectation of zero tribute, whether directly to 
aid the enemy or simply skimming off for purposes of funding 
individuals of some rank in their governments?
    General Nicholson. Sir, I would think so. I would have to 
go back and check with the commanders on the ground who do that 
coordination if you wanted specifics of that.
    Mr. Issa. Do you have a written policy delivered to those 
two governments making it clear that we consider it a breach of 
our relationship as allies if any money is skimmed off by any 
government person and not rigorously enforced?
    General Nicholson. I have to defer back to the contracting 
side with respect to financial arrangements.
    General Phillips. Sir, we would take action if we had any--
again, if we had any evidence that----
    Mr. Issa. General, that wasn't the question. The question 
was as to our two allies, we are funding both Pakistan and 
Afghanistan to a huge extent, and although they're slow 
Afghanistan is expected to ramp up a huge amount of troops, 
troops capable of riding alongside with guns to protect convoys 
and to do so at no additional cost beyond the support we give 
them of weapons, food, ammunition, radios, the works. Is there 
a record, a documented written record, of our dealing both 
militarily and at a government level to that expectation that 
there will be no skimming, no payola, no payment, whether it 
goes to the enemy or simply goes to connected people in their 
governments?
    General Phillips. Sir, under ``Afghan first'' policy within 
Afghanistan, which was my authority during my tenure there, our 
contracts and our clauses prohibited that kind of activity. And 
if it is brought to our attention we would not tolerate it. We 
would take action.
    Mr. Issa. Mr. Chairman, I don't want to belabor the point. 
My time is expired. But I would like an answer as to whether 
has that been communicated to the government, not the question 
of is it in the contract with the various people contracted. 
The answer is not responsive to the question. I apologize, but 
I would like that answer.
    Mr. Tierney. Well, if any of you gentlemen feel that you 
want to change your answer or add to it, I will give you a 
moment to do that. Otherwise we will move on and we can pursue 
that afterwards?
    Mr. Motsek. We are stuck as we are not policy folks.
    Mr. Issa. ``I don't know'' is acceptable. We don't know if 
the government has received that in writing would be OK.
    Mr. Motsek. And we would have to take that for the record.
    Mr. Issa. If you would, I would appreciate it.
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    Mr. Tierney. Thank you, Mr. Issa.
    Mr. Quigley, you are recognized for 5 minutes.
    Mr. Quigley. Thank you, Mr. Chairman. Mr. Chairman, I've 
been here 14 months now and this is the kind of work that the 
committee should be about, so I applaud your efforts and your 
staff efforts.
    Gentlemen, put yourself in our place. I understand your 
lack of awareness of what was taking place, but what would 
concern--you or us, but what is concerning is the fact that it 
took the committee and staff to ask these questions. Now, sir, 
you call them allegations, they are called findings here, but 
either way at least they are asking the right questions.
    Were you aware if any of these questions were asked at all 
by anybody else within your command?
    General Phillips. Sir, I will start and then let my 
teammates join in. Under Host Nation Trucking, I was not 
personally aware of the kind of allegations that are being 
made. But I have to say that we take them seriously, just as 
you and this committee have taken them seriously. When the 
allegations are presented, we need to research them to 
determine what the facts and the evidence are, and then to 
take--have the evidence that we can take hard actions, whether 
it is contractually or legally, in some kind of way, and then 
eventually I would assume go back and work with the government 
of Afghanistan.
    So I guess my message to you understanding where the 
committee is today and the report that was issued last night or 
this morning, we do take those allegations seriously and we 
will work them accordingly within the Department of Defense.
    Mr. Motsek. Sir, I can't comment on the specific findings 
of the report because I was not aware of them. However, for 
example, I took the Commission of Wartime Contracting to 
Afghanistan in December, and I participated in the briefing 
with one of the anti-corruption task force briefings. So I was 
aware that there was a broad spectrum of investigation ongoing 
inside Afghanistan to root out corruption. I was aware that CID 
was taking many allegations seriously. I was also aware that 
many, many allegations they did not legally substantiate and 
get on with that. And I was also aware, as we were told, that 
they had transmitted to the Afghan Government their concern, 
and that the anti-corruption court had just started, if I 
recall correctly, and that since then they had two prosecutions 
and convictions there.
    General Phillips. And, sir, if I could add one real quick. 
I was referring to a legal substantiation of evidence that we 
could use within our contracts to take action. And I don't 
think anyone would argue with that, that there is corruption 
that exists inside Afghanistan, and I think that's pretty 
clear, if you look at what some of the senior leaders have 
said, both within the Department of State and the Department of 
Defense. But in contractual actions against contractors we 
always look for the hard evidence that we can stand behind to 
take action to correct behavior or to terminate a contract.
    Mr. Quigley. I guess the line ``gambling at Rick's, I'm 
shocked'' comes to mind. But we are talking about Afghanistan, 
arguably the most corrupt country on the face of the Earth.
    Getting back to my original point, if you have that mindset 
going in, you would assume that there would be overlaying, 
overlapping areas of oversight to ask these questions all the 
time. And I understand that there are folks who are concerned, 
perhaps not a criminal investigation or investigations that 
require change, but at some point you have a pretty good idea 
that there's a problem and you want to act regardless of having 
not meeting the burden perhaps in a criminal court or a civil 
court, but recognizing where you are and what's taking place so 
far. And again, back to why weren't questions like this asked 
by the DOD earlier.
    General Nicholson. Sir, I can offer another perspective on 
that, having been in southern Afghanistan last year. We 
introduced 20,000 U.S. troops into southern Afghanistan last 
year requiring a significant increase in the amount of Host 
Nation Trucking and contacting to support the internal forces.
    So, as we did that, the commanders on the ground are 
primarily concerned about did the product or service get 
delivered on time; and they don't have the visibility on what 
happened en route to that point. But as these intelligence 
reports began to come in, as has been indicated in the study, 
these were referred to U.S. Forces Afghanistan who then had 
enough anecdotal information to warrant requesting assistance 
from the Criminal Investigation Command to begin an 
investigation to determine if there were violations. That 
eventually escalated into the introduction of a CID Task Force 
to really ramp up the investigation and which is still ongoing 
to make that determination.
    So in answer to your question, sir, these reports have 
flown in and commanders have forwarded them to appropriate 
authorities to begin this kind of investigation.
    In Afghanistan, as you point out, there is a lot of 
corruption. In southern Afghanistan, there are at least six 
major drug trafficking organizations. So we have a nexus of 
criminality and insurgency that occurs down there.
    So there is a significant amount of criminality there, and 
we are always looking at the linkages between criminality, 
insurgency and the government. And, in fact, we have 
established Special Intelligence Task Forces which look at 
these linkages which then feed into our Anti-Corruption Task 
Force and our Major Crimes Task Force. These task forces have 
successfully arrested and are now prosecuting some Afghan 
government officials. So it is not at the level we would like 
to see it, but it has begun, and we are assisting the Afghans 
in getting after this corruption.
    Mr. Quigley. I will close, Mr. Chairman.
    I do thank the gentleman. I can only begin to understand 
how complex the chore is. But I do hope there are some lessons 
learned. Thank you.
    Mr. Tierney. Thank you, Mr. Quigley.
    Mr. Welch, you're recognized for 5 minutes.
    Mr. Welch. Mr. Chairman, I want to repeat your remarks. I'm 
amazed at your capacity to get goods from here to there. I 
don't think the American people have any appreciation for how 
incredibly, incredibly complex and difficult it is, so thank 
you very much for your work.
    The big question I think is whether in the accomplishment 
of that and in the doing of that, the approach that's been 
chosen by others, not by you, essentially to pay $2 billion to 
a half a dozen or so private contractors who will then 
transport and provide security to equip our soldiers is the 
right approach. Or would it be better to do what frequently has 
been done in our history and that is to assign that 
responsibility to ISAF and the Afghan security force where they 
would be under the direct control and supervision of our 
commander?
    I would be interested in your opinions about the pros and 
cons of each approach. And I guess I will start with you, Mr. 
Motsek, because people are looking at you, but I want to give 
deference here to our men in uniform as well.
    Mr. Motsek. Sir, as General Nicholson said, we don't 
believe that the Afghan security forces are clearly mature 
enough to take over this mission. In a perfect world, in fact, 
this would be their responsibility. This is the normal securing 
of your interstates, if you will----
    Mr. Welch. Let me just stop there. Because I think that is 
an issue. I accept your judgment on that, that they are not in 
a position to do it now. And this is something that we can't 
mess around with because our soldiers need what you're 
delivering. But, on the other hand, is there a collateral 
consequence that, since we are giving this to a half a dozen 
contractors who, in turn, hire 1,000 guys with guns, that there 
is a down-the-road counterforce to what we hope will be the 
force of Afghan security forces?
    So can you comment on that?
    Mr. Motsek. Sir, you raise the key issue, as the chairman 
alluded to and your report alludes to it. We built the template 
where the responsibility to secure your convoy was a 
subcontracted responsibility. We made that decision in the Host 
Nation Trucking contract.
    Conversely, with LOGCAP in Iraq, we told KBR they were not 
responsible for the security, that the U.S. Government would 
contract separately for the private security contractors to 
manage that. So we took a template, and we are living with that 
template now.
    I'm here to tell you that we have to relook at it both 
ways. It may be appropriate----
    Mr. Welch. I appreciate you saying that. And, again, that 
is not your call. Because, again, I think the chairman made it 
very clear we have to get that stuff to our soldiers. However 
we get it there, it has to be done. There is no compromising on 
that. But there are consequences to how we do it.
    Obviously, you would have great confidence in the ability 
of our soldiers if we had enough to deploy to provide the 
security and transport the equipment. It would be at some risk 
to them, and they're in risk obviously in theater right now.
    But perhaps I will ask you, General, if you could comment 
on that.
    General Phillips. Sir, I can only address it really from 
the perspective of the requirement and flowing in.
    When we originally built the--we didn't build the 
requirement but the warfighters in Afghanistan, we felt we 
would have a need for about 100 trucks per day. And, as you 
just described, the need for equipment, supplies, ammunition, 
fuel, water, etc., that grew to well over 200 trucks per day 
and 200 missions per day. So it grew exponentially over time.
    And we first signed the contract in March 2009. There were 
about 30,000 troops that were in Afghanistan, about; and it was 
growing to about 60,000. Now we are growing to about 90,000. So 
you can see the tremendous growth and the need to have this 
capability.
    Now the other piece of it is the Afghan National Army and 
Police. President Karzai, made a declaration through the 
government a while ago that said we wanted to migrate all 
private security contractors to the Afghan National Police or 
Afghan National Army or another government agency, and they 
wanted that to occur within 2 years. I think we are 6 months 
down the road toward that piece. Not my lane in terms of 
operation, but it's going to take some while for us to buildup 
the appropriate forces to be able to take over that private 
security mission to include convoy escort.
    Mr. Welch. General Nicholson, I will ask you--here is the 
worry I have, and I will ask you to comment on that.
    If while we are trying to make that transition--and I know 
that's the policy and there's a great effort being put into it 
by General McChrystal and others to have the Afghan National 
Army take over more responsibility, but as we are doing it over 
this 2-year timetable, there is a $2 billion contract that is 
going to basically private individuals who now have under their 
command a separate army dependent on them for millions of 
dollars.
    Are those two developments incompatible? That is, on the 
one hand, wanting to buildup capacity in Afghanistan under the 
control of the government while, at the same time, we are 
providing an enormous financial incentive to a private army 
which is not going to lightly give up the benefits of these 
contracts? General.
    General Nicholson. Sir, we view this as a temporary 
necessity until we build our security forces to a level 
necessary so they can take over the security. For example, 
right now they are beginning to field these units. They are 
beginning to field these units in a position along the highways 
to provide additional security.
    Sir, we all share this concern about additional armed 
groups in Afghanistan. The international community went to 
great lengths at the beginning of the war to disarm the various 
armed groups, the DIAG process; and we don't want to take a 
step back toward rearming people or creating regional power 
brokers with guns. So we share this concern.
    And this gets to the positive second order COIN effects to 
which we are referring. Hence, President Karzai's guidance to a 
reduction of an armed group or a reduction of private security 
contractors, the growth of the ANSF, and the focus within the 
command on what we call freedom of movement, which is providing 
the ability for the Afghan economy to move freely along the 
roads within the country.
    So this is a priority of the commend, sir; and we share 
your concern.
    Mr. Welch. I thank the witnesses for your testimony and 
yield back.
    Mr. Tierney. Thank you on that.
    Mr. Murphy, you're recognized for 5 minutes please.
    Mr. Murphy. Thank you very much, Mr. Chairman.
    Let me join Mr. Welch in appreciating the complexity of the 
task of moving people and goods.
    When Mr. Welch and I and Mr. Tierney were in Afghanistan 
last year, we listened to agricultural ministers explain to us 
that for a simple agricultural shipment the particular farmer 
or the entity that they were contracting with were being 
stopped 20 to 25 times along that route for varying forms of 
illegal payments and tributes and bribes. I can't imagine the 
added complexity when you're dealing with security concerns of 
military shipments, military convoys.
    My question I guess to you, Mr. Motsek, is on the issue of 
reports that our investigators detail were made to the 
Department from the different contracting entities. I 
appreciate the fact that a lot of this information is new to 
you. You have to figure out what to do with it. But we 
certainly have a volume of reports that went from contracting 
agencies to the Department of Defense that detailed a variety 
of different levels of information regarding payoffs.
    One memo from one particular contractor to a contract 
manager detailed how he was approached by Taliban personnel to 
talk about payments for the safe passage of convoys through the 
area. We have talked to other carriers that are making missions 
through those areas that are paying the Taliban for safe 
passage. According to another contract manager, everyone is 
aware of the issue of these protection payments.
    Clearly, something was missed in terms of the reports 
initially being made to contract managers and whether or not 
that information got up the chain. Can you just tell me what 
the obligation of contract managers are on the ground when they 
receive reports of direct information of payoffs or potential 
payoffs to varying levels of the insurgency or Taliban? Just 
give me a sense of what the duty to report is and what we may 
have missed here.
    General Phillips. Sir, during my tenure as the CG for 
JCCIA, on numerous occasions when information like that was 
presented--and it often was in Iraq and Afghanistan--I would 
call in the Procurement Fraud Task Force. And, normally, it 
would be CID that I would task to go out and validate the 
anecdotal evidence that you might be presented with when 
someone says this might have occurred? Can you validate that 
this actually did occur? Can you investigate and use all the 
resources that they have at their hand?
    And once they complete their analysis and present those 
findings to you, we would take the appropriate contractual 
remedies, and we did often to make sure that we corrected the 
behavior and we held the client contractor accountable for 
their performance. That's our fiduciary responsibility to the 
American taxpayer and required by our contract clauses.
    Mr. Murphy. I guess my question is, how does it get to you? 
What level of obligation on the contract managers that are 
potentially receiving this information is there to report what 
they are hearing from the field?
    General Phillips. Sir, it would often come through the 
contractual chain of command, maybe through a COR, contracting 
officer, represented to the contracting officer, to the 
principal assistant responsible for contracting eventually in 
Afghanistan. And they would--if they were significant enough, 
they would report it to me; and then we would figure out a way 
ahead to pursue the evidence and the allegation, teaming with, 
potentially, the Procurement Fraud Task Force, or CID, whoever 
might be appropriate to do the research.
    In some cases, you might simply appoint a 15-6 officer to 
go out and do a commander's inquiry or investigation and report 
back. If it's serious enough, like the allegations that you are 
talking about, it would be CID; and there is an ongoing 
investigation by CID to look into the allegations.
    Mr. Murphy. With respect to existing contract standards--
Mr. Motsek, you referred to a sort of universal standard of 
conduct that is being developed for all PSCs. What is the level 
of proof that you need in order to take action? What level of 
evidence do you need that money has gone to a particular 
contractor and ended up in the hands of the Taliban or in the 
hands of the insurgents? At what level is just knowledge that a 
particular contractor has relationships with Taliban or local 
insurgents enough to be able to take action or pull a 
particular contract? What is the level of proof here that we 
need to take action?
    General Phillips. Sir, you need a preponderance of the 
evidence to show that, or have a level of confidence that 
something did occur. And each case is different, so it would be 
difficult to talk about one case versus the other. I would 
simply rely upon the investigating official, whoever that might 
be--it might be CID, it might be FBI--and they would present 
you that level of evidence.
    In my case, I have a legal staff that looked at everything 
that we executed in terms of action we would take against a 
contractor, and we would have a legal staff review it. And, in 
some cases, we might reach back to the army staff or the DOD to 
also leverage some of their experience and then take the 
appropriate action. But each case would be different, sir.
    Mr. Murphy. One last question, Mr. Chairman.
    Do you need actual specific evidence of a direct and 
immediate payment being made? Or is evidence of a link in 
association between a contractor and the Taliban, for instance, 
enough to be able to take action or to pull a particular 
contract?
    General Phillips. Sir, you would need facts. And facts 
might be a sworn statement. It might be two or three different 
individuals who might corroborate that something had occurred. 
But you would have to have fact-based evidence that something 
had occurred that you can take action against.
    In our contracts, we uphold the Federal acquisition 
regulations, which are derived by statute and law; and we also 
charge our contractors to uphold, in the case of Afghanistan, 
the government of Afghanistan's laws. So it would have to 
withstand the scrutiny of our legal analysis.
    Mr. Tierney. Thank you very much.
    Ms. Chu, you are recognized for 5 minutes.
    Ms. Chu. I find it disturbing that our budget for private 
security contractors is $2.16 billion; and that is such a large 
percentage of the GDP of Afghanistan, which is $13 billion. 
It's one-fifth of the GDP of the entire country of Afghanistan. 
Therefore, this money is a lucrative source of revenue for the 
people of Afghanistan. So my questions have to do with whether 
a portion of our taxpayers' dollars are going to the Taliban?
    And so, first, let me ask General Nicholson about one 
summer, 2008, incident where Commander Ruhullah's agents 
accompanying a Host Nation Trucking contractor along highway 1 
allegedly tipped off insurgents about an approaching convoy and 
were then allowed to pass unharmed before the insurgents 
attacked the convoy. Doesn't that suggest that Ruhullah, who is 
responsible for the lion's share of convoy security in southern 
Afghanistan, has a working relationship with the Taliban?
    General Nicholson. Ma'am, I would have to take that 
incident and examine it. I don't have the details of that 
incident at my fingertips. If that was in the report we 
received this morning, we will gladly get together with our 
investigative team in country and further develop that and see 
if the investigative team can tell us what they found.
    General Phillips. Ma'am, if I could make one clarification. 
The Host Nation Trucking contract is $2.16 billion, but it's 
not just for private security contractors. The majority of that 
actually goes for the short and long haul for the aid 
contractors that are serving every day. We increased it to 
$2.16 billion. The expenditure today is about $700,000 per day 
on average for trucking operations.
    To date, since we awarded the contract in March 2009, we 
have expended about $350 million against a ceiling of $2.16 
billion. The contract will expire I believe around April or May 
2011. So we are about 9 or 10 months from expiration.
    It's very doubtful that we today will spend the total $2.16 
billion, given the current burn rate of $700,000 per day. It 
was simply a ceiling that we knew or were assured that we could 
have the right number of trucks available to be able to deliver 
the equipment and supplies to warfighters, but it is doubtful 
today that we will reach the ceiling.
    Ms. Chu. And your estimate of how much we will actually 
spend is what?
    General Phillips. Ma'am, I will have to get back with you 
on that. But we could look at it and do the math and look at 
the surge operations that are going to occur and then give you 
an estimate of where we might be in a year from now. But, in my 
personal opinion, I doubt if we will get to $1 billion or much 
over $1 billion in terms of execution by the end of the actual 
contract. But I will get back with you with a more firm answer 
from JCCI.
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    Ms. Chu. I would have to say, though, that even if it's $1 
billion, $1 billion versus $13 billion for the entire GDP of 
Afghanistan still is substantial.
    General Nicholson, beyond the incident involving Ruhullah's 
agents reportedly tipping off insurgents, several other Host 
Nation Trucking contractors have stated that Ruhullah openly 
coordinates with and pays off Taliban insurgents to help secure 
safe passage when it's convenient for him to do so. And there 
was an incident report that was filed by a contractor in 2007 
explicitly stating that a Taliban commander had demanded money 
for the safe passage of goods and the Host Nation Trucking 
contract project managers requested greater armament authority 
from the Department of Defense to protect themselves and avoid 
paying an estimated $1.6 to $2 million per week to the 
insurgency.
    So even if a small percentage of this money is reaching the 
Taliban, what are the consequences for counterinsurgency 
strategy?
    General Nicholson. Yes, ma'am.
    First off, that would be unacceptable, U.S. taxpayer 
dollars going to the enemy; and it's something that every 
commander in Afghanistan certainly would be concerned about and 
would want to stop immediately.
    When we receive anecdotal intelligence reports or human 
intelligence, then those don't constitute evidence as General 
Phillips described. But we take those and look for the linkages 
between criminal networks and the government, criminal networks 
and contractors and pass that information to our investigative 
agencies to examine that so we can then take the appropriate 
action; and that may include referring it to the Afghan 
government for arrests. For example, we have recently seen some 
arrests of Afghan general officers and the border police who 
have been engaged in corrupt practices. We have seen arrests of 
district police chiefs in RC South, for example, for drug 
running.
    So there is a nascent and growing capacity within the 
Afghanistan government to act against corrupt officials. But 
under no circumstances will the funneling of U.S. dollars to 
the enemy be acceptable to any of us. The key is getting that 
information, developing it more fully, and then being able to 
take the appropriate action.
    Another thing I wanted to followup on, ma'am, that you 
mentioned earlier. We have tremendous potential with this money 
to have a positive effect on the Afghan economy, and so looking 
for ways to build capacity at the local level and encourage the 
growth of small businesses and reinvigorate local economies is 
paramount to the success of our COIN campaign. And so as we 
look at how we address the execution of our contracts, one of 
the objectives of Task Force 2010 is how to optimize the effect 
of dollars, not to just avoid or eliminate fraudulent 
activities but how to optimize the effect of these dollars so 
they in fact enhance the overall effects of what we are 
achieving with our investment in Afghanistan.
    Mr. Tierney. Thank you, Ms. Chu.
    You know, it's amazing. Two days after this contract went 
into effect there was a stream of complaints already filing in. 
People were reporting problems with the people they were 
paying, and that they were having to pay off people for 
security. The 25,000 documents are replete with e-mails, 
incident reports, and reports of situations where people 
thought there might be payments to the insurgents. They were 
concerned about paying warlords. They were concerned about the 
collective effect.
    So to say that now we have heard about it we are going to 
find out if it's real or not, we are going to try to get enough 
evidence to prosecute, brings to mind a couple of points. One 
is, it has been 14 months, go out and talk to Commander 
Ruhullah. He has noever met a single person in the U.S. 
Government. He will admit openly, as he did to the committee 
staff, ``yeah, I'm getting paid tens of millions of dollars to 
take care of a certain road over here. Yes, I drive around with 
equipment that has not been approved or authorized. I don't 
even know about the rules that they have. Then I'm paying off 
police, and I'm paying off members of the Afghan national 
military as well.''
    So I think there was a lot to go on to get people started 
on this thing quite some time ago.
    General Phillips, I look at your statement--actually, Mr. 
Motsek's statement here--notwithstanding media coverage 
regarding incidents regarding private security contractors, the 
frequency of serious incidents by DOD private security 
contractors is extraordinarily low. These numbers seem to 
demonstrate that, on the whole, U.S. private security 
contractors are operating in accordance with the host nation 
laws in support for overall counterinsurgency objectives.
    That leads me to believe that you think that, just because 
there haven't been enough reports, that in and of itself is 
proof that everything is going just fine, the host nation laws 
are being complied with, our counterinsurgency strategy is 
intact. When, in fact, Commander Ruhullah says he has lost 454 
guys. He hasn't filed a single report.
    Now your own rules and regulations require that every time 
there is a discharge of a weapon there is supposed to be a 
report, never mind anytime that somebody dies. So, obviously, 
that isn't happening. This idea that there aren't any reports 
filed isn't conclusive evidence that is the case.
    Who is supposed to be responsible on the ground to actually 
having eyes-on proof of whether or not there are checkpoints 
set up from time to time, whether there are bribes extracted 
for police or the national military in Afghanistan?
    Just because you don't get a report that it's happening 
doesn't mean that it may not be happening. In fact, you got 
reports--I'm not saying you particularly--but all up and down 
the chain there were reports that it was happening; and yet 
nobody that I know of, not a contractor and not anybody in the 
military that is supposed to be in charge of responsibility for 
oversight, ever went out, except during one incident that 
occurred on your list when they went out about 200 or 300 yards 
from the gate. And he said, when I got out there, it seemed 
that they changed their behavior and stopped doing what they 
were doing, but I wasn't allowed to go out again or go any 
further.
    So unless somebody is going out and seeing whether or not 
there are these checkpoints set up for bribes, unless someone 
is going out and seeing a fellow like Ruhullah getting paid off 
gobs of money and then whether or not he is paying anybody 
else, whether or not you're going out----
    And we have a list here of 44 different areas of the roads 
said to be controlled by different people: Commander Matiullah, 
Masud, Anga, Bamad, Masoud, Sharb, Habubulah, Koka, Trejah, and 
Ruhullah. Unless somebody is out there seeing that these people 
are getting paid who is responsible for doing that?
    Because you may never hear about it further up the chain. 
But if we're not letting anybody go out and do periodic 
inspections, if we're not letting somebody go out and put eyes 
on, then I don't see how you can say you're managing and 
overseeing these contracts. And just the fact the contractors 
didn't file incident reports, if that is how you reach a 
conclusion that everything is fine, I think that should be 
problematic for us.
    So I just leave that as a rhetorical question. I think the 
answer is pretty clear.
    But, General Nicholson, I will say this to you. I 
understand you think it is a terrible thing the Taliban is 
being paid. We all should be horrified to think that might be 
happening. But isn't it also a problem if you know somebody 
like Ruhullah, who has hundreds of militia under his authority, 
controls big segments of the country areas, isn't it also 
problematic that they are getting tens of millions of dollars 
by their own admission and they have armies that don't answer 
to the Afghan government, never speak to our people, just do 
whatever they want to do, and are known as ``the butcher'' as 
they drive through towns? How does that affect our 
counterinsurgency strategy?
    General Nicholson. Yes, sir. The existence of any armed 
force that is not a part of the Afghan government eventually, 
as President Karzai stated, needs to go away. And the 
international community supports that. We support that. And it 
is counter to our counterinsurgency strategy in the sense that 
they are a surrogate for a lack of capacity on the part of the 
government. So, clearly, sir, we want to get to an end state 
where we don't need private security contractors because----
    Mr. Tierney. But there were reports of this since 2 days 
after the contract started to be implemented. So where is the 
action? You go through the documents over there. The contractor 
says, ``I reported it up and I was told I can't deal with 
that.'' The legal department said they have to rebid the 
contract, so they are not going to deal with it. Another 
contractor said, ``I reported it up, and there is nothing they 
can do about it, and they just look the other way.'' They were 
met with indifference, was what one contractor said.
    So for 14 months, less 2 days after we got started on that 
contract, there has been an indifferent response or looking the 
other way or saying it's the cost of doing business. Where is 
the response? If you think it's a cost of doing business, if 
that is the legitimate argument that the Department of Defense 
wants to put forward, then where is the oversight and 
management aspect to make sure guys like Ruhullah aren't 
getting enriched and having militias out there with competing 
interests with the Afghanistan government and the United 
States? Where is the enforcement, the management, the oversight 
to make sure that the ANP and the ANA aren't getting paid off?
    We just don't see that happening; and, 14 months later, 
that is why I think the report is as disturbing as it is.
    General Phillips. I can add a couple of data points, sir.
    One of the issues we have had, in particular, many of these 
reports you have in your writing were focused on the southern 
region of Afghanistan, a new area for American forces. We began 
last year with adding 20,000 troops there. We are adding 
another 15,000 this year. These additional troops enable us to 
partner with the Afghan security forces.
    Additionally, we are roughly doubling the size of the 
Afghan National Army and significantly increasing the size of 
the police in the southern region.
    Mr. Tierney. Can I just interrupt you there?
    You wish. I don't mean to be a wise guy to say that, but we 
have been out there and looked at the training programs for the 
military and police, and you want to double them, but you don't 
want to give us a projection of whether you think there is any 
realistic prospect that they are going to be doubled with any 
capacity to actually accomplish the missions that we assigned.
    General Phillips. Yes, sir. They have needed to be doubled 
for a long time.
    One of the points I wanted to add, sir, was that by 
partnering with the Afghan police in particular our goal is to 
curb and limit and, to the extent we can, to eventually 
eliminate these corrupt practices you were referring to, these 
illegal checkpoints, by partnering with Afghan units, by having 
sufficient ISAF forces and a sufficient number of Afghan forces 
that are properly trained.
    And, of course the Afghan police in the timeframe we are 
discussing last year, 70 percent of them were not even trained. 
They had uniforms, they had guns, but they are not on the road, 
they have low pay, they are not properly trained, and they are 
engaged in these corrupt practices.
    Through the funding provided by the U.S. Congress and the 
efforts of the NATO training mission in Afghanistan, we have 
now increased the amount of training, we are eventually going 
to eliminate that deficit of untrained police, and we are going 
to be able to partner with the police units to increase their 
accountability and professional standards. And this is one of 
the approaches toward eliminating these illegal checkpoints 
which will be shaking down the drivers which will result in 
these things you report rightly----
    Mr. Tierney. I hope what you say about training them and 
getting them up to capacity is going to happen. We have looked 
at this in the past, we have done reports on that, and I 
suspect we will have to go out again and take a look at it. 
Because the concern is that retention rates are difficult and 
the success rates are difficult.
    But I don't want to take up all Mr. Flake's time.
    Mr. Flake.
    Mr. Flake. Thank you, Mr. Chairman.
    If I might borrow this, this is in the report. This is the 
list that the chairman read from--it lists who controls which 
miles of the road. Are you aware of how many miles or any in 
particular that are controlled by the Afghan security forces? 
Mr. Motsek.
    Mr. Motsek. That was the first time I saw that chart.
    Mr. Flake. Aside from the chart, are you aware of certain 
areas?
    Mr. Motsek. We are aware, and it goes back to what is in 
the report. I think it's safe to say that virtually everything 
in the report was, in fact, reported to many authorities. I'm 
assured that most of it was investigated by the appropriate 
task forces or is being investigated by the appropriate task 
forces. But the reality is we may not have gotten to a level of 
evidence that permits us to do something in every case that 
would meet the requirement.
    Clearly, the information, in general, has come forward. The 
Secretary of State made the comment that is in the preface of 
your report. The Secretary of Defense has said we are concerned 
about corruption. The U.N. does a survey inside the urban areas 
of Afghanistan. The No. 1 issue is corruption. Fifty-nine 
percent of the Nation cares about it. We've got it. Admiral 
Dussault was over there with another additional task force, 
with forensic accountants--not just accountants but forensic 
accountants--to try to track the dollars.
    I would caution you that one of the frustrations I have, I 
used to be a part-time policeman in New Jersey, and I know from 
talking to my old detective buddies how difficult it was to get 
a case against organized crime. It took years. And that was an 
environment with a baseline banking system, a baseline pay 
system, a baseline telecommunication system.
    We are doing this in another environment where it is not 
going to happen, in my estimation, overnight. But I assure you 
we are taking it all seriously. I would be as frustrated as you 
are that you have seen the issues being reported and you don't 
see an effect being incurred very, very quickly, but----
    Mr. Flake. That is the frustration.
    Mr. Motsek. If I was a cop on the other side, I would say, 
damn it, I'm doing what I can with what I got.
    Mr. Flake. This investigation has been going on for 6 
months, the committee's investigation. Yet there seems to be 
very little awareness--in fact, we only got last week any 
indication that the Department of Defense was doing really 
anything on the subject, and that was just in the form of a 
PowerPoint presentation.
    But, as the chairman mentioned, there is very little 
evidence that people are moving outside of the security gates 
or that you are taking reports of casualties or fire that have 
to be, under our law, reported. We either have to say we are 
taking those reports and ignoring them or assuming that there 
are no bad actors out there and none of this is happening. It 
can't be both.
    Let me just ask General Nicholson, you mentioned that if 
this activity is occurring, these payoffs to warlords, a 
parallel authority structure outside of the Afghan government, 
that is counter to our COIN strategy in Afghanistan. At what 
point do we say, if these allegations are true, if half of 
these allegations are true, if a 10th of these allegations are 
true in this report that we have to adjust our strategy because 
this runs so counter to the COIN strategy? Where is the tipping 
point?
    And at what point will we, as a committee that has 
oversight here, hear the Department of Defense simply say, hey, 
this is just the cost of doing business, and it's more 
important to move goods and services, or we simply can't 
tolerate this kind of parallel authority structure outside of 
the Afghan government operating in the countryside?
    General Nicholson. Yes, sir.
    Our activities to counter corruption are central to the 
campaign. We are engaging at all levels of our government. As 
you know, President Obama met with President Karzai. U.S. units 
are partnered with police inside Kandahar City trying to 
improve performance and accountability with their Afghan 
partner. So this is a high priority for us.
    Mr. Flake. Let me just say we hear that on the top. We 
heard the statement from Secretary Clinton that is in the 
report. We have heard the statements in the report that 
President Obama has said. We see this report, all of these 
findings, this overwhelming evidence from this investigation 
that this is occurring. Yet in the middle from those who have 
authority to address the situation actually on the ground by 
amending the contract or stripping somebody of the contract or 
making sure that this is not occurring, we don't see any 
activity there. And that is where the frustration lies.
    I'm out of time.
    Mr. Motsek. Sir, if I may, a particular contractor which 
you have raised by name a couple of times, a large private 
security contractor in Afghanistan, in part the reason that the 
next TWSS contract, which was going to be the large private 
security contract, a bundled contract, if you will, which would 
have made it easier for the contracting agency to manage that 
contract, that process was killed; and they are going back to 
individual awards for that contract in part because that 
particular individual was perceived to have a nationwide 
advantage if we awarded a contract nationally. And so we are 
going back to local awards of private security contracts, as 
opposed to a nationwide award. So there is knowledge and there 
is a cause and effect in some areas because of this.
    General Phillips. Sir, would it be possible for me to cover 
a couple of things where we have taken some action real quick?
    Sir, contracting officer representatives, we talked a 
little bit about that and alluded to them from time to time. 
Less than a month after I arrived into theater we had an issue 
or a problem with contracting officer representatives. And I 
met with the commanding general of Army Materiel Command and 
the Army acquisition executive who, before I went to Iraq, was 
my boss. And we knew that we had issues and problems, and we 
took that on as an Army, and we have made I think great strides 
in contracting officer representatives. And that also includes 
the pieces where people are monitoring what is happening with 
Host Nation Trucking.
    The Army has executed--or issued an execution order for 
CORs in December 2009 that requires a brigade to have up to 80 
CORs trained and receiving a certificate and being able to 
perform COR functions on various contracts. That is a great 
advancement or improvement from where we were 18 months ago, 
and we continue to make improvements with CORs.
    I have had personal discussions with division commanders 
before they get deployed into Iraq.
    And, sir, the other point I want to make sure that you 
understand is that we are taking great strides in subcontractor 
management. The committee has talked a lot about that piece. I 
spoke to the JCCIA commander just this week and have an ongoing 
dialog with her. They are now putting forth a new clause that 
will go into our contracts in Afghanistan and potentially in 
Iraq, I believe, that will give us greater visibility into 
subcontractors to include the private security contractors that 
would work on a Host Nation Trucking contract. It would give us 
greater visibility into banking and financial efforts. So we 
might be able to see if there is some kind of activity 
occurring. I think that is still in review, but I suspect that 
we will have something in place that we will begin to put in 
our contracts very soon.
    Mr. Tierney. Thank you for that.
    But I made two points. Now one is, none of your CORs, as 
you call them, ever get outside the gate; and the JCCIA now is 
going to fix up the legal paperwork. And that is good. That is 
a step in the right direction. But unless somebody actually 
gets out and checks to see whether or not that is being 
complied with leads us back into the same boat.
    I just want to take quick issue. A couple of times there 
has been a tendency where we think, gee, if we just had the 
hard facts, we would be able to do something. It took one e-
mail to Watan Risk Management to set up an interview with both 
the principals of that company--both of whom have done jail 
time in the United States, incidentally, before they got their 
present position--and to have them bring along Commander 
Ruhullah to an interview with the committee staff where he then 
readily admitted that he was making huge piles of money and had 
an extraordinarily large militia; that he was driving around 
with weaponry that wasn't allowable without paper 
authorization; that he basically controlled areas of the road 
and other people controlled other parts of different roads and 
what their conduct had been; and that he had paid off certain 
members of the ANA and ANP and named names for everybody. It 
wasn't like he wasn't out there for somebody to get.
    I just want to make that point.
    Mr. Welch, you have 5 minutes. I welcome you to it.
    Mr. Welch. Thank you very much, Mr. Chairman.
    General Nicholson, as a former commander in the south, my 
question to you is, do you believe it is sufficient for us to 
wait until there is a criminal indictment and completion of a 
criminal investigation or is there a core strategic decision 
that needs to be made more promptly?
    General Nicholson. Sir, it's clear as we learn these 
lessons we need to integrate them so we can improve our 
performance. And this is one of the reasons why the chairman 
chartered Task Force 2010, to bring in another set of eyes--
Admiral Kathleen Dussault, who had been a former commander of 
the contracting command--with a group of subject matter experts 
to enable the command to really focus on this issue and very 
quickly generate, No. 1, effects in the south. So her initial 
focus is Kandahar and how we can then begin to achieve this 
effect I mentioned earlier of optimizing contracting in support 
of the COIN company at Kandahar. So that will be their initial 
focus, and that was designated as such in order to more 
directly link these lessons learned and best practices and get 
them into the ongoing campaign. So, clearly, we want to move as 
quickly as possible.
    Having said that, sir, it's also important to achieve these 
prosecutions, to enable the Afghans to develop the kind of 
capacity they need to arrest and prosecute these folks; and, to 
date, they have arrested and are prosecuting a handful of 
senior officers in the border police and the Afghan police.
    Mr. Welch. Thank you.
    But, you know, again, I go back to what I think is a 
fundamental question as to whether or not the long-term goals 
of the United States are best served when our military, who are 
being asked to carry out and execute on those long-term goals, 
are better served by putting the security of these convoys 
under the direct supervision of our commander and the direct 
protection of our soldiers, who we know are accountable, versus 
$2 billion that is getting spread out and then we try to rely 
on lawyering up and criminal prosecutions.
    But that is my statement, and I know that is not the 
decision that you have made.
    But, Mr. Motsek, let me read you something. According to 
Lieutenant Colonel David Elrod, the Commander of the 484th 
Joint Movement Control Battalion that was in charge of 
overseeing and managing the Host Nation Trucking contract in 
Afghanistan, the battalion didn't have the vehicles, the 
weaponry, or the manpower to carry out oversight. It just 
didn't have what it needed, and they are stretched thin. I 
understand that. But they couldn't travel along the Afghan 
roads because it would have been, according to him, a combat 
mission.
    And also the Department of Defense instruction issued in 
April stated that ``security is inherently governmental if it 
is to be performed in environments where there is such a high 
likelihood of hostile fire by groups using sophisticated 
weapons and devices that in the judgment of the military 
commander the situation could evolve into combat.''
    And according to the Congressional Research Service, 
private security contractors working for the Department of 
Defense in Afghanistan are more than 4\1/2\ times more likely 
to be killed in action than even U.S. military personnel. That 
number is even higher for private security companies providing 
convoy service.
    So, the question I had, Mr. Motsek, is that, in light of 
these statistics, can you explain what you meant in your 
statement when you said that the roles of the private security 
contractors providing convoy security are ``analogous to 
civilian security guard forces, not combat forces.''
    Mr. Motsek. Sir, I can't comment on the numbers by CRS, but 
four times more likely, just on the raw numbers based upon what 
I know of casualties, it doesn't track. But that 
notwithstanding, first off, it goes back to my initial comment 
where the force protection mission, the force protection 
requirement is that of the commander. The commander makes the 
assessment and is responsible for the risk assessment.
    The guards that guard both movement and static positions in 
Afghanistan are just that, they are guards. They have no 
authority to execute any sort of combat role.
    A great many of the incidents that we are talking about 
today in a normal sense are considered criminal elements, not a 
military enemy in the traditional sense. We are talking about 
warlords attacking. These are criminal elements that are 
engaged. They are not----
    Mr. Welch. Again, I don't have your experience, and I don't 
have your knowledge, but I do appreciate that if we don't get 
those supplies to our troops, our troops are going to be in 
peril. And I would think it's a standard tactic of the enemies 
of our troops, the ones who want to do them harm, that they 
would frequently use as a tactic of trying to cutoff their 
supply. And that leads to combat, correct?
    Mr. Motsek. It's an action, yes, sir. It's an action.
    Mr. Welch. Well, does this whole policy depend on whether 
the folks who are killing and attacking, killing the security 
folks and attacking the convoys that are destined to serve our 
troops, whether they are doing it for a criminal purpose or for 
the Taliban?
    Mr. Motsek. No, sir. But the preponderance are more 
criminal than they are Taliban. Again, we cannot guarantee no 
attack.
    Mr. Welch. We understand that. I just want to again 
reiterate I think there is a fundamental strategic question 
here about whether we want to give $2 billion to folks who have 
no particular motivation other than to make money versus have 
that be under control of our troops, particularly when that 
alternative force is ultimately going to be in the opinion of 
some a threat to capacity building of the Afghan Army and the 
Afghan government.
    Mr. Tierney. Thank you, Mr. Welch. Thank you very much.
    Let me ask if you gentlemen would be willing to answer 
further questions that might be asked in writing at some point 
in time if we give you time to do that?
    I appreciate that. Thank you.
    Also, I just want to run through a couple of things 
following up with Mr. Welch.
    If, in fact, the United States decides to continue using 
small armies of private security contractors to defend the 
supply chain in the war zone, has there been any discussion or 
can we expect any discussion about getting direct authority and 
accountability over the private security companies, as opposed 
to going to them as subcontractors? Does anybody know if that 
is being considered?
    General Phillips. Sir, I can share this. Part of my answer 
before on the subcontractor clause would give us visibility 
into the subcontractor----
    Mr. Tierney. Separating them out from the trucking 
companies so you get trucking companies going one way and 
contractors who really don't have expertise in this area and 
are also directly in charge of these security people.
    General Phillips. You mean go directly to a private 
security contractor----
    Mr. Tierney. Make security contractors directly responsible 
to our military as security people, not through a trucking 
contract, not passing it off to the trucking contractors who 
seem perfectly incapable of doing it.
    Mr. Motsek. Sir, in my capacity, I'm going to force that 
consideration to be made.
    Mr. Tierney. Thank you.
    And I know you already talked about--at least General 
Nicholson has talked about the potential future role of the 
Afghan national forces.
    You have already talked, also, about contract transparency, 
the subcontractors. We appreciate that.
    We still, I think, need to work on the oversight and the 
management, getting people outside the gate and getting eyes on 
the road. And I think I heard everybody say--and I'll ask 
General Nicholson again, one more time, is there a conversation 
going on now at the Department of Defense about the effects of 
coalition contracting on Afghan corruption? Is that larger 
strategic conversation going on?
    General Nicholson. Yes, sir, it is.
    Mr. Tierney.I want to thank all of you for taking your time 
and bringing your expertise and information to the committee. 
We appreciate it a great deal, as well as your agreement that 
you will answer further questions in writing.
    With that, we will take about a 5-minute recess; and, 
again, thank you.
    [Recess.]
    Mr. Tierney. A quorum being present, the Subcommittee on 
National Security and Foreign affairs hearing entitled 
Investigation of Protection Payments for Safe Passage Along the 
Afghan Supply Chain will return to order.
    We are now going to receive testimony from our second panel 
of witnesses, and thank you for your patience in waiting while 
we had the first panel testify and answer questions.
    I'm going to do the same thing. I will introduce our 
panelists all at once, and then we will start again with Mr. 
Schwartz at the beginning for testimony.
    Moshe Schwartz is a Specialist in Defense Acquisition at 
the Congressional Research Service. Before joining the 
Congressional Research Service, he served as a Senior Analyst 
at the Government Accountability Office and as an Assistant 
District Attorney in Brooklyn, New York. He received his BA 
from Yeshiva University as well as a JD from Yeshiva 
University's Benjamin N. Cardozo School of Law, an MBA from 
Carnegie Mellon's Tepper School of Business and a masters in 
public policy management from Carnegie Mellon's John Heinz III 
School of Public Policy and Management.
    Carl Forsberg is a Research Analyst at the Institute for 
the Study of War, where he focuses on the security dynamics and 
politics of Southern Afghanistan. Previously, he worked at the 
Marine Corps Intelligence Headquarters and for Uganda's State 
Minister for Disaster Relief and Refugees in Kampala, Uganda. 
He holds a B.A. in history from Yale University.
    Colonel T.X. Hammes is a retired U.S. Marine Corps Colonel 
and an expert in U.S. military strategy. He is currently a 
Senior Research Fellow at the Institute for National Strategic 
Studies at the National Defense University. He has also served 
at all levels of the operating forces, to include command of 
the Rifle Company and Intelligence Company in the Chemical 
Biological Incidence Response Force. He is author of The Sling 
and The Stone: On War in the 21st Century and numerous articles 
and opinion pieces. Colonel Hammes is currently pursuing a 
Ph.D. in modern history at Oxford University.
    Dr. S. Frederick Starr is the founding chairman of Johns 
Hopkins University Central Asia Caucasus Institute. He is an 
expert in Afghanistan, Central Asia, and the Caucasus, Russia 
and the former Soviet Union. Over the course of his career, Dr. 
Starr has authored or edited 20 books and more than 200 
articles on Russian and Eurasian affairs. He received his 
doctorate from Princeton University in history.
    So thank you all for making time available for us and 
sharing your substantial expertise.
    Again, it is the policy of this subcommittee to swear you 
in before you testify. So I ask you to please stand and raise 
your right hands.
    [Witnesses sworn.]
    Mr. Tierney. Let the record please reflect that all of the 
witnesses answered in the affirmative.
    We will put your written testimony as well into the record, 
so you needn't read it in its entirety. If you can summarize it 
in about 5 minutes for us, remembering that the light goes 
amber when you have about a minute left, it goes red when 
you're out of time, and then we will hope you will wind it up. 
Thank you very much.
    Mr. Schwartz, you are recognized.

      STATEMENTS OF MOSHE SCHWARTZ, SPECIALIST IN DEFENSE 
  ACQUISITION, CONGRESSIONAL RESEARCH SERVICE; CARL FORSBERG, 
RESEARCH ANALYST, INSTITUTE FOR THE STUDY OF WAR; COLONEL T.X. 
    HAMMES, SENIOR RESEARCH FELLOW, INSTITUTE FOR NATIONAL 
    STRATEGIC STUDIES, NATIONAL DEFENSE UNIVERSITY; AND S. 
 FREDERICK STARR, PH.D., THE PAUL H. NITZE SCHOOL OF ADVANCED 
         INTERNATIONAL STUDIES, JOHN HOPKINS UNIVERSITY

                  STATEMENT OF MOSHE SCHWARTZ

    Mr. Schwartz. Chairman Tierney, Ranking Member Flake, 
distinguished members of the subcommittee, thank you for the 
opportunity to appear before you today to discuss the 
Department of Defense's use of private security contractors in 
Afghanistan.
    According to the Department of Defense, as of March 2010, 
there were over 110,000 contractors and almost 80,000 troops 
working for DOD in Afghanistan. Contractors made up 51 percent 
of the total DOD work force. Over 60,000 of these contractors 
in Afghanistan were armed private security contractor 
personnel. Over the last three quarters, the number of armed 
security contractor personnel increased four times faster than 
that of troops in Afghanistan. Since December 2009, there have 
been more armed security contractor personnel working for DOD 
in Afghanistan than in Iraq.
    Contractor personnel risk death and injury at the hands of 
insurgents in Afghanistan. According to DOD, from June 2009, to 
April 2010, 260 security contractor personnel working for DOD 
have been killed in Afghanistan compared to 324 U.S. troops.
    Adjusting for the difference in the number of PSC personnel 
compared to troops, PSC employees working for DOD are 4\1/2\ 
times more likely to be killed than uniformed personnel. More 
contractor personnel, 188 people, were killed providing convoy 
security than any other type of security.
    Regardless of how one analyzes the number of armed 
contractors working for DOD, PSCs play a critical role in U.S. 
efforts in Afghanistan. Many observers have pointed out that 
the extensive DOD reliance on PSCs and other contractors was 
not planned and was executed without a clear strategy, 
exacerbating the risks inherent in using armed contractors on 
the battlefield.
    This unprecedented reliance on PSCs raises some fundamental 
questions. First, what are the benefits and risks of using PSCs 
in military operations? Two, to what extent should contractors 
be used in contingency operations? And, three, what can be done 
to ensure that DOD improves its planning for the use of 
contractors in future operations?
    PSCs can provide significant operational benefits to the 
U.S. Government. They can be hired and released quickly, 
allowing agencies to adapt to changing environments. 
Contractors can possess skills that the government work force 
lacks, such as knowledge of the terrain, culture, and language 
of the region.
    According to many analysts, both DOD and the Department of 
State would be unable to execute their missions in Iraq and 
Afghanistan without PSCs. According to these analysts, the risk 
of not using PSCs is nothing short of depriving DOD of the 
resources it needs to succeed in its mission.
    There have been reports of local nationals being abused and 
mistreated by PSCs working for the U.S. Government. Such 
incidents continue to be reported in Afghanistan; and unlike 
Iraq, where many of these incidents involve contractors who are 
U.S. citizens, in Afghanistan many of the guards causing the 
problems are reportedly Afghans.
    The question can be asked, is the problem that DOD is using 
contractors to perform the critical function of armed security, 
or is the problem that DOD is not sufficiently managing 
contractors and holding them accountable?
    For analysts who believe that armed security should not be 
contracted out, options include increasing the size of the 
military, rethinking current force structure, or choosing not 
to engage in certain contingency operations.
    For those who believe that the problem is insufficient 
planning and poor management, the solution may be to develop an 
effective strategy for using PSCs, improving operational 
planning, and enhancing oversight.
    The Department of Defense has taken steps to improve its 
management of PSCs. According to many analysts, these efforts 
have improved the management, oversight, and coordination of 
PSCs. At the same time, many analysts maintain that more needs 
to be done.
    The extent to which DOD plans the use of contractors in the 
future can help ensure that DOD puts a similar effective 
management system in place. Such planning could ensure that 
contractors are used to improve overall operational 
effectiveness and not because DOD unexpectedly had insufficient 
military personnel to perform critical functions.
    This opinion was expressed in 2008 by a colonel who was 
responsible for overseeing PSCs in Iraq. While discussing 
efforts to improve contract management, he stated that the 
question is not whether DOD is going to fix the problem now. 
Rather, he stated the real question is why DOD was not thinking 
about this issue 10 years ago when steps could have been taken 
to avoid the situation we are in today.
    This raises another question, namely, is DOD assessing when 
and to what extent security contractors and even contractors in 
general should be used in future military operations?
    Some analysts argue that DOD missed an opportunity to 
address the issue in the 2010 Quadrennial Defense Review. 
Despite not being included in the QDR, DOD has begun to examine 
the issue. DOD has set up a task force to examine the extent to 
which it relies on contractors and to use the analysis to plan 
for future operations and help plan DOD's future force 
structure. The task force has already briefed the most senior 
levels of the Department. A number of analysts believe that 
this effort is a step in the right direction.
    Mr. Chairman, distinguished members of the subcommittee, 
this concludes my testimony. Thank you again for the 
opportunity to appear before you to discuss these issues. I 
will be pleased to respond to any questions that you might 
have.
    [The prepared statement of Mr. Schwartz follows:]

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    Mr. Tierney. Thank you very much, Mr. Schwartz. We will 
have some questions, so I appreciate you being here for that.
    Mr. Forsberg, if you would please, 5 minutes.

                   STATEMENT OF CARL FORSBERG

    Mr. Forsberg. Mr. Chairman, Ranking Member Flake, and 
members of the subcommittee, thank you for the opportunity to 
testify this afternoon on the issue of Host Nation Trucking 
contracts. I'm honored to testify on this subject of great 
significance for our country and Afghanistan, and I appreciate 
the committee's leadership on this pressing question.
    I want to address today the strategic context of contracts 
like the Host Nation Trucking contract to highlight their 
implications for the U.S. campaign to degrade and defeat the 
Taliban and to leave behind an enduring Afghan government.
    The chief strategic concern with current contracting 
practices is that private security companies in Afghanistan 
tend to subcontract to or pay predatory Afghan militias that 
further the ends of the poor brokers who own them often at the 
expense of enduring stability.
    To understand why this is such a concern, it is helpful to 
remember that when you are engaged in a counter insurgency 
fight, it is largely a question of establishing the legitimacy 
of a government. Lack of government legitimacy is, after all, 
the root cause of an insurgency. And if the Afghan government 
were widely viewed as legitimate, we would not be fighting the 
current campaign.
    The Afghan government has lost considerable standing by 
forming alliances since 2001 with factional actors, including 
predatory warlords and now militias. Afghan leaders at many 
levels have taken sides in local disputes and alienated 
significant elements of the Afghan population.
    It is noted that the Taliban rose to power in southern 
Afghanistan in 1994 because the population there deeply 
resented the behavior of militia commanders. Some of the very 
same commanders the Taliban expelled with popular support back 
then are now directly or indirectly operating on ISAF contacts.
    Kandahar province, the focus of ISAF's insurgency efforts 
this summer, offers a prime example of how ISAF contracting 
practices have inadvertently supported small groups of 
government-affiliated commanders. Ahmed Wali Karzai, the half 
brother of President Hamid Karzai and the chairman of the 
Kandahar Provincial Council, has close links with a number of 
Kandahar's key private security and militia commanders. Several 
of these commanders control key logistics routes and are 
heavily relied upon by almost all the Host Nation Trucking 
companies operating in southern Afghanistan. Ahmed Wali Karzai 
has used his connections to the Afghan government and to ISAF 
to build this network and, in some cases, to influence the 
awarding of contracts to his own allies.
    It is notable that one of the major private security 
companies in Kandahar, Watan Risk Management, is owned by 
cousins of the Karzai brothers, as well as, until recently, 
another group, Asia Security Group. These militias 
significantly outnumber the Afghan police force in Kandahar 
City. The army and police force thus find themselves competing 
with private security companies, especially when it comes to 
recruitment.
    For the population, meanwhile, the government is in essence 
seen as an exclusive and predatory oligarchy. It must be kept 
in mind, ultimately, that ISAF has not created the militias 
that exist throughout Afghanistan. These militias were largely 
the product of the anti-Soviet resistance and the civil war of 
the 1990's. That said, ISAF contracts have made these militias 
far more lucrative. And cutting these militias off from the 
indirect benefits of U.S. contracts will be a necessary step in 
dismantling their influence and replacing them with the Afghan 
army and police. This step cannot be taken completely and 
immediately, however. What is needed is a careful strategy to 
unwind the contracts, find gainful employment for the foot 
soldiers, and ensure that ISAF or the Afghan army and police 
are available to fill the security demands that contractors are 
now fulfilling.
    The issue of illegal militias in Afghanistan is 
challenging, but it is one that ISAF can solve. The U.S. troop 
surge has given the United States and its ISAF allies resources 
to reform and investigate contracting practices. ISAF has 
already begun standing up structures for reviewing and 
reforming contracting, including Joint Task Force 2010. Having 
additional boots in the ground is providing ISAF with insurgent 
intelligence on how contracting networks in Afghanistan operate 
and gives ISAF more options in providing oversight for these 
problems.
    The United States does have leverage at this point over the 
militias and local commanders who subcontract from the 
coalition. Once ISAF organizations like Joint Task Force 2010 
have understood the complex networks by which contracts support 
militias, these contracts can be restructured in ways that 
account for the dynamics of local Afghan politics. ISAF has 
announced its intention to do this, although the details of its 
plans are naturally still vague. But because the problem of 
illegitimate militias is more than a problem with ISAF's own 
contracting practices, reforming contracting should be part of 
a broader campaign to identify Afghan militias, and to 
eventually disarm and disband these groups; and once their 
command and control structures are severed, to integrate them 
into the Afghan National Army.
    In conclusion, current contracting practices are 
problematic and play into large trends that undermine the 
legitimacy of the Afghan government, but the situation can be 
addressed. The recent increase in U.S. force levels has given 
our commanders the resources to reform the oversight and 
management of its contract in practices, and this will be 
crucial for the U.S. counterinsurgency mission.
    Thank you, Mr. Chairman, Congressman Flake and members of 
the subcommittee, for the opportunity to address you this 
afternoon.
    I look forward to taking your questions.
    [The prepared statement of Mr. Forsberg follows:]

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    Mr. Tierney. Thank you very much, Mr. Forsberg.
    Colonel, if you would.

                STATEMENT OF COLONEL T.X. HAMMES

    Colonel Hammes. Chairman Tierney, Ranking Member Flake, 
thank you for the opportunity to appear today.
    Mr. Schwartz has provided a comprehensive view of the 
current status, so I will not attempt to duplicate his work.
    Instead I would like to briefly discuss the good, the bad, 
and the key question about using contractors in combat zones.
    The good: The primary value of private contractors is that 
they replace troops. Further, they can mobilize and deploy 
large numbers of personnel very quickly. And as soon as a 
crisis is resolved, they can be demobilized. Another critical 
advantage is that contractors may be able to do jobs that U.S. 
forces simply can't.
    In Afghanistan we lack the forces to provide security for 
our primary secure line to Pakistan. And if history is any 
guide, even a heavy presence of U.S. troops would not guarantee 
the delivery of supplies. Fortunately, Afghan contractors have 
the mix of force, personal connections, and negotiating skills 
to do so.
    The bad: When serving in a counterinsurgency, contractors 
create problems from the tactical to the strategic level. Three 
are particularly important. The first, quality control, is a 
well publicized issue that DOD has worked to resolve. Yet even 
if DOD enacts all planned reforms, how exactly does one 
determine the military qualifications of an individual, much 
less a group such as personnel security detail, before hiring 
them? We need to acknowledge we have no truly effective control 
over the quality of the personnel hired as armed contractors.
    The second issue compounds the problem of the first. The 
government does not control the contractor's daily contact with 
the population. Nothing short of having qualified U.S. 
Government personnel accompanying and in command of every 
contractor detail will provide that control. We do not 
accompany the Afghan security companies that escort the supply 
convoys throughout Afghanistan, and thus, we have no idea what 
they are doing with the population.
    The lack of quality and tactical control greatly increases 
the impact of the third major problem. The United States is 
held responsible for everything the contractors do or fail to 
do. Despite the fact that we have no effective quality or 
operational control, we pass the authority to use deadly force 
in the name of the United States to each armed contractor. 
Since insurgency is essentially a competition for legitimacy 
between the government and the insurgents, this factor elevates 
the issue of quality and tactical control to the strategic 
level.
    There are also a number of indirect consequences of 
employing armed contractors. First, it opens the door for local 
organizations to build militias under the cover of being a 
security contractor. Major General Nick Carter, Commander of 
NATO Region Command-South, has noted that warlords in Kandahar 
have been allowed to build militias that they claim were 
private security companies.
    In addition, private security companies compete directly 
with host nation's attempts to retain military and police 
personnel. In 2010, Major General Michael Ward stated that 
Afghan police were deserting in large numbers for the better 
pay and working conditions associated with private companies.
    And that leads us to the key question: Contractors clearly 
have a number of direct strategic level impacts on 
counterinsurgency operations. But most important are the 
reduction of political capital necessary to commit U.S. forces 
to war, the impacts on the legitimacy of the counterinsurgency 
effort, and the perceived morality of that effort. Both 
proponents and opponents admit the United States would have 
required much greater mobilization to support Iraq or 
Afghanistan without contractors, thus we are able to conduct 
both wars with much less domestic political discourse.
    But is this a good idea? Should it be easier to take this 
nation to war? Along the same lines, we should ask, is it a 
good idea to pass authority to use deadly force in the name of 
the United States to people we don't know? Should we hire poor 
Third World nationals to sustain casualties for us? Any 
examination of the U.S. use of contractors must conclude they 
undercut the legitimacy and morality of our efforts in 
counterinsurgency.
    Given the central role that legitimacy and morality play in 
counterinsurgency, it is essential we ask the real question: Is 
it strategically a good idea to use contractors in combat 
zones?
    While it is too late to debate this question for our 
current conflicts, it is essential we make it a critical part 
of our post-Afghanistan force structure discussions. The size 
and type of force we build for the future depends upon the 
issue.
    Mr. Chairman, distinguished Members, that concludes my 
testimony. I look forward to answering your questions.
    [The prepared statement of Colonel Hammes follows:]

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    Mr. Tierney. Thank you, Colonel.
    Dr. Starr.

             STATEMENT OF S. FREDERICK STARR, Ph.D.

    Mr. Starr. Mr. Chairman, Mr. Flake, I have nothing to add 
to the various interventions regarding the tactics of 
contracting.
    Mr. Tierney. Well, then it is a rap, and we will start 
again. No.
    Mr. Starr. However, I would like to suggest that none of 
these will affect the bigger picture of the fate of the mission 
in Afghanistan.
    And let me get to this point by a couple of simple 
questions.
    Why do we need so much protection along the roads? Well, 
the answer is obvious; because there are Taliban forces and 
other criminal groups floating about.
    Second, why do they move about so freely? Again, the answer 
is obvious; because the population at large is totally passive. 
It is indifferent to this.
    Then, why are they not engaged in the protection of their 
roads? Well, because they don't see any benefit from the roads 
being open. These are being opened for transport of U.S. 
military equipment, not for the transport of their local crops, 
their local products, let alone for regional transport, let 
alone for continental transport from which they could richly 
benefit. So they are spectators.
    And beyond that, of course, you might note that the defeat 
of the Taliban and the crippling of al Qaeda are perceived as 
our objectives. They don't see where our objectives mesh with 
their personal objectives, which is economic betterment.
    So let me raise the question, what kind of strategy would 
work? What is needed? Well, obviously, an economic strategy, 
and both Presidents Bush and Obama have spoken about that. We 
have a lot of economic projects; we don't have a strategy.
    What would meet that criteria for us--what are the criteria 
that must be met for such a strategy? Well, I would say there 
are three or four. First of all, it has to benefit locals. If 
they don't see a benefit from it, they are going to be neutral 
or opposed to anything we do, including transport. Second, it 
must support our military effort, and it has to go 
simultaneously with it. Third, it has to be able to provide an 
income stream for the government. We are paying all Afghan 
civil service salaries today. That isn't a sustainable 
arrangement. And finally, it has to work fast.
    Now, the only strategy that meets such criteria, the only 
one that I am aware of is exactly the subject that we are 
discussing today, transport and trade. I would submit this is a 
much more important hearing, even than has been suggested by 
our very competent previous speakers.
    What do we mean? We are talking about opening up local 
channels of trade for local trade. We are talking about 
regional channels of trade, Afghanistan and its immediate 
neighbors. And we are also talking about the great continental 
trade routes that literally go from Hamburg to Hanoi, connect 
Europe and the Indian subcontinent. This potentially is a money 
machine. Once it starts to flow at the most local level, 
everyone will take advantage of it. You don't have to advertise 
it. Everyone will know, and they will become the defenders of 
the open road rather than the passive observers or worse.
    Now, you could say, well, aren't we doing this anyway with 
the Northern Distribution Network and so on. Yes, we are doing 
fantastic stuff in transportation, whatever the problems are, 
and they are serious. Nonetheless, it is a major achievement. 
Yet we have no plan for engaging the local economies in this, 
we have no plan for opening this to local shippers, local 
producers, farmers and so on, we have no exit plan, no 
transition plan on this to privatize, if you will, civilianize 
these transport groups. And therefore, everyone is skeptical or 
opposed.
    Now, what is needed? Very simply, the United States needs 
to adopt this as a fundamental strategy on par with its 
military strategy, because without this, the military strategy 
will not succeed. And one might say, well, isn't this very 
expensive? Aren't you talking about building masses of roads? 
But we have heard from several of the Congressmen today that, 
in fact, the biggest impediments are actually bureaucratic and 
people imposing long delays at borders and these sorts. It is a 
managerial problem; it is not an infrastructure problem 
fundamentally.
    And beyond that, let me say that this bigger development I 
am talking about is being actively promoted by, well, all the 
major international banks, especially Asia Development Bank, 
ECO, World Bank and so on; also by China, India, Pakistan, 
Iran, all the central Asian countries, Saudi Arabia, Japan and 
so forth.
    In other words, this is happening. What I am speaking about 
is going to break through. The question is whether the United 
States is savvy enough to put itself at the head of this to be 
the coordinator and convenor for the effort that opens the cork 
which Afghanistan now presents to the system as a whole. If we 
do, I think we are on the road to success in Afghanistan. If we 
don't, all the efforts, the commendable suggestions that have 
been made here with regard to transport, will be for naught.
    Thank you, sir.
    [The prepared statement of Mr. Starr follows:]

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    Mr. Tierney. Thank you.
    And thank all of you.
    It is great food for thought.
    Let me start, if I might, with Mr. Schwartz. When you count 
the contractors, the armed contractors in theater, is there any 
way you can actually count the people that might be part of one 
of the commanders' militia if they are not registered, or do we 
just assume that it is whatever number you count plus a whole 
lot more people who are unregistered working as militia forces?
    Mr. Schwartz. There have been questions raised as to the 
ability to accurately count those people. The Department of 
Defense has acknowledged that difficulty. The easiest segments 
to count are, of course, the U.S. nationals and third-country 
nationals, particularly those that need permission to come in 
and get arming authority from the PSCs that are properly 
regulated.
    But it is a question that many people have raised, 
including DOD, as I said: the issue of the ability to 
accurately count private security contractor personnel that are 
working for local militias, beyond Kabul for sure.
    Mr. Tierney. Thank you.
    Has CRS or anybody that you know done an analysis comparing 
the risk of using, or I should say the risk of not using 
private security contractors in a counterinsurgency sort of 
situation against the risk of using them but not managing and 
overseeing them properly?
    Mr. Schwartz. I am not familiar with a particular study 
that analyzes specifically Afghanistan beyond what some of the 
other people here on the panel have discussed. But there have 
been concerns expressed by people in uniform over there in 
Afghanistan that some of the events that are occurring are in 
fact making their mission much more difficult.
    Mr. Tierney. Mr. Forsberg, Ahmed Wali Karzai, in your 
research and your work, have you heard recent contemplations 
that he might be behind or somehow connected with a desire to 
have a Kandahar security operation where they consolidate a 
number of the different people that have been adding security 
to the southern area so far?
    Mr. Forsberg. There have been several media reports to that 
effect. Dexter Filkins has done several of these pieces. If you 
look at Ahmed Wali Karzai's connections, there are linkages 
between him and some of the figures involved in the Kandahar 
security force, including Commander Ruhullah, and reporting 
that Minister Atmar had asked Ahmed Wali Karzai to take a role 
in achieving the formation of the Kandahar security force.
    Mr. Tierney. Thank you.
    Dr. Starr, I have to ask you this. If I am hearing you 
right, are you saying that the U.S.' strategy would be better 
served if we took our military forces and used them to protect 
the transportation lines and that could open up a whole host of 
other possibilities over there, as opposed to paying off 
warlords or others, but to use our forces and concentrate them 
on keeping those transportation lines free and then using them 
for the regional, local and continental trade?
    Mr. Starr. Yes, sir. Keeping open--the opening and 
maintenance of the transportation corridors should be a high 
strategic objective.
    Mr. Tierney. Colonel, do you have an opinion on that?
    Colonel Hammes. Sir, if you take--the figures on the GDP of 
Afghanistan are disputed. But if you take the $13 billion here, 
Afghanistan has a GDP of $500 per person. If we were wildly 
successful and in 10 years doubled that, they would still be 
poorer than today's Chad. Chad is not a functioning state. I 
don't see in 10 years making Afghanistan a functioning state 
based on a doubling of the economy of the country.
    Mr. Tierney. And that is even with say Dr. Starr's program 
being successful, it would still be a problem you think?
    Colonel Hammes. Sir, I think the ability to double the 
economy of a country is a pretty significant accomplishment. 
You have to go to 17 percent. With the reduction in drug trade, 
you have to go to about 10 percent to sustain it for 10 years 
to get to poorer than today's Chad, sir.
    Mr. Tierney. Dr. Starr.
    Mr. Starr. If I may say, Korea at a certain point was 
almost at the level of Afghanistan today. We persisted. We 
pursued prudent market-based economic policies, and look what 
happened, not only in the economy but in the governmental 
structures.
    I think the possibilities are well beyond anything 
suggested here. Those aren't my conclusions. They are the 
conclusions of the Asian Development Bank. They are the 
conclusions of a half-dozen serious studies that have been done 
by national governments before they have invested in these 
critical infrastructure issues.
    Mr. Tierney. Thank you.
    Mr. Flake.
    Mr. Flake. Thank you.
    Mr. Schwartz, given the current structure that we have for 
these contracts, is it possible for the Department of Defense 
to manage or supervise these contracts the way that the law 
requires them to do?
    Mr. Schwartz. Thank you for that question. A lot of people 
have actually done a lot of good in-depth analysis into that, 
including the Government Accountability Office, the Special 
Inspector General, as well as the Commission on Wartime 
Contracting. And while they have all expressed that DOD has 
made progress, they have also generally expressed that there is 
a lot to be done. A number of them have come up with specific 
options and recommendations that they believe can definitely 
have an impact, and a lot of them are out there.
    I will just mention a couple that have been thrown out by 
various people. One is as a result of Nisous Square, that event 
with Blackwater about 3 years ago in Iraq, the Kennedy 
Commission, which was published by the State Department, 
required, based on the recommendation from the Kennedy report, 
to have U.S. Government personnel go along with every convoy of 
the State Department. Some analysts have recommended that would 
be useful for the Department of Defense, to make sure that 
every time there is a large convoy, to go out. That is one 
option that has been mentioned there.
    Another option that has been mentioned is to do an in-depth 
analysis of who is being hired. So the general view of many of 
the people who have looked in depth at this is that progress 
can be made.
    Mr. Flake. Mr. Forsberg, I tried to get from the last 
panel, and I understand I wasn't going to get much of a policy 
response from them, but at what point does it become 
counterproductive to a COIN strategy to have the kind of 
activity that has been found in this report? And what level is 
acceptable to still have an effective counterinsurgency 
strategy, to have a parallel structure of authority outside of 
the Afghan government?
    Mr. Forsberg. Thank you, Congressman.
    As I said, this is a very serious problem. And I think the 
goal needs to be to reduce it as much as possible. The issue, 
of course, is that while we avoid the costs of the system, we 
also have to weigh the benefits and say, that would require 
looking at how hard it would be to move the logistics without 
the current system, but it is clear the current system is 
counterproductive. And even though in the short term we may 
have to continue to tolerate the reliance on these militia 
commanders, I think it is imperative, because this is such a 
fundamental driver of the insurgency, that we have a long-term 
strategy to shift away from the current model because the 
current model is a key factor undermining the Afghan 
government's legitimacy.
    Mr. Flake. Colonel Hammes, how likely is it that we can 
move away from this model? These warlords and the militias that 
they control are likely making as much money as they would as 
part of the Afghan security forces, either the police or the 
military. How likely is it, in your view, that we can make this 
shift?
    Colonel Hammes. Sir, I think it would be very unlikely. The 
people who gain power from this are not going to voluntarily 
give it up, so it would have to be integrated into some kind of 
a negotiated deal.
    In the mid-1980's when insurgents were good guys, I was 
segunded to the agency and was helping with the Afghan task 
force. The Soviets needed to push a 4,000 truck convoy to 
Kandahar or they were going to lose Kandahar. They attempted to 
fight their way through with multiple regiments of armored 
troops and could not. They struck a deal with the tribes and 
rented an opening of the road for a certain period of time. 
Money was paid, convoy through, then the road was closed behind 
them. So it is still a matter of Afghan negotiation plus 
contacts plus the willingness to fight. It is not a military 
solvable problem without a very large force structure.
    Mr. Flake. Well, some on this panel have suggested that we 
have leverage to make this happen. Do we have that leverage, in 
your view, sufficient leverage to--I mean, we control the 
contracts?
    Colonel Hammes. I am not an expert on relationships with 
the various groups, but there is a huge problem here in terms 
of the internal dynamics that we would have to understand at 
the Afghan level to make the negotiations appropriate on the 
various road sections and then we would have to dismantle the 
current military organizations that have been built to do this, 
unless we can co-opt them by bringing them onsite. And of 
course, to break them up and put them in the armed forces, they 
don't view that as co-option but rather as loss.
    Mr. Flake. Dr. Starr, you talk about the importance of 
trade routes and having the necessary infrastructure to enable 
that. If we play a greater role in creating that 
infrastructure, don't we still have the same problem protecting 
it?
    Mr. Starr. No. Because what we have now is, first, U.S. 
Government state trade, basically our moving our goods around. 
You don't have the kind of serious private trade that I am 
speaking of. And when you do have the beginnings of it, it is 
highly localized, which feeds exactly the situation we have 
been talking about, local bosses.
    Once you have longer strings of trade connecting remote 
people to secondary markets, and secondary to primary markets, 
you have people way down this line exerting pressure to keep 
this particular problematic section open. You don't have that 
today.
    We have a conflictual model. It is basically the United 
States versus all kinds of good and bad, some very bad, private 
interest there.
    This is an alternative model in which we actually are 
opening up channels for trade in which you actually create an 
entirely different incentive structure, not just for the 
traders, as I have emphasized, but also for the public, which 
becomes actively engaged in keeping the roads open as, indeed, 
in a few cases they have been actively engaged in keeping 
schools open.
    Now, this isn't utopian. Let me just say, this is the 
policy of the Afghan government right now. They would love to 
see us engage in this. This has been presented to General 
Petraeus's staff and the people at CENTCOM in the last 2 weeks. 
They were very, very positive about the ideas, as indicated in 
the published report. I think this is fast gaining traction as 
essential.
    And, by the way, it is very relevant, just as we get 
involved with this project in Kandahar, if you look on the map 
over here, what isn't shown is the new Pakistani port at 
Gwardar. Now, Gwardar is a clear shot from Kandahar. But never 
in our 8, 9 years in Afghanistan have we made a priority of 
linking that immediate port with the ring road via Kandahar.
    Now, this does two things. Were we, in arriving in 
Kandahar, to say, within the next 3 weeks, you are going to be 
able to get a truck from here to Karachi port--I am sorry, 
Gwardar port, with no more than 6 or 8 hours at the border 
crossing, if we were to do that, we would so juggle the 
incentives, not just in Kandahar, but in the Taliban stronghold 
of Quetta. We would transform the economic situation. The 
incentives would be different. You would have new actors. You 
would have old actors taking up new roles and so on. Now, this 
is ours for the taking. I mean, we are there. We are in the 
catbird seat right now. We can make this happen. If we choose 
not to, it will eventually happen without us. But, 
unfortunately, not to the benefit of our mission.
    Mr. Flake. Thank you.
    Mr. Tierney. That is interesting.
    Colonel Hammes, let me ask you again. You were a former 
military commander, you have done just about everything there 
is to do from the ground on up, so I put this question to you. 
If you were still a military commander in this theater, how 
would you feel about knowing that a convoy of pick-up trucks 
and SUVs with mounted DShK anti-aircraft machine guns mounted 
on them were rolling through your battle space accompanied by a 
guide force of 400 men with AK-47s and RPGs firing at villages 
in an attempt to intimidate potential attackers?
    Colonel Hammes. Sir, obviously, this is a contradiction of 
the COIN approach, but I think currently it is rooted in 
necessity. If you don't let them, you have no supplies. And I 
think that is the problem we built for ourselves.
    Most of these figures indicate about 15,000 armed 
contractors doing this job. That would require more than a 
division of additional U.S. troops, which of course means you 
need more convoys. So you would consume your entire plus-up for 
Afghanistan in providing supplies to get through.
    When you choose to fight a battle where your lines of 
communication run through territories that have been challenged 
since Alexander fought his way out of Afghanistan, it is hard 
to envision a way to resupply other than making deals with the 
locals.
    Mr. Tierney. Well, Mr. Forsberg talks about transitioning 
out of that model to a different and better model. Can you 
foresee an example of that?
    Colonel Hammes. It would be very difficult and take a long 
time, sir.
    Mr. Tierney. And how do you envision, Mr. Forsberg, to what 
do we transition, or how do we get there, do you think?
    Mr. Forsberg. I think, Congressman, the first step is to 
gain oversight of what is happening. There are some things we 
can do simply by reforming contracting practices to ensure that 
we are not creating monopolies in the hands of certain 
commanders, to ensure that we are restraining their behaviors. 
And that is the sort of preliminarily step.
    But in terms of transitioning, there is also the capacity 
to rely on Afghan force structures eventually. I think once you 
start--if you take action to break down these militias, that I 
think will at some point help recruitment in the ANA and ANP. 
Right now there is a competition between some of these private 
security companies and ANA for recruitment.
    Mr. Tierney. But other than taking them on militarily, how 
are you going to do it?
    Mr. Forsberg. Eventually we want the Afghan army and the 
Afghan police to be strong enough to provide security on these 
routes. And this, of course, will take some time. The U.S.' 
commitment to generating the Afghan army is a long-term one, 
and I think we have only seen the industrial strength mentoring 
and partnership efforts start in the last 6 months. And I think 
we can hope that the pace at which we develop the Afghan army 
will accelerate past what we have seen in the past.
    Mr. Tierney. I mean, this is sort of perplexing, you know, 
which comes first?
    Go ahead, Dr. Starr.
    Mr. Starr. I think there is some naivety here about, well, 
can the Afghan army take over this function or not, or should 
it be put in the hands of the U.S. forces and so on? The fact 
is that if it is put in the hands of the U.S. forces, you have 
made every one of the people now doing it active opponents. You 
have doubled the opposition, and they are effective because 
they know it from the inside.
    If you try to turn it over to the Afghan army, this is a 
very slow and long-term project. It will have much the same 
effect.
    It seems to me you have to look fundamentally at the 
incentive structures. We have announced that we are leaving. It 
is not, in my judgment, even if we are, it is not a prudent 
thing to publicize the way we have, because every one in the 
region, not just Afghanistan, set its watch. And you have a lot 
of people now who are involved in the security and transport 
businesses in Afghanistan making hay while the sun shines in 
any way they can. They don't see a future. We leave, this 
system collapses. They better have plenty of money in Dubai by 
then or they have lost their chance.
    What I am suggesting is that we become the sponsors, well-
wishers of normal trade and transport. And some of these guys 
will transition into it.
    How do you do that? It is partly rhetorical. It is 
announcing it, saying publicly that is our goal.
    But beyond that, it is saying, yes, we are going to extend 
security to private trade where the same----
    Mr. Tierney. When you say extend security, Doctor, extend 
U.S. force security or contractor security?
    Mr. Starr. That I will leave to the conclusion of the 
discussion. I think, however, that is something that the Afghan 
National Army could undertake tomorrow.
    Mr. Tierney. The protection of the road system? You think 
that they are prepared to----
    Mr. Starr. For private local trade, yes. Because that would 
not involve foreign forces or even foreign money directly.
    My point is simply that if we are unable to offer anything 
in the way of a serious economic incentive to the local 
population to keep roads open, we will fail. And the only kind 
of solution that I can conceive that will meet that criterion 
is that we become the sponsor of the open road.
    Mr. Tierney. We are going to wind this up because we really 
appreciate the time that you have spent with us here this 
afternoon.
    And I do want to give any of you or all of you an 
opportunity for one last word if you feel compelled.
    Mr. Schwartz.
    Pass.
    Mr. Forsberg.
    Pass.
    Colonel.
    Pass.
    Dr. Starr.
    Mr. Starr. I would like to return to what Mr. Flake said 
three times, and which I think, Mr. Chairman, you said several 
times. This is a problem fundamentally not of tactics but of 
strategy. If we try to solve today's question on a mere 
tactical level, it won't work. It must be addressed on a 
strategic level. If you can come up with a better alternative 
economic strategy than I proposed here, I think you should rush 
to embrace it. But we need one. We don't have one.
    Mr. Tierney. Thank you. Thank you all very, very much. It 
is great food for thought, and we appreciate the time and 
thoughtfulness that you put into your testimony. The hearing is 
adjourned.
    [Whereupon, at 5:14 p.m., the subcommittee was adjourned.]

                                 
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