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




 
         CONTRACTING IN COMBAT ZONES: WHO ARE OUR CONTRACTORS?

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

                                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 29, 2010

                               __________

                           Serial No. 111-142

                               __________

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 29, 2010....................................     1
Statement of:
    Solis, William, Director, Defense Capabilities and 
      Management, Government Accountability Office; Mary Ugone, 
      Deputy Inspector General for Auditing, Department of 
      Defense Inspector General; Stuart Bowen, Jr., Special 
      Inspector General for Iraq Reconstruction; and Richard 
      Fontaine, senior fellow, Center for a New American Security     5
        Bowen, Stuart, Jr.,......................................    48
        Fontaine, Richard........................................    65
        Solis, William...........................................     5
        Ugone, Mary..............................................    33
Letters, statements, etc., submitted for the record by:
    Bowen, Stuart, Jr., Special Inspector General for Iraq 
      Reconstruction, prepared statement of......................    50
    Fontaine, Richard, senior fellow, Center for a New American 
      Security, prepared statement of............................    67
    Solis, William, Director, Defense Capabilities and 
      Management, Government Accountability Office, prepared 
      statement of...............................................     7
    Ugone, Mary, Deputy Inspector General for Auditing, 
      Department of Defense Inspector General, prepared statement 
      of.........................................................    35


         CONTRACTING IN COMBAT ZONES: WHO ARE OUR CONTRACTORS?

                              ----------                              


                         TUESDAY, JUNE 29, 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 10:05 a.m., in 
room 2154, Rayburn House Office Building, Hon. John F. Tierney 
(chairman of the subcommittee) presiding.
    Present: Representatives Tierney, Lynch, Van Hollen, Welch, 
Quigley, Chu, Flake, Duncan, and Luetkemeyer.
    Staff present: Andy Wright, staff director; Talia Dubovi 
and Scott Lindsay, counsels; LaToya King, GAO detailee; Boris 
Maguire, clerk; Aaron Blacksberg, professional staff member; 
Brendon Olson and Alexandra Mahler-Haug, interns; John 
Cuaderes, minority deputy staff director; 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; Ashley Callen, 
minority counsel; and Christopher Bright, minority senior 
professional staff member.
    Mr. Tierney. A quorum being present, the Subcommittee on 
National Security and Foreign Affairs hearing entitled, 
``Contracting in Combat Zones: Who Are Our Subcontractors?'' 
will come to order.
    I ask unanimous consent that only the chairman and the 
ranking member of the subcommittee be allowed the make opening 
statements.
    Without objection, so ordered.
    I ask unanimous consent that the hearing record be kept 
open for 5 business days so that all members of the 
subcommittee may be allowed to submit a written statement for 
the record.
    Without objection, so ordered.
    Good morning. And my apologies for being a bit late. I have 
to say, it is seldom that Mr. Flake is here before I am. So we 
know that it certainly was not intended, but I appreciate Jeff 
for being here and all of you for showing up today and giving 
us your considerable expertise.
    I sadly report that I understand we are going to have votes 
at about 10:30, so that there will be an interruption. And we 
will try to make it as brief a one as possible and get back 
here.
    Today, we are continuing our oversight on the U.S. 
Government contracting in our conflicts overseas. We are going 
to ask the important questions: Who is getting U.S. taxpayer 
money? And how are they using those funds once they get it?
    Last week, this subcommittee held a hearing that examined 
the results of a 6-month examination into the Host Nation 
Trucking contract in Afghanistan. That investigation uncovered 
distressing details of how U.S. taxpayer money is funding 
warlordism and corruption in Afghanistan and how the 
contractors are undermining U.S. counterinsurgency strategy.
    Equally troubling is the finding that the U.S. officials 
charged with overseeing this contract had no visibility into 
the actual operations of the contractors and subcontractors. In 
most cases, officials did not know who the subcontractors were, 
let alone who they employed, how they functioned, and where 
they spent their money.
    To give one example, seven of the eight prime contractors 
in the Host Nation Trucking contract employ, either directly or 
indirectly, a man by the name of Commander Ruhullah. And he 
provides security for the supply convoys. Commander Ruhullah 
claims to spend $1\1/2\ million per month on ammunition and has 
reportedly attacked convoys that do not use his security 
services. Still, no U.S. military officials have ever met with 
Commander Ruhullah. And, despite the fact that he receives 
millions of dollars of taxpayer money, there have been no 
attempts to enforce the U.S. laws that govern his U.S.-funded 
contractual relationship. With $2.16 billion of taxpayer funds 
at stake, it is unconscionable that the military does not have 
tighter control over Host Nation Trucking subcontractors.
    But the Host Nation Trucking contract is not the only 
problem. This week's Economist reports that 570 NATO contracts 
worth millions of dollars were issued in southern Afghanistan 
but nobody is quite sure to whom. In January, the Special 
Inspector General for Iraq Reconstruction, one of our witnesses 
here today, issued a report about a State Department contract 
with DynCorp which noted that, ``Over $2.5 billion in U.S. 
funds were vulnerable to waste and fraud.''
    In May, the Inspector General for the U.S. Agency for 
International Development issued an audit of its private 
security contractors in Afghanistan which highlighted 
significant problems with USAID contracts. It found that USAID 
does not have, ``reasonable assurance that private security 
contractors are reporting all serious security incidents, are 
suitably qualified, and are authorized to operate in 
Afghanistan.''
    Audits from the Department of State, USAID, and others have 
found problems with subcontractor management in areas as 
diverse as embassy construction, fuel delivery, and educational 
outreach programs. The Government Accountability Office, 
another of our witnesses here today, has reported that the 
agencies are not even able to accurately report the number of 
contractor and subcontractor personnel working on U.S. 
contracts.
    And just yesterday, the Wall Street Journal reported that 
over $3 billion in cash has been flown out of Afghanistan in 
the last 3 years. That is $3 billion of cash on a plane flying 
out Afghanistan. Officials believe that at least some of that 
money has been skimmed from U.S. contracts and aid projects.
    The conflicts in Iraq and Afghanistan have dramatically 
changed the way the U.S. wages war. With more contractors than 
combat troops currently in both countries, the role that these 
civilians play has become increasingly important. The changing 
role of contractors have challenged the agencies that employ 
them. Thus far, the agencies have not risen to meet those 
challenges.
    Over the last several years, Congress has tried to impose 
greater control over contingency contractors and 
subcontractors, including private security companies. The last 
three Defense Authorization Acts included provisions aimed to 
strengthen oversight mechanisms and mandate more stringent 
controls over all of the contractors and subcontractors working 
on U.S. contracts. These new regulations apparently have not 
been sufficient.
    We are here today, however, not to criticize what has or 
has not been done so far. We want to work in the spirit of 
constructive oversight. So today we are asking what can be done 
to keep from these significant problems from reoccurring.
    We have invited a panel of witnesses with considerable 
expertise and experience in the area of contingency 
contracting. It is my hope that today we can discuss what more 
Congress, the agencies, and others can do to increase 
visibility, oversight, and accountability over the contractors 
and subcontractors who are now crucial to the success of our 
missions in Iraq and Afghanistan.
    As we learned from the Host Nation Trucking investigation, 
the actions of the subcontractors on that contract may be 
undermining our entire strategy in the region. With so much at 
stake, it is time to dig in and find solutions. I look forward 
to continuing that conversation today.
    And, with that, I would like to recognize Mr. Flake for his 
opening statement.
    Mr. Flake. I thank the chairman for holding this hearing 
and thank the witnesses for coming.
    As the chairman said, given the report that was issued just 
a couple of weeks ago and the hearing held last week, this is a 
very important hearing. There is enough water under the bridge, 
we have enough time with Iraq and Afghanistan, with these 
contracts in place, to have some kind of history that we can 
look to and to see what we are doing wrong and what we can do 
better.
    So I look forward to the testimony.
    Mr. Tierney. Well, thank you.
    And, with that, we will introduce the witnesses for today's 
hearing. And I will introduce each of you here now, and then we 
will start again with Mr. Solis at the end of the 
introductions.
    Mr. William Solis is Director of the Defense Capabilities 
and Management Team at the U.S. Government Accountability 
Office, where he is responsible for a wide range of program 
audits and evaluations in the area of defense logistics and 
warfighter support. Throughout his career at GAO, Mr. Solis's 
audit engagements have included work on military readiness and 
training, weapons system effectiveness, housing, and military 
doctrine. He has received numerous GAO awards, including the 
GAO Distinguished Service Award in 2008.
    Ms. Mary Ugone is the Deputy Inspector General for Auditing 
in the Department of Defense Office of the Inspector General. 
Ms. Ugone is a certified public accountant with more than 29 
years of accounting experience, the last 26 of which have been 
with the Inspector General. Ms. Ugone was also chair of the 
Federal Audit Executive Council from 2007 to 2009 and publicly 
was recognized by the President of the United States as the 
2007 recipient of the Prestigious Meritorious Executive 
Presidential Rank Award. This award is one of the highest in 
the Federal Government service. She is also a recipient of the 
Inspector General Distinguished Service Award and the Secretary 
of Defense Exceptional Civilian Service Award and a member of 
the Association of Government Accountants and a graduate of the 
Federal Executive Institute.
    And now that I have said your name three times, have I said 
it properly?
    Ms. Ugone. Yes.
    Mr. Tierney. Thank you. Appreciate that.
    Mr. Stuart Bowen, Jr., is the Special Inspector General for 
Iraq Reconstruction. He previously served as the Inspector 
General for the Coalition Provisional Authority. Mr. Bowen's 
mission includes ensuring effective oversight of the $52 
billion appropriated for the reconstruction of Iraq. Under the 
previous administration, Mr. Bowen served as the Deputy 
Assistant to the President, the Deputy Staff Secretary, and the 
Special Assistant to the President and Associate Counsel. Prior 
to his White House tenure, Mr. Bowen was a partner at the law 
firm of Patton Boggs LLP. He also spent 4 years on active duty 
as an intelligence officer in the U.S. Air Force, achieving the 
rank of Captain. He holds a BA from the University of the South 
and received a JD from St. Mary's Law School.
    We welcome you back, sir. You have been with us before.
    Mr. Richard Fontaine is a senior fellow at the Center for a 
New American Security. He previously served as foreign policy 
advisor to Senator John McCain for more than 5 years. During 
his tenure with Senator McCain, Mr. Fontaine worked on numerous 
pieces of important foreign policy legislation, such as the 9/
11 Commission Report Implementation Act. He also served as 
Associate Director for Near Eastern Affairs at the National 
Security Council from 2003 to 2004 and as a policy analyst in 
that same council's Asian Affairs Directorate. Prior to that, 
Mr. Fontaine worked in the office of former Deputy Secretary of 
State Richard Armitage and in the State Department's South Asia 
Bureau. Mr. Fontaine holds a BA from Tulane University and an 
MA in international affairs from the Johns Hopkins School of 
Advanced International Studies.
    I want to thank all of you for being our witnesses here 
today and for taking time out of your schedules.
    It looks like I will swear you in and we will go down and 
vote. Maybe we will get one or two statements in before we head 
off, if we could.
    But it is the practice of this committee to swear our 
witnesses in, so if you would please rise and raise your right 
hands.
    [Witnesses sworn.]
    Mr. Tierney. The record will please reflect that all of the 
witnesses answered in the affirmative.
    As Mr. Bowen knows and I think the others also probably 
know, your full statement is going to be entered into the 
record, by consent of the committee members. So we ask that you 
try to synopsize your remarks down to about 5 minutes so that 
we will have some time for questions and answers after that.
    So, Mr. Solis, please, if you would.

STATEMENTS OF WILLIAM SOLIS, DIRECTOR, DEFENSE CAPABILITIES AND 
   MANAGEMENT, GOVERNMENT ACCOUNTABILITY OFFICE; MARY UGONE, 
 DEPUTY INSPECTOR GENERAL FOR AUDITING, DEPARTMENT OF DEFENSE 
INSPECTOR GENERAL; STUART BOWEN, JR., SPECIAL INSPECTOR GENERAL 
 FOR IRAQ RECONSTRUCTION; AND RICHARD FONTAINE, SENIOR FELLOW, 
               CENTER FOR A NEW AMERICAN SECURITY

                   STATEMENT OF WILLIAM SOLIS

    Mr. Solis. Chairman Tierney, Ranking Member Flake, members 
of the subcommittee, I appreciate the opportunity to be here to 
discuss a number of issues related to DOD's use of contractors 
to support U.S. forces and contingency operations.
    The report the subcommittee issued and the hearing held 
last week focused on a number of oversight challenges related 
to the Host Nation Trucking contract, an important logistics 
contract providing support to U.S. forces. The oversight issues 
associated with this contract highlight many of the 
longstanding challenges that our reports have addressed in the 
past.
    My statement today will focus on some of the challenges the 
Department continues to face when it uses contractors in 
contingencies like Afghanistan. I will also discuss two steps 
the Department needs to take to address these challenges in 
future operations, to include the need for DOD to 
systematically evaluate its reliance on contractors and 
institutionally plan for their use.
    As you know, DOD relies greatly on contractors to support 
its current operations. Currently, there are about 95,000 
contractors in Iraq supporting about 90,000 troops and over 
112,000 contract personnel in Afghanistan supporting 94,000 
troops. In addition, GAO reported that DOD had more than 30,000 
contracts in place during fiscal year 2008 and for the first 6 
months of 2009 to support operations in Afghanistan. DOD 
officials have stated that the Department is likely to continue 
to rely on contractors to support future contingencies.
    Based on our ongoing audit work in Iraq and Afghanistan, 
DOD continues to face a number of challenges to fully integrate 
operational contract support within the Department, to include: 
finalizing joint guidance for operational contract support, as 
required by Congress; identifying and planning for the use of 
contractors in support of ongoing operations and in DOD's plans 
for future contingencies; providing an adequate number of 
personnel to conduct oversight and management of contractors; 
training of non-acquisition personnel, such as unit commanders 
and contracting officer representatives, on how to work 
effectively with contractors in contingency operations; and, 
last, ensuring that local and host-country nationals have been 
properly screened and badged.
    Since the mid-'90's, we have made numerous recommendations 
aimed at addressing each of these challenges. While DOD has 
taken some actions in response to our recommendations, it has 
been slow to implement others. For example, DOD continues to 
face challenges in identifying a plan for operations for 
contract support for ongoing operations.
    Recently, officials from several battalions who had just 
returned from Afghanistan told us that, when they arrived at 
their locations that were intended to be their combat outpost, 
that they lacked housing, heating, laundry facilities, showers, 
and food services. Additionally, because these units were 
unaware that they would have the responsibility for obtaining 
these prior to deploying, they did not plan for and allocate 
adequate personnel to handle the extensive contract management 
and oversight duties associated with building and maintaining 
their combat outpost. As a result, these units had to assign 
military personnel away from their primary missions in order to 
handle these contract management duties.
    Failure to identify and plan for contractor support goes 
well beyond Iraq and Afghanistan. As we reported earlier this 
year, the Department has also made limited progress in 
including the roles of contractors in operational plans for 
future contingencies. For example, DOD guidance calls for the 
inclusion of operational contract support annex in some 
operation plans. However, of the 89 plans that required such 
annexes, we found only four plans where these annexes had been 
approved, and the annexes had been drafted for an additional 30 
plans.
    As a result, DOD continues to risk, one, not understanding 
the extent to which the Department will rely on contractors to 
support combat operations and, two, being unprepared to provide 
management and oversight of these contractor personnel because 
they have not been included in the planning process.
    Let me just say quickly, DOD has taken some steps to 
institutionalize contract support, such as establishing a focal 
point. And, in addition, they have issued a variety of 
contractor guidance.
    Let me just close and say that, in looking toward the 
future, what is needed is a cultural change across DOD that 
emphasizes the importance of operational contract support 
throughout all aspects of the Department, including planning, 
training, and personnel requirements. Only when DOD has 
established its future vision for the use and role of 
contractors supporting deployed forces and fully 
institutionalizes the concepts of operational contract support 
can it effectively address its long-term capability to oversee 
and manage those contractors.
    It is important that this change occur quickly while 
current operations keep a significant amount of attention 
focused on the use and role of contractors and the political 
will exists to effect such a change within DOD. A failure to do 
so will likely result in the Department continuing to confront 
the challenges it faces today in future contingencies.
    This concludes my statement. I will be happy to answer any 
questions.
    [The prepared statement of Mr. Solis follows:]

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    Mr. Tierney. Thank you, Mr. Solis. We appreciate it.
    Ms. Ugone.

                    STATEMENT OF MARY UGONE

    Ms. Ugone. Chairman Tierney, Ranking Member Flake, and 
distinguished members of this subcommittee, thank you for the 
opportunity to appear on behalf of the Inspector General of the 
Department of Defense to discuss contracting in combat zones. 
Specifically, I will highlight a few key deficiencies in 
contingency contracting and discuss related ongoing actions to 
help prevent waste, fraud, and abuse.
    Since the early 1990's, we have identified contract 
management as a major challenge for the Department to overcome, 
and the Government Accountability Office has continued to 
identify this area as high-risk. The need for expediency in 
contingency operations, such as in Iraq and Afghanistan, can 
further increase risks.
    In May 2010, we issued our report, ``Contingency 
Contracting: A Framework for Reform.'' The intent of the report 
was to provide a useful tool for commanders and contract 
managers in their efforts to improve contingency contracting 
practices.
    One of the most important areas in contingency contracting 
is requirements definition, because the pace of contingency 
operations should compel us to get it right in the beginning. 
In particular, user requirements need to be appropriately 
translated into contractor performance expectations and 
measures.
    In February 2010, we and our colleagues at the Department 
of State Inspector General Office jointly reported that two 
task orders, valued at $1 billion, did not meet defense needs 
in developing the Afghan National Police because the contract 
did not allow for rapid changes to the requirements as the 
security situation in Afghanistan changed.
    Another important area is adequate administration of the 
contract. Fundamental steps include having a quality assurance 
plan and assigning qualified contracting officer 
representatives. For example, a Special Operations Forces 
support activity contracting officer did not assign a 
contracting officer representative to 44 service task orders 
valued at $514 million. Only after a test caused damage to a C-
130 aircraft did command officials discover that the contractor 
improperly installed a part that later cost $219,000 to fix.
    Sufficient controls of the payment process to ensure that 
payments are proper is another important area in contingency 
contracting. For example, Marine Corps officials did not 
properly authorize over 9,500 payments, totaling about $310 
million. We found that Marine Corps officials made 32 duplicate 
payments, totaling $2\1/2\ million. One vendor was paid over 
$200,000 when the Marine Corps paid the same invoice three 
times.
    Although the examples I provided today involve the 
relationship between the Department and prime contractors, the 
need for effective contract management and oversight also 
exists when the Department, through its prime contractors, 
relies on subcontractors.
    Subcontracting guidance applies to the phases of the 
contracting process. For example, during source selection, when 
required by the contracting officer, offers must demonstrate 
the responsibility of their proposed subcontractors.
    The contracting officer may also require consent to 
subcontract to adequately protect the government because of the 
type of subcontract, its complexity or value, or because 
special surveillance is needed. Additionally, the Federal 
Acquisition Regulation emphasizes that government quality 
assurance on subcontracted supplies or services should only be 
performed when it is in the government's interest.
    Ultimately, however, the prime contractor is responsible 
for delivering supplies or services that conform to the 
contract requirements. Therefore, it is the prime contractor's 
responsibility to ensure that a proposed subcontract is 
appropriate for the risks involved and is consistent with sound 
business judgment.
    There remains continuing concern about whether a prime 
contractor provides value to the contract when a subcontractor 
is performing most or all of the tasks under the contract. In 
response to section 852 of the National Defense Authorization 
Act for fiscal year 2007, the Department of Defense has 
implemented contract clauses providing the contracting officer 
with the authority to recover excessive past-due charges for 
contracts where the prime contractor or a subcontractor adds no 
or negligible value in accomplishing the work performed under 
the contract.
    The effectiveness of contractor support to expand U.S. 
operations in Afghanistan and other contingency operations can 
be improved by applying lessons learned from contingency 
contracts already executed. Among the steps that can be taken 
to improve contingency contracting are: define what is needed 
and how it can be measured; have both program and contracting 
personnel involved in implementing a well-documented oversight 
plan; and have required documentary evidence, such as a receipt 
of goods and services, to support proper payments.
    In closing, I would like to add that the top priority of 
the Office of the Inspector General, Department of Defense, is 
to provide effective and meaningful oversight in Southwest 
Asia. We will continue to coordinate and integrate our efforts 
within the oversight community. And I look forward to answering 
any questions you may have. Thank you.
    [The prepared statement of Ms. Ugone follows:]

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    Mr. Tierney. Thank you very much, Ms. Ugone.
    Mr. Bowen.

                 STATEMENT OF STUART BOWEN, JR.

    Mr. Bowen. Good morning, Chairman Tierney, Ranking Member 
Flake, distinguished members. Thank you for inviting me again 
to appear before the committee to address the challenges of 
contracting in combat zones, and specifically to address the 
issue of ``who are our subcontractors.''
    Permit me to provide three premises that frame my remarks 
at the outset. First, the Iraq experience underscores the 
truism that contracting in a war zone is uniquely challenging 
and vulnerable to fraud, waste, and abuse. Second, fraud, 
waste, and abuse will metastasize unless a well-managed 
oversight regime is implemented that balances the principle of 
effective financial stewardship with the goal of mission 
accomplishment. Third, a weakly resourced contracting corps, 
such as we have seen in Iraq and Afghanistan, will vitiate 
oversight severely and, as you pointed out, Chairman Tierney, 
potentially undermine mission accomplishment.
    Since we have been studying the problems arising from Iraq 
contracting for the last 6 years, we have issued 230 reports, 
chiefly looking at primes, because that is what the FAR tells 
us about. But we have gotten into some of the subcontracting 
issues, and, in those cases, we have seen that the primes 
frequently don't know who their subcontractors are either. I 
think part of the reason that Chairman Towns sent his letter to 
Secretary Gates last November was to get at this issue, to find 
out what knowledge the Defense Department had about their 
primes, about the subcontractors, and, thus, this hearing.
    Two paramount lessons learned arise from our reporting that 
I think still need to be addressed to grapple with this issue. 
One, as we pointed out 4 years ago in our contracting lessons 
learned report, the U.S. Government should develop and 
implement contingency Federal acquisition regulations, that are 
specifically shaped and defined for contingency operations.
    Two, as part of an overall reform and a recognition that 
there is a lack of unity of command and, thus, a lack of unity 
of effort in Iraq and Afghanistan, a new institution should be 
established, a U.S. Office for Contingency Operations, that 
grasps contracting, personnel, IT, all the elements essential 
to success. And that new institution should be given 
responsibility.
    Right now, we have a contingency contracting corps in GSA, 
but it is not really functioning. The Coordinator for 
Reconstruction and Stabilization at State has the personnel 
responsibilities--not really engaged in Iraq at all, very 
limited in Afghanistan. And DOD, meanwhile, is pushing forward 
with its significant stabilization entities, but they are not 
effectively integrated. That reform, that challenge, that 
problem stands before the Congress and the country to fix.
    Finding out and understanding who our subcontractors are 
and who our contractors are in Iraq and Afghanistan should be 
studied through three lenses: policy, transparency, and 
accountability.
    In Iraq, two policies shaped the overall contracting 
effort: the heavy use of contractors to begin with, 
unprecedented in the history of contingency operations, in 2008 
reaching upwards of 190,000 contractors in-country, with the 
contracting corps simply not sufficient, not capable of keeping 
track of them. Thus, you get waste, the real issue in Iraq, and 
I think the real issue in Afghanistan. Severe waste ensued, 
billions of dollars wasted needlessly, because of poor quality 
assurance programs, which are intended to ensure there are 
quality control programs, which primes are supposed to 
implement to cover subcontractors. Didn't get done enough. And, 
as a result, this serious waste occurred.
    Second, the movement toward using local contractors, 
understandably from a policy perspective to build capital, to 
improve employment. But, in Iraq, we don't know who those 
contractors are. We don't have a data base. It's difficult to 
track. And, thus, there certainly was waste and corruption that 
ensued.
    On the transparency front, I think that if the Congress 
wants to know who our subcontractors are, amending the FAR is a 
good way to do it. Right now, the only way that the contracts 
that Chairman Towns requested from DOD will reveal who the 
subcontractors are is if the terms of the contract required it. 
However, if you so chose, you could amend the law to require a 
minimal disclosure of subcontracting. I think that's a step in 
the right direction toward transparency.
    And on the accountability front, rebuilding the contracting 
corps is an essential element to ensuring not just the 
oversight of primes, but also the oversight of subcontractors.
    So, in summary, I think there are four recommendations that 
we put forward for the committee and for the Congress to 
consider. First, implement the Contingency Federal Acquisition 
Regulation and develop the U.S. Office for Contingency 
Operations to manage these methods, this new way forward for 
protecting our national security interests abroad.
    Second, reexamine the heavy use of contractors in 
contingencies and explore whether some inherently governmental 
functions are, in fact, being incorrectly outsourced.
    Third, rebuild the contracting corps. It's ongoing at DOD, 
but I think it's a governmentwide issue. And, certainly, with 
respect to contingencies, when you have 190,000 contractors in-
country, you have to have a contracting corps that is capable. 
We don't have it today.
    And, finally, amend the FAR as you see fit to give you the 
transparency, the information you need and want about who our 
subcontractors are.
    And, with that, Mr. Chairman and Members, I look forward to 
your questions. Thank you.
    [The prepared statement of Mr. Bowen follows:]

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    Mr. Tierney. Thank you very much.
    Mr. Fontaine.

                 STATEMENT OF RICHARD FONTAINE

    Mr. Fontaine. Mr. Chairman, Ranking Member Flake, and 
members of the subcommittee, thank you very much for granting 
me the opportunity to testify today, and I'm honored to take 
part in this hearing.
    My testimony today is based on a report entitled, 
``Contracting in Conflicts: The Path to Reform,'' released by 
the Center for a New American Security earlier this month.
    In this report, my CNAS colleague John Nagl and I discuss 
possible solutions to many of the problems that have plagued 
the expeditionary contracting process. The entire report is 
available for download on the CNAS Web site.
    Our report proceeds from the realization that, when our 
Nation goes to war, contractors go with it. The 2001 invasion 
of Afghanistan, together with the March 2003 invasion of Iraq, 
saw an increase in the size and scope of contracted support on 
the battlefield that is unprecedented in U.S. history.
    Yet the system within which this contracting takes place 
has not caught up with the new reality. As America's dependence 
on expeditionary contractors in conflicts or stabilization or 
reconstruction efforts is likely to continue, the need for 
reform is pressing.
    My written testimony details the many recommendations we 
have made to move down the path of reform. I would like to 
highlight just a few that we believe are particularly 
important.
    First, expand the work force. As the volume and scale of 
contracts has exploded in recent years, the number of 
government workers qualified to oversee them has remained 
stable or even fallen. It's critical to grow the work force, 
both in Washington and overseas. Only by expanding the quantity 
and quality of the government's human infrastructure will the 
majority of other necessary reforms be possible.
    Second, increase transparency and scrutiny. The post-
invasion reconstruction environments in Iraq and Afghanistan 
represent the largest-ever markets for private contracting 
firms, which has led to opacity and inconsistent data. DOD, 
State, and USAID should establish uniform standards across 
agencies and contract type for consistency and consolidation of 
data. They should improve the transparency of subcontractors 
and establish a permanent Inspector General and include clauses 
in contracts that require firms to enforce rules governing 
behavior that impacts the overall U.S. mission.
    Third, establish a coordination mechanism within the 
executive branch. The approach to contingency contracting 
remains fragmented and ad hoc. We propose establishing a formal 
but relatively simple interagency coordination mechanism in 
which State, DOD, and USAID would designate one individual and 
bureau to focus on contingency contracting and then ensure that 
these individuals meet on a regular basis with OMB and the NSC 
in order to harmonize policies and standards.
    Fourth, deal better with the military implications. The 
unprecedented number of private contractors on the battlefield 
and the vast scope of their activities pose special dilemmas in 
command coordination and discipline for the U.S. military. The 
Department of Defense needs to give much more strategic thought 
to the role that private contractors play. They should consult 
with contractors during the military's mission planning 
process, include the expected roles of contractors in 
operational plans and predeployment training, and incorporate 
contracting issues in professional military education courses.
    Fifth, clarify laws and regulations. The legal framework 
governing expeditionary contractors in wartime is complicated, 
it features overlapping jurisdictions, and it's somewhat 
ambiguous. The Department of Defense, together with Department 
of Justice, should clarify how the various laws that 
potentially apply to contractors in-theater interact to create 
obligations for, or jurisdiction over, private contractors. We 
believe that Congress should amend the Military Exterritorial 
Jurisdiction Act to unambiguously cover all expeditionary 
contractors and streamline acquisition regulations that govern 
U.S. service contracting in hostile environments.
    Sixth, and finally, resolve the inherently governmental 
conundrum. U.S. law has long aimed to protect the core 
functions of government by prohibiting anyone other than 
Federal employees from performing such tasks, yet today there 
is little consensus about what those functions are. The 
government should define as ``inherently governmental'' those 
areas in which there is some consensus and move toward a core-
competencies approach in areas where there is not. Such an 
approach would focus on the functions the U.S. Government 
should possess and maintain, rather than debate internally over 
which are inherently governmental.
    To close, I would note that the U.S. Government and its 
contract employees have been thrust together as partners in a 
shared endeavor, the scale, cost, and duration of which have 
taken nearly all observers by surprise. The reality is that 
America's reliance on private contractors is not likely to 
fade, and it's time for the United States to adapt.
    As a result, the government, the military, the contracting 
community, and, ultimately, the American people will benefit 
from sweeping reform of the contracting system, reform that 
ensures the private sector's role in American engagements 
aligns firmly with our Nation's interests and values.
    Thank you very much, and I look forward to your questions.
    [The prepared statement of Mr. Fontaine follows:]

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    Mr. Tierney. Thank you, Mr. Fontaine.
    Thank all of you.
    And now, for the continuation of that bad news I spoke 
about. I think it's probably more prudent if we just break now 
and go and vote. There's only a few minutes left on the vote.
    There are only two votes, so hopefully we will be back 
relatively soon, I would say certainly by about 5 minutes of 11 
or 11 a.m. So if you want to get yourself a cup of coffee or 
relax a little bit. My apologies, and we will be back. So we 
will be adjourned until 11.
    [Recess.]
    Mr. Tierney. Thank you for your patience. We had one more 
vote than had been anticipated, and so it took a little bit 
longer. But we are happy that you are all back with us, and 
ready to start asking some questions, which I will kick off for 
5 minutes, because I want to ask something about the basic 
premise of this whole operation here.
    Everybody seems to be testifying on the notion that we have 
accepted the premise that private contracting and 
subcontracting is here to stay on contingency operations. Yet, 
every one of you cites numerous problems with oversight, with 
management and personnel, integration of the planning, the 
command structure, legal issues, liability, responsibility, 
control over individuals for whom we are going to get the 
blame, whatever they do, even though they may not be 
technically be in our Department of Defense or our State 
Department or at USAID.
    So, given all of those difficulties--and separating out the 
State and USAID part of it right now, but start with Department 
of Defense--why aren't we giving more consideration to the 
notion of not having contractors and subcontractors in our 
military operations where we already have established clear 
lines of responsibility for those in the military, clear lines 
of management, clear lines of accountability, and all of that?
    I mean, it seems to me that if we just define military 
operations as inherently governmental because the military 
operations are under the name of the United States and under 
our flag overseas, that would remedy a lot of these problems.
    Mr. Solis.
    Mr. Solis. I will take a first stab at it.
    I think what we have tried to say is that we are not saying 
that contractors should be used one way or the other. I think 
what we try to say is that, from what we understand from the 
Department and military operations, that it's likely that they 
are going to be part of it. So we are not saying that they are.
    That being said, going back to what I mentioned in our 
statement, is that there needs to be a fundamental look at the 
requirements for contracting, if, in fact, you want to do 
contracting. I don't think we're trying to say that you will 
use contracting, but if that is what you are going to do in 
terms of your military operations, you have to plan that up 
front.
    You have to look and say, are we going to contract for 
certain things--not just on the logistical side, that we are 
using contractors on the intel side and network operations and 
a number of other things. We are using them as linguists. 
Everywhere I go, you know, military members say, ``I think we 
have gone too far.''
    But I think there needs to be this fundamental look-see at 
the beginning to say whether or not we are going to use them. 
And if we are going to use them, then we need to put the proper 
oversight and controls in place.
    Mr. Tierney. I certainly would agree with you there.
    I'll tell you something. You know, when I look at all of 
you talking about being on top of this issue since the 1990's 
and advising everybody to start looking at these contracts and 
moving forward and, basically, there's a large part just being 
blown off.
    I mean, here we are 20 years later, and you have a little 
bit of compliance with some of the recommendations and a whole 
lot of noncompliance and sometimes inattention to them.
    Ms. Ugone.
    Ms. Ugone. Yeah, I think the whole issue, and I think my 
colleagues here have raised it, is the inherently governmental 
function issue, which is--I believe OMB has proposed policy 
definitions of that.
    The issue is, how closely related is it to the inherently 
governmental function, and should these critical capabilities 
be in-sourced? I believe there was legislation passed in the 
last couple years that requires the military departments to 
take a look at their contracted-out capabilities to see whether 
or not any of them should actually be in-sourced, which is 
brought back in-house.
    And that is one way in which the Department can analyze 
that particular situation. I think there is already legislation 
out there that allows----
    Mr. Tierney. The legislation is there; the compliance 
isn't. And that is the problem.
    And, again, the question goes back to, when did war ever 
become something that wasn't inherently governmental, in all 
the things that go with it?
    When I see recommendations here, you know, trying to 
incorporate in and integrate into the command chain contractors 
so that they are more involved in the planning and the 
operation and stuff like that, well, if you're going to do 
that, you might as well have them be on your payroll.
    Mr. Bowen.
    Mr. Bowen. Mr. Chairman, you say, when did that happen? I 
think the time is the late 1980's, when LOGCAP I was created 
and, essentially, the support--fuel, food, billeting--of troops 
in the field was outsourced. And we have spent now on LOGCAP in 
Iraq in excess of $35 billion in those three areas.
    It has been incremental increases since the late 1980's. 
``What can be covered,'' is a continuing question in every 
conflict, and the answer is always, ``a little bit more.''
    Mr. Tierney. Has anybody ever looked at, you know, what is 
it that we did in World War II, what is it that we did in the 
Korean conflict?
    Mr. Fontaine, what a segue, huh?
    Mr. Fontaine. Yeah, exactly. In our report, actually, we 
have a historical section that looks back, actually, all the 
way to George Washington. And contractors in some way, shape, 
or form have played a role in all of our conflicts going back 
that far. There were, you know, thousands of contractors 
working in Vietnam and Korea.
    The big change, though, has been what they've done and the 
dependence that the United States has had upon what they've 
done. So in Vietnam, for example, you had a large number of 
contractors working on construction projects in Vietnam. And 
that, obviously, is less controversial, in terms of what 
contractors do. You know, now, in the current wars, we've had 
contractors doing interrogation, private security operations, 
weapons maintenance, according to reports even maintaining 
drone operations, those sort of things, which are much more 
controversial.
    So I think that is the big change that has happened over 
the years, is the scope of activities that contractors have 
begun to carry out. And because we have, you know, upwards of 
200,000 contractors now in Iraq and Afghanistan, if you pulled 
those out of the operation or tried to Federalize them all, it 
would be very difficult to do so.
    Mr. Tierney. And I wonder how easy it would be to keep 
voting to be over there involved in these conflicts if it was 
200,000 people, U.S. citizens in combat, as opposed to 90,000 
in one place, with 110,000 contractors, sort of, off the books. 
It's a political consideration.
    Mr. Fontaine. Right. I mean, I think this is another aspect 
of it, is the political cost goes down to the degree that 
contracting support goes up. Because, you know, we always mourn 
the losses of American service people who are killed; they are 
on the ``faces of the fallen'' tributes and everything else. 
But contractors die and are hurt, and they barely register. So 
there's a reduction in the political costs of these operations.
    But I think, at the same time, unless the United States has 
a very significant reduction in its international commitments--
which, personally, I think is relatively unlikely, at least in 
the near to mid-term--then we will probably continue to rely 
with our current force structure on contractors to do the work 
that our military is not big enough to carry out on its own.
    Mr. Tierney. Thank you.
    Mr. Flake.
    Mr. Flake. Let me just follow on that theme, if I could. 
And Mr. Bowen and Mr. Fontaine first.
    The report that was issued, ``Warlord, Inc.,'' this is 
one--and it was mentioned before by Mr. Solis that you take 
into account both efficiency and whether or not it aids our 
policy, our overall policy goals. This is one where, when you 
have local contractors with the trucking contract, it's, I 
think, undoubtedly the most efficient way to move goods between 
military bases in Afghanistan.
    But when we find out that a significant portion of the 
money that is used to pay those contracts is going for 
protection money to some very unsavory characters, some of whom 
are very tight with the Taliban or are contracting with the 
Taliban for this protection, that certainly runs counter to our 
policy, our counterinsurgency policy, which calls for one 
source of authority--that being the Afghan Government, and no 
parallel authority structures there--that we're, in this case, 
not only tolerating, we're building up these militias and 
warlords.
    How do we reconcile that? It goes back to what the chairman 
was talking about, you know, the political cost. Certainly, if 
we did what the Soviets did, used their force structure to 
guard the supply lines--according to this report, it was 75 
percent of their force structure--that would require, you know, 
a doubling of our number of troops. And it wouldn't be very 
efficient, and we would have, certainly, more casualties. But 
it may be the only way to run an effective counterinsurgency 
policy as we have defined it.
    How do we reconcile that? Or can we reconcile that?
    Mr. Bowen, do you want to give it a shot?
    Mr. Bowen. Well, the policy issue, I guess, is using 
financial resources to pacify a region. And it was certainly 
expedient, an expedient process, ad hoc, with respect to 
keeping the trucking routes safe.
    In Iraq, it was much more complicated, a much more thought-
through process. The ``Anbar Awakening,'' the Sons of Iraq 
program, spent in excess of $450 million of Commander's 
Emergency Response Program money to pacify Anbar province and 
similar regions. Similar policy issues, different approaches to 
how well-thought-out, how well-structured the execution of the 
two programs was.
    In Afghanistan, the policy execution was essentially 
expedient and almost outsourced, as you point out. In Iraq, it 
was carefully thought through, as was the transition of the 
maintenance of that pacification program, now borne financially 
by the Iraqi Government.
    Mr. Flake. Mr. Fontaine, do you have any thoughts on that? 
From that 35,000-foot level, how does this look in terms of the 
use of contractors in this trucking contract?
    Mr. Fontaine. Well, obviously, in any war, funneling money 
to your enemy is not a good idea. So I think you should start 
from that premise.
    I do think that, at some point, there may need to be a 
fundamental choice made whether to proceed--whether the effects 
are mitigated through more oversight and that kind of thing, to 
proceed in a fashion where we are willing to trade money in 
order to have a pacified area through which our supply lines 
can travel, knowing that some of that money will go to our 
enemy, or whether we are willing to tolerate the potential of 
more casualties and more disruption of our supply lines. I 
think that is probably a fundamental choice.
    But when it comes to counterinsurgency, I think that not 
only do they have all the problems that you just described when 
it comes to aiding our enemies, reducing government legitimacy, 
giving them more opportunity to attack rather than to not 
attack, but I also think there is a strategic communications 
issue to this. We are supposed to be on the side of the good 
guys. And so, as word gets out that we are, sort of, willingly 
or knowingly providing money that ends up in the hands of the 
Taliban, I wonder if that promotes a sense that the United 
States is not in this, sort of, for the long term, in order to 
actually see the government succeed, rather than trying to go 
with short-term expediency.
    Mr. Flake. Thank you.
    Ms. Ugone, I have just a moment left. You mentioned that 
there are provisions; if there is no value added from having 
the prime contractor or the subcontractors, that we have the 
authority to pull back some of the funds used for that. How 
often is that utilized?
    Ms. Ugone. We haven't done work in the area, on the 
passthrough. That was legislation that was enacted, I think, in 
fiscal year 2007.
    But one of the things that it focuses on is the 
subcontractor level. We do plan to do some work based on the 
contingency contracting framework for reform. We have 
identified where primes have had problems, where we plan to 
take a look at the primes that are primarily IDIQ contracts. 
And we are going to do down to the sub-level to see if there 
are issues related to passthrough, as well as other issues 
related to subcontractor responsibility as well.
    Mr. Flake. OK. Let me just ask it another way quickly. 
You're not aware of any instance where we have actually pulled 
back funds?
    Ms. Ugone. No. I'm not aware of any instances about 
recovering excess costs.
    Mr. Flake. OK. Thanks.
    Mr. Tierney. Thank you.
    Ms. Chu, you're recognized for 5 minutes.
    Ms. Chu. Thank you, Mr. Chair.
    Well, last week, we found out that, in the course of 
investigating the Host Nation Trucking contract, that military 
logisticians were relying on reports from prime contractors to 
gain visibility into the subcontractors that were actually 
driving the trucks and providing security for the convoys. And 
there was strong evidence that these subcontractors were paying 
off the Taliban. This is a very distressing situation.
    And what I would like to ask the panelists is, in general, 
what areas of oversight are appropriate for DOD to leave up to 
the prime contractor, and what areas should DOD take a more 
direct role in overseeing? And, in doing so, how can we prevent 
this corruption from occurring?
    Ms. Ugone. You know, I think one of the things--in 
preparing for this hearing, it became quite apparent that the 
Federal Acquisition Regulation has not kept up with subcontract 
management. We just took one contract out of here, an IDIQ 
contract with I believe it was five prime contractors, and 
there were 200 subcontractors under that prime.
    If you take a look at the Federal Acquisition Regulation, 
there are provisions, but as far as subcontract management, I 
don't think it's kept up with the level of subcontractor 
performance that is required under these primes. So I think 
there needs to be a look at the Federal Acquisition Regulation 
with respect to subcontract management.
    Ms. Chu. Are there not guidelines for this?
    Ms. Ugone. There are. And there is--and I talked about it a 
little bit in my opening statement--there is the consent to 
subcontract, which is, if the contracting officer requires a 
prime to provide information on their subs in order for the 
contracting officer to consent to subcontract, then there is 
some insight into subcontractor responsibility. But if the 
contracting officer does not require that, then you're not 
going to have the insight.
    And the provisions in the current FAR allow a lot of leeway 
to the contracting officer.
    Ms. Chu. And what would change it so that you could have 
this more stringent oversight of the subcontractor?
    Ms. Ugone. Excuse me? I didn't quite hear the question.
    Ms. Chu. What would it take to change it so that you could 
have----
    Ms. Ugone. Well, one of the things is, I think the 
provisions--let me just take the situation with the warlord 
situation. The contracting officer can, under the current 
provisions of the FAR, designate subcontracts in that 
situation. If something requires special surveillance or 
special oversight, it does allow, in the FAR, to do that. For 
example, you could say to the prime, ``I need to be able to 
consent to you subcontracting with these primes. I need to get 
insight into your subcontractors.'' I can also establish, 
perhaps, a special surveillance program for those particular 
subcontractors.
    So there are some provisions, but it's up to the 
contracting officer to determine whether or not those 
provisions are invoked.
    And there are some other additional requirements that have 
to do with the contractor purchasing system, and it gets a 
little bit more detailed, as to when you have to get a consent 
to subcontract from a contracting officer.
    Ms. Chu. I want to ask another question about the culture 
at the Department of Defense.
    And, Mr. Solis, you talked about the fact that the 
contracting reform at DOD is hampered by the Department's 
inability to institutionalize operational contract support by 
accepting contractors as an integral part of the total force. 
But I also note that you had had several recommendations but 
the DOD has been slow to implement many of the recommendations.
    What could change this culture?
    Mr. Solis. I think one of the things, again--and I think 
the Joint Staff--and I think this was alluded to at the hearing 
last week. There was a Joint Staff study to look at the 
reliance on contractors in Iraq. And I think that, again, 
begins the process of looking at how reliant the DOD is, not 
only for Iraq but for future operations, in terms of the 
reliance.
    I think, also, as I mentioned in the testimony here, when 
you look for future operations, there are requirements to look 
for--there are requirements to produce what was called an 
``Annex W,'' which looks at contractor requirements for new 
operations or future operations. That has to be done. That has 
to be done very rigorously and on time. And I think, unless the 
Department does that kind of thing, we are going to be in this 
same situation, talking about another contract, the next time.
    I think the only other thing I would offer is that I know 
in the current version of the defense authorization bill that 
the Senate just passed that they made some changes to the 
requirements for looking at contractor requirements in the 
defense bill. And that is going to be part of the QDR, at least 
as envisioned now. So it's going to bring that strategic look 
up to it at that point.
    I still think there are some basic problems in terms of, 
again, as I mentioned, lessons learned, you know, background 
screenings. I think those things--we're on record with some of 
the recommendations to make changes to that. For whatever 
reason, the Department has not acted upon all those in a timely 
manner. We are still trying to pursue some of those. But, 
again, I think the fundamental piece is that you have to look 
at your reliance on contractors before you start making other 
adjustments.
    Ms. Chu. Thank you. I yield back.
    Mr. Tierney. Mr. Duncan, you're recognized for 5 minutes.
    Mr. Duncan. Well, thank you. Thank you very much, Mr. 
Chairman, and thank you for holding another hearing and trying 
to call attention to all the problems, all the waste, fraud, 
and abuse, the one scandal after another that has gone on 
through these many years that we have been in Iraq and 
Afghanistan.
    Throughout all this time, we have had more contractors and 
subcontractors than we've had soldiers in these areas. I heard 
Mr. Fontaine say a moment ago that the use of contractors by 
the military has gone on since the founding of the country. But 
I can tell you there's never been the ridiculous markups, the 
excessive, almost obscene profiteering, there's never been the 
rip-offs of the taxpayers that have gone on to the extent that 
they have gone on in Iraq and Afghanistan. And these wars have 
always been more about--far more about money than they have 
been about any real threat to this Nation.
    It's really shameful, and it's very, very sad, what has 
gone on. And there is really no real way to correct it. When 
you have private companies dealing with each other, things are 
done at a fourth or a third or half of the cost that you have 
when you have the Federal Government involved dealing with 
contractors. And the Department of Defense, because of the 
lobbying influence of the retired admirals and generals, has 
been the worst and the most expensive of any of the Federal 
contracting that has gone on by our government.
    But that is really all I have to say. I thank you very much 
for giving me this time.
    Mr. Tierney. Thank you, Mr. Duncan.
    Mr. Lynch, you are recognized for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman. And I want to thank you 
for holding this hearing.
    Mr. Bowen, it's good to see you again.
    Mr. Bowen, you and I have had a pretty long history over 
the Iraq reconstruction model. I have been to Iraq 12 times, 
working with you to try to tighten up the situation there. We 
started at a very low basis, and I think there were a lot of 
lessons learned.
    What troubles me is that now, when I more often visit 
Afghanistan, I don't see that the lessons learned in Iraq are 
being used in Afghanistan. And it distresses me greatly.
    I have been involved with the chairman on this Host Nation 
Trucking issue. I went down and tried to meet with a couple of 
the warlords down there on the Afghan-Pakistani border. They 
ended up shutting down the pass there at Spin Boldak and shut 
off the trucking because they didn't want me down in that area 
asking questions.
    I just have come to question whether or not even the modest 
and painful gains that were achieved in Iraq are possible in 
Afghanistan. And I'm wondering, Mr. Bowen, because, you know, 
you're the Inspector General for Iraq Reconstruction, you're 
the one who was the point person for us, can you point--now, I 
know you've helped the Inspector General--the SIGAR, right? 
Special Inspector General for Afghan Reconstruction?
    Mr. Bowen. Yes, sir, that's right.
    Mr. Lynch. I know you've helped them file some reports. The 
reports, at least the ones that I have seen and asked for, they 
are, well, very poor, I would say, in my estimation. Going into 
Afghanistan and asking for a progress report on where we were, 
just a status report, even if there is no progress to report, 
just tell us where we were--that information has been very 
poor, not very informative.
    When I compare it to the information I get from you and 
your office in Iraq--and I know you have been helping them 
generate some reports, but, look, I have low confidence in the 
Special Inspector General for Afghan Reconstruction. It may be 
because of the environment there; it may not be his office. It 
may be it's just a different environment and my expectations 
are too high.
    But I wonder if you could share, you know, just some of the 
lessons learned in Iraq and maybe some things going on in 
Afghanistan that you think could be done better.
    Mr. Bowen. First, Mr. Lynch, I think almost exactly 2 years 
ago, we had a colloquy in this room about subcontractors, and 
that was regarding the DynCorp contract. And you identified in 
our then-recently released audit, our first one on DynCorp, 
that a subcontractor who apparently didn't do much work but 
pocketed $8 million, Cogen Corp and then Corporate Bank, you 
remember for the police training camp that never got completed? 
I point that out simply to say that this is a continuing and 
enduring problem, that is, ensuring that taxpayer interests are 
protected while mission goals are achieved. One doesn't trump 
the other.
    Reform is still needed, and the reason for that shortfall 
then and the shortfalls that you saw in Afghanistan and the 
shortfalls that are experienced today in both countries is the 
lack of transparency, no required reporting, as we have heard 
today regarding subcontractors, the lack of effective 
accountability, and insufficient oversight presence in country. 
You went outside the wire. We have been outside the wire a lot 
in Iraq.
    We have been together, you and I, sometimes when our 
inspectors have visited sites. Frequently we are the first 
Americans that they have seen in a long time. So the quality 
assurance programs being done outside the wire are not 
sufficient to protect those taxpayers' interests, 
notwithstanding the importance of the mission goals.
    What lessons should be applied? Two are in my statement. 
One, the contingency Federal Acquisition Regulation that we 
have talked about before, recommended 4 years ago in our 
lessons learned report, I think these settings, as you point 
out, are uniquely difficult and uniquely susceptible, I believe 
to fraud, waste and abuse; and, therefore, specially focused 
contracting regulations should be used for all agencies to use 
in theater.
    What I think most don't realize is that there are multiple 
versions of the FAR at work in both Iraq and Afghanistan 
because each agency can amend and apply the FAR as it sees fit 
to contracting overseas. That creates problems for contractors; 
it creates problems for contract management, and causes waste, 
which is ultimately where the taxpayers' interests are 
shortchanged.
    I think also that we have talked about the need for unity 
of effort in contingency operations and we don't have that in 
Afghanistan, and we haven't seen it sufficiently in Iraq. It 
shouldn't be dependent on personality; it ought to be driven by 
structure, and that structure ought to be something like the 
U.S. Office for Contingency Operations that would bring 
contracting, bring IT, bring personnel, bring planning, bring 
oversight, and bring execution under one roof. Right now all of 
those elements are diffused across the agencies in a disordered 
fashion; and the results, unfortunately, are occasionally 
revealed in oversight reporting.
    Mr. Lynch. Thank you, Mr. Chairman. I yield back the 
balance of my time.
    Mr. Tierney. Let me continue on that line.
    Mr. Solis, your testimony recalled a December 2009 trip to 
Afghanistan that you took, and you were told by members of the 
Defense Contract Management Agency that they required at least 
47 more subject matter experts for contract oversight. And 
since government personnel were unavailable, they planned to 
staff those positions with contractors. How are we doing? 
Obviously, I think I know what your answer is going to be. I 
mean, is this wise strategy? You are going to hire out 
contractors to oversee contractors?
    Mr. Solis. It is being done. I am not saying that is the 
way it should be done. I think it is through the lack of 
planning for the use of contractors. I think, again, you have 
to look at what your requirements are going to be. And if we 
are going to be doing more contracting and if we are going to 
require people who have to have technical backgrounds, 
particularly in the construction trades and the engineering 
trades, is this where we want to be? I think ultimately, this 
is what they may have had to do because they had no other 
choice.
    Mr. Tierney. The choice has been since the late 1980's. As 
Mr. Bowen said, they have had this issue since the late 1980's. 
You have pointed it out to them over and over again. It seems 
to me to be total nonresponsiveness, or certainly very 
insufficient responsiveness.
    Following along that line, you talked about the risk-based 
approach for contract officer representatives. They are going 
to assign contract officer representatives to oversee only 
those contracted services related to health and safety, such as 
food service and power generation, leaving other services with 
no contractor officer representative and only quarterly 
oversight. How smart is that?
    Mr. Solis. Well, we haven't looked at it in detail, but my 
understanding is that they were categorizing high and medium 
risk, and it is not that they weren't going to have oversight, 
it is that they were going to have less oversight. They were 
not going to review those contracts as often. I think it was 
maybe once a quarter or longer periods of time. It does create 
risk. And certainly, just by looking at some of these contracts 
and things, I think you've got to continue to look at is this 
going to increase my risk. I think there has to be a continual 
review. You cannot just say I am not going to do this ever 
again because I think you are going to set yourself up for 
problems.
    Mr. Tierney. Ms. Ugone, they talked about the deployable 
cadre of experts. There was testimony to that regard. Do you 
have any information on how the Department of Defense is 
progressing with regard to identifying a so-called deployable 
cadre of contracting experts?
    Ms. Ugone. As far as a deployable cadre of contracting 
experts, I don't have a macro view. I have a much more selected 
view, depending on the contract. For example, the INLE 
contract, the International Narcotics Law Enforcement contract 
we looked at, that was a billion dollars, running, equipping 
and training the Afghan National Police, we were told by the 
command that they stood up a contracting officer representative 
oversight structure just for that one contract.
    But we do have concerns about contingency contracting in 
Afghanistan, particularly using our framework for reform.
    The area that is problematic is getting the requirements 
right and translated into the contract correctly and then 
monitoring and paying. We have concerns about those same issues 
again in Afghanistan. And that's one of the things that we want 
to watch as the money flows in to equip and train the Afghan 
National Police and the security forces.
    Mr. Tierney. Thank you. I think you have made that point 
quite well. Unfortunately, this cuts across a number of 
government agencies, and it cuts across a number of functions. 
And we look at it in the procurement aspect as well. Too little 
oversight, and too few people who are professionalized in 
managing the contracts, and all that pertains to that, so we 
had people in one case, we contracted out the people to oversee 
the contractor, only they were from the same company. That is 
how absurd it gets.
    Ms. Ugone. Yes. I think the key is you are going to get it 
wrong at the end if you don't get it right at the beginning. If 
you don't translate those requirements correctly and you don't 
plan the acquisitions and you don't have a strategy for how you 
are going to spend the money, then you are going to have a 
problem definitely.
    Mr. Tierney. I am beginning to think that we can't rely on 
the Department of Defense and maybe the State Department to do 
this any longer. It has been since the late 1980's. We are 
going to have to maybe put a swat team together and just get 
these things in place and just shove it on them. We will see 
about that.
    I will yield to Mr. Flake.
    Mr. Flake. Mr. Solis, obviously the contracting DOD does 
dwarf everything, any other agency of the U.S. Government does; 
but what best practices can we look at from some of the other 
agencies that could be done here? What are some of the others 
agencies doing, or is it applicable at all given the scale that 
we are dealing with here at DOD?
    Mr. Solis. Congressman, my work has been focused on the DOD 
side, so I can't really answer your question in terms of best 
practices.
    Obviously, I think the Department knows things that it has 
to do. Again, it just hasn't always translated into doing those 
best practices. Again, doing lessons learned, as Stuart 
mentioned, I think translating that over from Iraq to 
Afghanistan, whether it is reconstruction or military 
operations on the use of contractors, so I think the Department 
is aware of the kinds of things that it needs to do in terms of 
those best practices. And so I think it is a matter of 
implementation at this point. And they do a lot of contracting. 
I can't really speak for State or AID as to what I would deem 
is best practices for DOD. But I think DOD is aware of the 
things that it needs to do, and I think it is a matter of 
implementation at this point.
    Mr. Flake. Matter of implementation, so is it incumbent on 
us, we can rewrite the regs, but nothing has seemed to work to 
prompt them other than simply withholding funds, and then you 
get into policy issues that are bigger than all of this.
    Mr. Solis. There is obviously a lot of guidance out there 
already. As I mentioned, I think there is another attempt in 
the current version of the NDA to try to raise this at a more 
strategic level in terms of planning for the overall use of 
contractors and operations and military missions. I think that 
is one of the first things that needs to be done.
    I think holding folks accountable and feet to the fire in 
terms of implementing these regulations is probably the next 
step; but I think there is an awful lot of guidance.
    The other thing I would mention, we talk about this in a 
contracting sense. I think the other entity within DOD that has 
to step up to the plate is Personnel and Readiness because I 
think it is a force structure issue.
    Again, how we look at Iraq or Afghanistan, we have nearly a 
couple hundred thousand personnel, both contractors and 
military members, doing the mission. Is that where we want to 
be? Is that how we want to do these things? Are the kinds of 
things contractors doing today the kinds of things that we want 
to do for future operations? That is where I think it is not 
just the contracting side. I agree with everything that my 
colleagues have said about things like requirements and 
planning, but I also think it has to be a force structure 
issue. It has to look and see where we want to be with 
personnel, both contractors and military members.
    Mr. Flake. Thank you, Mr. Chairman.
    Mr. Tierney. Mr. Bowen, we talked at one point in time 
about the idea of having an Inspector General for Contingency 
Operations. What are your current thoughts on that and how 
would that improve our ability to oversee any progress or lack 
of progress from these various agencies in this area?
    Mr. Bowen. Having a standing Inspector General for 
Contingency Operations would simply ensure that the oversight 
was well prepared in advance of any operation beginning. In 
both Iraq and Afghanistan, adequate oversight was not created 
until well after those operations were underway. In 
Afghanistan's case, it was 7 years after it was underway. The 
dam had broken. The disaster was unfolding. It is difficult to 
make a significant difference as I think we were able to make 
in Iraq through lessons learned reporting that helped the 
course corrections get implemented.
    Thus, I think it makes perfect sense and fits within the 
gist of this hearing of the need for greater accountability 
together with more transparency.
    Mr. Tierney. Mr. Fontaine, can you compare for us the 
competencies involved when the military oversees its own 
personnel, versus how well they do in overseeing the conduct of 
contractors?
    Mr. Fontaine. This is an ongoing problem related to the 
laws, regulations, and internal command structures that the 
military has versus what the contractors have. The contractors, 
at the end of the day, are responsible to the terms of their 
contract. Nonfulfillment of the contract has certain penalties, 
but not the same penalties that military personnel have if they 
don't obey an order where they can be court-martialed.
    So the discipline and the command and control procedures 
are much clearer and crisper on the military side rather than 
the contracting side. On the contracting side, there has been 
increasingly an attempt to write into the contracts themselves 
some of these. So, for example, contractors before were not 
subject to the Uniform Code of Military Justice; they are now 
subject to some provisions of the UCMJ. Contractors, in some 
cases before, were not subject to fragmentary orders and other 
orders given by commanders in the field. Now many contractors 
are subject to those.
    So there has been a move in the right direction; but I 
think you fundamentally will have a disjunction between the way 
military personnel operate and contractors doing the same 
function simply because of who they are responsible to at the 
end of the day.
    Mr. Tierney. I didn't see Mr. Welch was back, and I don't 
want to usurp his time.
    Mr. Welch, I recognize you for 5 minutes.
    Mr. Welch. Thank you very much, Mr. Chairman. I thank the 
witnesses for the good work they are doing.
    One of the contradictions, of course, is the more we spend 
on contracting, the more we undercut the chain of command in 
the military. I want to just ask your opinions on things 
because you are not the ones who make the decisions.
    Mr. Solis, I understand it has been recently reported that 
there is a $100 million contract to Blackwater, now known as Xe 
to provide security to CIA bases. As you know, Blackwater has 
an incredible history. The Nisour Square incident, they fatally 
shot 17 Iraqis. It looks very much like it was a hair-trigger 
kind of response.
    In December 2007, Blackwater officials allegedly authorized 
a secret payment of $1 million to Iraqi officials to buy their 
support for allowing the company to continue in business. The 
company is under continuing investigation with the Foreign 
Corrupt Practices Act. In 2009, Blackwater lost its State 
Department contract to provide diplomatic security for U.S. 
officials in Iraq because of the Nisour Square incident. And in 
April 2010, Federal prosecutors charged five former senior 
Blackwater officials with weapons violations and making false 
statements. Why in the world would we enter into any new 
contract with a company like that? Can you explain that to me?
    Mr. Solis. I'm not sure I can answer the question, 
Congressman, in detail, but I think it is obvious that when the 
folks who were making the decision on that contract, they 
obviously have to look at past performance, how those folks 
have worked in the past. Obviously the things you have raised 
would raise concern, I would imagine. But not being in the 
decision chain, I don't know exactly how that decision would 
have been made by the folks who are making it.
    Mr. Welch. Ms. Ugone.
    Ms. Ugone. Well, there are a couple of things. Definitely 
as Bill said, past performance, and we did an audit a few years 
ago, and frankly, the population of past performance 
information, we are not doing a very good job of populating 
that. That actually would be quite helpful in having primes 
register that kind of information. They also have a section in 
the past performance information blocks for also providing 
information on subcontractors.
    At the same time, there also should be a look at whether or 
not any of these subs are on the excluded parties list or have 
been suspended or debarred. There are numerous checks that the 
contracting officer can use.
    Mr. Welch. Let me just develop on this because obviously 
you can have a list where the history of the subcontracts is 
made available to the people who are going to be signing a 
contract. But obviously, in the case of Blackwater, it is well 
known what their record is. So that wasn't a mystery to the 
CIA. One of the dilemmas that we have, and maybe Mr. Bowen, I 
will ask you to comment on this, is that the urgent 
requirements of providing security in this case to our CIA 
officers in forward-operating bases, which obviously has to be 
a compelling concern for Mr. Panetta, outweigh considerations 
about criminal allegations, reckless use of violence by a 
company because they can, ``more or less get the job done.'' So 
that internal contradiction means that we waive decency in some 
respects and go back to Blackwater, despite their sorry record. 
Do you have any comment on that?
    Mr. Bowen. I think it is almost a rhetorical question. We 
can't waive our core principles of stewardship of the taxpayer 
dollars. Mission accomplishment has to be balanced with the 
core principles of oversight and execution in country. Mission 
accomplishment does not trump those principles.
    I think, though, regarding the subcontracting issue, we 
have talked about it today, so much of it is discretionary. 
What kind of information can you as an oversight body get 
access to to find out what is going on below that surface so 
that you and, frankly, departments can make better judgments? 
That calls for some, I think, amendment of the Federal 
Acquisition Regulation that will give you data, information, 
about subcontractors so that from here, from this dais, you can 
make judgments about how the primes are doing.
    Mr. Welch. I commend you for the good work you have been 
doing over the years.
    Mr. Chairman, I yield back.
    Mr. Tierney. Mr. Lynch, any further questions?
    Mr. Lynch. Mr. Chairman, thank you.
    Mr. Fontaine, right now it seems since the beginning of the 
war in Iraq and up to the present, there has been a trend to 
subcontract out, to contract out core government services. The 
argument initially made by the Bush administration was that 
this would allow us to save some money here. There were 
efficiencies gained here. But after all of our experience, I 
just don't see that. Is there cause to revisit that assumption 
that contracting out, while it does allow us to tap into some 
expertise that is not available or wasn't available at the 
time, is there cause here for us to review that decision to 
contract out government services rather than to build 
internally our government capacity to actually do this with 
government employees?
    Mr. Fontaine. Yes, I think I would divide that into two 
separate points. First is on the cost and providing 
comprehensive cost comparisons between contractors and 
government personnel carrying out the same function. I think 
our GAO colleague may be able to say more on this, but it has 
proven to be exceedingly difficult for a variety of reasons. 
One of the last GAO reports required data from the Department 
of Defense in order to make this comparison, and the Department 
of Defense was unable to provide the data.
    But there seems to be a difference in cost as you move up 
the skills chain. So if you are going to hire locals or third-
party nationals to do things like construction or laundry or 
mail service, then you are much more likely to save money than 
to do things at the top of the skills chain, private security, 
more engineering functions, where if you hire Americans, you 
may be paying on a per-day basis more than you would pay to an 
American official to do the same things. The benefits seem to 
be less on the cost side often and more on the quick 
deployability of such contractors into a war zone.
    On the inherently governmental side, there is certainly 
reason to try to revisit this whole issue. Our recommendation 
has been to try to move away from trying to divide every single 
activity into inherently governmental and then against the law 
to ever contract out, or not inherently governmental, which 
doesn't mean that it is a good idea to contract out, it just 
means it is not against the law, and instead move to something 
you were suggesting which is to try to determine the universe 
of activity which it is a good idea for the U.S. Government to 
have an in-house capacity to carry out rather than to contract 
out and then move toward that.
    And then only in extremes, if we need to contract it out, 
we may be allowed the flexibility to do that as a surge 
capacity, but that should not be the run-of-the-mill way we do 
our operations.
    Mr. Lynch. In our recent experience, we have found that our 
Federal pension rules, we have some very, very highly skilled, 
experienced personnel who we could really use in Afghanistan 
and Iraq. The problem is that if we brought them back in as 
government employees, and this goes for Treasury, DOD, the 
whole nine yards, they would have to--well, they would 
basically violate their pension rules and they would be 
penalized for coming back. Recently in the subcommittee that I 
chair on Federal employees, we have actually entertained 
creating some flexibility there to allow folks to come back for 
a year, to come back into government employment without 
violating their pension rules and without being penalized to 
come back onto the payroll and provide that service for a year 
or 18 months and then go back into retirement. Is that the type 
of flexibility that might help us in some of those upper 
tranche responsibilities that you refer to?
    Mr. Fontaine. Yes, the double dipping problem you refer to 
is a real issue. I think that definitely makes sense in the 
upper tranche, but I would also say that it makes sense on the 
contract officer, contract management level. A number of people 
have pointed out correctly that we do not have enough contract 
officers in the U.S. Government to oversee these contracts. 
That has led to fraud, waste and abuse problems and all sorts 
of other problems. You cannot mint a qualified government 
contracting officer in 5 days, maybe not even in a year.
    And you also often can't just pluck one who has never done 
government contracting from the private sector. What you may be 
able to do is get folks who were contract officers in the 
government before, but who have left the government and have 
pensions, don't have an incentive to come back in because they 
would have to give that up, be able to come back in for a year 
or 2 years or something like that to serve their country and 
put their expertise to use. I think that makes perfect sense.
    Mr. Lynch. I yield back the balance of my time.
    Mr. Tierney. Thank you.
    Mr. Solis, you talk in your report about contracting reform 
and the Department of Defense being hampered by the 
Department's inability to institutionalize operational contract 
support by accepting contractors as an integral part of the 
total force. Part of my reaction to that was if you are going 
to do that, you might as well make them part of the total 
force. Assuming that what I think is common sense doesn't 
prevail, what are the major obstacles that you think are 
preventing the Department of Defense from actually doing that, 
from accepting contractors as an integral part of their force?
    Mr. Solis. Again, I think that was reiterated going back to 
what the Department said in its 2006 QDR. And I think it has 
always been out there, just to reframe in terms of what the 
reliance on contractors would be. They have said that their 
total force includes military members, DA civilians and 
contractors.
    I think in terms of trying to get to that point about 
institutionalization, and again, I keep hammering this thing 
about planning, planning, planning, and I think it is something 
that while they do a lot of on the military side, military 
force structure piece, it is left out in gaps for the 
contractor side. I think the Army, for example, does a total 
Army analysis. There was talk before I came to this hearing 
about the fact that there is a piece in there about doing 
something for contractors. To my knowledge, that has never been 
done. I think what has to happen is you have to look at what 
you are going to need for your military force structure; and if 
I have gaps, then you have to make a policy decision, do I want 
to fill that with military members? Do I want to fill that with 
civilians, or do I want to fill that with contractors?
    If I want to fill it with any of those, particularly 
contractors, then what are the risks involved with those? What 
are the requirements? What am I going to need to absorb that 
contractor force into that force structure.
    I think again, it has to be something that the military 
makes as a stop priority. I know that the Secretary has talked 
about this and Admiral Mullen has talked about this, but I 
think the time is now, and we have to do it at the highest 
level.
    Mr. Tierney. We have heard the talk as well. Do you know of 
any effort that has gone from talk to action?
    Mr. Solis. Again, it has been ad hoc. I think there have 
been efforts, as I mentioned the joint staff study was to look 
at reliance on contractors in Iraq. I think there are efforts 
to put planners out at the different combatant commands to help 
them prepare and do the Nnnex W's. But again, it has been slow. 
So I think there needs to be a more forceful effort at the 
highest levels to implement and do the things that are already 
on the books. There is a lot of guidance. There is work force 
planning guidance out there that includes not only just 
contractors but again military, the whole force structure of 
what you need to conduct your military operations.
    Mr. Tierney. The slowness of activity borders on 
insubordination, almost. The failure to respond and actually do 
some of these things, it is frustrating from the policy aspect. 
I think the legislation is pretty much in place. I think the 
regulation is pretty much in place, it is just the actual 
execution that we keep waiting on and waiting on and waiting 
on. We have to think of some strategy from our end and from the 
White House's end, frankly, to get this thing in gear.
    I want to just wrap things up if nobody else has any 
questions. We didn't talk a lot about background screening, 
badging and tracking of local personnel, which did come up 
during our last hearing on a trucking situation. It was an 
important factor. In fact, the witnesses came up afterwards to 
reiterate how important it was for them to be able to identify 
the subcontractors out there. In Iraq, Mr. Bowen, we seem to do 
it one way sort of theater-wide; and in Afghanistan, it appears 
they are doing it on an ad hoc installation-type basis, making 
sure there is some aspect on that.
    If there is a Department of Defense wide screening policy 
that is absent on that, do we know whether or not your agency, 
Mr. Solis, or Ms. Ugone, have you done any work in this area or 
made any recommendations?
    Ms. Ugone. Actually, we do have some ongoing work right now 
on the issue of contractors occupying sensitive positions who 
don't have proof of clearances.
    There is existing regulation in the Department that needs 
to be complied with, and the issue is a compliance issue. That 
report that we are working on right now, we are expecting it to 
go final in the next month or two. But we have issues in that 
regard as well.
    Mr. Tierney. The Department of Defense, are they moving 
forward on this as well?
    Ms. Ugone. It depends on their response to our report. We 
haven't received it yet as to where--we are predicting they 
will agree with us, that there is an issue and we need to solve 
it.
    Mr. Tierney. We are going to track that. We are going to 
ask the staff to make sure that we followup on that and move it 
on.
    One obstacle cited in the GAO report on department-wide 
screening policy was a disagreement apparently between the 
Under Secretary of Defense for Intelligence and the Under 
Secretary for Acquisition, Technology and Logistics over the 
level of detail required in screening local personnel. It seems 
sort of fantastic that would bring things to a grinding halt 
and they wouldn't find some way to resolve that. Mr. Solis, 
have they resolved that particular dispute or found someone 
that can referee it?
    Mr. Solis. My understanding is that has been turned over to 
AT&L to resolve this issue in terms of trying to figure out 
what the background screening requirements are going to be.
    Mr. Tierney. You believe that will happen, that is the 
right place to boot it to and get it resolved?
    Mr. Solis. Our recommendation was that there be somebody, a 
sort of referee, between USDI and AT&L because I don't know 
that it clearly falls in either spot. But there needed to be 
some way of coming up with a plan that would incorporate what 
USDI would be looking for, as well as AT&L. But my 
understanding is that it has been turned over to AT&L, and that 
is about as far as what I know at this point and they have not 
responded in terms of the specific things that they are going 
to do. We will continue to followup on that. Obviously, it is a 
very important issue in terms of background screening, and that 
is something we will look into.
    Mr. Tierney. Ms. Ugone, you mentioned that your report 
didn't really get into an examination of subcontractors on 
that. Do you think most of your recommendations with respect to 
contractors would also apply to subcontractors?
    Ms. Ugone. Yes. The process itself is absolutely critical, 
particularly when it comes to the requirements of translating 
it into a statement of work and the actual contract 
administration. Those two areas we think are absolutely 
critical. If you don't get it right in the beginning, you are 
going to have problems at the end. And also, contract 
administration has the payment function in it. That is a 
recurring problem in the contract administration, not having 
the invoices and receipts of goods and services reconciled is a 
key issue.
    Mr. Tierney. Thank you. I suspect we could go on for quite 
a bit of time because your written testimony, together with 
your oral testimony was very provocative and very in depth and 
informing. I'm going to stop at this point, but I'm going to 
give you each an opportunity to mention if there is one thing 
that we didn't cover thoroughly enough or didn't mention at 
all.
    Mr. Solis.
    Mr. Solis. I think we have covered a lot, and I appreciate 
the fact that the subcommittee has had this hearing. I think 
there are a lot of things that have gone on with operational 
contract support that need to be looked into. Obviously, we 
have talked about a lot of things that they haven't done. I 
think there areopportunities for the Department to move out and 
grasp these things. And I think again, as Mr. Flake mentioned, 
asked about best practices, I think they are aware of what they 
need to do. It is a matter of execution at this point.
    So I would just offer again, the only other thing, I think 
there needs to be more planning for the use of contractors in 
contingencies. I think by doing that, that will eliminate, or 
mitigate a number of the issues to include things like the Host 
the Nation Trucking contract problems.
    Mr. Tierney. Thank you. Ms. Ugone.
    Ms. Ugone. I think as money flows into equipping and 
training the Afghan National Security Forces, the Department 
needs to apply the lessons learned from prior contingency 
contracting practices, particularly paying attention to 
planning for the acquisition up front as billions of dollars 
are flowed in to do the mission.
    Mr. Tierney. Thank you. Mr. Bowen.
    Mr. Bowen. Mr. Chairman, you were exploring the causes of 
these problems and when did they begin. And we were talking 
about LOGCAP. I was thinking, contemporaneous with the 
expansion of LOGCAP in the late 1980's or early 1990's was the 
decision, perhaps as part of a cold war dividend, to 
drastically reduce the contracting corps. So just as 
outsourcing was expanding, the capacity to oversee and contract 
manage that outsourcing was contracting; and the consequences 
therefrom, I think, are with us today.
    Mr. Tierney. Mr. Fontaine.
    Mr. Fontaine. Just one final point, and it gets to 
training. If contractors are going to be part of the total 
force which the 2010 QDR says that they are, then those 
military individuals or civilians who go over to theaters who 
don't do contract management will need to know something about 
contractors, what they do, how to find out what they do, what 
the regulations are, whether they can order them to do 
something or not.
    Currently, if you go out to one of the training places 
before the predeployment training, they are actually run by 
contractors, but there is almost no one playing contractors. 
And then when these guys get over to Afghanistan or Iraq, they 
will actually find more of them than they will find of the 
military. The same is true of war gaming. The role of 
contractors is rarely incorporated.
    In the 2008 National Defense Authorization Act, there was a 
requirement that DOD issue a joint directive to bring together 
war gaming and predeployment training, the role of contractors 
and integrate that, and they have not issued that document yet, 
even though it was required in 2008. And I think moving down 
that path would be a real step forward.
    Mr. Tierney. Thank you.
    So my final panel question, would each of you tell me what 
you think is the place or person at the Department of Defense, 
the State Department, and USAID where this committee should go 
to inquire on progress in the area of contracting and put 
pressure on them and make sure that results occur?
    Mr. Solis. Again, I will say for DOD, because I am not as 
familiar with State Department or AID, it is combined between 
Dr. Carter and the Under Secretary for Personnel and Readiness. 
I think it falls between those two because as I mentioned, it 
is not only a contracting and contract issue, it is a force 
structure and personnel issue.
    Mr. Tierney. Thank you. Ms. Ugone.
    Ms. Ugone. Yes, two offices, NATO training mission, 
combined security transition command Afghanistan; and the Under 
Secretary of Defense Comptroller.
    Mr. Tierney. Thank you. Mr. Bowen.
    Mr. Bowen. The only one I would add is Pat Kennedy, the 
Under Secretary for Management at the State Department.
    Mr. Tierney. Thank you. Mr. Fontaine.
    Mr. Fontaine. Since we are adding people as we go along the 
table here, at AID it is actually somewhat split. But I think 
that there are two areas both at AID, the bureau that handles 
conflict and humanitarian reconstruction would be the place to 
go. If you don't go above that, to say is there one locus at 
USAID that handles these sorts of issues; and if not, why isn't 
there?
    Mr. Tierney. Well, thank you all very much once again for 
both your written testimony and oral testimony here today. I 
think we have benefited greatly from it. Thank you for your 
service.
    We are adjourned.
    [Whereupon, at 12:22 p.m., the subcommittee was adjourned.]

                                 
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