[Senate Hearing 111-792]
[From the U.S. Government Publishing Office]


                                                        S. Hrg. 111-792
 
                   AFGHANISTAN CONTRACTS: AN OVERVIEW 

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

                                HEARING

                               before the

              AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                     ONE HUNDRED ELEVENTH CONGRESS

                             FIRST SESSION

                               __________

                           DECEMBER 17, 2009

                               __________

       Available via http://www.gpoaccess.gov/congress/index.html

       Printed for the use of the Committee on Homeland Security
                        and Governmental Affairs

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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           JOHN McCAIN, Arizona
MARK L. PRYOR, Arkansas              GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
JON TESTER, Montana                  ROBERT F. BENNETT, Utah
ROLAND W. BURRIS, Illinois
PAUL G. KIRK, JR., Massachusetts

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk


              AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT

                       CLAIRE McCASKILL, Chairman
CARL LEVIN, Michigan                 ROBERT F. BENNETT, Utah
THOMAS R. CARPER, Delaware           SUSAN M. COLLINS, Maine
MARK L. PRYOR, Arkansas              TOM COBURN, Oklahoma
JON TESTER, Montana                  JOHN McCAIN, Arizona
PAUL G. KIRK, JR., Massachusetts     LINDSEY GRAHAM, South Carolina
                     Margaret Daum, Staff Director
                Molly Wilkinson, Minority Staff Director
                       Kelsey Stroud, Chief Clerk





















                            C O N T E N T S

                                 ------                                
Opening statements:
                                                                   Page
    Senator McCaskill............................................     1
    Senator Bennett..............................................     3
    Senator Kirk.................................................    17
Prepared statements:
    Senator McCaskill............................................    35
    Senator Bennett..............................................    37

                               WITNESSES
                      Thursday, December 17, 2009

Colonel William H. Campbell, III, Director of Operations, Office 
  of the Under Secretary of Defense (Comptroller), U.S. 
  Department of Defense..........................................     5
Edward M. Harrington, Deputy Assistant Secretary of the Army 
  (Procurement), Department of the Army, U.S. Department of 
  Defense........................................................     7
Jeffrey Parsons, Executive Director, Army Contracting Command, 
  Department of the Army, U.S. Department of Defense.............     8
Charles North, Senior Deputy Director, Afghanistan-Pakistan Task 
  Force, U.S. Agency for International Development...............     9
Daniel F. Feldman, Deputy Special Respresentative for Afghanistan 
  and Pakistan, U.S. Department of State.........................    10

                     Alphabetical List of Witnesses

Campbell, Colonel William H., III:
    Testimony....................................................     5
    Prepared statement...........................................    39
Feldman, Daniel F.:
    Testimony....................................................    10
    Prepared statement...........................................    63
Harrington, Edward M.:
    Testimony....................................................     7
    Joint prepared statement with Mr. Parsons....................    41
North, Charles:
    Testimony....................................................     9
    Prepared statement...........................................    55
Parsons, Jeffrey:
    Testimony....................................................     8
    Joint prepared statement with Mr. Harrington.................    41

                                APPENDIX

Responses to questions for the Record from:
    Colonel Campbell.............................................    66
    Mr. Harrington...............................................    74
    Mr. Parsons..................................................    85
    Mr. North....................................................    93
    Mr. Feldman..................................................   100
Charts submitted by Mr. Feldman..................................   106


                   AFGHANISTAN CONTRACTS: AN OVERVIEW

                              ----------                              


                      THURSDAY, DECEMBER 17, 2009

                                   U.S. Senate,    
          Ad Hoc Subcommittee on Contracting Oversight,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 2:03 p.m., in 
room 342, Dirksen Senate Office Building, Hon. Claire 
McCaskill, Chairman of the Subcommittee, presiding.
    Present: Senators McCaskill, Kirk and Bennett.

           OPENING STATEMENT OF SENATOR MCCASKILL\1\

    Senator McCaskill. Thank you all very much for being here, 
and this hearing will come to order.
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator McCaskill appears in the 
Appendix on page 35.
---------------------------------------------------------------------------
    I have a great opening statement that an incredibly 
competent and conscientious staff has helped me with, but I 
think instead of delivering it I think I will make it part of 
the record. I think I will tell a story.
    Fresh out of auditing in the State of Missouri, having run 
a government auditing agency for a number of years, I came to 
the U.S. Senate and was honored to get a seat on the Armed 
Services Committee. So, as I began to learn about the conflict 
in Iraq, I kept coming back to contracting because the auditor 
in me was surprised at some of the things I began learning 
about contracting in Iraq.
    So I went to Iraq, and the purpose of my trip was not to do 
what many Senators do when they go to Iraq, which is to look at 
the conflict through the prism of the military mission. I went 
specifically for the reason to oversee contracting and what was 
going on with contracting. So I spent, frankly, more time in 
Kuwait, which will not surprise some of you, than I actually 
spent in the theater.
    And I had many different things that happened on that trip 
that are seared into my hard drive--realizations about the lack 
of coordination and integration between various pots of money, 
amazing lapses in scoping contracts, in making contracts 
definite enough that they could be enforced, particularly from 
any kind of accountability standpoint and the government 
getting their money back when it had been abused and misused by 
contractors. I will, though, tell you one of many stories I 
could tell you because I think it is so illustrative of how bad 
the problem was in Iraq.
    We were sitting in a room where the Logistics Civil 
Augmentation Program (LOGCAP) was administered in Iraq. This 
was not in Kuwait. As so often the case, I say this with 
affection, when you are getting a briefing from the military, 
there was a PowerPoint. In fact, I think there must be a law 
somewhere that you are not allowed to get a briefing from the 
military without a PowerPoint.
    There was a PowerPoint, and there were a lot of important 
people in the room. There were command staff. There were lots 
of people that clearly had the military command authority in 
the area, but they turned over the discussion of the LOGCAP 
contract to a woman in the room, clearly a civilian and maybe 
the most knowledgeable about the LOGCAP contract in the room. 
And I think they turned it over to her because she was the one 
that was trying to make the trains run on time and knew a lot 
about it.
    She put up a PowerPoint showing the LOGCAP contract by 
year. As many of you remember, the first year, the LOGCAP 
contract wildly exceeded the estimates by billions of dollars. 
I think, I cannot remember now, and I have not gone back to 
look, but my recollection is the first year was maybe $17 or 
$18 billion on LOGCAP, and the original estimate was less than 
a billion.
    Then she showed a bar graph of the years, and you saw a big 
drop in the LOGCAP contract after the first year to the next 
year, and then it kind of leveled out and was still a huge 
amount of money.
    So she got through the presentation, and you could tell she 
was kind of nervous, and so I was trying to help her. Right? I 
was trying to be kind. I know sometimes in this hearing room 
and others, it does not appear that I am kind.
    I was trying to be kind to her, and I said to her, well, 
you left out what you all did to bring that contract down so 
much after the first year.
    There was an awkward, uncomfortable silence in the room as 
everyone kind of shifted and looked at each other. And, with 
God as my witness, she looked at me across that table and said, 
it was a fluke.
    That is the best example I can give you of several examples 
of how contracting went wild in Iraq.
    So here we are in Afghanistan, and I know many of you, 
because you reference it in your testimony, have gone through 
SIGAR's book of hard lessons. I know many of you understand the 
challenges now that we face in contracting.
    But one thing is clear; we will have more contractors in 
Afghanistan than we will have men and women in uniform. There 
is no doubt about that.
    We will spend. A significant chunk of the tens of billions 
of dollars in Afghanistan will be spent through contractors. So 
the purpose of this hearing, and it will be the first of 
several hearings we will have, is to begin to get an overview 
as to how the ground has changed as it relates to contracting 
during a contingency.
    How is the coordination occurring, if it is? How integrated 
is the effort?
    Most importantly, is the mission now saturated with the 
knowledge that if we are going to have contractors do supply 
lines, make breakfast, do the laundry, build not only the 
buildings for our men and women in uniform but also buildings 
and roads for the people of Afghanistan, do the taxpayers have 
any better shot of getting value for their money this time than 
they did in Iraq? I certainly hope they do.
    And I want to thank all of you for being here today, and 
look forward to your testimony, and a work in progress as we 
begin to try to get a real handle on how we spend money in a 
contingency, to make sure that we do not waste the billions of 
dollars that went up in smoke in Iraq.
    Senator McCaskill. I will turn it over to you, Senator 
Bennett, for your statement.

            OPENING STATEMENT OF SENATOR BENNETT \1\

    Senator Bennett. Thank you very much, Madam Chairman, and I 
am interested in your story.
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Bennett appears in the 
Appendix on page 37.
---------------------------------------------------------------------------
    I have a very quick story about when I went to Iraq and was 
being shown in Kuwait--as you rightly put it, that is where 
everything jumps off--the transportation program of how they 
were shipping material from Kuwait to Iraq. A very competent 
lieutenant colonel was in charge of this, and he was obviously 
very much on top of the whole thing.
    I asked him, are you regular Army or Reserve? And he said, 
I am Reserve.
    I said, what do you do in civilian life? And he said, I am 
a distribution manager for Wal-Mart.
    I decided, well, for once, the Army has the right joint of 
the civilian experience and the military assignment.
    That may be a jumping-off to pick up on where you have led 
us with your opening statement. The challenge in Afghanistan 
where, as you have correctly noticed, mentioned, we have as 
many contractors and contracting personnel as we have military 
personnel, and that ratio is going to stay the same and in fact 
we may end up with more contracting personnel than we have 
military personnel.
    They are both engaged in exactly the same thing, which is a 
counterinsurgency kind of battle which means the contractor 
cannot sit back and say, well, I have done my job, but I am not 
engaged in the counterinsurgency because the way we deal with 
counterinsurgency, to take the slogan of the Iraq surge, is 
that you control it, then you hold it, and then you build. The 
contractor is very much involved in the holding and the 
building, and must work hand in glove with the military, and 
cannot have its own separate command and control system and its 
own separate management plan without being completely 
integrated in this kind of circumstance.
    It is not your traditional war where the military does all 
of the warfighting and the contractor simply fills in the back 
functions. So I agree with you that you have described this 
properly.
    Now I am encouraged by the initiatives, some of the things 
we have learned in Iraq. I agree with you, there are a lot of 
lessons in Iraq that we need to learn that maybe we have not.
    But the Commander's Emergency Response Program that allows 
the military to, if something needs to be done quickly, put out 
the money to do it quickly--do we make sure that we do not 
cross the line there of having the commanders do something that 
the U.S. Agency for International Development (USAID) and the 
State Department should be doing, in the name of the 
Commander's Emergency Response Program? That is another part of 
this where there needs to be some coordination.
    So I guess basically what I am saying is when the 
government agencies outsource the work that they want 
performed, they cannot outsource the results, and that is too 
often what happens. You outsource the work, and you say, well, 
that is the contractor's responsibility, and we do not have to 
oversee the results.
    Everything has to be properly coordinated, and the work, 
the challenge that we have from our witness panel is to see 
that the military, the State Department, USAID, and the 
contractors are all meshed together for the best result there.
    I believe in contracting. I think it is a great improvement 
over the old military where everything had to be done by a 
soldier somewhere, even if it had nothing whatever to do with 
the military mission. But, as we move to that good idea, the 
challenge of coordinating all of that becomes a very serious 
one, and it is very laudatory that you are holding this hearing 
to try to probe into how that is done.
    Senator McCaskill. Thank you, Senator Bennett.
    Let me introduce the witnesses. We have with us today 
William Campbell, who is the Director of Operations for the 
Under Secretary of Defense, the Comptroller, at the U.S. 
Department of Defense (DOD) where in addition to oversight of 
operation and maintenance accounts, he has responsibility for 
the development of the Overseas Contingency Operations Request. 
Previously, Mr. Campbell served as Acting Deputy Assistant 
Secretary of the Army for Budget.
    We have Ed Harrington, who is the Deputy Assistant 
Secretary of the Army for Procurement. He is a former senior 
U.S. Army officer with more than 28 years of experience in 
weapons acquisition and contracting. He also served as Director 
of the Defense Contract Management Agency from 2001 to 2003.
    Charles North is a Senior Deputy Director of the 
Afghanistan-Pakistan Task Force at the U.S. Agency for 
International Development. Mr. North has been with USAID since 
1987. He previously served as the Director of USAID's Policy 
Office and the Regional Director for the Western Hemisphere in 
the Office of the Director of Foreign Assistance in the State 
Department.
    Daniel Feldman is the Deputy Special Representative for 
Afghanistan and Pakistan at the U.S. Department of State. Mr. 
Feldman is one of two deputies to Ambassador Holbrooke, the 
Special Representative for Afghanistan and Pakistan. He 
previously served as Director of the Multilateral and 
Humanitarian Affairs at the National Security Council during 
the Clinton Administration and was the Counsel and 
Communications Advisor on this Committee, the Senate Homeland 
Security and Governmental Affairs Committee. Most recently, Mr. 
Feldman was a partner at Foley and Hoag.
    Jeff Parsons is Executive Director of the Army Contracting 
Command. Mr. Parsons also serves as the principal advisor to 
the Commanding General of the Army Materiel Command on 
Contracting Matters and as the Army Materiel Command Career 
Program manager for the Contracting and Acquisition Career 
Program.
    It is the custom of this Subcommittee to swear in all 
witnesses that appear before us. So, if you do not mind, I 
would like to ask you to stand.
    Do you all swear that the testimony that you will give 
before this Subcommittee will be the truth, the whole truth and 
nothing but the truth, so help you, God?
    Colonel Campbell. I do.
    Mr. Harrington. I do.
    Mr. North. I do.
    Mr. Feldman. I do.
    Mr. Parsons. I do.
    Senator McCaskill. Thank you. Let the record reflect that 
the witnesses have all answered in the affirmative.
    We will be using a timing system today. We would ask that 
your oral testimony be no more than 5 minutes, and we will put 
your entire written testimony as part of the record.
    Once again, I want to thank all of you for your service to 
your Country. None of you are in these jobs because you are 
making the big bucks. You are obviously working in the jobs you 
are working because you care about your Country and want to 
contribute. So let's start with that, and we will begin with 
Mr. Campbell.

     TESTIMONY OF WILLIAM H. CAMPBELL, III,\1\ DIRECTOR OF 
     OPERATIONS, OFFICE OF THE UNDER SECRETARY OF DEFENSE 
   (COMPTROLLER), DEPARTMENT OF THE ARMY, U.S. DEPARTMENT OF 
                            DEFENSE

    Colonel Campbell. Thank you, Chairman McCaskill and Senator 
Bennett. I appreciate the opportunity to explain from a budget 
perspective the actions of the Department of Defense to improve 
the oversight of reconstruction projects in Afghanistan. My 
remarks in particular, though, will focus on the Commander's 
Emergency Response Program (CERP) program.
---------------------------------------------------------------------------
    \1\ The prepared statement of Colonel Campbell appears in the 
Appendix on page 39.
---------------------------------------------------------------------------
    As you may know, CERP began as a U.S.-funded program in 
fiscal year 2004 and is designed to enable local commanders in 
Iraq and Afghanistan to respond to urgent humanitarian relief 
and reconstruction requirements within their area of 
responsibility. It is a valuable tool that commanders use to 
fund projects that will immediately assist the local 
populations.
    In testimony before the Senate Armed Services Committee 
last April, General Petraeus called CERP ``a vital 
counterinsurgency tool for our commanders in Afghanistan and 
Iraq.'' He added, ``Small CERP projects can be the most 
efficient and effective means to address a local community's 
needs, and where security is lacking it is often the only 
immediate means for addressing these needs.''
    Since 2004, DOD has obligated approximately $1.6 billion 
for CERP programs in Afghanistan. That includes about $551 
million in fiscal year 2009. Of those projects, about 2,300 
projects in 2009, two-thirds of those funds were spent on 
transportation projects, but about 90 percent of all the 
projects were valued at $500,000 or less.
    Now recognition of the program's effectiveness and the 
value, Congress has authorized for fiscal year 2010 about $1.3 
billion for the CERP program, and we understand will 
appropriate $1.2 billion for the program. CENTCOM plans to 
allocate the bulk of those funds to operations in Afghanistan.
    Now, by its nature, CERP involves decentralized 
implementation by local commanders in theater. Its hallmarks 
are responsiveness to urgent needs and flexibility.
    And we have heard the concerns expressed by Members of 
Congress here today as well. We have studied the recent 
findings of audit reports, and we have examined lessons learned 
from previous deployments. And we have taken steps within the 
Department, within the Army, and within CENTCOM theater to 
improve the oversight of the program, all with a goal of not 
diminishing the key element of flexibility and responsiveness 
this program provides to the commanders in the field.
    Within DOD, the Office of the Comptroller provides guidance 
for the program though the Financial Management Regulation. 
These regulations went through a significant update in June and 
December 2008, and this guidance is then supplemented by field 
level instructions and training. All guidance is continually 
updated to respond to changing operational conditions.
    To improve oversight of the program, the Army has enhanced 
CERP training for four key positions: The project manager, the 
project purchasing officer, the paying agent, and the unit 
commander. The first three form a triad of expertise that every 
project must have. Unit commanders are vital to ensure the 
appropriate projects are identified. Integrated training and 
detailed procedures provide the checks and balances necessary 
in every project.
    In addition, in Afghanistan, the U.S. Agency for 
International Development now participates as a voting member 
on the CERP review board at the command level. Their 
participation prevents duplication of effort and helps identify 
any problems with sustainment of projects nominated by the CERP 
program.
    The time, energy, and ingenuity that people have devoted to 
improving CERP reflects both a desire to spend taxpayers' money 
wisely and to maintain a program that has proven to be a 
valuable tool in the fight in Afghanistan and Iraq.
    DOD recognizes that more improvements can be made in the 
management of CERP, to maintain both the flexibility and the 
accountability of this essential field-driven program. To that 
end, the Deputy Secretary will lead a review of CERP to 
determine how best to enhance the Department's guidance, 
management and oversight, and this report will be completed and 
made available to the Congress this spring.
    Let me again thank you for the tremendous support of the 
Congress to this program, and I will be glad to address any 
questions on CERP. Thank you.
    Senator McCaskill. Mr. Harrington.

    TESTIMONY OF EDWARD M. HARRINGTON,\1\ DEPUTY ASSISTANT 
SECRETARY OF THE ARMY FOR PROCUREMENT, DEPARTMENT OF THE ARMY, 
                   U.S. DEPARTMENT OF DEFENSE

    Mr. Harrington. Chairman McCaskill, Senator Bennett, 
distinguished Members of the Subcommittee on Contracting 
Oversight, thank you for this opportunity to discuss the Army's 
contracting operations in Afghanistan where we strive to be 
agile, expeditionary, and responsive to our warfighters, while 
ensuring the proper stewardship of taxpayer dollars.
---------------------------------------------------------------------------
    \1\ The joint prepared statement of Mr. Harrington and Mr. Parsons 
appears in the Appendix on page 41.
---------------------------------------------------------------------------
    With me today is Jeff Parsons, Executive Director of the 
Army Contracting Command. We have a joint written statement 
that I respectfully request be made a part of the record for 
today's hearing.
    We thank the Members of this Subcommittee and the Members 
of Congress as we work to rebuild the acquisition and 
contracting workforce to execute the increasing workload in the 
number of contracted actions and the contracted dollars, which 
in the last 15 years has increased in excess of 500 percent. 
With your help and the help of the Office of the Secretary of 
Defense, we are working aggressively to rebuild our workforce 
numbers and restore their skills to deal with the growing 
complexities of contracting.
    Along with the additional workforce personnel, we thank you 
for authorizing five additional general officer billets for 
acquisition. Our progress in filling these positions is 
outlined in our written statement.
    It is important to note, however, that Major General 
Promotable Bill Phillips will soon relinquish command of the 
Joint Contracting Command-Iraq/Afghanistan (JCC-I/A), and 
become the Principal Military Deputy to our Assistant Secretary 
of the Army for Acquisition, Logistics and Technology. He will 
also become our Director for Acquisition Career Management. 
Both of these require a three-star billet.
    Brigadier General Camille Nichols is slated to take command 
of JCC-I/A later this month, replacing General Phillips.
    General Phillips is the first contracting general officer 
to be the Principal Military Deputy. We feel this is a strong 
example to the Army's commitment to contracting.
    The JCC-I/A is authorized to contract for goods and 
services, to include supporting the Defense Department's 
Commander's Emergency Response Program. The JCC-I/A mission 
does not include reconstruction of Afghanistan because that 
mission is assigned to the U.S. Agency for International 
Development.
    JCC-I/A, however, does have a direct role in developing the 
economy of Afghanistan. For example, through the Afghan First 
program, JCC-I/A has awarded roughly $1.8 billion to Afghani 
business since October 1, 2008. Of note, JCC-I/A awarded more 
than $39 million to Afghani women-owned businesses.
    In support of the President's decision to send an 
additional 30,000 U.S. troops to Afghanistan, General Phillips 
and his staff are conducting a mission analysis in coordination 
with CENTCOM, the Joint Staff and our Army staff, to determine 
the resources, personnel and locations where contractor support 
will be required for this surge. We are engaged with JCC-I/A on 
a daily basis to provide that direct support to them.
    Earlier this year, we established the Joint Theater 
Contracting Support Office within my office at the Pentagon to 
ensure JCC-I/A has fully funded, manned, and supported 
resources in this contingency contracting mission. As 
additional troops deploy, this mission takes on even greater 
importance.
    We are also continually improving our processes to leverage 
stateside contracting capabilities to augment JCC-I/A's. As an 
example, the Army Contracting Command established a Reach-Back 
Contracting Office as a center of excellence at the Rock Island 
Contracting Center in Illinois. Through this center, we are 
working with JCC-I/A and the Army Contracting Command to 
identify requirements in theater that can be performed at Rock 
Island. We have also initiated coordination with the Air Force 
to provide a team of its contracting officers to augment Rock 
Island's reach-back capability.
    In addition, to ease the workload in theater, the Army has 
established a JCC-I/A specific Contract Closeout Task Force in 
San Antonio, now in the process of closing out 80,000 
contracts.
    Thank you very much, ma'am. This concludes my opening 
remarks. Mr. Parsons will now discuss the Logistics Civil 
Augmentation Program, after which we look forward to your 
questions.
    Senator McCaskill. Mr. Parsons, would you like to go right 
after Mr. Harrington?

   TESTIMONY OF JEFFREY PARSONS,\1\ EXECUTIVE DIRECTOR, ARMY 
CONTRACTING COMMAND, DEPARTMENT OF THE ARMY, U.S. DEPARTMENT OF 
                            DEFENSE

    Mr. Parsons. Thank you, Chairman McCaskill, Senator 
Bennett, and distinguished Members of the Subcommittee. Thank 
you for the opportunity to provide information on the status of 
the LOGCAP contracts in Afghanistan, including the continuing 
transition from LOGCAP III which relies on a single source 
company, to the LOGCAP IV which uses three different 
performance contractors. Both of these contingency contracts 
enable the Army to provide critical support to buoy troops 
serving on the front lines of Afghanistan.
---------------------------------------------------------------------------
    \1\ The joint prepared statement of Mr. Parsons and Mr. Harrington 
appears in the Appendix on page 41.
---------------------------------------------------------------------------
    The highly complex and challenging LOGCAP program is 
accomplished by a team of forward deployed and rear echelon 
Department of the Army civilians, Army Reserve officers and 
noncommissioned officers in the LOGCAP Support Unit, and the 
officers, NCOs and civilian employees of the Defense Contract 
Management Agency (DCMA). These hardworking, highly skilled 
people make up Team LOGCAP and provide contract oversight of 
the three performance contractors: DynCorp, Fluor, and KBR.
    The Defense Contract Audit Agency also provides forward 
support and is a key partner in our oversight functions. Team 
LOGCAP is further supported by the men and women serving here 
in the United States with the U.S. Army Materiel Command and 
its subordinate commands, the U.S. Army Contracting Command and 
the U.S. Army Sustainment Command.
    Today, I plan to provide you a status update and answer 
your questions on what we are doing to support deployed forces 
through the LOGCAP contracts in Afghanistan. I thank you for 
your continued interest in LOGCAP and the contingency 
contracting process.
    The Army Contracting command is committed to excellence in 
all contracting, including these very complex and critical 
LOGCAP contracts. We continue to collect lessons learned and 
make improvements and adjustments along the way to ensure 
mission success and protection of the interests of the U.S. 
Government and the taxpayer. It is my honor to lead the 
contracting team in achievement of these goals.
    Thank you for inviting me to speak with you today. This 
concludes my opening remarks.
    Senator McCaskill. Thank you, Mr. Parsons. Mr. North.

    TESTIMONY OF CHARLES NORTH,\1\ SENIOR DEPUTY DIRECTOR, 
AFGHANISTAN-PAKISTAN TASK FORCE, U.S. AGENCY FOR INTERNATIONAL 
                          DEVELOPMENT

    Mr. North. Chairman McCaskill, Ranking Member Bennett, 
Senator Kirk, and other Members of the Subcommittee, thank you 
for your invitation to testify before this Subcommittee on the 
topic of Afghan reconstruction and development contracts. I 
will keep my remarks brief and ask that my full written 
statement be submitted as part of the official record.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. North appears in the Appendix on 
page 55.
---------------------------------------------------------------------------
    Within the President's Afghanistan-Pakistan strategy, 
USAID's mission in Afghanistan is to support Afghan-led 
development, build Afghan capacity at the local and national 
levels and strive for Afghan sustainability.
    As you know, Afghanistan is a high-risk environment in 
which corruption and extortion pose significant risk. As a 
result, it would be impossible for me or for USAID, under these 
circumstances, to declare unequivocally that wrongdoing will 
never occur. At the same time, though, it is important to 
underscore that we have in place well-designed systems and 
practices to minimize opportunities for misconduct and 
misappropriation of funds.
    Based on these requirements, we aggressively manage and 
monitor performance, review and improve our systems and 
practices, and promptly respond to all allegations. 
Furthermore, we work closely with the USAID Inspector General 
as well as the Special Inspector General for Afghanistan 
Reconstruction and the Government Accountability Office.
    To best respond to President Obama's strategy, USAID has 
become an integral component in a whole-of-government unity of 
effort in Afghanistan. All our planning and operations are 
streamlined and coordinated with the various U.S. Government 
agencies.
    On the ground, we work under the leadership of Ambassador 
Eikenberry and Ambassador Wayne. At the Provincial 
Reconstruction Teams and in the Regional Command Offices, our 
field officers work daily with our military and interagency 
civilian counterparts to implement the U.S. Government's 
mission in Afghanistan. The PRTs serve as additional eyes and 
ears on the ground to further improve our program effectiveness 
and to flag potential issues.
    USAID's U.S. and Afghan staff are central to program 
implementation. Our on-the-ground presence has doubled since 
January and continues to grow. As of December 7, 2009, USAID/
Afghanistan has 180 American staff in-country. USAID expects to 
have a total of 333 Americans on the ground early next year. We 
also have 136 Afghans and 16 third country nationals on our 
staff in Afghanistan.
    USAID currently has 10 contracting officers who focus on 
Afghanistan and more than 57 contracting officer's technical 
representatives on our staff in-country as well.
    Our staff operate within a new initiative called Afghan 
First which others have referred to. The guiding principle is 
that Afghans lead, not follow, in their path to a secure and 
economically viable country. The program strives to buy Afghan 
products, use Afghan-owned firms for procurement and to use 
Afghan specialists whenever it is possible in order to build 
capacity in Afghanistan.
    In conclusion, Afghanistan is hungry for development. The 
United States, in coordination with international partners, is 
providing jobs for the jobless, a voice to the voiceless, food 
for the hungry and hope for the hopeless.
    We know it will be difficult. We remain optimistic even 
during weeks like this when five members of our team from 
Development Alternatives Incorporated were killed by a suicide 
bomber. But these principles--extending monitoring and 
oversight, a whole-of-government approach, a skilled core of 
civilian development specialists, and placing Afghans first--
will make a difference for the people of Afghanistan.
    Thank you.
    Senator McCaskill. Thank you, Mr. North, and obviously we 
continuously stand in awe of people who lose their lives in 
this effort. Whether they are civilians from State Department 
or a part of our military, it is obviously beyond bravery that 
people are willing to stand up and go into a contingency like 
that.
    Especially, in some ways, I do not think civilians get 
enough pats on the back. We love our military and their 
bravery, but I think we forget sometimes that there are a lot 
of brave people who are stepping forward that do not wear a 
uniform, that are in harm's way.
    Mr. Feldman, please proceed.

       TESTIMONY OF DANIEL F. FELDMAN,\1\ DEPUTY SPECIAL 
REPRESENTATIVE FOR AFGHANISTAN AND PAKISTAN, U.S. DEPARTMENT OF 
                             STATE

    Mr. Feldman. Chairman McCaskill, Senator Bennett, and 
Senator Kirk, thank you for your invitation to appear before 
the Subcommittee to discuss our efforts to enhance oversight 
and accountability for development and reconstruction 
contracting in Afghanistan.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Feldman appears in the Appendix 
on page 63.
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    And, as a former staffer on this Committee, it is an honor 
and a unique experience to be back in this hearing room, but on 
this side of the table.
    Senator McCaskill. We cannot wait. [Laughter.]
    Mr. Feldman. As you know, this is a complex topic with many 
agencies owning various aspects of it. The State Department's 
Office of the Special Representative for Afghanistan and 
Pakistan has a role in formulating broader policy and then in 
reviewing and approving contracts. While our embassy in Kabul 
and our USAID colleagues can speak more directly to the 
challenges related to implementation, yet other colleagues can 
speak more closely to the situation in Afghanistan as it 
compares to Iraq.
    As Secretary Clinton noted in her recent appearance before 
the Senate Foreign Relations Committee, the Obama 
Administration inherited an underresourced civilian effort in 
Afghanistan. As a result, efforts since 2001 have fallen short 
of expectations.
    Over the past 10 months, we have conducted a broader 
review, not only of our assistance objectives, but also how we 
go about delivering our assistance programs. The result of this 
review is a new, more focused and effective assistance effort 
aligned with our core goal of disrupting, dismantling and 
defeating al-Qaeda. Additionally, our assistance is 
increasingly implemented in partnership with the Afghan 
government and local Afghan implementing partners.
    While we have not resolved all the problems that we 
uncovered, I believe we now have a more robust system of 
review, management and oversight in place that will deliver 
improved results over the next 12 to 18 months. Let me briefly 
outline a few aspects of our new approach.
    Our civilian assistance in Afghanistan aims to build the 
capacity of key Afghan government institutions to withstand and 
diminish the threat posed by extremism. Short-term assistance 
aims to deny the insurgency foot soldiers and popular support 
by focusing on licit job creation, especially in the 
agricultural sector, and improving basic service delivery at 
the national, provincial, and local levels. Long-term 
reconstruction efforts aim to provide a foundation for 
sustainable economic growth.
    To achieve these goals and maximize the effectiveness of 
our assistance, we have pursued four discrete topics or 
categories: One, smaller, more flexible contracts; two, 
decentralization; three, increased direct assistance; and four, 
improved accountability and oversight.
    On smaller, more flexible contracts, we are shifting away 
from large U.S.-based contracts to smaller, more flexible 
reconstruction contracts with fewer sub-grants and sub-
contracts that enable greater on the ground oversight.
    The premise behind this flexibility is simple. In a dynamic 
conflict environment like Afghanistan, we need to be able to 
adapt our programs as conditions change on the ground. These 
smaller contracts and grants will be managed by U.S. officials 
in the field, closer to the actual activity implementation, 
making it easier for those same officials to direct, monitor 
and oversee projects to ensure the proper use of taxpayers' 
funds.
    On decentralization, USAID officials posted to region 
civilian-military platforms bring with them funding and 
flexible authorities to enhance the responsiveness of programs 
and better coordinate local Afghan priorities. We found that 
not only does a decentralized program platform enhance 
development activities at the provincial and district level, 
but that it is also more cost effective.
    On increased direct assistance, we are also decreasing our 
reliance on large international contractors and building Afghan 
institutional capacity by increasing our direct assistance 
through Afghan government mechanisms in consultation with 
Congress. This includes increased U.S. contributions to the 
World Bank administered Afghan Reconstruction Trust Fund, which 
includes the National Solidarity Program. To receive direct 
assistance, Afghan ministries must be certified as meeting 
accountability and transparency requirements.
    Support to the Afghan Civil Service Commission increases 
the professional skills and leadership within the Afghan 
government, enabling Afghans to increasingly assume 
responsibility for their country's economic development. Our 
goal is to have up to 40 percent of U.S. assistance delivered 
through local entities by December, 2010, and to certify six of 
the core Afghan ministries in the same time period.
    On improved accountability and oversight, at the start of 
our contracting review, Ambassador Holbrooke and Deputy 
Secretary Lew reviewed individually every major contract to 
ensure that they were aligned with the strategy that the 
President had announced in March 2009. They focused on ensuring 
that our new contracts introduced mechanisms to improve 
performance and significantly decrease the overall percent of 
multiyear contracts.
    While Washington remains closely involved in the contract 
review process, Ambassador Tony Wayne, who you have previously 
heard about, our Coordinating Director for Development and 
Economic Assistance in Kabul, now has day to day responsibility 
for reviewing each contract to ensure adherence to our national 
security goals.
    Recognizing that the substantial international assistance 
to Afghanistan has the potential to contribute to corruption, 
we have deployed a sizeable number of new direct hire 
contracting personnel to enhance oversight of programs, as well 
as additional technical staff in the field to monitor program 
implementation and impact.
    The Special Inspector General for Afghanistan 
Reconstruction is Congress's eyes and ears on the ground in 
Afghanistan, and we support its role in evaluating internal 
controls and implementation of assistance programs.
    In conclusion, the Secretary and all of us who work on 
Afghanistan believe we have a duty to ensure that the resources 
provided by the Congress and the American people are used for 
the purposes intended and approved by the Congress. The reforms 
that we have implemented will, over time, decrease overhead and 
related costs for assistance programs, increasing the amount 
per dollar of U.S. assistance, directly benefiting the Afghan 
people and the Afghan institutions.
    Afghanistan is a complex, dynamic, and difficult 
operational environment, and that constrains our ability to 
sometimes provide the high level of oversight of projects that 
we would otherwise require. But we are making every effort to 
ensure that the required operational flexibility is matched 
with the highest dedication to accountability, and we are 
committed to taking the necessary corrective actions when a 
problem occurs.
    Thank you.
    Senator McCaskill. Thank you, Mr. Feldman.
    We will each do 5-minute rounds and do as many rounds as we 
need to do in order for everyone to cover their questions 
today.
    Let me start out by asking a question that probably 
individually none of you can answer, but it might be one of 
those moments for collaboration that would be important. Can 
somebody give me a number in terms of how much we are spending 
on contracts in Afghanistan, what you would guess the number is 
going to be or ballpark number for either this year or next 
year?
    Can anybody do that?
    Maybe let's do it by stovepipe then. Are there significant 
contractual obligations other than CERP and USAID? Am I missing 
a significant outlay of contracts other than CERP and USAID?
    Mr. Harrington. Ma'am, from an Army perspective, both the 
Joint Contracting Command-Iraq/Afghanistan will contract for 
all of the goods and services.
    Senator McCaskill. Oh, LOGCAP. I left out LOGCAP. The 
three: LOGCAP, CERP and USAID.
    Mr. Harrington. Yes, ma'am, and the Joint Contracting 
Command-Iraq/Afghanistan contracts for specific goods and 
services for those requirements outside the bounds of LOGCAP 
that are instant to the standing-up of a forward operating base 
command outpost, those types.
    Senator McCaskill. OK.
    Mr. Harrington. Host nation trucking, air support, services 
such as that.
    Senator McCaskill. OK. So we have CERP. We have LOGCAP. I 
am going to refer to what you just said as the other.
    Mr. Harrington. Yes, ma'am.
    Senator McCaskill. And USAID.
    Anything else that I have missed, any big pots of money 
somewhere that are being spent that I have missed?
    Mr. Feldman.
    Mr. Feldman. Yes, the State Department altogether, we are 
in a little bit of a state of flux with one particularly large 
contract. One of our largest contracts under INL, which is for 
police training, that is in the process of being transferred 
back to DOD. That was about $450 million.
    If you take that out, and that should probably be back at 
DOD in the first quarter of next year, if you take that out, we 
have about $900 million of programming. The majority of it is 
INL for counter-narcotics, for justice programs, for 
corrections programs, for a range of other things, and then 
there is some smaller contracts for security personnel and 
embassy security. But altogether, it comes to about $900 
million. It seems with taking out that police piece, under 
1,500 contractors altogether.
    Senator McCaskill. What about LOGCAP? How big is LOGCAP, 
Mr. Parsons, in Afghanistan?
    Mr. Parsons. Ma'am, the current LOGCAP III contract in 
Afghanistan is probably in the neighborhood of $1.8 to $2 
billion, and the recent awards that we made to both Fluor and 
to DynCorp will well exceed over a billion dollars as well.
    I would also like to add that I know we are doing quite a 
bit of contracting for the Combined Security Transition 
Command-Afghanistan (CSTC-A), where we are buying a lot of 
equipment that is being provided to the Afghan army and the 
Afghan police, plus some of the training support contracts that 
we do for CSTC-A. Those, I know are averaging probably a total 
of about a billion dollars a year as well, if not more.
    Senator McCaskill. OK, and that is not in other? That is 
not in Mr. Harrington's other? That is an additional?
    Mr. Harrington. Yes, ma'am.
    Mr. Parsons. Yes.
    Senator McCaskill. OK. So now tell me again what that is 
called.
    Mr. Parsons. The Combined Security Transition Command-
Afghanistan (CSTC-A).
    Senator McCaskill. CSTC-A.
    Mr. Parsons. Right.
    Senator McCaskill. You guys kill me. [Laughter.]
    Mr. Parsons. Lieutenant General Caldwell.
    Senator McCaskill. You have never found an acronym you did 
not love.
    Colonel Campbell. Actually, Senator, the funds that they 
spend are out of the Afghan Security Forces Fund, which is a 
separate account that is appropriated to DOD.
    Senator McCaskill. OK. What I really need you all to do, we 
are going to try to do a chart after this hearing as to where 
the money is being spent because what I want to make sure I 
know at this point in time is who is responsible for each pot 
of money. That is one of the things that made my eyes cross in 
Iraq. It was just not clear who was the one that was going to 
be accountable when things went badly.
    Let me ask this because one of the things that happened in 
Iraq was you had Army Corps of Engineers that kind of got 
layered in there. And it was interesting to me because I would 
go in Iraq to talk to the Army Corps of Engineers, and I would 
hear one set of facts. Then I would move to somewhere else, and 
I would hear a completely different set of facts. So where is 
Army Corps of Engineers in here, if at all?
    Mr. Harrington. Ma'am, I was going to say the Army Corps of 
Engineers is the other component of this, and I will take a 
question for the record to get an accurate dollar count for 
you. Some of this is still slightly unknown because 
requirements are going to be generated throughout this 
timeframe, but we will get the accurate figures for you for the 
Army Corps of Engineers.
    Senator McCaskill. What will the Army Corps of Engineers be 
doing?
    Mr. Harrington. Obviously, ma'am, primarily construction 
projects, permanent building type construction projects.
    Senator McCaskill. For the military or for the Afghan 
people, because they were doing reconstruction in Iraq?
    Mr. Harrington. Yes, ma'am, essentially for both.
    Senator McCaskill. And their money is going to come from 
where? The Army Corps money is coming from your money or is it 
coming from State's money?
    Mr. Harrington. I do not know, ma'am. I will find out.
    Senator McCaskill. OK.
    Colonel Campbell. Ma'am, I believe actually the Army Corps 
of Engineers----
    Senator McCaskill. I appreciate your honesty that you do 
not know, but it is a problem.
    Mr. Harrington. Yes, ma'am.
    Colonel Campbell. My understanding is the Army Corps of 
Engineers will oversee large projects, and that is probably why 
you would get different facts from Corps of Engineers than you 
would from an Army command because the Army is going to be 
executing funds appropriated to the Army, funds appropriated in 
the case of Iraq to Iraq Security Forces funds. There could 
also be some MILCON projects that go directly through Army 
Corps of Engineers and not through the commands in theater. So 
I can understand why you would get different facts in theater.
    Senator McCaskill. And that is how things get lost in the 
shuffle.
    Colonel Campbell. Right.
    Senator McCaskill. You know CERP is doing big stuff now. 
And I am about out of time for this round. So I am going to go 
ahead and turn it over to Senator Bennett. We will come back to 
that, but CERP is no longer just fixing broken glass on store 
fronts.
    Colonel Campbell. Right.
    Senator McCaskill. CERP is doing large projects. The 
question is are they contracting with people to do that or is 
Army Corps going to come in and do that? That is where I am not 
clear.
    Has CERP drifted from its initial, what I affectionately 
called, walking-around money? Has it drifted into the category 
of an USAID or an Army Corps reconstruction major project, and 
are we losing expertise in this shuffle? More importantly, are 
we going to get the oversight and the monitoring that we need?
    Thank you, and I will turn it over to Senator Bennett.
    Senator Bennett. Thank you very much.
    Following through with what the Chairman has said, I have 
talked about the coordination between the combat units and the 
contractors, and when combat units are in the field they expect 
to have a high degree of situational awareness established 
between operating centers at higher levels of command. This 
means that the tactical maneuvers of one unit do not get messed 
up with the tactical maneuvers of another unit. All right.
    What is the command structure at the local, provincial, and 
national level in Afghanistan to ensure that you have the same 
degree of coordination, or avoidance of duplication if you 
will, that is expected of combat units with respect to 
reconstruction units?
    Mr. Harrington. Senator, within the Central Command, the 
Joint Contracting Command-Iraq/Afghanistan has the 
responsibility for what we call theater business clearance for 
all requirements coming into the Central Command. That is the 
clearinghouse, if you will, for those requirements with respect 
to where our responsibilities lie at, for executing the 
requirements for the warfighting units.
    Outside of that, we do not have a purview of those other 
requirements. But, within that Central Command function, the 
Joint Contracting Command-Iraq/Afghanistan, in coordination 
with LOGCAP, is the central point through which we find ways to 
execute requirements for the warfighters that we support.
    Senator Bennett. All right. Since you have that group in 
place, do you have any information about how often they stumble 
into situations where what is being done in Reconstruction Unit 
A does not properly coordinate with what is being done in Unit 
B, and they exercise their authority to say, OK, straighten 
that out? It is nice to have the thing in place, but you have 
been there for long enough that you can give me some examples 
of how it works?
    Mr. Harrington. Sir, it is the organizational structure in 
terms of executing those requirements at the different 
geographical locations. When a requirement comes in for a 
forward operating base in a certain geographical location, that 
regional contracting center gets that responsibility to execute 
that. If it is a large, more complex requirement, that is when 
we turn it back to the reach-back capability at Rock Island.
    So Joint Contracting Command-Iraq/Afghanistan, the staff 
that supports that, oversees the allocation of those functions 
to award those contracts and has the purview of all of those 
functions coming to it. That is within CENTCOM, though. That is 
our responsibility.
    Senator Bennett. Anyone else have a comment on that?
    Colonel Campbell. Senator, I can tell you, again, I am a 
budget person. I am not one who works out in the field from an 
operational level.
    But on the CERP program, what they have done in 
Afghanistan, and partly from lessons learned in Iraq and even 
going back to Kosovo and Bosnia, they have set up a CERP review 
board. And, as I mentioned in my opening statement, it has a 
USAID representative on there, and that board is at the command 
level. So it is not sort of segregated or dispersed out in the 
field. All those CERP projects come back up to at least a two-
star, if not higher level, command where they can do the kind 
of integration that you are referring to.
    I cannot say that they have everything in there, but they 
do their best to integrate at least with USAID.
    Senator Bennett. There have been reports of friction 
between the State Department and USAID that exacerbated after 
the 2006 merger of USAID into State. I am not asking you to 
tell any tales out of school, but can you give us some 
characterization of the relationship between USAID and the 
State Department?
    Mr. Feldman. I think we should both answer.
    Senator Bennett. Everything is fine?
    Mr. North. Sir, we work very closely with the State 
Department at all levels. Certainly here in Washington, 
Ambassador Holbrooke's staff is an interagency group which 
includes three USAID officers on his staff.
    We have three USAID officers on Ambassador Holbrooke's 
staff to help with that coordination here in Washington. Out in 
Kabul, we work very closely with Ambassador Wayne and 
Ambassador Eikenberry. We have several examples of interagency 
strategies and implementation plans, for example, on 
agriculture, with the U.S. Department of Agriculture and the 
National Guard and how we go forward on implementing 
agricultural programs in Afghanistan.
    When you go out to the provincial level, at the planning 
level there, we have heard USAID does participate in CERP 
decision-making, but it is also interagency effort, not just 
USAID and the military but also with the State Department.
    So it is a close relationship, two different organizations. 
There are areas we continue to work on to improve that 
coordination.
    Senator Bennett. Mr. Feldman, do you have any comment?
    Mr. Feldman. No. I would just say the success of our 
mission would be impossible without a very close working and 
cooperative relationship with USAID, and we feel very lucky to 
have the working relationship that we do with them. It was part 
and parcel of Ambassador Holbrooke's intent when he created his 
office to make it the whole-of-government approach.
    We have detailees from 10 different agencies, but USAID is 
the only one that has three there right now. Actually, DOD also 
has three representatives. So those are far more representated 
than any of the others, and they are extremely well integrated 
into our staff, into all of our planning.
    And I would also amplify the point about Ambassador Tony 
Wayne in the field, who is the Coordinating Director for 
Development and Economic Affairs ever since June. So he 
oversees all U.S. Government non-military assistance, and we 
have created a counterpart also in Pakistan to try to have the 
same sort of coordination. So he directs and supervises a wide 
range of embassy sections, programs, agencies, and there are 15 
national level working groups to coordinate policy 
implementation.
    So, not only do we believe, we have to work towards as 
coordinated an interagency approach as possible to be 
successful.
    Senator Bennett. Thank you.
    Madam Chairman, I have another Subcommittee I have to go 
to. So I am at your mercy. You can do whatever you want by 
unanimous consent. [Laughter.]
    Senator McCaskill. By unanimous consent, I would like us to 
vote on the health care bill by Monday, so I can get home for 
Christmas. Will that work?
    Senator Bennett. Maybe not that?
    Senator McCaskill. I thought I would give it a shot. 
[Laughter.]
    Senator Kirk.
    Senator Kirk. Thank you, Madam Chairman and Senator 
Bennett, for this opportunity. It is a timely hearing, 
obviously.
    We welcome you gentlemen and thank you for your service.
    We are about to spend billions of dollars in the 
construction and counterinsurgency in Afghanistan, a country 
that enjoys a reputation of having a culture of corruption. It 
is sometimes said it is the second most corrupt country in the 
world.
    General McChrystal, when he was here, and he has written 
beforehand that the success of the American operation in 
Afghanistan will largely be measured on how we do--I am 
paraphrasing--by, with and through the Afghanistan government.
    I guess my first question is with that as a background, in 
each of your agencies and departments, are there particular 
procedures, practices and systems that you are going to 
undertake that will give us some assurance, and the American 
taxpayers some assurance, that the money that is going to be 
spent over there will be properly overseen and accountable, so 
that we do not fall into the trap of that culture and find that 
a lot of our taxpayers' dollars are being expended as payola or 
for kickbacks or however you want to describe it?
    Maybe I will start with you, Mr. North, and if others want 
to join in, in terms of what is happening in your respective 
departments and agencies, it would be helpful.
    Mr. North. Thank you. We do recognize the issue of 
corruption is a major concern in Afghanistan, but we are also 
looking increasingly to put more of our resources through the 
government of Afghanistan, but doing it responsibly.
    We have ongoing programs to strengthen the capacity of 
government ministries, not only the personnel, but their 
systems, so that they can bring them up to the standards that 
we require for us to provide direct assistance to the 
government. We signed an agreement with the Ministry of Health 
a little over a year ago for over $200 million, and we have 
since also certified the Ministry of Communications and the 
Ministry of Finance to receive direct financing.
    In addition to continuing to strengthen their systems, we 
have ongoing assessments of other ministries including the 
Ministry of Education, the Ministry of Agriculture and the 
Ministry of Rural Rehabilitation and Development. By going 
through these assessments, we can identify where the weaknesses 
are and support their efforts to strengthen their systems, not 
just to be able to manage our resources, but also to improve 
the overall accountability of Afghan resources for the long 
term.
    So this is very much a part and parcel of what we are 
about. It is strengthening their systems but also working with 
and through the Afghan government.
    Mr. Feldman. I am happy to.
    Senator Kirk. Thank you.
    Mr. Feldman. There are a range of initiatives that we have 
tried to implement since the beginning of this year, to try to 
improve contract oversight and performance, and they fall 
roughly into five broad categories.
    The first is the overarching organizational structure, and, 
as I laid out already, having Ambassador Tony Wayne there 
helped to do that. That position did not exist a year ago. Its 
establishment helped improve the oversight and the interagency 
coordination.
    Second is the actual contracting methods, and the structure 
of these development contracts has changed. So USAID is now 
increasing its use of performance-based one-year contracts 
which give more options for contracting officers who encounter 
poor performance. Contracts are designed with fewer 
subcontracting layers and with more professional supervision, 
so they will hopefully perform better. And, as Mr. North has 
said, we are moving towards Afghan contractors when feasible 
and international contractors that have a strong percentage of 
Afghan personnel. This also includes working with certified 
Afghan ministries.
    The third category is the actual personnel additions. So 
the State Department and USAID are both increasing the number 
of financial analysts, contracting officers, technical 
officers, program officers, who altogether better track the 
flow of money and ensure that contractors are performing more 
according to standards.
    The fourth is the general civilian increases in the field 
at the national and sub-governance levels. We have more than 
doubled and come close to tripling the number of U.S. 
Government civilians deployed to the field this year. The more 
that are there, where the contracts are actually located and 
the projects are happening, the more oversight we can provide.
    And the fifth is the external oversight mechanisms, and 
that is obviously working in close concert and supporting the 
missions of SIGAR, the various inspectors general, the GAO and 
other external reporting mechanisms.
    Then last, what I would say about corruption in particular 
is that this is obviously an issue that is at the core of our 
strategy in combating it in Afghanistan. We have made a very 
robust and consistent case on dealing more aggressively on 
corruption to the Karzai government. It was part of his 
inaugural speech, as we had hoped it would be. He held just 
yesterday the anti-corruption conference. But it is something 
that we and the rest of the international community are going 
to continue to watch very closely.
    There has been a range of suggestions from revitalize the 
anti-corruption commission, to hopefully bring some high level 
prosecutions, if we cannot deal with it at the national level, 
to working at a sub-national, regional governance structure 
where we can hopefully work around corruption if we have to. So 
it is something that is very central to our core mission.
    Senator Kirk. Thank you very much.
    Mr. Parsons. Sir, if I could add just real quickly, one of 
the things that we are doing with our soldiers that are 
becoming contracting officer representatives is we see them as 
kind of the front line on being able to identify bad business 
practices. We are teaching all of them now a block on ethics 
training and the things that they need to look for as they 
perform their duties as a contracting officer representative. 
So I think that will go a long way.
    In fact, I met with the Expeditionary Fraud Investigation 
Unit right before this hearing, this part of the Criminal 
Investigation Division of the Army, and they are increasing 
their presence there as well, in Afghanistan.
    Senator Kirk. Thank you. Madam Chairman, I know my time is 
up, but may I just ask if there are any other statments?
    Senator McCaskill. Absolutely. Take all the time you would 
like, Senator Kirk.
    Senator Kirk. Mr. Campbell or Mr. Harrington?
    Colonel Campbell. Senator Kirk, yes, thank you.
    What I would do is just give you an example which I think 
will get to sort of at the local level issue you are talking 
about. Of course, all CERP money is executed and managed by 
U.S. Government employees or soldiers. In rare exception, 
Coalition Forces can use CERP money.
    One of the things that General McGhee, who is the resource 
manager in CENTCOM, has implemented is moving more towards 
electronic transfer of funds. So, in Iraq, years ago where we 
used to have to essentially just fly in plane loads of cash, 
what you are finding more in Afghanistan is a lot of this money 
is being transferred, one, in local currencies but, two, as an 
electronic fund transfer.
    Of course, once it gets into the hands of the local 
population, it is kind of up to them to deal with, but I think 
that is where State Department's and USAID's more overarching 
efforts will come into play.
    Senator Kirk. Thank you.
    Mr. Harrington. Sir, Army-wide, to reinforce Mr. Parson's 
comments, we are taking a lot more of an active role in 
training our contracting officer's representatives earlier in 
the process and ensuring that they are identified, trained and 
assigned, with certificates, such that when they do arrive in 
theater they are then linked with their contracting officers, 
and they go through a very good briefing on the contractor's 
performance and the contractor's functions.
    That training includes being able to evaluate the 
contractor's performance and provide that relative information 
to the contracting officer. That really culminates in 
ascertaining the deliverable we are supposed to get, in either 
a supply or a product, and then executing a payment, as Mr. 
Campbell notes, electronically, so that we have got a very 
good, succinct process all the way through the payment of the 
contractor.
    Senator Kirk. Thank you.
    Just a final question on this, the notion that has been 
advanced, I think, by President Karzai that the contracting or 
the licensing program be managed or administered through the 
Afghan government, is that something that we should take 
comfort in? Is that notion something that can work out, do you 
think?
    I mean are you confident about that for the same reason 
that obviously this is a great amount of dollars, a very 
important theater?
    In my own view, we are taking a huge bet on success in 
Afghanistan, and part of it obviously is going to be the 
civilian component of it. I am just wondering about the 
licensing program being administered by the Afghan government. 
Is that something that each of you subscribe to as the right 
way to go?
    Mr. Feldman. Ambassador Eikenberry addressed this in his 
recent testimony, and we are fully supportive of that. We do 
think that it would help to provide a certain consistency.
    This came up in part due to the rates that international 
contractors pay compared to rates that Afghans may make, lesser 
rates at this point, if they go into the army or police or 
things, and wanting to make sure that we create the right 
incentives and do not create disincentives for them to join 
security forces, which is in our own long-term interests. This 
was a question that obviously Chairwoman McCaskill asked about. 
So we do see this as one way to help address that, and we would 
strongly favor it.
    Senator Kirk. Thank you very much.
    Madam Chairman, I am also going to have to excuse myself. 
Thank you for your forbearance, and I thank you gentlemen as 
well.
    Senator McCaskill. Thank you, Senator Kirk. We are glad you 
were here.
    Let me start on a little bit drilling down on LOGCAP. You 
know how I feel about LOGCAP III, it is like the movie that 
never ends. I continue to be confused why we are utilizing 
LOGCAP III and not more aggressively transitioning to LOGCAP 
IV.
    Even though we have awarded under LOGCAP IV, it appears to 
me that less than a billion has been funded under LOGCAP IV, 
and LOGCAP III now is totaling $34.4 billion. What is the hold-
up here? Why can we not let loose of the KBR dynasty?
    Mr. Parsons. Well, ma'am, I think we are letting loose of 
that. We have been deliberately moving from LOGCAP III to 
LOGCAP IV. I think as we have testified before and have talked 
with many of the staffers, there was a deliberate process that 
we would move from Kuwait requirements on LOGCAP, move them 
from III to IV, then move to Afghanistan, and then move to the 
more complex situation which was in Iraq. And that is what we 
have been following.
    I think you are aware that all the work, LOGCAP 
requirements in Kuwait have now transitioned fully to LOGCAP 
IV. We are in the beginning parts of the transition in 
Afghanistan, from the old LOGCAP III to LOGCAP IV. We expect 
that transition to be complete by about July 2010.
    It is not a simple transition process, as we have learned 
especially with having to account for all the equipment that 
has been bought by KBR at the different FOBs and the different 
camps, and having to account for that, and also just getting 
men and women and equipment in to transition in Afghanistan. So 
it does take some time, and we have got to be cognizant of the 
commanders' operational requirements as well.
    With LOGCAP requirements in Iraq, we should be making an 
award I hope at the end of this month or the beginning of 
January for some of the services in Iraq. What has been holding 
us back a little bit on the base life support is knowing 
exactly what the requirements are going to be now that the 
President has made the decision with the drawdown and trying to 
extract all the forces by December 2011.
    So it has been taking us some time working with theater to 
identify those, but I think we are there. We should be 
releasing that RFP very soon, and then that transition will 
start taking place again sometime in 2010.
    Senator McCaskill. It is my understanding that Fluor has 
the North in Afghanistan and DynCorp has the South, correct?
    Mr. Parsons. Correct, ma'am.
    Senator McCaskill. And they are doing all of the tasks in 
those areas?
    Mr. Parsons. Yes.
    Senator McCaskill. So it is not task to task competition 
that we ended up with. It ended up regional competition.
    Mr. Parsons. Yes, ma'am. What we did, we made a conscious 
decision in Afghanistan to split Afghanistan in two, with two 
different contractors, because we wanted to maintain that 
capability and capacity with two contractors. So, if we need to 
increase the requirements, which obviously we need to do now, 
they will have that capacity in there.
    Plus, we did not want to have a single point of failure, 
which is what we really recognized in Iraq. We were tied to KBR 
in Iraq. If KBR decided not to perform anymore, we did not 
really have a backup. This way, if we have problems with one of 
the performance contractors, we will have two there in the 
theater. Then one of them, the other one could pick up.
    I know you had concerns about the way we structured these 
task orders. We recognized that if we were going to select one 
for the North and one of the South, we would have to find a way 
to preserve the competition that we had with the award of those 
task orders. So what we did was we established what they call a 
service price matrix.
    We took about 80 percent of all the key services that are 
provided underneath those task orders for all the different 
base life support, and we had a matrix where the baseline 
pricing, which the fee was based on. So the fee that these 
contractors will earn are tied back to that pricing matrix. So, 
even if there is really no incentive for them to run the costs 
up because they will not get any more fee.
    Senator McCaskill. So what you are telling me, which is 
great news, huge improvement, is that somebody who is peeling a 
potato up North is going to get paid about what somebody who is 
pealing a potato down South?
    Mr. Parsons. Not necessarily, ma'am. There are differences 
for some of the services between what we have in our price 
matrix for the North versus the South, but that is because the 
contractors have different rate structures. They took different 
approaches at it.
    What we are also going to have is DCAA going in and 
auditing the baseline for both contractors for these prices.
    Senator McCaskill. Right, I am aware they are doing that.
    Mr. Parsons. If they see something out of whack, we will go 
back and negotiate with them.
    Senator McCaskill. Let's just say something a little bit 
easier. Per head breakfast, I mean on a per head. I assume we 
are buying breakfast by head.
    Mr. Parsons. Very close. There was no unbalanced pricing 
that we saw when we did the competition.
    Senator McCaskill. OK.
    Mr. Parsons. So, when you take a look overall, we are 
pretty comfortable.
    Senator McCaskill. I saw that DynCorp's partner got 
indicted, Agility, criminally indicted for violations of the 
False Claims Act, which to translate into lay terms, they got 
caught ripping us off.
    Now I understand that you all have suspended them, but it 
is also my understanding that the way the rules and regs and 
laws work, they can continue to get work under their contract 
with Fluor even though they have been indicted for ripping us 
off. Is that accurate?
    Mr. Parsons. Ma'am, interesting that you should bring this 
question up. Mr. Harrington and I met with DynCorp officials 
earlier this week to discuss another matter, but they did bring 
up Agility. I know that what they informed us was that they 
were no longer going to be using Agility as a partner. They had 
set up the agreement with their partners that if anybody got 
indicted for any reason, that they could dis-establish that 
relationship, and we were informed on Monday this week, that 
was their plan.
    Senator McCaskill. More progress, OK. I also understood 
that you recently suspended $14.2 million in costs that were 
billed by Fluor, that you, under LOGCAP IV, have refused or 
decided not to pay $14.2 million worth of expenses that were 
submitted.
    Mr. Parsons. Ma'am, there are some withholdings that are 
taking place. I do not know the exact amount. I would have to 
get back to you on that, but there have been some questions 
about Fluor's compensation and also their purchasing system. So 
I know that the administrative contracting officer, working 
with the contractor officer, has been looking at withholds 
until those systems are corrected.
    Senator McCaskill. Well, I would love to know the details 
of that. For one thing, it will reassure me that we have 
transitioned into a situation where we are going to try to take 
money away, instead of paying them and then saying later: Maybe 
we should not have given that to you, but too late now. We have 
already given it to you, and we are not going to try to claw 
back.
    Mr. Parsons. Right.
    Senator McCaskill. So I would like to know the underlying 
details. If in fact we are withholding, I would like to know 
what the details are.
    Mr. Parsons. OK, we will get that for you.
    Senator McCaskill. Now let's talk about the contractors 
versus police and military. If you cannot give me these answers 
now, these are answers I think it is very important for the 
record.
    Understanding I went over this with Secretary Gates in the 
Armed Services hearing, and with McChrystal, it is my 
understanding that many of these contract positions--people 
need to understand this is a world of difference from Iraq in 
terms of the use of Afghans. We have got more than 50 percent, 
in fact almost 100 percent of the security contractors are 
Afghans. I think right now we have about 11,000 security 
contractors, and 10,000 of them are Afghans. Clearly, that is a 
much different scenario than what we had in Iraq when it was 
almost all third party nationals.
    Now the same thing is true with the other contractors. More 
than half, in fact I think it is close to two-thirds of the 
100,000 contractors we have in Afghanistan are in fact Afghans.
    Now it is my understanding, and some of this was from 
talking to Ambassador Holbrooke, that he mentioned to me that 
Karzai talked about this problem in his inauguration address. 
That is that we are paying our contractors more money than they 
are paying their police or their military. If you are an Afghan 
and you can make more money cooking for American troops than 
you can make taking up a gun to fight the Taliban, I am betting 
they are going to cook for the troops.
    If our entire mission is to build up the Afghan military 
and the Afghan police, how do we accomplish that if the left 
hand does not know what the right hand is doing and we are 
paying our contractors more than those military or police make?
    Can any of you confirm that is in fact the case and what is 
being done to fix that problem? Because we are never going to 
accomplish our mission since we are hiring certainly many more 
contractors than we are ever going to be able to attract to the 
police or the military.
    Mr. Harrington. Ma'am, let me take that question for the 
record and get the accurate facts back to you.
    Senator McCaskill. OK. If it is true, then it really 
worries me because that means once again we have not had the 
integration between the military mission and the realities of 
contracting. In fact, the realities of contracting in this 
instance are completing undercutting the military mission, and 
I am betting the military did not even realize that was 
potentially occurring.
    Mr. Harrington. I understand.
    Senator McCaskill. So I think it is pretty important.
    Mr. Harrington. Certainly.
    Senator McCaskill. And I really want to know specifics. How 
much does somebody make doing laundry for our troops and how 
much do they make, let's say, in Kandahar or at Camp Phoenix? 
What do they make and what do they make in the police 
department locally? So we can do an apples to apples comparison 
about the level of salary and if we are cutting off our nose to 
spite our face.
    Let me go to USAID and State Department now for some 
questions about that. I know there is a reason we have six 
ambassadors in Afghanistan, but it is not clear to me who is 
doing what. Who is the ambassador? Who is in charge?
    Where is the org chart? What is the difference between 
Eikenberry and Holbrooke, and who is answerable to them?
    Can you help me with that, Mr. Feldman?
    Mr. Feldman. I would be happy to. We do have six 
ambassadors in Kabul, but we feel extremely well served by 
having them there, given the critical nature of our mission and 
given the talent that they bring.
    So Ambassador Eikenberry is charged with all of our work 
coming out of the embassy. I am just looking for the actual org 
chart, which I brought with me and am happy to share.\1\
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    \1\ The chart referred to by Mr. Feldman appears in the Appendix on 
page 106.
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    Senator McCaskill. That is fine. You can get it to us for 
the record.
    Mr. Feldman. Sure.
    Senator McCaskill. The reason I ask the question is not to 
try to--I am sure that there is a valid substantial reason for 
all of the work that all of them are doing. I am trying to 
focus on this just because I have learned the hard way that the 
accountability piece never happens if you do not know who is in 
charge, and I am trying to determine among these ambassadors 
who is the ambassador that has the authority and the 
accountability and the responsibility in terms of the 
contracting that is going on.
    Mr. Feldman. Yes. Ambassador Eikenberry has responsibility 
for the State Department's operations in Afghanistan, including 
all foreign assistance programs. Ambassador Ricciardone is his 
deputy. Ambassador Mussomeli helps to run operations.
    And, Ambassador Wayne, as we said, is the Coordinating 
Director for Development and Economic Assistance. So he is the 
one that oversees all the U.S. Government non-military 
assistance to Afghanistan. He directs and supervises the range 
of embassy sections, programs, agencies, offices in the field. 
He is our main point of contact on many of these specific 
contracting issues, but obviously anything would go up to 
Ambassador Eikenberry, if need be.
    Ambassador Holbrooke, here in Washington, coordinates the 
interagency effort to advance the U.S.'s strategic goals in 
Afghanistan and Pakistan.
    Senator McCaskill. So Ambassador Holbrooke's office is the 
one that would be looking to see if CERP was trying to do the 
same thing that USAID was doing, that was trying to do the same 
thing State was trying to do?
    Mr. Feldman. Yes, in Washington, we do all of that. That 
interagency coordination is done from our office.
    Senator McCaskill. OK.
    Mr. Feldman. But, importantly, much of this work is 
actually done in the field, obviously--so, on CERP, on the 
specific decisions that are done with the local councils, on 
how the project is implemented. We need and rely on what is 
being done in the field, which ultimately goes through 
Ambassador Wayne for our coordinating basis, but we do the 
coordinating in Washington
    Senator McCaskill. Well, if we determined down the line 
that there was a lack of coordination that caused a massive 
amount of waste, the buck would stop at Ambassador Holbrooke's 
desk?
    Mr. Feldman. I think it would be jointly our desk here in 
Washington, and we would be working with the appropriate people 
at post as well, but, yes.
    Senator McCaskill. OK.
    Mr. Feldman. As far as the fifth ambassador, I think it is 
just Ambassador Carney who was there for the specific elections 
purpose and, now that the elections are over, will be 
returning.
    Senator McCaskill. OK. USAID, you are not putting your 
contracts into the database.
    Mr. North. Which database?
    Senator McCaskill. SPOT.
    Mr. North. SPOT.
    Senator McCaskill. The fact that you had to ask which one 
is a problem. There is supposed to be one, and everyone is 
supposed to be using it, so we can have transparency across in 
terms of all the contracts that are outstanding and the work 
that is being done.
    Mr. North. We are, definitely. We are putting our contracts 
into SPOT. We are putting at the company organizational level.
    We have not put in individual names because of concern for 
the security of the individuals. Of the 20,000 people who work 
under USAID contracts and grants in Afghanistan, 19,000 are 
Afghans. There is great concern, particularly among the NGO 
community, about having their names in a database. There are 
concerns for their security and privacy.
    So, while we are complying with the law in terms of 
ensuring that all the companies that are working for us are 
included in the database, we have not as yet put individuals 
into the system.
    Senator McCaskill. Well, let me ask is the information that 
the Army is putting in, I assume it is more comprehensive than 
what USAID is putting in?
    Mr. Harrington. Yes, ma'am. I do not know what USAID is 
putting in, but the Army requires the contractors to put 
specific names of his contractor personnel in the database.
    Senator McCaskill. I think we got to resolve this. Clearly, 
everyone is hiring Afghans. I mean this is an unprecedented 
hiring of locals in terms of our country. I do not think we 
have ever embarked on this kind of massive hiring program in-
country when we have been in a contingency, or even close. So I 
think we have to decide if it is a security problem for the 
people at USAID, then certainly it is a security problem for 
the people that are working through the military.
    The problem is going to be this whole SPOT was designed so 
that we could at least have one central repository which we 
never had. I mean we did not even have electronic in Iraq. It 
was all paper everywhere. The accountability is very important, 
that this database work in theater, everyone using it.
    So I would ask USAID to come back to the Subcommittee with 
their specific concerns as to why they are not fully utilizing 
the database and what needs to be done in terms of getting 
everyone together and everyone doing the same thing.
    Mr. North. I would note that there is a separate meeting 
ongoing this afternoon on SPOT, here on the Hill.
    Senator McCaskill. Good timing.
    Mr. North. Thank you. Also, about 40 members of the NGO 
community asked to meet with us this afternoon to express their 
concerns about the system. It was also supposed to be today, 
but now we have been able to put that off to the first week of 
January.
    We need to work with them to ensure that as we go forward 
with implementation that their concerns are addressed. We have 
considered the possibility of using the classified version for 
putting individual names in. That is a possibility we can look 
at, but we still need to work through those issues.
    We want to fully comply with the law and make a joint, full 
U.S. Government effort on this, but we also have to be mindful 
of the concerns of the groups that we work with.
    Senator McCaskill. Well, I think if everybody gets in the 
same room, I would find it defies common sense that you all 
would not share the same set of values as to what should go in 
the database and what should not. I think that we just got to 
all agree on what we are going to put in or what we are not 
going to put in, and, if we are not putting in something, then 
there has to be obviously a great justification for it.
    My concern is everyone is not utilizing it the same way. 
Until they are, it is of limited value. I am really tired of 
databases with limited value. There is about every five feet 
you walk in Federal Government, you find a database that is of 
little value.
    So I am determined that we are going to--since I was 
involved in trying to make sure we had some kind of central 
database--I am determined to stay on it and make sure that we 
get it so that it is working the way it should.
    Mr. North. If I could make one last comment on this.
    Senator McCaskill. Sure.
    Mr. North. There is a memorandum of understanding that we 
are working out with DOD on SPOT and how we will go forward. 
That is in draft. So we are trying to figure this out.
    I would also say we are also hiring a full-time person just 
to administer this database from our side and make sure that we 
are keeping up to date on data entry.
    Senator McCaskill. That is terrific. Chop, chop. I know how 
long those MOU drafts take sometimes. Let's see if we cannot 
move that along because we are spending a whole lot of money, 
and we have got a lot of contractors on the ground. The ability 
to do oversight is going to be greatly hampered if we do not 
get that database working the way it should.
    Let me go to CERP. I am trying to get a handle on the 
evolution of CERP and especially when you realize that such a 
large percentage of the monies being spent now are on projects 
that cost more than a half a million dollars.
    General McChrystal told me in the Armed Services hearing 
that there was sign-off. It goes as high as Petraeus on some of 
these.
    Is JCC-I/A doing the oversight and reporting requirements 
on CERP, and is it your responsibility that is where it is 
occurring?
    Mr. Harrington. Ma'am, at dollar values of $500,000 and 
above, JCC-I/A contracting officers execute CERP actions as 
contracts. They are overseen with contracting officer's 
representatives. They are paid in accordance with our payment 
processes for the normal FAR-based contracts. So, yes, on those 
types of actions.
    For actions below $500,000 it is much as Mr. Campbell 
described in terms of the assignment of a project payment 
officer, project control officer.
    Senator McCaskill. Is the COR still somebody who, are they 
involved in the CERP, the contracting officer's representative 
in unit? Are they doing part of this?
    Mr. Harrington. Yes, ma'am. The requiring activity provides 
the contracting officer's representative in all these types of 
actions. So, when the CERP requirement comes forth, we require 
a contracting officer's representative to be able to be there 
to surveil.
    Typically, the project control officer, so far anyway, has 
been that function, to oversee the execution of that.
    Senator McCaskill. Would it make sense when it is over 
$500,000 that it transfer over to USAID? I mean would that not 
make more sense?
    I mean you guys oversee. I mean you have got turnover. The 
idea that we have the military overseeing a massive road-
building project just seems weird to me.
    Yes? That is nod for the record. He is nodding yes.
    Mr. Harrington. Yes, ma'am. We will take whatever job comes 
to it and try to do our best with it. But, if it is more 
appropriate and the expertise lies in another area, then 
absolutely. We are here to take the mission on when it is 
assigned to us.
    Senator McCaskill. I mean we are going to build up a whole 
level of expertise within the military in overseeing massive 
building projects. To me, that is very duplicative of what we 
are trying to maintain at USAID. Right?
    He is nodding yes, for the record.
    Mr. Harrington. Yes, ma'am.
    Senator McCaskill. Mr. North, would you like to comment on 
that?
    Mr. North. I would just note that as I have mentioned 
before we do work very closely with the military on CERP 
planning, certainly at the provincial and at the district 
level.
    Before the striker brigade began clearing areas of 
Kandahar, there was close coordination planning. USAID 
development officers, with other civilians at that level, 
worked with the military to figure out what needed to happen. 
We advised on the use of CERP, so that it would have a 
development impact that all thought was appropriate, and then 
our folks entered the clearing areas within 24 to 48 hours 
behind the military.
    So there is a very close relationship that we are working 
to build, and continuing to build, at the provincial level, and 
even down at the district level. When an idea comes up, that 
here is something we need to do, to finance, it is that joint 
interagency team of military, USAID, State Department, USDA, 
others, that figures out which is the best mechanism to get the 
job done.
    Senator McCaskill. I have a sneaking suspicion, and maybe I 
am being cynical, that it is easier to get money in the budget 
for CERP than it is for USAID. I have watched CERP grow, and my 
suspicion is that folks around here are much more willing to go 
wherever they are asked to go, to support the military in a 
contingency, whereas when you start talking about USAID, then 
all of a sudden it does not feel that it is as important to 
many members.
    We do this all the time around here. Because of ways to get 
money in the budget, we twist up like pretzels in terms of what 
our responsibility should be.
    So I want to make sure that even if you want to continue to 
try to get CERP money in the budget, I want to make sure you 
are not duplicating the expertise at USAID in order to spend it 
because that truly is a waste of money.
    Mr. Harrington. Yes, ma'am. I think our obligation--it is 
Commander's Emergency Response Program, and I think our 
obligation is to ensure that requirement is a commander's 
emergency response requirement.
    Senator McCaskill. Yes. Building roads, I mean I know it 
may seem like an emergency in Afghanistan in some instances. 
But I do not ever remember someone saying we have an emergency, 
we have to build 15 miles of highway.
    Mr. North. Well, I think in the case of roads one of the 
reasons that CERP would see as a reason for funding it is a way 
of employing youth in the region and, therefore, pulling 
loyalties away from the Taliban.
    Senator McCaskill. And that makes perfect sense.
    Colonel Campbell. And Senator, if you would not mind if I 
could expand a little bit.
    Senator McCaskill. Sure, absolutely.
    Colonel Campbell. I would say the reason that CERP does 
such a large funding of road projects in Afghanistan is for two 
reasons. One is just kind of where we are in the process of, in 
the phasing of operations in Afghanistan.
    As has been mentioned here already, I believe it was there 
are about 300 USAID officers in Afghanistan. There are 60,000 
soldiers in Afghanistan, out in the field. So they act as kind 
of the eyes and ears of what is needed out in the population 
and bring those back up through their command level, so that it 
is then integrated with USAID.
    Actually, I was on the phone the other day with someone in 
Kabul, or actually Kandahar rather, and what they were 
explaining to me on why there are so many road projects is 
because there are not any roads in there now to speak of. Less 
than 20 percent of the villages are actually connected by a 
road.
    Your phrase that you used where CERP was initially was 
walking-around money, well, they need something to walk around 
on in Afghanistan, and so that is why I think you are seeing so 
much emphasis on road projects.
    Senator McCaskill. So many more road projects, yes. That 
makes sense.
    Colonel Campbell. At some point, it should transition to 
more of a State Department/USAID issue, but right now it is in 
the military's interest.
    Senator McCaskill. Let's talk a minute.
    Mr. Feldman. Madam Chairman, can I say one word on that.
    Senator McCaskill. Yes, Mr. Feldman.
    Mr. Feldman. On CERP, we absolutely believe it is a 
valuable program, and it is closely integrated with the 
civilian effort.
    I just wanted to also make sure you and the Subcommittee 
realize that the State Department had requested and received 
$30 million from Congress through fiscal year 2009 
supplemental, for quick response funds which is meant to be 
exactly that type of walk-around money, which we will start 
implementing in the first half of 2010 and will be used for 
State Department civilians in the field--so nothing approaching 
CERP--which have been trying to implement.
    Senator McCaskill. CERP that is small.
    Mr. Feldman. But to get at that same core mission, which 
you realize.
    And I did find the org chart.\1\
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    \1\ The chart referred to by Mr. Feldman appears in the Appendix on 
page 106.
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    Senator McCaskill. OK, great.
    Let me talk about projects that do not work. We have $1.4 
billion contract to restore Afghanistan's infrastructure, a 
joint venture between Berger and Black and Veatch, USAID. It 
was supposed to build two power plants projected to deliver 140 
megawatts of electrical power. Two hundred and fifty million 
dollars have been spent. It is 2 years later. The two projects 
together were only capable of producing 12 megawatts of power 
and not 1 megawatt has been delivered to 1 single citizen of 
Afghanistan.
    Worse than the failure to complete the project, the 
inspector general at USAID found that the Afghan government may 
not be able to even operate the Kabul power plant because it 
cannot afford to pay for the diesel fuel it needs to run it. 
The other plant, which is producing zero power, is costing 
USAID one million dollars a month to be guarded.
    So we have $250 million spent. We have a little bit of 
electricity being generated but not being delivered. And we 
have one plant that has been built, and we are spending a 
million dollars a month to guard it with nothing going on.
    What is the problem here and have the contractors been held 
accountable?
    Mr. North. The security has been a major issue certainly 
for many infrastructure programs. In the case of the Kabul 
power plant, the latest figures I have show that it is now 
producing 105 megawatts of power.
    Senator McCaskill. Is any of it getting delivered?
    Mr. North. Yes, it is.
    Senator McCaskill. OK.
    Mr. North. And we are also concerned about the 
sustainability of this plant. Mind you, the intent, in addition 
to the economic needs for Kabul, was certainly to demonstrate 
that the government of Afghanistan was able to deliver 
services. So there was certainly a short-term political need.
    But at the same time we were looking at the sustainability 
of the plant. We had negotiated with the government that they 
would pick up the operating costs, but with the understanding 
that we were also building transmission lines coming from the 
North integrated with Central Asia, to provide power to Kabul, 
so that the power plant then becomes a backup system rather 
than the main, primary means of power.
    The other plant I believe you are referring to is the 
Kajaki Dam which is now producing 33 megawatts of power. 
Kandahar now has power 24 hours, though there are some areas 
that are not. It is uneven in some areas.
    We have two of the turbines that are running. The third 
needs to be installed. It is at the dam. It took one of the 
largest NATO operations since World War II to move that turbine 
into place a year and a half ago. We are now, due to security 
concerns, unable to get that turbine installed as well as to 
build additional transmission lines.
    So we are taking actions to hold off on further costs to us 
until the military, ISAF, can secure that region so those 
programs can go forward.
    With the third turbine, we will increase power going from 
Kajaki to 55 megawatts, but we are already seeing significant 
impact in Kandahar and some of the smaller cities, Lashkar Gah 
and so forth in that region, from what we have already been 
able to do.
    Senator McCaskill. Well, I am glad that you have updated 
information based on our research, and I would appreciate 
getting all of that for the record, so we can compare the 
information we have--it came from the IG--and check with the IG 
on it.
    Frankly, if you are holding off to make sure that you have 
the correct security environment, that is progress over Iraq 
because we did not hold off in Iraq and almost everything we 
built got blown up. That is part of the money that went up in 
smoke.
    So thank you for the additional facts that you have done 
there.
    Let me finish up. Unfortunately, if I allowed myself to, we 
could be here for another couple of hours. I have that many 
questions. But there are more hearings, and we can cover many 
of these subjects as we go forward in these hearings.
    Let me ask each of you to give yourselves a grade on how 
well you are coordinating contracting in Afghanistan. Let's 
assume that there was an F in Iraq, and, if you think you 
deserved more than an F in Iraq, you are grading on a different 
scale than I am grading on. I think it was an F.
    Now, in the end, it got better. But in terms of how it all 
came about and how the LOGCAP happened and how all of the 
reconstruction happened and the confusion and the lack of 
accountability, maybe a D minus.
    What do you think your grade is in Afghanistan right now, 
in terms of how well you are integrating, coordinating, 
monitoring, and overseeing contractors?
    Mr. Campbell.
    Colonel Campbell. Yes, ma'am, I can start. Right off, I 
would say probably about a C, and let me put that into 
perspective for you.
    I think we have done a good job, probably towards the A and 
B range, on the front end where we have put together now some 
lessons learned. We have put out guidance. We have put out 
training. We now have these officers and enlisted soldiers 
being trained here in the States before they go over to 
Afghanistan, on CERP and CERP management. So we have done, I 
think, pretty well here on the front end.
    Where we are lacking and where we still need some work and 
where we are concentrating our efforts now is more the back 
end. We have systems in Afghanistan that track contracting. We 
have systems that track the financial piece. We have systems 
that the Corps of Engineers uses to track construction 
projects--all useful databases, but, to your point, what we 
have got to do now is link them together.
    That is one of the things in this review group that we are 
looking at. We have the Business Transformation Agency looking 
at the entire business process--end to end as they call it--in 
Afghanistan, to see rather than going and inventing a new 
database and inventing a new process or system, how do we first 
link together what is out there, so we can get some immediate 
feedback and immediate results, so that we do not have soldiers 
and civilians out there doing spreadsheets, pulling numbers out 
of three different databases. So, on that part, I would say we 
are still in the D minus/F.
    So, on average, I would probably rate CERP at about a C.
    Senator McCaskill. OK. Mr. Harrington.
    Mr. Harrington. Ma'am, I would give us a C also for a 
different reason, if I understand your question correctly. We 
see awarding contracts to contractors. Over the period of time, 
some of the prices for the commodities and services continue to 
get bid up because other agencies, other organizations are 
contracting with the same contractors and contractors are 
enjoying being able to present products at a higher price. I 
think the organization aspect of this needs to be addressed 
further.
    We have review boards, requirements review boards. We have 
priorities, allocation processes in place to evaluate what 
comes first in the order for addressing, in terms of the most 
urgent needs and in terms of the most widespread needs. But it 
is an organization, from my perspective, at a higher level that 
gets together and collaborates in theater to determine overall 
where the requirements are being placed and how to best 
leverage the contractor community there, the vendor spread if 
you will, to be able to make sure we are getting the best deal 
for the government as a whole.
    So I think there is an organizational element needed at a 
higher level to be able to accomplish that. We would obviously 
participate as a component to that and be able to present our 
priorities to that and, as well, coordinate with other agencies 
to determine how to get the best contracts in place, perhaps on 
a wider basis, on an agency level basis as opposed to an 
individual basis.
    Senator McCaskill. Mr. North.
    Mr. North. I guess I am a little more optimistic. I think 
we have a B, but I think a lot of that relates to the effort 
and the progress we have made in the last 10 months. Things 
like the agricultural strategy as a whole-of-government 
strategy, clearly defining roles and responsibilities among the 
respective agencies involved, but also the clarity of purpose 
in where we are trying to go in the agriculture sector--this is 
one example that we have developed.
    There are others. Certainly our collaboration in the health 
sector with the U.S. Military, with CDC and others has been 
quite strong.
    An area that we need to improve on, that we are working on 
certainly is getting more of our staff into the theater, so 
that when you are at the PRT there are more development staff 
there to help with coordination and to monitor and manage our 
programs.
    So there are systems that still need work, of course, but I 
think we are moving in the right direction.
    Senator McCaskill. Mr. Feldman.
    Mr. Feldman. Showing the synchronicity between State and 
USAID, I would say----
    Senator McCaskill. Oh, you guys get along so well. You are 
going to give yourself a B, let me guess. [Laughter.]
    Mr. Feldman. I would also give ourselves a B, but I think 
actually more important than the grade is the general 
trajectory. I would say at the beginning of the year we were 
probably much closer to a D, and I think that we have gone up 
quite a bit.
    There is a lot of people in Washington, a lot of people in 
Kabul, a lot of people around the world and certainly in the 
field, actually implementing these projects, that are working 
very hard at doing all the things that we uncovered in the 
course of our review and that we tried to put in place to make 
sure that we were the best possible stewards of U.S. taxpayer 
money.
    And I think that we are definitely going in the right 
direction, with the better coordination with civil agencies, 
with military partners, with the international community, with 
the civilian surge, with all the kind of oversight mechanisms 
that I laid out, including the financial and technical 
officers.
    But, yes, this is going to take a while to do, and there is 
going to be a lot more to be done, and we will have to continue 
to be very vigilant and rigorous in implementing this. So there 
is always room to do much better, but I think at this point I 
am pretty comfortable with where we are.
    Senator McCaskill. OK. Mr. Parsons.
    Mr. Parsons. I would say if Iraq was a F, then I think we 
are a C in Afghanistan because we have learned a lot of lessons 
out of Iraq.
    Certainly with the establishment of the Army Contracting 
Command and being part of AMC with LOGCAP, we have a very close 
bond now with the Joint Contracting Command-Iraq/Afghanistan. 
We are doing reach-back for them, so there is a lot of good 
coordination going on there. What the ACC is allowing us to do 
from an enterprise is look where are we duplicating efforts and 
where can we be more effective in using different types of 
contract instruments.
    I know that one of Brigadier General Camille Nichols' 
concerns as she goes in to be the new commander in Joint 
Contracting Command-Iraq/Afghanistan is even though we have 
established some of these Joint Logistics Procurement Support 
Boards where we try to bring the different parties together to 
look at the procurement requirements in Afghanistan, those are 
more of a collaboration and cooperation by the parties to come 
see those boards and look at it.
    And we do have coalition partners there, and I know one of 
her concerns is that we understand that NATO is doing quite a 
bit of contracting in Afghanistan as well as for some of their 
forces. So I know General Nichols is going to put that as one 
of her priorities, to look at how do we get closer 
collaboration and cooperation there.
    But there is a lot of room for improvement.
    Senator McCaskill. If we are getting integration and 
coordination between NATO and our efforts, then I will give all 
of you an A because that means we have our house in order and 
now we can try to integrate NATO into it. I still think we have 
a ways to go.
    As time goes on, we will see if the grades hold up. I think 
it may be a little grading on a curve, Mr. Feldman, to go from 
a D to a B in 10 months because you are moving a very large 
thing here. This is not an organization, as it relates to 
contracting, that is nimble or flexible.
    When it is nimble and flexible, it generally is a bad 
contract because it happened too quickly, and nobody was paying 
attention to what was in it and whether it was definite enough 
and whether there were enforcement mechanisms contained in it.
    Let me leave you with what I would like to still get for 
the record as we begin to build our information, so that we can 
continue to do the kind of oversight I think that we need to 
do.
    I want to make sure I understand what every silo is in 
terms of contracting money. The new CSTC-A, I want to try to--
that is a new one I have to now put into my jargon. Now that I 
finally figured out LOGCAP, you spring a new one on me.
    I want to make sure that there is some kind of org chart 
that has where the contracting money is all going, and we will 
put that together if you all will give us what is within your 
silo of contracting money and how much it is.
    I believe that we will end up spending as much or more on 
contracting in Afghanistan as we spend on our military. 
Therefore, we have a huge obligation to try to get this right. 
So, if you all will get that to me, that would be great, and 
then we will begin to drill down in those various places and 
make sure of the on-the-ground oversight.
    And the other thing that we would like from you is if you 
believe you have enough oversight personnel in place, right now 
in theater, and if not what you need to get enough oversight 
people in place in theater.
    I really appreciate all of your time today.
    And I am going to say this. I do not mean to embarrass her, 
and I do not mean to embarrass Mr. North or Mr. Feldman. But 
the woman in the front row that keeps handing you notes, I 
think I want to have lunch with her. [Laughter.]
    I think she knows an awful lot because every question I 
ask--everyone was feeding them to her. OK, the whole little 
group, I need all of you to come to my place for lunch, so I 
can begin to get----
    Mr. Feldman. This is how integrated we are.
    Mr. North. She is an USAID officer on Mr. Holbrooke's 
staff.
    Senator McCaskill. That is great. There you go. There is 
that integration.
    OK, thank you all very much. I appreciate your time today.
    [Whereupon, at 3:45 p.m., the Subcommittee was adjourned.]






















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