[Senate Hearing 111-964]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 111-964
 
                 OVERSIGHT OF RECONSTRUCTION CONTRACTS
      IN AFGHANISTAN AND THE ROLE OF THE SPECIAL INSPECTOR GENERAL

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

                                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

                             SECOND SESSION

                               __________

                           NOVEMBER 18, 2010

                               __________

                   Available via http://www.fdsys.gov

       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 PRYOR, Arkansas                 GEORGE V. VOINOVICH, Ohio
MARY L. LANDRIEU, Louisiana          JOHN ENSIGN, Nevada
CLAIRE McCASKILL, Missouri           LINDSEY GRAHAM, South Carolina
JON TESTER, Montana
ROLAND W. BURRIS, Illinois
MICHAEL F. BENNET, Colorado

                  Michael L. Alexander, Staff Director
     Brandon L. Milhorn, Minority Staff Director and Chief Counsel
                  Trina Driessnack Tyrer, Chief Clerk
            Joyce Ward, Publications Clerk and GPO Detailee


              AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT

                       CLAIRE McCASKILL, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
THOMAS R. CARPER, Delaware           TOM COBURN, Oklahoma
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
JON TESTER, Montana                  LINDSEY GRAHAM, South Carolina
MICHAEL F. BENNET, Colorado
                     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 Brown................................................     3

                               WITNESSES
                      Thursday, November 18, 2010

Hon. Jon T. Rymer, Inspector General, Federal Deposit Insurance 
  Corporation, and Chair, Audit Committee, Council of the 
  Inspectors General on Integrity and Efficiency.................     5
Hon. Richard W. Moore, Inspector General, Tennessee Valley 
  Authority, and Chair, Investigation Committee, Council of the 
  Inspectors General on Integrity and Efficiency.................     6
Arnold Fields, Special Inspector General for Afghanistan 
  Reconstruction.................................................    14
Hon. Gordon S. Heddell, Inspector General, U.S. Department of 
  Defense........................................................    32
Hon. Harold W. Geisel, Deputy Inspector General, U.S. Department 
  of State.......................................................    34
Michael G. Carroll, Deputy Inspector General, U.S. Agency for 
  International Development......................................    35
Stuart W. Bowen, Jr., Special Inspector General for Iraq 
  Reconstruction.................................................    36

                     Alphabetical List of Witnesses

Bowen, Stuart W. Jr.:
    Testimony....................................................    36
    Prepared statement with an attachment........................   192
Carroll, Michael G.:
    Testimony....................................................    35
    Prepared statement...........................................   180
Fields, Arnold:
    Testimony....................................................    14
    Prepared statement with attachment...........................    64
Geisel, Hon. Harold W.:
    Testimony....................................................    34
    Prepared statement with an attachment........................   168
Heddell, Hon. Gordon S.:
    Testimony....................................................    32
    Prepared statement...........................................   151
Moore, Hon. Richard W.:
    Testimony....................................................     6
    Prepared statement...........................................    57
Rymer, Hon. Jon T.:
    Testimony....................................................     5
    Prepared statement...........................................    45

                                APPENDIX

Chart referenced by Senator Brown submitted by Senator Coburn....   212
Questions and Responses for the Record from:
    Mr. Fields...................................................   213
Additional statement submitted for the record from Mr. Fields....   218


                      OVERSIGHT OF RECONSTRUCTION
                   CONTRACTS IN BILITY OF INSPECTORS
       AFGHANISTAN AND THE ROLE OF THE SPECIAL INSPECTOR GENERAL

                              ----------                              


                      THURSDAY, NOVEMBER 18, 2010

                                   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 3:35 p.m., in 
room SR-428A, Russell Senate Office Building, Hon. Claire 
McCaskill, Chairman of the Subcommittee, presiding.
    Present: Senators McCaskill and Brown.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. First, let me apologize to the witnesses 
and the people who are attending this hearing. This has been an 
incredibly busy week, and I got caught up in a meeting and 
could not get out, so I apologize for being a few minutes late.
    The Subcommittee on Contracting Oversight of the U.S. 
Senate Committee on Homeland Security will come to order, and I 
will briefly have an opening statement about the hearing today 
and then defer to my colleague Senator Brown for his opening 
statement, and then we will have three panels of witnesses to 
get at the issue that we want to cover this afternoon.
    This is a hearing on the role of the Special Inspector 
General (SIG) in oversight of contracts in Afghanistan. This 
Subcommittee was created at the beginning of the Congress to 
provide oversight of government contracting. Over the last 18 
months, we have focused on two key areas: Improving the 
government's oversight and reducing waste, fraud, and abuse. 
Four of the Subcommittee's 15 hearings, including today's, have 
examined contracting in Afghanistan and how to ensure that the 
government is getting the best possible value for the billions 
of dollars we spend there.
    Today's hearing on the Special Inspector General for 
Afghanistan Reconstruction (SIGAR), brings these issues 
together. The origin of this hearing began in March 2009 when I 
joined with Senator Lieberman, Senator Collins, Senator Coburn, 
and Senator Grassley to introduce legislation to give SIGAR 
better hiring authority. At that time, General Fields had been 
the SIGAR for more than 7 months, and SIGAR had not yet 
completed any original audit or investigative work. This raised 
serious concerns about SIGAR's effectiveness at protecting 
against waste, fraud, and abuse in Afghanistan.
    Even though SIGAR received additional money and new hiring 
authorities in the summer of 2009, the organization did not 
improve. SIGAR continued to have difficulties in recruiting 
adequate experienced staff. We learned that SIGAR performed 
only one contract audit prior to December 2009 while devoting 
time and resources to reviews of subjects outside of its 
mission, like a 2009 review of the role of women in the Afghan 
election.
    We were particularly concerned that SIGAR was failing to 
establish the right priorities for its work, and so in December 
2009, Senator Collins, Senator Coburn, and I asked the 
President to conduct a thorough review of SIGAR. In July 2010, 
the Council of the Inspectors General for Integrity and 
Efficiency (CIGIE), completed their review. This review 
confirmed many of the problems that my fellow Senators and I 
had been concerned about. SIGAR did not have a plan and was not 
doing risk assessment. They had not put the right investigative 
team in place. Their audits were more focused on quantity than 
quality. And their management and leadership had failed to 
create an efficient, effective organization.
    The focus of today's hearing is how SIGAR, under the 
leadership of General Arnold Fields, whom I hold in high regard 
as a decorated retired general in the United States Marine 
Corps and one of our Nation's heroes, has fallen so short of 
the mark. CIGIE found SIGAR's Investigations Division failed to 
meet minimum standards and referred its findings to the 
Attorney General to consider revoking SIGAR's law enforcement 
authority. CIGIE also found that SIGAR's Audit Division had no 
less than five major deficiencies. Today we will ask General 
Fields how this happened on his watch.
    In the course of today's hearing, we will also examine 
General Fields' decision to award a $96,000 sole-source 
contract to Joseph Schmitz, the former Defense Department 
Inspector General, who did resign in 2005 and did have 
allegations made against him. General Fields hired Mr. Schmitz 
to act as a ``independent monitor'' of SIGAR's compliance with 
the CIGIE review and to report SIGAR's progress to the 
Department of Justice (DOJ).
    We have learned that SIGAR understood that by awarding the 
contract to Mr. Schmitz, they would also be obtaining the 
services of Louis Freeh, the former FBI Director, whom SIGAR 
thought would act as an advocate for them at the Justice 
Department. Interestingly, we have learned that Mr. Freeh's 
organization spoke only briefly with Mr. Schmitz about this 
contract and quickly decided that they were not interested in 
participating. We will ask General Fields why he thought that 
this contract was in the best interests of the taxpayer.
    We will also be hearing from four experts on conducting 
oversight in a war zone: The Inspectors General for the Defense 
Department, the State Department, United States Agency for 
International Development (USAID), and the Special Inspector 
General for Iraq Reconstruction. They will share their lessons 
learned and what needs to happen going forward.
    The government's record on contracting in Iraq and 
Afghanistan has not been pretty. That is why it is so important 
that we have aggressive, independent, quality oversight. With 
hundreds of billions of dollars at stake, there is no room for 
error and no time to delay.
    We are having this hearing today because a frank, open, and 
on-the-record discussion is imperative to adequately oversight 
going forward and to make sure that we protect the men and 
women in uniform in the contingency theater and also protect 
the American taxpayer.
    I look forward to hearing the testimony of our witnesses 
today and providing General Fields the opportunity to address 
the Subcommittee's concerns. And I will now defer to my 
colleague Senator Brown.

               OPENING STATEMENT OF SENATOR BROWN

    Senator Brown. Thank you, Madam Chairman. Well said.
    Today as Ranking Member of the Subcommittee, I would like 
to specifically thank you, Madam Chairman, for scheduling this 
afternoon's hearing on this very important topic. And since I 
joined the Subcommittee, this is the second hearing I have 
participated in on this very important topic: The oversight of 
contracts in Afghanistan.
    As General Petraeus recently stated in his contracting 
guidance, ``The scale of our contracting efforts in Afghanistan 
represent both an opportunity and a danger. With proper 
oversight, contracting can spur economic development and 
support the Afghan Government's and International Security 
Assistance Forces (ISAFs) campaign objectives. However, we 
spend large quantities of money on international contracting 
funds quickly, and with insufficient oversight it is likely 
that some of these funds will unintentionally fuel corruption, 
finance insurgent organizations, strengthen criminal activities 
and networks, and undermine our efforts in Afghanistan.'' And, 
Madam Chairman, I agree with General Petraeus, his guidance 
that if our soldiers are willing to pay the ultimate sacrifice 
for the success of the mission, the least we can do in Congress 
is to ensure that the American taxpayers' funds go to the right 
people for the right purpose.
    Since the United States and its coalition partners began 
operations in Afghanistan on October 7, 2001, the United States 
has invested approximately $56 billion in Afghanistan, which is 
more than the $53.8 billion invested in Iraq. Despite this 
substantial commitment on the part of the American taxpayers, 
problems continue to persist, such as waste, fraud, and the 
fueling of corruption. By far, the most troubling finding is 
that American taxpayer money has been flowing to Taliban 
insurgents, which I find unconscionable.
    Today we will examine whether the oversight in Afghanistan 
is meeting the necessary level to accomplish the mission and 
protect the taxpayers and use it how our soldiers expect it to 
be used so they can be provided with the tools and resources to 
do the job.
    On January 28, 2008, Congress created SIGAR to provide 
leadership in preventing and detecting waste, fraud, and abuse 
of taxpayer funds used in the Afghanistan conflict. To date, 
Congress has appropriated $46.2 million for this mission. While 
I fully appreciate the difficult circumstances in which SIGAR 
must work, I am convinced that we are not receiving the 
necessary return on our investment in our oversight activities. 
As noted, we will soon, hopefully, find out more about those 
numbers.
    The recent council, noted as CIGIE, as you noted, Madam 
Chairman, report on SIGAR found that it did not have the 
robust, ongoing program of risk assessment and that it was not 
looking in the right places for fraud, waste, and abuse. The 
oversight army in Afghanistan includes the Department of 
Defense (DOD), State, Agency for International Development, 
Inspectors General (IG), and SIGAR. Yet the accountability of 
the American taxpayers funds in Afghanistan remains limited.
    In this hearing today, I plan to ask the Inspectors General 
how we can better strategically align these oversight resources 
to maximize the return on taxpayer investment and achieve the 
accountability our mission requires and our soldiers deserve.
    Thank you, Madam Chairman.
    Senator McCaskill. Thank you, Senator Brown.
    Let me introduce the first panel. Jon T. Rymer has served 
as the Inspector General for the Federal Deposit Insurance 
Corporation (FDIC) since July 2006. He is also the Chairman of 
the Audit Committee of the Council of the Inspectors General on 
Integrity and Efficiency, which we have been referring to as 
CIGIE. Mr. Rymer has served for 30 years in the active and 
reserve components of the U.S. Army. Prior to his confirmation 
as Inspector General, Mr. Rymer served as a Director at KPMG 
LLP.
    Richard W. Moore has served as the Tennessee Valley 
Authority's (TVA's) Inspector General since May 2003. He is 
also the Chairman of the Investigations Committee of the 
Council of the Inspectors General on Integrity and Efficiency, 
known as CIGIE. Prior to joining TVA, Mr. Moore served as an 
assistant U.S. Attorney for the Southern District of Alabama 
for 18 years.
    It is the custom of this Subcommittee to swear in all 
witnesses that appear before us, so if you do not mind, I would 
ask you to stand. Do you 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?
    Mr. Rymer. I do.
    Mr. Moore. I do.
    Senator McCaskill. Let the record reflect the witnesses 
have 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, especially since 
we have three panels today. Your written testimony will be 
printed in the record in its entirety. Mr. Rymer.

   TESTIMONY OF THE HON. JON T. RYMER,\1\ INSPECTOR GENERAL, 
    FEDERAL DEPOSIT INSURANCE CORPORATION, AND CHAIR, AUDIT 
 COMMITTEE, COUNCIL OF THE INSPECTORS GENERAL ON INTEGRITY AND 
                           EFFICIENCY

    Mr. Rymer. Thank you, Chairman McCaskill, Senator Brown. My 
name is Jon Rymer. I am the Inspector General of the FDIC. I am 
appearing today before you in my capacity as Chair of the CIGIE 
Audit Committee.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Rymer appears in the appendix on 
page 45.
---------------------------------------------------------------------------
    You have asked me to address the recent CIGIE peer 
evaluation of SIGAR and specifically SIGAR's conduct of audits. 
We thank you for including the peer evaluation report in the 
hearing record.
    In late February 2010, the CIGIE Chair received a letter 
from General Arnold Fields, Special Inspector General for 
Afghanistan Reconstruction, requesting a peer evaluation of his 
operations. The CIGIE Executive Council was convened to discuss 
SIGAR's request and determined that conducting three separate, 
yet coordinated, standards-based reviews would provide SIGAR 
with the information it was requesting.
    I led a team to conduct a peer review of SIGAR's audit 
organization, and I will speak on the results of that review in 
just a moment. Mr. Moore led a team to conduct a quality 
assessment of SIGAR's investigative operations, and he will 
discuss the results of that review. Mr. Moore and I jointly led 
a team to review the other management support operations not 
covered by either of the two peer reviews.
    I will focus the remainder of my remarks on the external 
peer review of SIGAR's audit organization and SIGAR's request 
for a follow-up review.
    In the audit community, an external peer review is an 
independent, backward-looking review, requiring a peer to 
examine and opine on, at least once every 3 years, an audit 
organization's system of quality control. A peer review is done 
in accordance with CIGIE's Audit Peer Review Guide and is based 
upon GAO's Yellow Book standards.
    The goal of a peer review is to provide reasonable 
assurance that the audit organization has: One, adopted audit 
processes that are properly designed to produce accurate and 
reliable information and reports, and, two, is following those 
processes in conducting its work. A peer review is not designed 
to assess the reliability of individual reports.
    On July 14th this year, we issued our report on the results 
of this review. We concluded that SIGAR's system of quality 
controls was suitably designed, but its compliance with its 
policies and procedures was inconsistent and incomplete.
    We specifically identified five deficiencies in the audit 
organization's practices that could generate situations in 
which SIGAR would have less than reasonable assurance of 
performing and reporting on audits, in conformity with the 
Yellow Book and its own policies.
    These deficiencies relate to quality assurance, audit 
planning, documentation and supervision, reporting, and 
independent referencing. We made eight recommendations for 
improvement.
    We believe the processes we followed, the procedures we 
performed, and the deficiencies we identified in SIGAR's audit 
organization provide a reasonable basis for a pass with 
deficiencies opinion. In its response, SIGAR concurred with the 
results of our peer review and committed to implementing 
corrective actions to overcome the deficiencies.
    Last month, General Fields contacted the CIGIE Chair to 
request a follow-up review to address the extent to which his 
audit organization had implemented our recommendations. Earlier 
this week, my office began a focused, limited-scope review to 
do so. This review will not modify the opinion and conclusions 
reached in our July 2010 report, nor will it qualify as an 
external peer review of SIGAR's audit organization. I have 
scheduled a full-scope peer review of SIGAR's audit 
organization to commence next October.
    At this time I would like to make two concluding comments.
    First, SIGAR's request for a peer evaluation was 
unprecedented and warranted a unique approach. Despite 
competing demands and challenges that our individual offices 
faced, we responded in a fair, professional manner, conducted a 
thorough review, and provided SIGAR with useful and meaningful 
information.
    Second, I would like to recognize the professionals who 
volunteered to participate in these reviews and the support of 
their respective IGs. I would also like to acknowledge the 
courtesy and cooperation extended to us by General Fields and 
his staff, and to acknowledge the assistance of those who 
facilitated our travel to and our work in Afghanistan.
    This concludes my testimony. I look forward to answering 
your questions. Thank you.
    Senator McCaskill. Thank you, Mr. Rymer. Mr. Moore.

 TESTIMONY OF THE HON. RICHARD W. MOORE,\1\ INSPECTOR GENERAL, 
TENNESSEE VALLEY AUTHORITY, AND CHAIR, INVESTIGATION COMMITTEE, 
 COUNCIL OF THE INSPECTORS GENERAL ON INTEGRITY AND EFFICIENCY

    Mr. Moore. Chairman McCaskill, Senator Brown, good 
afternoon. As you mentioned, I am Richard Moore, the Inspector 
General at TVA, and I am appearing before you today in my 
capacity as the Chair of the Investigations Committee for 
CIGIE. My colleague Mr. Rymer has ably laid out how we got here 
in terms of these peer reviews, and I will not restate that.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Moore appears in the appendix on 
page 57.
---------------------------------------------------------------------------
    I would like to make a few comments about the work that we 
did, however. The reviews, particularly, for example, the 
investigations peer review, was not the work of one IG or one 
office. It was a community-wide review. In the case of the 
investigations peer review, there were six IGs who 
participated--their offices participated, rather, in that 
review. For the peer evaluation or Silver Book, as we call it, 
there were seven IG offices that participated in that 
particular review.
    The investigations peer review resulted in a finding that 
SIGAR was not in compliance, as you mentioned, with our quality 
standards. There are only two possible outcomes in our 
investigation peer reviews, and that would be either you are in 
compliance or you are not. The determination that SIGAR was not 
in compliance with our peer review standards was based on 10 
specific findings which were attached to the report, and I will 
be happy to discuss that in detail, if you would like later.
    As you mentioned, Chairman McCaskill, we were required to 
alert the Attorney General of this finding, which I did. The 
Attorney General supervises all of the IGs who exercise 
statutory law enforcement powers, and it is conditioned--we 
exercise those powers based on our compliance with the Attorney 
General standards and the CIGIE peer review standards. And as 
Mr. Rymer mentioned, there will be an audit follow-on review, 
and there will be one on the investigation side as well. I 
would reiterate what Mr. Rymer said about the audit review for 
the investigation peer review. This is not a new peer review, 
and it will not change the finding or decision on the peer 
review, that is, noncompliance. This is merely to determine 
whether or not there has been remediation of the deficiencies 
that we found.
    As to the peer evaluation, that Silver Book review, as we 
call it, was done pursuant to standards that are called the 
Quality Standards for Federal Offices of Inspector General. The 
Silver Book sets forth the overall approach for managing, 
operating, and conducting the work of the Inspector General. 
There are nine categories in the Silver Book that we addressed 
with SIGAR, and in the end, the team found 22 different 
suggestions or recommendations for improvement of SIGAR.
    That concludes my testimony, and I look forward to 
answering any questions that you may have.
    Senator McCaskill. Thank you, Mr. Moore.
    Let me first start by putting on the record how 
conservative peer reviews are. And let me just say that every 3 
years, as the elected auditor of Missouri, we had a peer 
review. And I loaned some of my senior staff to the national 
peer review effort that goes on nationwide. So I am very 
intimately aware of what a peer review is and what it means.
    I also know that auditors by nature are extremely 
conservative, and the only time they become even more 
conservative is when they are passing judgment on their peers.
    How often does an organization, based on all of your 
experience in the Council of Inspectors General for Efficiency 
in operations, how often does an organization fail its peer 
review, especially in light of the failure of SIGAR?
    Mr. Rymer. Let me start, ma'am, by saying that the Audit 
Committee of CIGIE supervised or administered 58 peer reviews 
from 2006 to 2010. Of those 58, 55 were pass, and there were 
three pass with deficiencies. So 3 out of 58.
    Senator McCaskill. And so we had three pass with 
deficiencies. Have there been any that have failed?
    Mr. Rymer. Not in that 3-year period, ma'am, that I know 
of.
    Senator McCaskill. OK. And what about on your end in terms 
of the Investigations Standards?
    Mr. Moore. On the investigations side, in terms of the 
investigation peer reviews, I believe there has been one 
noncompliance since we have been conducting peer reviews in 
2003.
    Senator McCaskill. How many have been done since 2003?
    Mr. Moore. Approximately 50.
    Senator McCaskill. OK. So one time out of 50, and that 
would be this one?
    Mr. Moore. Yes--well, no.
    Senator McCaskill. One other.
    Mr. Moore. One other, other than this, yes.
    Senator McCaskill. So this would be the second time since 
2003. And could you share with us what the organization was 
that had these serious problems, the other organization that 
was evaluated?
    Mr. Moore. I was not the Chair then. My recollection--and, 
Jon, you may recall. I believe it was OPM.
    Senator McCaskill. Office of Personnel Management?
    Mr. Moore. Yes.
    Senator McCaskill. OK. How serious would you all 
characterize the failures that you documented in your review of 
SIGAR?
    Mr. Rymer. Well, I think what you have already pointed out 
and established, Senator, is the fact that it is very rare. The 
overall deficiencies that we noted, the five deficiencies on 
the audit side, were problems of noncompliance. We did 
positively note that SIGAR had established a policies and 
procedures manual and processes that we thought met the 
standards. However, we often found that they were not in 
compliance. And in most cases, we found situations where the 
compliance levels were in the two-thirds or so. Of the 12 
reports we reviewed, we would often find that five, six, seven, 
or eight reports would be in compliance, and then three or four 
would not be.
    Mr. Moore. And I would say on the investigations side, the 
seriousness is, of course, if you have special agents in an 
investigative component of an IG shop who have not been trained 
or confronted with the guidelines that they are required to 
adhere to. Use of deadly force and use of confidential 
informants, the surveillance techniques, those kind of things 
are in the Attorney General's guidelines. You put at risk 
investigations that you are conducting, and you potentially put 
at risk all the Federal law enforcement simply because of the 
reputational damage that can occur if agents are not fully 
knowledgeable of the guidelines and adhering to them.
    Senator McCaskill. Which obviously could be exacerbated in 
a contingency theater where we are fighting a battle, and one 
of the battles we are fighting is, in fact, corruption.
    Mr. Moore. I believe that is true.
    Senator McCaskill. One response that SIGAR had to these 
issues is that they were a new organization, and normally 
Inspectors General are not given a peer review for 3 years. 
Now, I understand that the reason this happened was because 
General Fields asked for the review. But is that a valid 
response, that the kinds of problems that you found could be 
attributable to the fact that they had not been in existence 
for 3 full years?
    Mr. Rymer. Ma'am, we took that perspective into 
consideration. I think it is valuable to note that, as I said 
in my statement, this review was unprecedented. No one else had 
asked for a peer review at this stage as a de novo IG, 
particularly none of the three special IGs that are now in 
existence. So I think that was positive. I think we noted that 
in terms of how we conducted the review. We were concerned 
that, given its fairly short existence, 18 months or so when we 
began the review, there would not be sufficient evidence of how 
they were performing. So to accommodate that fact, I chose to 
do a 100-percent sample of every audit they did, frankly, to 
try to give the organization the opportunity to show 
improvement.
    Senator McCaskill. To give them the benefit of the doubt.
    Mr. Rymer. Yes, ma'am, to make sure that if there were 
opportunities to show improvement from Audit 1 to Audit 10 or 
12, we could demonstrate that. But the results were mixed. We 
noted that some audits showed improvement on occasion, and then 
other audits did not show improvement.
    Senator McCaskill. So you did a 100-percent sample?
    Mr. Rymer. Yes, ma'am.
    Senator McCaskill. And you do not need to tell me that is 
very, very unusual.
    Mr. Rymer. Yes, ma'am.
    Mr. Moore. On the investigations side, again, as Mr. Rymer 
suggested, we have not looked at an organization this early in 
their development. We were surprised to see the absence of 
policies and procedures and the fact that agents that we 
interviewed--and we interviewed agents here in the United 
States and in Afghanistan, and they were not conversant with 
the guidelines that they had to adhere to or the standards. And 
as we reflected in our report, it appeared that there were no 
manuals or standards at SIGAR's headquarters that were being 
taught to the agents and holding them accountable by when we 
went in, but there were block stamp policies at the time that 
we conducted the peer review. So it appeared that they were 
making good-faith efforts to adopt policies, but they had not 
been in existence before April of this year.
    Senator McCaskill. OK. Senator Brown.
    Senator Brown. Thank you, Madam Chairman.
    First of all, thank you very much for your testimony. I am 
trying to get my hands around the fact that we have a group 
like SIGAR, and while I am appreciative that they said, ``Hey, 
can you come in and, audit us and see what is up and report 
back--I certainly appreciate.'' But the results in terms of 
actual numbers that we have actually expended in terms of 
providing them the resources and then the return--I know 
Senator Coburn has here the comparison of oversight in 
Afghanistan, the funds recovered by other entities, USAID IG, 
DOD IG, and SIGAR.
    Now if my numbers are correct, we have given approximately 
$46.2 million to SIGAR for this mission, yet they have only 
identified and collected $8.2 million. I know the value of a 
dollar, but that does not seem to be a good value for our 
taxpayer dollars.
    Do you have any comments as to whether you feel that we are 
getting the value for our dollars and/or why do you feel--if 
you could get into that. And then also, why do you feel the 
recovery is so low compared to these other entities?
    Mr. Rymer. I'll start and attempt to answer that, Senator. 
The issue of funds put to better use is a direct function of 
the audits that the organization chooses to do. One of the 
observations we had in the peer review and in the capstone 
review was that we were concerned about the process that SIGAR 
went through in selecting the initial audits, the first 12 or 
so, in our sample. We were concerned that the audits perhaps 
were not as focused, and we heard this in some of our 
interviews, on either contract oversight, funds put to better 
use, or improper payments.
    Senator Brown. Well, wasn't that their mission, though, 
contract oversight?
    Mr. Rymer. Well, I think that would certainly be a large 
part of their mission. Let me explain a little bit and put it 
in greater context.
    We did not really see any audits that were specifically 
designed, where the principal objective was to recover funds. 
But the IG has a responsibility also to detect and comment on 
lapses of internal controls. We saw a few audits directed at 
internal controls, or preventive processes. Specifically, I 
think we saw three audits that were in my judgment, internal 
control-related audits. So of the 12 we looked at, 3 addressed 
internal control and the other 9 were audits that, in my view, 
were audits examining or looking at either U.S. policy rules 
and regulations or at international policy rules and 
regulations.
    So in that continuum, we suggested--and SIGAR certainly 
agreed--that a more risk-based approach to identifying the 
audits that SIGAR should be focusing on was something they 
should do.
    Senator Brown. Yes, but do you think--you have to give them 
$46-plus million--I mean, is it the fact that nobody gave them 
the proper guidance as to where to go and what to do? Or they 
just chose to ignore the guidance and do their own thing in 
those areas that you just commented upon? And let me just also 
ask, what is your independent professional opinion as to 
whether we are actually getting our money's worth out of this 
particular group?
    Mr. Rymer. Well, Senator, I have to be a bit careful. As a 
professional auditor, I have to stick to the scope and approach 
of the review, and Senator McCaskill----
    Senator Brown. I am asking you your professional auditor 
opinion.
    Mr. Rymer [continuing]. Will agree to this, but the concern 
that I had, as I said, was that the sort of ``tier one'' 
auditing was not in the original plan. We suggested that it be 
in their plan. The other concern I have would be not paying as 
much attention in the early stages to the suggestions of the 
auditees, of folks that have responsibility for managing the 
programs. There was, in my view, a bit of top-down and not 
enough bottom-up audit planning. So I think the audit planning 
process was one that was not quite balanced and I think needs 
improvement.
    Senator Brown. And I recognize--certainly I think everybody 
does--the difficult operating environment in Afghanistan. I 
have been there. I understand it. In your opinion, does SIGAR 
have the sufficient resources to overcome that lack of 
direction or obstacles or not?
    Mr. Moore. Well, Senator, I would say that we looked at 
funding for SIGAR because that was raised to us by SIGAR staff, 
that there were funding issues early on, and we were 
particularly concerned about that on the investigative side, 
whether they had the proper funding to put agents in 
Afghanistan. We found that they did have appropriate funding 
levels.
    And I would just say in terms of performance of the 
organization, which you have been asking us about here today, 
there are at least three things that handicapped the 
organization, in my opinion, and we cover this in the report. 
One is what we have mentioned before, the lack of risk 
assessment. Really what are the risks to the pot of money, if 
you will, that you are charge with overseeing? We typically in 
IG offices look at what are the likely frauds that are most 
likely to occur? What is the likelihood of that happening? And 
then we look at the severity if it does. We make heat maps that 
give us an indication about where we should put our dollars, 
where they would be most effective. That was not done at SIGAR.
    The second thing is strategic planning. Everybody, I think, 
appreciates the importance of having goals, making sure your 
priorities are understood, and, unfortunately, that was not 
done very well at SIGAR, at least in the period that we 
reviewed.
    And, finally, I would say in terms of performance, a 
handicap that we saw was the way that human resource issues 
were handled--that is, the hiring decisions. As we point out in 
the report, there was a decision to wait to hire the head of 
investigations, to pursue one particular candidate, and that 
cost them almost a year in terms of performance on the 
investigative side. They decided not to hire a deputy until 
recently. That is another human resource issue that made it 
more difficult for them to perform.
    Senator Brown. So were the hiring delays, do you think, a 
lack of experience or knowledge in what the job at hand was? I 
mean, where do you see the breakdown?
    Mr. Moore. I would say that it goes back to not having the 
kind of focus on risk and the plan. If you are not sure exactly 
what the strategic plan is, what your priorities should be, it 
can affect the hiring decisions that you make.
    Senator Brown. Now, before I turn it back over to the 
Chair, I would think out of everything that we have been 
talking about here today that the number one priority of every 
independent group here is to try--well, obviously, dealing with 
Afghanistan specifically now--is to find out how much and where 
the monies are going, if they going at all to the Taliban and 
other groups that want to basically kill us. I am shocked that 
this is not like the number one priority, that we find out 
where that money is going and why it is going and who is 
delivering the funds, under what circumstances. Where is the 
breakdown? I am just flabbergasted as to--and I know that, I am 
going to be asking the questions to the next panel, but am I 
missing something? I mean, should not that be the priority of 
SIGAR and any other entity that is there independently finding 
where the waste, fraud, and abuse is? The biggest abuse is the 
fact that we are giving money to people that want to kill us, 
and they are not entitled to it. It is our money. I mean, I am 
sorry, folks. I know I am still semi-new here. We have a few 
new members now, but give me a break.
    Mr. Rymer. The one thing I would say, Senator, is the 
Special IG--to differentiate the Special IGs from the IGs that 
are assigned to or work in existing, standing Federal 
agencies--should be primarily focused, in my opinion, on 
contract oversight and management of dollars. The Special IGs 
exist because they are essentially attached to an appropriation 
or a series of appropriations, meaning that financial oversight 
should be a primary responsibility.
    Take the case of my organization, my primary responsibility 
as an IG in a regulatory agency is to look for waste, fraud, 
and abuse in the programs of a regulator, but it does not give 
me the same opportunities to look at situations where 
appropriations are managed controls are established, and 
contracting dollars are spent.
    So I think there is a difference, and I think it speaks to 
all three of the Special IGs, that their principal mission 
should be, in my view at least, looking at controls associated 
with contracting and how cash is being used.
    Senator Brown. And just to note, I wholeheartedly agree 
with you, so thank you for that independent statement and 
assessment, because the taxpayers are being hurt and the 
soldiers that are trying to defend us and do their jobs are 
being provided with--they have a disadvantage because some of 
our own monies are being potentially used to hurt or kill them, 
and I find that deeply troubling. So, Madam Chairman, I will 
turn it back over.
    Senator McCaskill. Thank you, Senator Brown.
    In reading your reports, I was struck by how factual and--
which I was not surprised. I knew that these would be very by-
the-book, very factual recitations of compliance and 
noncompliance that you found in the Yellow Book and in the 
Silver Book. And I think that I just have really one area I 
would like to cover with you, and that is the management and 
oversight issue.
    The head of an audit agency, their responsibility is really 
to make the decision about how the resources of that agency are 
going to be used. I think you all will both agree that General 
Fields was never expected to do these audits or to do these 
investigations. Is that correct?
    Mr. Moore. That is correct.
    Mr. Rymer. That is correct.
    Senator McCaskill. But, rather, his entire responsibility 
of taking over in this position was to look at what was flowing 
into Afghanistan and figure out where there was a risk. That 
was his most important job: First, the risk assessment; and, 
second, the audit plan that would address the risks that were 
assessed within the scope of the work that he had the legal 
ability to audit or investigate. Would that be correct?
    Mr. Rymer. That is correct. Yes, ma'am.
    Mr. Moore. Yes.
    Senator McCaskill. All right. Now put, in this context that 
we have been informed by major problems in Iraq. I mean, my 
frustration with General Fields and his position is that, as a 
former auditor, his job--it was like shooting fish in a barrel. 
There was so much work to be done as an auditor. I mean, 
everywhere you looked there was a contract that needed another 
set of eyes. There was a flow of money that needed 
investigation. There is potential for corruption, waste, misuse 
of money in almost every single location this money was 
flowing. I mean, this is a free-for-all in terms of risk 
assessment.
    But yet in the first 16 months of his tenure, there was not 
one audit performed on one contract. Is that correct?
    Mr. Rymer. Yes, ma'am, I believe that is correct.
    Senator McCaskill. That is hard for me to get around.
    Mr. Rymer. Ma'am, there were assessments of internal 
controls.
    Senator McCaskill. Right.
    Mr. Rymer. Specifically a contract audit? I do not recall a 
contract audit.
    Senator McCaskill. There was assessment of controls, and 
there was also a study done on the participation of women in 
the Afghan election. And I do not mean to minimize--the 
participation of women in the Afghan election is an important 
policy problem, and it is an important part of the overall 
mission in Afghanistan because we want--obviously, the 
capabilities of that country in terms of keeping the Taliban at 
bay includes a healthy participation in a democracy.
    With all due respect, either one of you in your experience 
as auditors, would that study--would that have made your risk 
assessment if you had been given this job in the first 18 
months?
    Mr. Rymer. The Afghan election? As I said, for a Special 
IG, I think the focus should be on the dollars. That should be 
the principal responsibility of any of the three Special IGs we 
have.
    Senator McCaskill. Mr. Moore.
    Mr. Moore. I would agree, and I would just point out that, 
in addition to doing the risk assessment as to the pot of 
money, if you will, one of the things that we discussed with 
SIGAR staff and pointed out in our report was you have to do 
that internal office risk assessment so that you know what your 
limitations are, what your skill sets are, what your resources 
are, what your priorities are, what is likely to limit you from 
getting the mission accomplished. That was not done at SIGAR.
    Senator McCaskill. Right. That is all the questions I have 
for this panel.
    Senator Brown. I am all set, too.
    Senator McCaskill. Thank you both very much for your 
service, and CIGIE is a very, very important part of oversight 
in this government. It is unfortunate that most Americans have 
no idea that many, many professional Inspectors General in the 
Federal system give of their time in overseeing other 
Inspectors General in the system. But I certainly understand 
that we would not have the quality of Inspectors General that 
we have in the Federal Government were it not for the work of 
CIGIE. So thank you, and please convey our thanks to your 
entire organization that does these peer reviews.
    Mr. Rymer. Thank you, ma'am.
    Mr. Moore. Thank you. [Pause.]
    Senator McCaskill. General Fields, welcome. Thank you for 
your attendance today. Let me introduce you to the hearing.
    General Fields has served as Special Inspector General for 
Afghanistan Reconstruction since July 2008. General Fields 
previously served as Deputy Director of the Africa Center for 
Strategic Studies at the Department of Defense and is a member 
of the U.S. Department of State (DoS) assigned to the U.S. 
embassy in Iraq, where he performed duties as the Chief of 
Staff of the Iraq Reconstruction and Management Office (IRMO). 
He retired as a Major General from the United States Marine 
Corps in January 2004 after 34 years of active military 
service.
    Let me state for the record how much your record speaks of 
you as an American, as a patriot, and how much our country owes 
you a debt of gratitude for your many years of service on 
behalf of the United States of America.
    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 you to stand. Do you 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?
    General Fields. I do.
    Senator McCaskill. We welcome your testimony, General 
Fields.

   TESTIMONY OF THE HON. ARNOLD FIELDS,\1\ SPECIAL INSPECTOR 
             GENERAL FOR AFGHANISTAN RECONSTRUCTION

    General Fields. Thank you, Chairman McCaskill and Ranking 
Member Senator Brown. I appreciate this opportunity to be here 
today. I would say it is a pleasure, but I would be telling a 
lie if I were to say so. But it is a privilege as well as an 
opportunity, and I wish to take full advantage of that 
opportunity.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Fields appears in the appendix on 
page 64.
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    I have worked in support of SIGAR for the past basically 
year and a half. Funding we received in June 2009 fully funded 
this organization. I have built SIGAR from nothing to 123 very 
well informed and talented staff, of which 32 to date are 
assigned for 13 months to a very dangerous place known as 
Afghanistan.
    This work is challenging. I have to find people who are 
willing to put their lives in harm's way in Afghanistan 
conducting this work in the midst of a very competitive market 
of investigators and auditors. I am proud of the staff that we 
have.
    We have conducted work in 22 of 34 provinces in Afghanistan 
and 48 separate locations. We have produced 34 audits, over 100 
recommendations, 90 percent of which have been accepted by the 
institutions of this Federal Government that we have 
scrutinized. They are using our work. I could cite many cases, 
but I will not at this point. But our work is, in fact, making 
a difference.
    I did--and I appreciate that the Chairwoman acknowledged 
that I requested the CIGIE assessment. We would not normally 
have undergone such a thing until--the earliest would have been 
2012. I wanted to make this organization what Senator McCaskill 
would wish that it be, and that assessment for which I 
individually and unilaterally made requests was intended to do 
just that.
    My leadership has been referred to as ``inept.'' That is 
the first time, Senator, that in all my life, a man of 64 years 
of age, who has supported this Federal Government for 41 
straight years, of which 34 have been as a military officer. I 
do not even allow my own auditors to refer to the people in 
Afghanistan as ``inept'' because it is too general a statement 
for any human being. I have met with many people in 
Afghanistan, from the President of Afghanistan to the little 
children in the province of Ghor. And when I ask those little 
children what is it on which this reconstruction effort and $56 
billion that the United States has invested in Afghanistan 
should be based, and I want you to know that those children, 
who were no higher than my knee, said to me the same things 
that President Karzai said as well as his ministers. They want 
energy or electricity or light. They want agriculture. They 
want education. And what really broke my heart is when those 
little children told me that, ``What we really want is a floor 
in our school.'' That is what we are up against in Afghanistan.
    We have created by way of this $56 billion an opportunity 
for the children in Afghanistan, who I feel represent the 
future of Afghanistan, as well as the rest of the people. And I 
would be the last, Senator McCaskill and Senator Brown, to 
condone in any form or fashion any activity that leads to less 
than the full measure of that $56 billion being used for the 
purposes for which it was made available.
    I want this Subcommittee to also note that I take this work 
very seriously. Why? Because I was raised up in South Carolina 
in a family not unlike that in Afghanistan, where the level of 
education for both my mother and father was less than fifth 
grade. But, nonetheless, the best training that I received in 
my life came from my mother who had less than a fifth grade 
education. I wish that someone had brought $56 billion to bear 
upon my life. But here I am in a very important position and 
trying to influence what is going on in Afghanistan to the best 
of my ability, using a very knowledgeable and competent staff 
by which to do so.
    I raised up hard, ladies and gentlemen, in poverty myself. 
I worked for less than $1.50 a day, about what the average 
Afghan makes today in the year 2010. On the day President 
Kennedy was buried, which was a no-school day for me, my 
brother and I shoveled stuff out of a local farmer's septic 
tank with a shovel for 75 cents per hour for the two of us. I 
know what it is to live in poverty, and I know what it is to 
have an opportunity, and my country has given me that, and by 
which I am pleased and very grateful.
    I will do my best, Senator McCaskill and Senator Brown, to 
measure up to your full expectations. I appreciate the emphasis 
that you have placed on contracting in Afghanistan, but I want 
also to say that the legislation that I am carrying out has 
three dimensions. Contracts is not the exclusive one, but I 
will agree with you that is where the money is, and we should 
focus more on that. But I am also tasked to look at the 
programs as well as the operations that support this tremendous 
reconstruction effort. And I promise you, Senators, that I will 
do so. Thank you.
    Senator McCaskill. Thank you, General Fields.
    General Fields, I certainly respect your life story and 
what you have accomplished, and no one--I can speak, I think, 
confidently for Senator Brown and every other U.S. Senator. No 
one questions your commitment to the United States of America. 
That is not the question here. The question here is whether or 
not the important work of the Inspector General in Afghanistan 
has been fulfilled and completed, especially within the time 
frames that we are working with because of the contingency 
operation.
    You submitted 12 pages of written testimony for this 
hearing. Less than one page of those 12 addressed the serious 
deficiencies found in your peer review by other Inspectors 
General trying to measure the work of your audit agency against 
the standards that are required in the Federal Government. You 
did say in your testimony that the findings have helped you 
strengthen your organization and that you have now made 
changes.
    Let me talk about the law that you are operating under. The 
law that you are operating under, I am sure you are aware, 
requires a comprehensive audit plan. Are you aware of that, 
General Fields, that the law requires a comprehensive audit 
plan?
    General Fields. Yes, I am.
    Senator McCaskill. And when did you begin work on a 
comprehensive audit plan?
    General Fields. We began work on a comprehensive work plan, 
Senator, when I published the very first quarterly report which 
contained how we planned to proceed with this very new 
organization and oversight entity. In that report delivered to 
this Congress on the--I am sorry. In that report delivered to 
this Congress at the end of October 2008, I laid out in general 
what we would pursue, and I am pleased to say that at the top 
of that list is, in fact, contracting. That was followed up 
with the hiring of Mr. John Brummet as my principal auditor, 
someone who----
    Senator McCaskill. And when did that hire occur?
    General Fields. That hiring actually occurred the first 
week of January 2009. That is when Mr. Brummet actually 
reported aboard. But we commenced the process of bringing him 
aboard, of course, much earlier than that. And then we----
    Senator McCaskill. And you had been at the agency how long 
when he actually joined the agency?
    General Fields. I had been at the agency----
    Senator McCaskill. Since July 2008, correct?
    General Fields. That is when I was sworn in, yes, ma'am.
    Senator McCaskill. Now, in the audit plan that the law 
requires--and I am sure that--I hope the first thing you did 
was to look at Public Law 110-181 and look at the statutory 
requirements of your job. That plan that was required lays out 
that it must be consistent with the requirements of Section 
842, subsection (h), which are the audit requirements that the 
Congress placed on SIGAR. Are you familiar with the audit 
requirements in subsection (h), General?
    General Fields. In general, yes, I am.
    Senator McCaskill. Could you tell us what those 
requirements are?
    General Fields. That we would conduct thorough audits of 
the spending associated with our contribution to reconstruction 
in Afghanistan.
    Senator McCaskill. I am not trying to play ``gotcha'' here, 
General, but there are seven requirements in Section (h), and I 
am going to lay them out for the record, and after I do each 
one, I would like you to tell me if that has been completed 
and, if so, when.
    General Fields. Yes, ma'am.
    Senator McCaskill. The first one is--these are the things 
at a minimum you are required to examine as Special Inspector 
General. The first one is the manner in which contract 
requirements were developed and contracts or task and delivery 
orders were awarded. Has that been done by SIGAR? Have you 
examined contract requirements in Afghanistan and contracts or 
task and delivery orders, how they were awarded? Has you agency 
done that at this date?
    General Fields. We have conducted several contract audits. 
Each of those audits has addressed matters associated with how 
contracts came about.
    Senator McCaskill. How many contract audits have you 
completed?
    General Fields. We have completed about four contract 
audits.
    Senator McCaskill. And how long--you have done four 
contract audits, but isn't it true that all of those have 
occurred essentially in the last 12 months?
    General Fields. That is correct.
    Senator McCaskill. Number two, the manner in which the 
Federal agency exercised control over the performance of 
contractors. Have you done that audit work?
    General Fields. We have examined in each of our audits the 
extent to which controls have been in place to guard against 
waste, fraud, and abuse of the American taxpayer's dollar. In 
so doing, yes, ma'am, we have looked at those matters as they 
related to contracts specifically in those areas in which we 
have conducted focused contract audits of specific initiatives 
for which funding is being available.
    Senator McCaskill. All right. So the first requirement 
dealt with contract requirements and task and delivery orders. 
The second requirement, the manner of control over contractors 
of the Federal Government.
    Number three, the extent to which operational field 
commanders were able to coordinate or direct the performance of 
contractors in the area of combat operations. Has that work 
been done?
    General Fields. Senator, the very first audit that we 
conducted was a contract being supervised by CSTC-A, which is 
responsible for the oversight of training and equipping the 
Afghanistan security forces. That contract is worth $404 
million to the American taxpayer.
    Senator McCaskill. And how many audits have you done that 
address the oversight of contractors by field commanders?
    General Fields. Forty percent, Senator, of our audits have 
either been direct audits or focused contract audits or 
contract-related audits.
    Senator McCaskill. I thought you said you had done four 
audits on contracts.
    General Fields. I said four audits because I was 
referencing four focused contract audits, which were of multi-
million-dollar infrastructure initiatives specifically 
associated with the stand-up of the Afghanistan security 
forces. But I am also saying we have audits that addressed 
contracts in general that relate to the stand-up of the 
Afghanistan security forces and other initiatives in 
Afghanistan.
    Senator McCaskill. Number four, the degree to which 
contractor employees were properly screened, selected, trained, 
and equipped for the functions to be performed. Is there a 
report that you could point me to where I could get reassurance 
that we are doing adequate selection, training, equipping, and 
screening of contract personnel in Afghanistan?
    General Fields. Senator, the very first audit, once again, 
that we published, the $404 million contract, we found in that 
audit the supervision of that particular contract was 
inadequate whereby the actual entity, the expert in contract 
was really living in Maryland and not physically located on a 
permanent basis in Afghanistan.
    Senator McCaskill. How many contracts are operational in 
Afghanistan right now?
    General Fields. I do not know, Senator.
    Senator McCaskill. Can you give me a ballpark?
    General Fields. I know that there are, based on our most 
recent audit, between 2007 and 2009 of all contracts for which 
we could find information at that point in time 6,900 
contracts, among which I am confident are a number of the type 
that you just mentioned.
    Senator McCaskill. OK. So I have asked several questions. 
In each one you referred to the same audit of one contract. So 
of the six thousand--what did you say the number was?
    General Fields. 6,900, Senator.
    Senator McCaskill. So we have almost 7,000 active 
operational contracts, and there have been four audits 
completed of those contracts?
    General Fields. The 6,900 is a roll-up of contracts in 
general regarding Afghanistan between the years 2007 and 2009. 
How many of those might be defined as operational contracts, I 
do not know.
    Senator McCaskill. But you do not have any reason to 
believe that has gone down, do you?
    General Fields. No, ma'am, I do not.
    Senator McCaskill. In fact, it has probably gone up.
    General Fields. Absolutely.
    Senator McCaskill. Absolutely. All right. The next one, the 
nature and extent of any incidents of misconduct or unlawful 
activity by contractor employees. How many audits have you done 
that would reassure the American people that you have, in fact, 
looked for, found, or are confident there is no unlawful 
activity by contractor employees?
    General Fields. Senator, I would say that in each of the 34 
audits that we have conducted, those matters have been of 
concern. But each of those 34 audits may not necessarily have 
been directly related to a contract.
    Senator McCaskill. How many findings have you issued 
dealing with misconduct or unlawful activity by contractor 
employees? How many findings in these audits?
    General Fields. I do not think that we have identified 
misconduct per se. We have identified issues that we have given 
to our investigators for further follow-up. And I can 
specifically----
    Senator McCaskill. I am sorry. Excuse me.
    General Fields. Well, I am sorry, Senator.
    Senator McCaskill. That is OK. Go ahead.
    General Fields. I can specifically tell you of a specific 
audit that we have conducted which started out as a general 
audit of the Kabul Power Plant, an item worth $300 million to 
the American taxpayer. And during the course of that audit, we 
found anomalies that we felt were investigatory in nature, so 
we tailored and shortened the scope of our audit, and the rest 
of those matters were turned over to our investigators, and 
they are still being pursued.
    Senator McCaskill. The remaining two requirements in terms 
of audits that must be performed: The nature and extent of any 
activity by contractor employees that was inconsistent with the 
objections of operational field commanders. And, finally, 
number seven, the extent to which any incidents of misconduct 
or unlawful activity were reported, documented, investigated, 
and prosecuted.
    To what extent have you been able to produce a report as to 
how much unlawful activity has actually been investigated and 
prosecuted?
    General Fields. I do not have an answer for that question 
at this time, but I will assure the Senator that, as we conduct 
our audit work and as we conduct our investigations work, all 
of those matters are, in fact, taken into consideration.
    Senator McCaskill. Thank you, General.
    Senator Brown.
    Senator Brown. Thank you, Madam Chairman.
    General thank you once again. I mirror Senator McCaskill's 
kind words about your service. As someone who is still serving, 
I greatly appreciate that service. And I noted in your 
testimony how you had great concern for the Afghan children and 
the needs of the people in Afghanistan, and I understand that. 
I also have, however, great concern about our soldiers, the men 
and women that are fighting, and also the taxpayers who are 
providing that $56 billion. It does not grow on trees.
    And that being said, I know you have been in the position 
since July 2008, and the last panel that you heard noted 
serious deficiencies, management deficiencies during their 
review.
    Now that you have held the office for over 2 years, what 
major course corrections are you currently taking to rectify 
these serious deficiencies?
    General Fields. Thank you, Senator. July 2008, that was the 
month during which I was privileged to be sworn into this 
position, but funding for SIGAR did not really come until much 
later. That is why I pointed out that we did not receive full 
funding for this organization until June 2009.
    Senator Brown. So noted, and that is a good point. Thank 
you.
    General Fields. Thank you, Senator. But in reference to 
course corrections, one of the reasons I asked for the CIGIE to 
come in early, about 2 years in advance of the time which it 
normally would have as we anticipated, was to help me set the 
course correctly for this organization. And I am using the 
results of both the audit, the investigations, and the so-
called capstone review of SIGAR to help chart the course. So I 
have put in place as of September 30 of this year the 
recommendations and are implementing the suggestions made by 
the review team.
    Senator Brown. And how have you done that? What 
specifically as to--the biggest thing where I think Senator 
McCaskill and I are concerned about, which is the money. I know 
you have done some good reports and investigations on other 
things that you have commented on, which is policy issues 
relating to the ability for the Afghan people to, live and 
grow. But in terms of the things that many taxpayers right now 
are concerned about is the dollars. They are growing weary. 
They want to know where their money is going. What actions, 
based on the recommendations, do you have in place?
    General Fields. Thank you, Senator. I am a taxpayer as 
well, so I have as much interest, if not more in my particular 
case, as the individual American taxpayer. We are doing a 
better job of risk assessment. We found that to be a weakness 
to which earlier attention in a much more pointed way should 
have been turned. So we are improving the means by which we 
determine where it is that we should focus our effort.
    Senator Brown. And where is that leading you now?
    General Fields. Well, it is leading us to a greater focus 
on contracts, because that is, in fact, where the money is. But 
as the initial questioning by Madam Chairman, we have to also 
address the front end of this reconstruction effort. To what 
extent are the policies being put in place by those who are 
implementing this $56 billion?
    Senator Brown. I understand that and I respect that 
approach. But right now, now that you have kind of been put on 
notice by everybody that, we understand the policies and all 
that stuff, but what specifically are you doing now based on 
the recommendations that you have been given? What are you 
specifically doing so I can tell the people back home in 
Massachusetts and all of our viewers--I do not know how many 
there are, but all the viewers we have--where are you focusing? 
Give me some specific examples so I can advocate and say, hey, 
he is kind of learning--he is learning and growing, he has 
taken a spot, he has the funding after a year of being sworn 
in. He has now been given an independent requested audit. So 
give me some specific examples as to what you--I do not want to 
beat a dead horse here, but I need to know where exactly you 
are focusing. Are you focusing, for example, on how the heck 
Taliban is allegedly getting money from us taxpayers? Are you 
focusing on that? Are you focusing on the bribes and payoffs? 
Are you focusing on the fact that the Afghan army is not--after 
the $6-plus billion we have spent, is still not up and running. 
I mean, where are you focusing exactly?
    General Fields. Sir, we are focusing on several broad 
areas, but at the top of that list happens to be contracting.
    Senator Brown. What specifically in contracting? What area 
are you doing? Are you looking at bridges, roads, power? What 
are you doing specifically? I know contracting is so big. We 
heard we have 7,000 contracts or more.
    General Fields. Yes, sir.
    Senator Brown. Give me an area. Have you actually initiated 
some investigations already?
    General Fields. Sir, we have 89 investigations ongoing as 
we speak.
    Senator Brown. And where are they being focused?
    General Fields. They are focused on fraud and theft.
    Senator Brown. And based on that, what types of things are 
you investigating? What examples could you give to me and the 
American taxpayers of what you are seeing? What made you go to 
that particular area versus another area?
    General Fields. Because that is where we feel that the 
vulnerability is for the American taxpayer's dollar.
    Senator Brown. Based on what? Some tip-off? Some prior 
types of contracts? I mean, why did you specifically want to go 
for that area?
    General Fields. Based on all of the above, sir.
    Senator Brown. OK. Can you share your thoughts about how we 
can strategically deal with this very complex challenge that 
you stated in your testimony about your concern in the role and 
cost of private security contractors, specifically as it 
relates to fueling corruption and financing insurgents, as I 
said, or strengthening criminal networks? What tangible actions 
are required to try to defer this corruption? What can you tell 
me about that?
    General Fields. Sir, I believe that the fight against 
corruption must take place on several levels and many 
dimensions, the first of which is that we need to give 
consideration to what it is that we are doing in support of the 
reconstruction effort and the government of Afghanistan. We are 
conducting a reconstruction effort in three broad areas: 
Security, governance, and development. And each of those we 
feel needs to be addressed.
    We are devoting and have devoted $29 billion to security in 
Afghanistan itself, the stand-up of the Afghan security forces, 
the police and the army. We have devoted $16 billion to 
governance and development, and therein lies the vulnerability 
of the American taxpayer's dollar.
    So we are pursuing audits and investigations that will help 
mitigate the potential for the American taxpayer dollar to be 
wasted, frauded, or abused.
    Senator Brown. I know you are getting $46 million to 
complete your mission. That is a lot of money. And I noted here 
on the chart that Senator Coburn referenced, you have basically 
identified in terms of fraud, waste, and abuse of about $8 
million. So 46 you have been given, $8 million in the time 
frame. Can you tell me why there has not been more of kind of a 
collection on that fraud, waste, and abuse up to this point?
    General Fields. Sir, a contributing factor is the slow 
start that this organization had in standing up, a part of 
which I am inclined to attribute to the lack of funding----
    Senator Brown. Listen, I am going to give you that one 
because that is something that I would note. You are sworn in, 
you get the funding, you get the funding, you got to get it up, 
you got to get it running. So let us just take in the last 9 
months, for example, have you had any success that you want to 
share with us?
    General Fields. I feel that we have had some successes. We 
have----
    Senator Brown. Hard-dollar success?
    General Fields. Hard dollars, $6 million that we have 
reported in our most recent report. We have an ongoing forensic 
audit of $37 billion looking at over 73,000 transactions from 
which we intend to be vectored towards crime or potential 
crime. And we are moving in that direction, so we are using 
forensics as a means by which to fairly quickly identify the 
vulnerabilities, and then we are structuring audits and our 
investigations accordingly.
    Senator Brown. One final, and then I will turn it back. In 
your latest SIGAR quarterly report, on page 6, it mentions that 
Afghan private security contractor--I think it is Watan Risk 
Management--has been suspended and debarred after it was found 
funneling large sums of money to insurgents.
    Now, I have met with General Petraeus on many occasions 
concerning our Afghan policy, and I agree with him that we must 
be better buyers and buy from better people.
    What oversight actions are you taking through your audits 
and investigations to prioritize General Petraeus' directive 
that those funds will be given to better people and not to our 
enemies?
    General Fields. Well, first, I applaud General Petraeus and 
the initiatives that he has taken to address this issue of 
corruption. The stand-up of Task Force 2010 is one of those 
very significant initiatives. We are working very closely with 
Task Force 2010. We are also working with the International 
Contract Corruption Task Force in order to harness the 
investigatory initiatives of the Federal agencies so that we 
can bring our wherewithal very quickly to bear upon finding 
folks who are bilking the American taxpayer out of money.
    Senator Brown. OK. Thank you, Madam Chairman. Thank you, 
General.
    Senator McCaskill. General Fields, in your testimony to me 
a few minutes ago, you referred to the CSTC-A audit. The CSTC-A 
audit, the first audit you did.
    General Fields. Yes, ma'am.
    Senator McCaskill. Is that correct? That was the first 
audit?
    General Fields. That is correct.
    Senator McCaskill. And do you recall how long that audit 
was, how many pages?
    General Fields. I do not recall how many pages, but I am 
pretty sure it was not a very large audit, Senator.
    Senator McCaskill. Does 12 pages sound right?
    General Fields. That may be about right, the summary of 
that audit, yes, ma'am.
    Senator McCaskill. And how many pages in that audit 
actually contained the audit work?
    General Fields. I would have to review that audit because 
it----
    Senator McCaskill. Would four pages sound correct?
    General Fields. Maybe, Senator.
    Senator McCaskill. OK. And the other audit you referred to 
in the previous testimony was the audit on the Kabul Power 
Plant?
    General Fields. That is correct.
    Senator McCaskill. And had not a very similar audit been 
done by USAID exactly 1 year prior to the time that you did 
that audit?
    General Fields. That is correct.
    Senator McCaskill. And let us talk about the funding of 
your agency. USAID did a very similar audit to the one that you 
did 1 year prior on the Kabul Power Plant. Do you know what the 
funding for USAID has been in terms of their Inspector General 
work in Afghanistan over the last--I do not know how many--5, 6 
years? Do you know what their total funding has been?
    General Fields. Funding for USAID in terms of its 
operations in Afghanistan? I do not know.
    Senator McCaskill. $10 million. And do you see what they 
have recovered for a $10 million taxpayer investment? $149 
million. And you have received $46 million. Is that correct, 
General?
    General Fields. $46.2 million, to be exact, Senator.
    Senator McCaskill. And you all have recovered $8.2 million?
    General Fields. At this point in time, yes.
    Senator McCaskill. Can you understand as an auditor, as I 
look at those numbers, it is very hard for me to reconcile the 
notion that a lack of funding has been your problem?
    General Fields. Senator, the recoveries that we have thus 
far experienced are small, but the full measure of the outcome 
of audits and investigations that are underway are--that full 
measure has not thus far been determined, and our forthcoming 
numbers will be much larger than the numbers that we submitted 
to the CIGIE in their roll-up of work that the Federal IG 
community in general, had done for 2009.
    Senator McCaskill. Let us talk about contracting. One of 
the things that is very important is how audit agencies 
contract because your job is to oversee contracts. And your job 
is to determine if there are contracts that are not needed, or 
could be put to better use. Out of the $46 million that you 
have received, how much money are you spending to Deloitte & 
Touche just to prepare your reports for Congress?
    General Fields. That contract, Senator, started out at $3.7 
million at a time when we had a paucity of people to do the 
very specific type of work for which we have contracted 
Deloitte & Touche to help us. The intent of that arrangement 
was to facilitate the gaps in our own personnel and the skill 
sets that were needed at that point in time. And over a period 
of time, we would commensurately reduce that contract as we 
were able to bring that particular level of talent aboard in 
SIGAR.
    Senator McCaskill. OK.
    General Fields. And we are doing that, Senator.
    Senator McCaskill. All right. You spent $3.7 million in the 
base year on Deloitte & Touche and $2.7 million this year for 
Deloitte & Touche, and their only function is to produce 
reports to Congress, correct?
    General Fields. Deloitte provides also assistance to us in 
database management. That is one aspect of it. But they 
principally assist SIGAR in putting together the reports that 
we do submit to Congress, which is a very detailed report, a 
very important report, and we feel that the extent to which we 
have gone to ensure that the report is put together correctly 
and is presentable to this Congress is commensurate with the 
money that we have invested in Deloitte & Touche to do so.
    Senator McCaskill. So just because I want to clarify this, 
because I will tell you, candidly, I do not want to lay out my 
fellow Members of Congress here, but an investment of that kind 
of money in a report to Congress when there is the kind of 
audit work that needs to be done, and when you are using the 
lack of funding as one of the rationales because of why more 
audit work has not been done and why it has taken so long for 
audits to really be performed or produced in a manner 
commensurate with the size of your agency, let us compare here. 
The contract total to Deloitte & Touche is $6.6 million, and 
the total amount of funding to AID IG is $10 million in 
Afghanistan. And for that $10 million, we got $149 million 
back. Meanwhile, with the $6.6 million to Deloitte & Touche, 
all we have is a shiny report and pretty pictures for Members 
of Congress, most of which will never see it.
    Do you understand why that causes one pause about whether 
or not that is a strong leadership decision, General Fields?
    General Fields. Senator, we have been told by Members of 
this very Congress that they appreciate the report that we 
provide for them. Similarly, the Federal community elsewhere 
have told us that they appreciate the detail and the 
correctness of the reports that we produce.
    Senator McCaskill. And let us talk about the contract with 
Joseph Schmitz. Now, you have an audit, and it is completed, 
your peer review, and it is not good. And, in fact, for only 
the second time in 50 peer reviews you have been recommended to 
lose your law enforcement capability in an arena where 
desperately needed law enforcement capability is absolutely 
essential. You have had this audit, and after the audit is 
done, you hire someone, it is my understanding, to help you 
monitor compliance with the audit recommendations. Is that a 
fair characterization of what your contract with Joseph Schmitz 
was supposed to represent?
    General Fields. That is a fairly fair characterization, 
Senator. But we hired this independent monitor commensurate 
with a plan of action and milestones that I put in place in 
response to the results of the CIGIE in order to move SIGAR 
quickly along to putting in place the corrective action that 
had been identified for us. I set that date at September 30 of 
this year, and we are a better organization because we had this 
external agency to come in and provide us this particular 
expertise during that period.
    Senator McCaskill. And this was a no-bid contract.
    General Fields. It was a sole-source contract for which we 
made a request.
    Senator McCaskill. That is a no-bid contract, sole-source. 
Correct.
    General Fields. That is correct?
    Senator McCaskill. OK. And what you said is you needed the 
immediate establishment of an independent monitor to 
independently validate and verify agency actions and compliance 
in response to issues contained in the CIGIE letter of July 15, 
2010, to the Attorney General of the United States. Is that 
correct?
    General Fields. Senator, we wanted to----
    Senator McCaskill. That is the document that--the 
information in the document for the justification and approval 
of a no-bid contract.
    General Fields. Senator, we wanted to quickly correct the 
areas of concern pointed out by the peer evaluation. We did not 
wish to lose or put in jeopardy any further the authorities for 
criminal investigations that had been provided to me by way of 
the Department of Justice. And we felt that this entity would 
provide that independent look at us, and we felt that would 
help mitigate any concerns that this Congress and the overseers 
of SIGAR on Capitol Hill might have as well as to reassure 
anyone else who might be interested in the outcome of that peer 
evaluation.
    Senator McCaskill. Well, isn't CIGIE back doing an 
independent review of whether or not you have complied with the 
audit now?
    General Fields. Please repeat the question, Senator.
    Senator McCaskill. Isn't CIGIE looking now to see if you 
have complied with the audit? Aren't they the independent body 
you are looking for in terms of seeing if you have, in fact, 
corrected the deficiencies?
    General Fields. CIGIE is now looking at the audit piece, 
but the investigation piece has yet to get underway. But, 
nonetheless, I have made requests that they come back in.
    Senator McCaskill. OK. And so Army Contracting Command who 
awarded the contract on behalf of SIGAR said this contract was 
sole-source because there was only one person, Mr. Schmitz, who 
was available and qualified. Did you reach out to any other 
retired IGs if you were going to hire someone else to come in 
and tell you whether or not you were complying with the audit?
    General Fields. Not at that time, Senator.
    Senator McCaskill. Did you ask for suggestions from Mr. 
Rymer or, more importantly, Mr. Moore?
    General Fields. No, we did not.
    Senator McCaskill. And did you talk to them about using Mr. 
Schmitz?
    General Fields. Did I what?
    Senator McCaskill. Did you talk to Mr. Moore and his team, 
the group of independent peer review auditors that looked at 
your process and quality control in criminal investigations, 
did you discuss Mr. Schmitz with them, about hiring Mr. 
Schmitz?
    General Fields. No, I did not.
    Senator McCaskill. All right.
    General Fields. Someone may have done so on my behalf, but 
I did not personally.
    Senator McCaskill. When my staff spoke with your staff in 
September, your staff said they had expected Mr. Schmitz would 
be entering into a subcontract with Louis Freeh, the former 
Director of the FBI, who also works with Mr. Schmitz, on the 
independent monitor team for DaimlerChrysler. Or Daimler now, I 
guess. SIGAR officials stated they believed that Mr. Freeh 
would ``be intimately involved'' in the outreach to Attorney 
General Holder. Was that your understanding?
    General Fields. That is not necessarily my understanding, 
and I cannot account for what folks may have communicated to 
your staff or to anyone else. My intent, Senator, was to bring 
aboard an independent entity to provide the oversight of the 
plan of action that we were putting in place to move this 
effort quickly along so that we could come into compliance with 
the Department of Justice (DOJ) requirements.
    Senator McCaskill. Did you expect that Mr. Freeh was going 
to be working on this contract, General Fields?
    General Fields. I did at the onset, yes, ma'am. I had 
confidence----
    Senator McCaskill. And what was Mr. Freeh's function as it 
related to what you expected him to do? A reach-out to General 
Holder?
    General Fields. No, ma'am. I did not expect anyone to reach 
out per se. I expected the oversight being provided by this 
entity to help SIGAR and the Inspector General correct the 
issues that had been pointed out.
    Senator McCaskill. Well, your staff said to us that Mr. 
Freeh would be intimately involved in an outreach to General 
Holder. You understand what this looks like, don't you?
    General Fields. I would ask that the Senator explain what 
you are referring to.
    Senator McCaskill. It looks like that you all went out and 
found somebody who could get to Louis Freeh, who could get to 
Attorney General Holder, and make sure you did not lose your 
ability to exercise law enforcement functions. It looked like 
you were trying to hire someone to help influence the Attorney 
General of the United States as opposed to fixing the problem 
and then having the same independent audit group come back and 
certify that you had fixed the problem.
    General Fields. Senator, I as Inspector General had 
confidence in Mr. Freeh because he is a former Director of the 
FBI, because he is a former judge, and because, as I learned 
along the way, Mr. Schmitz was associated with his firm, and in 
which I had confidence because of Mr. Freeh's contribution 
already to this government and also Mr. Schmitz's contribution 
to the government in a role that I was playing at that time. 
That was my line of thinking. It had nothing to do, Senator, 
with any other potential influence in reference to the Attorney 
General. I wanted to correct the issues that had been pointed 
out to me by the peer evaluation, and that was my only 
objective.
    Senator McCaskill. It is my understanding that Mr. Moore's 
team--this contract was worth $100,000, correct, to Mr. 
Schmitz? He got a hundred grand?
    General Fields. No, Senator. The contract was worth 
$95,000.
    Senator McCaskill. Excuse me. The contract was worth 
$96,095. And how many days did Mr. Schmitz work on this for 
$96,095?
    General Fields. He was with SIGAR for approximately 2 
months.
    Senator McCaskill. So 60 days and he got $96,095.
    General Fields. That is correct, and----
    Senator McCaskill. About $45,000 a month.
    General Fields. Senator, we followed the rules in engaging 
in this contract. We utilized the Contract Center of Excellence 
in Washington that many other entities use, and the $95,000 was 
the fair market value for the specific work that we were 
requesting that this----
    Senator McCaskill. With all due respect, General, I got to 
tell you the truth. You are supposed to be finding ways to save 
the American taxpayers' dollars, and, please, I do not think it 
is a good idea to say that it was fair market value to pay 
somebody $46,095 a month to try to fix a problem in your 
investigations unit to the satisfaction of the Attorney 
General. Isn't it true that Mr. Moore is going to complete the 
work in just a few days and it is not going to cost anything in 
terms of determining whether or not you now have the proper 
procedures in place to do law enforcement work as the Special 
Inspector General of Afghanistan?
    General Fields. Senator, I believe that the decision that I 
made at that point in time was a good decision. I did not 
anticipate all of the scrutiny that this particular initiative 
has received since that decision. Had I had an opportunity to 
do it all over again, I probably would have made a different 
decision.
    Senator McCaskill. That is good news. General. Senator 
Brown.
    Senator Brown. Thank you. I just have a couple of 
questions.
    In fiscal year 2011, General, you are slated to get $16.2 
billion. If approved, how will that money be tracked and how 
will it be measured? And what expected return on the investment 
would you expect the taxpayer to get?
    General Fields. Senator, we would expect that the full 
measure of the $16.2 billion, which is primarily designed for 
training and equipping of the Afghanistan security forces, we 
expect that the full measure of the taxpayers' investment in 
terms of a return will be achieved. To that end, we have asked 
for additional funding for SIGAR so that we can increase the 
numbers in our staff so that we can provide the coverage and 
oversight necessary to ensure the American taxpayer that the 
money is completely used for the purposes for which made 
available.
    Senator Brown. So when you say ``full measure,'' what does 
that mean exactly in laymen's terms, ``full measure''?
    General Fields. Well----
    Senator Brown. I know there is some military in there. I 
get it. So just tell--when you say you expect to get the ``full 
measure,'' what does that mean exactly?
    General Fields. Well, ``full measure'' means, sir, that the 
$16.2 billion was requested for specific initiatives associated 
with the stand-up of the Afghanistan security forces. So the 
full measure means that $16.2 billion would be exclusively used 
for that purpose without waste, fraud, and abuse. That is what 
I am referring to, Senator.
    Senator Brown. I see there is 25--if I am reading this 
correctly--well, how much are you going to spend in personnel 
compensation? Do you have any idea?
    General Fields. Personnel compensation, not unlike the rest 
of the Federal community, is high, and our personnel 
compensation is, I believe, commensurate with my SIGIR 
counterpart. Our staff who work in Afghanistan by way of a 
compensation package approved by this Congress receives 70 
percent in addition to their regular pay for danger pay and 
location pay. We have to pay that, Senator. SIGAR is an 
independent agency. I must pay as we go for everything that we 
receive, personnel and otherwise. The cost is very high, but we 
are also a temporary organization, Senator, so when we bring 
people aboard, they know that. And we bring people aboard for 
13 months. It is not like a standing and statutory Federal 
agency and the Inspectors General thereof.
    We are also competing in a market where 70 other Inspectors 
General in this city are looking for auditors and 
investigators, and we have to compete in that regard with their 
compensation in order to bring aboard the level of talent that 
we need.
    I wish it were cheaper, Senator. I certainly do.
    Senator Brown. So, General, let me just finish with this. 
Then I am going to move on, either to turn it back or we are 
going to go on to the next panel. You know where I would like 
you to focus? I just want you to follow the money. I just want 
you to find out where the money is going and zero in on the 
Taliban issue, why and how they are getting any of our monies, 
number one. I want to know if there are any bribes and payoffs 
and criminal activity going on where the money should not be 
going. If there are people that are doing it, then, what are we 
going to do to stop it and plug that leak? I understand--but 
not for you telling me, I would have overlooked the fact that 
you got appointed and then there was a transitional period. So 
I get that. But now that you have done all the--women in 
elections and all the policy stuff and you have focused there, 
I think the message from me and Senator McCaskill and the folks 
that did your independent audit--and I commend you for reaching 
out and doing that. Either it was a CYA situation or you 
seriously wanted to actually get there and get some guidance, 
because maybe it was new or maybe there was not any guidance. 
But they have given you the guidance. I think we are giving you 
some guidance. Please protect our money. Find a way to bring 
that number up so that we can feel confident that the millions 
we are giving you, we are getting millions in return. At least 
make it a wash. That is my only message.
    I have nothing further. Thank you.
    Senator McCaskill. Let me clean up a couple of things. I do 
not have a lot of other questions. But, in fact, Louis Freeh 
never was engaged or declined to participate in any way in this 
contract. Correct, General Fields?
    General Fields. That is correct, Senator, as far as I know. 
What assistance Mr. Freeh may have given Mr. Schmitz of which I 
am not aware, then I am not able to comment on that, Senator.
    Senator McCaskill. And I have not gone into any of the 
issues surrounding Mr. Schmitz in his previous tenure at the 
Department of Defense. But were you aware at the time that you 
hired him that there had been some controversy concerning his 
previous tenure as a Department of Defense Inspector General?
    General Fields. Senator, I was completely unaware of any--
--
    Senator McCaskill. But that would have been a vet that you 
might have done, maybe just a basic Google search for his name 
that would have revealed that there was, in fact, some 
questions that were asked, so you would have had a chance to 
ask him before you hired him and be clear that there were not 
any problems associated with him?
    General Fields. Senator, our initial initiative really was 
to engage the Louis Freeh group of which Mr. Schmitz, to our 
understanding, was a part.
    Senator McCaskill. So now you have said that the reason for 
hiring him was to get to Louis Freeh, to engage Louis Freeh.
    General Fields. Not necessarily, Senator. The reason for 
hiring any of these entities was to help bring the talent and 
expertise that we needed at that point in time to address the 
issues in SIGAR, and we----
    Senator McCaskill. You just said--I said, ``Why didn't you 
vet him,'' and you said, ``Because we were hiring him to get to 
Louis Freeh.'' You just said that in your testimony. We can 
read it back.
    General Fields. No, Senator, I did not say that I was 
hiring anybody to get to Louis Freeh.
    Senator McCaskill. OK. Then let us start again. Why did you 
not vet Mr. Schmitz before you hired him?
    General Fields. I personally had no cause to do so.
    Senator McCaskill. OK.
    General Fields. And these matters, Senator, were being 
handled by way of my contracting officer and by way of the CCE.
    Senator McCaskill. So----
    General Fields. I did not have any reason to doubt the 
integrity and so forth of Mr. Schmitz, and as I understand it, 
the issues of which he may have been accused during his tenure 
as Inspector General--and this is information I have found out 
subsequent to the Senator having raised questions about my 
decision in hiring this particular contractor. But as I 
understand it, the issues that were brought up concerning Mr. 
Schmitz were not corroborated in the final analysis.
    Senator McCaskill. You understand that the reason that this 
even has come up about Mr. Schmitz is in preparation for this 
hearing, we did basic investigatory work that SIGAR should be 
doing. And when we did basic investigatory work, we found that 
Senator Grassley had a lot of questions about Mr. Schmitz when 
he was Inspector General at DOD. And I am not saying whether 
Senator Grassley was right or wrong. I am saying it is very 
troubling that you would not be aware of those questions before 
paying someone the amount of $450,000 a year to do work for the 
Federal Government, General Fields. That is what I am getting 
at, that this--an audit agency is careful about who they hire 
and whether or not there is any appearance or problem. And I am 
not saying there is a problem, but the fact that you did not 
even know that there might be one is what I am trying to bring 
to your attention.
    Did Mr. Schmitz ever go to Afghanistan?
    General Fields. Not under the contract involving SIGAR, to 
my knowledge. There was----
    Senator McCaskill. So the pay for him that you claim is 
market value, the $45,000 a month, did not involve any high 
risk on Mr. Schmitz's part, other than calling Louis Freeh's 
office?
    General Fields. Potentially--correct, as far as I know, 
Senator.
    Senator McCaskill. All right.
    General Fields. But let me also say, Senator, begging the 
Senator's pardon, that Mr. Schmitz is registered to contract 
with the government of the United States as far as I 
understand.
    Senator McCaskill. I understand, General, but I think the 
point I am trying to make here is your job is to oversee 
contracting. Your job is to set the gold standard on 
contracting. So you do a sole-source contract, no bid; you 
immediately hire someone. Clearly there was not even a vet done 
that brought to your attention that there were questions you 
need to ask him about his previous service as an Inspector 
General. That is the point I am making, General Fields. That is 
the point I am making.
    Have you ever done or worked with an audit agency before 
you were given this job? Had you ever done any audit work or 
been around any auditors before you were given this job?
    General Fields. Yes, Senator, I have been.
    Senator McCaskill. OK. Tell me in what capacity you had 
worked with auditors prior to taking this job.
    General Fields. I worked with auditors in conjunction with 
my support to the Iraq Management and Reconstruction Office 
(IRMO). This was indirect work associated with reconstruction 
and support of Iraq.
    Senator McCaskill. And what audit agencies did you work 
with, General?
    General Fields. I did not specifically work with an audit 
agency per se, but as the Chief of Staff of IRMO, my work 
covered multiple dimensions of reconstruction in Iraq. Prior to 
that, Senator, I served as the Inspector General for United 
States Central Command. I did that work for 2 years, and that 
work involved some degree of oversight involving audit-type 
work, but not necessarily the professional auditors by which 
SIGAR is currently characterized.
    Senator McCaskill. Right. And, in fact, this is something 
that the public is not aware of, that there is a vast 
difference between Inspectors General within the active 
military and Inspectors General within the Federal Government. 
Correct, General Fields?
    General Fields. I would say that is correct.
    Senator McCaskill. Inspectors General in the active 
military report to the commander and are there as the eyes and 
ears of the commander. They have no duty whatsoever to report 
to the public or to the Congress or to perform an independent 
function in terms of monitoring taxpayer dollars. Correct?
    General Fields. Those Inspectors General are guided by the 
basic intent, no less, of the Inspector General Act of 1978 by 
which I and other Federal Inspectors General are guided as 
well, Senator.
    Senator McCaskill. Well, I understand. I was just shocked 
when I went to Iraq on my first contract oversight trip, and I 
am sitting with Inspectors General, and I did not realize we 
had two varieties that were vastly different in the Federal 
Government. In fact, I wish they were not called the same 
thing. I wanted to rename the military Inspectors General 
another name, and then the military informed me they had the 
name first. So it got a little tricky. But these are not the 
same functions, and they do not do the same work.
    I guess the reason I ask this question, General, is, the 
first thing you do if you head an audit agency is to figure out 
where the risk is and do a risk assessment and do a tier 
analysis as to what tier is the top tier of work that you 
should do where the highest risk is. Then you go down and then 
you do your audit plan determining how much resources you have 
and how you can get to the most risk.
    General Fields. Yes, Senator.
    Senator McCaskill. At what point in time was a risk 
assessment completed at SIGAR?
    General Fields. I will go back, Senator, to what I said 
earlier. We conducted a risk assessment which was published in 
our 2008 report to Congress. That risk assessment was made up 
of several elements. It may not look like a risk assessment as 
the Senator might----
    Senator McCaskill. It is not a Yellow Book risk assessment, 
is it, General Fields?
    General Fields. Say again, Senator?
    Senator McCaskill. It is not a Yellow Book risk assessment.
    General Fields. It would not be a Yellow Book assessment 
per se, but it would certainly contain the elements relevant to 
any risk assessment when it comes to oversight of money.
    Senator McCaskill. Did the auditors working for you at that 
time tell you that was sufficient in terms of a Yellow Book 
risk assessment?
    General Fields. I had no auditors at that time, Senator, 
because we completed that assessment in conjunction with our 
October report to Congress before I was privileged to hire my 
first auditor.
    Senator McCaskill. So you are saying that you performed 
what you would consider a professional risk assessment of a 
major responsibility in terms of audit function without any 
auditors?
    General Fields. I performed that assessment, Senator, with 
intelligent folks, and I feel that--this is not--I do not feel 
that this is necessarily rocket science in order to determine 
what needs to be done, Senator.
    Senator McCaskill. Well, I got to tell you the truth. Once 
again, I do not mean to be cruel. I do not mean to--this is not 
fun for me either. It is very uncomfortable to say that I do 
not think that you are the right person for this job, General 
Fields. But I do not think you are the right person for this 
job---- [Interruption by protester.]
    Please, no. That is very inappropriate. Please leave the 
room. Please.
    The risk assessment, the reason that you had the findings 
from peer review was because you fell short of the professional 
standards that are demanded in the world of auditing. And I am 
not saying the people that worked for you were not intelligent. 
I am not saying you are not intelligent. I am not saying that 
you are not a hero, sir. I am saying this is too important a 
government function to not have the very highest level of 
experience, qualifications, and expertise leading this kind of 
audit agency.
    I have no other questions for you. We will keep this record 
open. If there is anything that I have said in this hearing 
that you believe is unfair, if there is any information that 
you want to bring to our attention, we will keep the record of 
the hearing open. And I can assure you I will look at all of it 
with the eye of an auditor and examine it and make sure that 
our final record in this hearing is fair and balanced. And we 
are happy to include anything else that you would like to 
include, and I thank you very much for all of your service to 
America.
    Senator Brown. Madam Chairman, if I may----
    Senator McCaskill. Oh, I am sorry.
    Senator Brown. Thank you, General. I want to thank you for 
your service as well, and I appreciate your forthright answers. 
Thank you.
    Senator McCaskill. Thank you, sir.
    General Fields. Thank you, Senators.
    Senator McCaskill. And we will now take the third panel. 
Thank you all for being here. Let me introduce this panel.
    Gordon Heddell has served as the Inspector General for the 
Department of Defense since July 2009. He was Acting Inspector 
General from 2008 to 2009. Prior to joining the DOD IG, Mr. 
Heddell served as the Inspector General for the Department of 
Labor (DOL).
    Harold Geisel has served as the Deputy Inspector General 
for the State Department since June 2008. He has more than 25 
years of experience with the State Department and previously 
served as the Acting Inspector General in 1994.
    Michael G. Carroll has served as the Deputy Inspector 
General for the U.S. Agency for International Development, 
USAID, since February 2006. Mr. Carroll is a member of the 
Senior Executive Service with more than 26 years of government 
service. Prior to his appointment, Mr. Carroll served as the 
Director of Administration for the Bureau of Industry and 
Security in the Department of Commerce.
    Stuart Bowen--and I understand you are not feeling well 
today, Mr. Bowen. Thank you for arriving and try not to breathe 
on Mr. Carroll. [Laughter.]
    Mr. Bowen has served as Special Inspector General for Iraq 
Reconstruction since October 2004. Mr. Bowen served President 
George W. Bush as Deputy Assistant to the President, Deputy 
Staff Secretary, Special Assistant to the President, and 
Associate Counsel. Mr. Bowen also spent 4 years on active duty 
as an intelligence officer in the U.S. Air Force, achieving the 
rank of captain.
    Thank you all for your service to our government, and 
obviously this is a four-person panel and it is our third 
panel. I will stay here all night. You know this is what I 
enjoy; this is the stuff I enjoy. But I do not want to prolong 
the hearing for any of you any longer than necessary. So feel 
free to make any testimony you would like as long as it is less 
than 5 minutes. If you want to do less than that, that is fine. 
If you want to just stand for questions, that is fine, too. But 
I am anxious to hear from all of you. Mr. Heddell.

 TESTIMONY OF THE HON. GORDON S. HEDDELL,\1\ INSPECTOR GENERAL 
                   U.S. DEPARTMENT OF DEFENSE

    Mr. Heddell. Thank you, Chairman McCaskill, Ranking Member 
Brown, and distinguished Members of this Subcommittee. Thank 
you for the opportunity to appear before you this afternoon to 
discuss our oversight efforts in Afghanistan and throughout the 
region.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Heddell appears in the appendix 
on page 151.
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    Effective, meaningful, and timely oversight of U.S. 
contingency operations in Southwest Asia is critical to our 
success in Afghanistan. I would like to focus on one of the 
fundamental reasons behind our success: The effective and 
efficient coordination of the audit, inspection, and 
investigative assets of the many agencies in the region. This 
cooperation has not only maximized our ability to complete our 
mission, but has reduced the amount of impact our presence has 
had on the commands in theater to complete their mission. Due 
to the complexity of contingency operations and the involvement 
of multiple Federal agencies, interagency coordination is 
essential to identifying whether critical gaps exist in 
oversight efforts and recommending actions to address those 
gaps.
    I appointed Mickey McDermott as the Special Deputy 
Inspector General for Southwest Asia in November 2009. His role 
is to ensure effective coordination within the Defense and 
Federal oversight community. Mr. McDermott reports directly to 
me and coordinates and de-conflicts oversight efforts within 
Southwest Asia. He is forward-deployed on a 2-year assignment 
and over the past year has worked with the oversight community, 
Department of Defense leadership, and the supporting commands 
to improve communications and identify oversight requirements.
    Mr. McDermott also serves as the chairperson of the 
Southwest Asia Joint Planning Group, which develops the 
Comprehensive Oversight Plan for Southwest Asia. The Joint 
Planning Group is developing a comprehensive strategy for the 
oversight of the training, equipping, and mentoring of the 
Afghanistan National Security Forces and has plans to develop a 
comprehensive strategy for the oversight of contingency 
contracting in Afghanistan. In May 2009, the Joint Planning 
Group established a sub-group to coordinate audit and 
inspection work in Afghanistan and Pakistan.
    In addition to the Joint Planning Group, we participate in 
the U.S. Forces-Afghanistan oversight Shura. This forum 
provides another opportunity for each of the oversight 
community in-country representatives to update the supporting 
commands on the status of their current and planned projects. 
We also collaborate on criminal investigations in Afghanistan. 
The Defense Criminal Investigative Service maintains a close 
working relationship with the International Contract Corruption 
Task Force and is a member of the Task Force 2010. We have 
learned from our experiences in Iraq that maintaining an in-
theater presence is essential to providing effective oversight 
in an overseas contingency environment.
    Additionally, one of the most important lessons we have 
learned is the value of having the Special Deputy Inspector 
General as our single point of contact in the region for 
coordinating oversight efforts and to ensure effective 
communication with senior leaders in the theater. This is key 
for minimizing the impact on the daily operation of the 
activities we visit, and it provides those activities a single 
point of contact.
    Another important lesson learned is that contracting in a 
contingency environment presents many challenges. In May 2010, 
we summarized our experiences in the report--and I have it 
here--titled ``Contingency Contracting: A Framework for 
Reform.'' This report identifies key systemic contingency 
contracting issues as well as actions that need to be taken to 
correct these issues for future contracting. By compiling this 
data and summarizing our findings, we were able to provide a 
useful tool for operators on the ground to improve their 
operations by avoiding past mistakes.
    In closing, I would like to thank the Subcommittee for the 
opportunity to discuss our work in Afghanistan, and I look 
forward to continuing our strong working relationship with the 
Congress, the Department, and with all oversight agencies in 
Southwest Asia. Thank you.
    Senator McCaskill. Mr. Geisel.

  TESTIMONY OF THE HON. HAROLD W. GEISEL,\1\ DEPUTY INSPECTOR 
                GENERAL U.S. DEPARTMENT OF STATE

    Mr. Geisel. Thank you, Chairman McCaskill and Ranking 
Member Brown, for the opportunity to appear today. I have 
prepared remarks but ask that my written testimony also be made 
part of the record.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Geisel appears in the appendix on 
page 168.
---------------------------------------------------------------------------
    Our oversight role in Afghanistan includes performing 
audits, evaluations, inspections, and investigations with 
respect to activities that are funded and managed by the 
Department of State. These funded and managed programs include 
activities such as worldwide protective services for diplomats, 
embassy security, counternarcotics, and police training 
programs, as well as construction and maintenance of U.S. 
embassies.
    Our Middle East Regional Office (MERO), has an office in 
Kabul with boots on the ground to provide quick and timely 
evaluations of high-risk, high-dollar programs. In addition, 
our Office of Investigations provides on-the-ground 
investigative support in Afghanistan. And our Offices of Audits 
and Inspections also perform work there.
    We have provided the Subcommittee with a list of audits, 
evaluations, and inspections related to Department of State 
operations in Afghanistan that have been issued by our office 
since 2004. We have used congressional resource increases since 
2009 in both supplemental and the appropriations base to 
greatly increase the number of completed and planned audits, 
evaluations, and inspections in Afghanistan during 2009 and 
2010. Approximately 25 percent of our ongoing or planned 
oversight for the Middle East and South Asia regions, which 
include 33 countries, will take place in or are otherwise 
related to Afghanistan.
    Madam Chairman, coordination occurs at several levels 
within the oversight community to reinforce the efficiency of 
oversight efforts. In Washington, D.C., coordination occurs 
first through the Southwest Asia Planning Group, which meets 
quarterly to plan ongoing activities to ensure minimum 
duplication of oversight and maximum cooperation. There is also 
a separate sub-group, the AFPAK Working Group, which meets to 
address oversight work in Pakistan and Afghanistan. This 
working group is where IG coordination, deconfliction, and 
agreement occur. OIG personnel from the Department of State, 
USAID, DOD, Government Accountability Office (GAO), and SIGAR 
are members of the AFPAK group.
    Informal coordination regarding oversight work in 
Afghanistan and elsewhere in the region also takes place 
between these same organizations as well as other OIGs. These 
groups will continue to play a vital role and serve as a model 
for new and flexible groups formed in response to future 
contingency operations, regardless of where they occur in the 
world.
    In Afghanistan, there are additional coordination groups. 
The IG Shura is facilitated in-country by U.S. Forces-
Afghanistan and the DOD OIG. Participants meet monthly and 
include representatives from all OIG offices working in 
Afghanistan.
    Madam Chairman, Senator Brown, the novel concept of 
creating a permanent Inspector General--because that was one of 
the questions we were asked in advance--to oversee contingency 
operations merits serious consideration. However, existing 
departmental OIGs have proven their ability to work well 
together and with the Special IGs over the past 2 years to 
provide effective, coordinated oversight in contingency 
operations. They have existing processes, organizational 
structures, and institutional knowledge of the programs within 
their departments that facilitate efficient oversight of those 
programs and eliminate the learning curve that would be 
required of a contingency IG.
    Moreover, in an era of fiscal restraint, creating a 
permanent IG to oversee contingency operations might not be 
prudent. Millions of start-up dollars would be required to 
establish and sustain a new bureaucracy.
    Current organizations already in existence, such as the 
Southwest Asia Joint Planning Group and the International 
Contract Corruption Task Force, could be used for interagency 
coordination or as models for the fast creation of other 
coordination groups for new contingencies around the world as 
the need arises. These groups have the means, methodology, and 
practices in place to facilitate efficient, cost-effective 
oversight and through planning, coordination, and 
deconfliction.
    Once again, I thank you, Chairman McCaskill and Senator 
Brown, for the opportunity to appear today, and I am ready to 
answer any questions.
    Senator McCaskill. Thank you, Mr. Geisel. Mr. Carroll.

 TESTIMONY OF MICHAEL G. CARROLL,\1\ DEPUTY INSPECTOR GENERAL, 
           U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT

    Mr. Carroll. Thank you, Chairwoman McCaskill, Senator 
Brown. Thanks for having me here today to brief the 
Subcommittee on our oversight activities in Afghanistan, our 
working relationship with SIGAR, and, finally, to share our 
views on the feasibility of a Special IG for contingency 
operations.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Carroll appears in the appendix 
on page 180.
---------------------------------------------------------------------------
    I want to start by saying that from its inception almost 30 
years ago, the USAID IG has operated in an overseas environment 
with foreign service auditors, investigators, and management 
analysts, providing audit and investigative coverage of USAID's 
programs. And we think that gives us a unique comparative 
advantage in providing oversight in contingency operations.
    Our oversight in Afghanistan has really evolved over the 
past--well, since we had ``boots on the ground'' in November 
2002. We started out covering it as a country in a regional 
portfolio out of our office in the Philippines, and it has 
morphed into what will soon be the largest country office that 
we have of our eight overseas offices with 14 auditors and 
investigators.
    On relationship with the SIGAR, Special IG for Afghan 
Reconstruction, I would have to draw a distinction between 
audit and investigations as I describe that relationship. On 
the audit side, I would characterize the relationship as 
cooperative and productive. It has taken some time to get to 
that point because obviously we have duplicative authorities, 
and we have the authority to look at the same programs. So it 
has taken some time, it has taken some effort, but I can say 
now that through planning and deconfliction, we are not going 
to have any overlap in audits.
    I cannot characterize the relationship with the SIGAR 
investigations in the same way. We seem to not be able to come 
to terms with jurisdictions. Again, they have law enforcement 
jurisdiction over AID programs. So do we. But we feel that as 
the statutory IG for AID we should have primary law enforcement 
jurisdiction over any allegations of corruption in AID programs 
or against AID employees, and we should lead any investigation 
that has to do with AID programs and employees. And we are 
still trying to work through that relationship with the SIGAR 
folks on the investigation side.
    Also, if I could just share our views, as Mr. Geisel did, 
about the practicality or the feasibility of a statutory IG for 
contingency operations. I cannot imagine an entity that has a 
better comparative advantage than the statutory IGs for doing 
oversight work. And when you talk about contingency operations, 
I think we would all agree that the two best examples of that 
over the past 10 years are Iraq and Afghanistan. And you have 
before you today the three statutory IGs for the Department of 
Defense, Department of State, and AID. And I think that with 
our collective experience, our in-depth knowledge and 
understanding of our agency's programs, people, systems, 
policies, I think that, properly funded, with the same 
authorities that the special IGs have for personnel, working 
closely with the Government Accountability Office, I think we 
can, as a collective group, provide the same comprehensive 
oversight and reporting that a statutory IG for contingency 
operations could.
    I thank you for your time and look forward to any questions 
you might have.
    Senator McCaskill. Thank you, Mr. Carroll. Mr. Bowen.

    TESTIMONY OF THE HON. STUART W. BOWEN,\1\ JR., SPECIAL 
           INSPECTOR GENERAL FOR IRAQ RECONSTRUCTION

    Mr. Bowen. Thank you, Chairman McCaskill, for this 
opportunity to appear before your Subcommittee and testify on 
the critical issue of oversight in contingency operations. It 
is an issue that has been acutely with us for the last 8 years 
in Iraq, and indeed, almost exactly 7 years ago, the Congress 
created my office, the Special Inspector General for Iraq 
Reconstruction, because of weakness regarding oversight by the 
departmental IGs then in Iraq and the significant waste that 
occurred.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Bowen appears in the appendix on 
page 192.
---------------------------------------------------------------------------
    To carry out this mission, I focused my organization on 
four critical operational principles.
    First, real-time auditing. We get our audits out quickly, 
averaging six a quarter, and that is essential in a war zone 
because the operators need to get answers fast. If you wait the 
typical 9 to 15 months for an audit, the world has completely 
changed. It is not a useful audit.
    Second, in-country engagement. We have been as high as 50. 
We are at 22 now. That is the largest single contingent of 
oversight operators in-country in Iraq, and it is 
investigators, it is auditors, it is inspectors, it is 
evaluators, and that has given us the capacity, the special 
capacity with our focused mission, to be highly productive.
    Third, unprecedented transparency. We operate I think 
fairly uniquely as an IG in that we meet every week with the 
subject of our oversight to inform them of what we are doing, 
the progress we are making, and what we are finding to promote 
improvement in the overall reconstruction program as the 
consultative component. That is the fourth mandate that I give 
my auditors and inspectors: Be consultative.
    Just a week ago, I was in Iraq at Camp Victory, meeting 
with General Austin, the commander of U.S. Forces-Iraq, on a 
critical SIGIR audit that is going to produce really tough 
findings in January. But he needed to know about those findings 
today because they affect an enormous contractor. That is the 
kind of work we are able to do by being heavily engaged on the 
ground with leadership.
    We have produced 27 quarterly reports and five Lessons 
Learned reports. They help strengthen performance, and they 
have been focused on accounting for taxpayer dollars, the 
dollars appropriated to four major funds which comprise about 
$46 billion of the money.
    The question that you have asked me to address particularly 
is: Does a Special Inspector General for Overseas Contingency 
Operations (SIGOCO), make sense? And differing from my fellow 
panel members, I say yes, absolutely, because of several 
reasons: First, the cross-cutting jurisdiction. I have a CAC 
card and a State badge. I can go to any door of any department 
with any funds, and a lot of these projects and programs are 
multi-funded from different sources--police training--for 
example, and I can get answers from any Department, and I do 
not have to operate in a stovepipe.
    Second, a singularly focused mission. I have a staff that 
is focused on one thing: Protecting taxpayer interest and 
improving mission performance in a contingency. That allows for 
aggressive oversight and gets you quick reporting.
    We have focused on coordination. We have talked about that 
a lot today. Well, the Iraq Inspectors General Council was 
something I formed within a couple of months of starting up 7 
years ago, and we met every quarter, and now this quarter we 
are going to fold it into the Southwest Asia program. But it 
has facilitated really strong interaction with my fellow 
Inspector General auditors here at the table, in Iraq, and on 
this side of the world.
    Next, flexibility in hiring practices. We have unique 
authority, and thus we have been able to maintain high-quality 
staff throughout the life of our organization. We are highly 
independent, and we report quarterly to the Congress, not 
semiannually. So you get comprehensive, detailed analyses, and 
factual data about what is going on in Iraq every 3 months.
    A permanent Special IG would eliminate the inherent 
challenges that arise in starting up a Special IG in a 
contingency. Oversight has to be present there from the 
beginning. You know you would have that if you had a SIGOCO in 
existence. You would not need to have a departmental IG 
formulate and draw out of their own resources a capacity to 
deploy and execute that kind of oversight. SIGOCO would ensure 
it.
    A feasible SIGOCO standing operation could have a core 
staff of 25 and cost about $5 million a year. If such an 
organization had existed, say, at the beginning of the Iraq 
reconstruction program, the amount of waste it would have 
averted would pay for it for our lifetimes. There is no doubt 
that it would be cost-effective. Indeed, the return on 
investment in cost for SIGAR has been about 5:1.
    There will be other contingency operations no doubt. That 
is a new phase in modern national security reality, and we will 
have significant contingency relief and reconstruction 
operations. How do we avoid the kind of waste that we have seen 
in Iraq and Afghanistan--significant, unacceptable, 
ridiculously high levels of waste--in the future? One way would 
be, as we have heard at the table, to provide more funds to the 
departmental IGs to allow them to hire more auditors and 
inspectors. But to ensure that you would have a capacity that 
is capable and ready to deploy, SIGOCO is a good answer.
    Thank you, Madam Chairman. I look forward to your 
questions.
    Senator McCaskill. Thank you all. Let me start. How many 
people do you have on the ground in Afghanistan right now, Mr. 
Heddell.
    Mr. Heddell. Right now I have 15 auditors, 8 criminal 
investigators, 2 administrative staff, and in addition to that, 
I complement that with expeditionary forces that enter and exit 
on a regular basis. That is just in Afghanistan.
    Senator McCaskill. OK. And, Mr. Geisel, how about you in 
Afghanistan?
    Mr. Geisel. We have five auditors and analysts in Kabul, 
and that will increase to eight by January. Our investigators 
are always on a TDY status, and I think at the moment we have 
two investigators actually in-country.
    Senator McCaskill. OK. Mr. Carroll.
    Mr. Carroll. Well, we have nine auditors, and hopefully 
very shortly we will have five investigators.
    Senator McCaskill. And what do you have currently in Iraq, 
Mr. Bowen.
    Mr. Bowen. I was there just last week, and with 18 
personnel, there were 10 auditors, 3 investigators, 3 
evaluators, and a chief of staff, and support staff.
    Senator McCaskill. And what was the high point, high mark 
in Iraq in terms of how many auditors you had on ground?
    Mr. Bowen. Total number of auditors? Not inspectors, just 
auditors?
    Senator McCaskill. Just auditors.
    Mr. Bowen. We were up to 29.
    Senator McCaskill. Twenty-nine. How many times have the 
four of you been in the same room with General Fields?
    Mr. Geisel. I reckon at least five times.
    Senator McCaskill. No, I mean all four of you together with 
General Fields. Have you ever been in the room with all four of 
you and General Fields at the same time?
    Mr. Geisel. No.
    Mr. Heddell. Well, I think there may be times at the 
monthly CIGIE meetings.
    Mr. Bowen. Yes.
    Mr. Heddell. And General Fields frequently attended those.
    Senator McCaskill. OK. But I am not talking about at the 
CIGIE meeting, and, of course, the CIGIE meeting is a meeting 
where all the Inspectors General come together, I do not want 
to say it is like your Rotary Club, but it is your association 
where you come and network and talk to one another, and 
obviously that is the pool of people which the peer reviews 
come out of, correct?
    Mr. Heddell. Yes.
    Mr. Bowen. Yes.
    Senator McCaskill. I am talking about how many times have 
the four of you sat down with General Fields and talked about 
contingency operation audits, writ large?
    Mr. Bowen. Not as a group, but frequently individually.
    Senator McCaskill. OK.
    Mr. Heddell. Senator McCaskill, if I could add to that, 
however, I think the point you are getting at is how much we 
talk to each other, share information, and assess risk. And 
that is one of the reasons that the Department of Defense 
Inspector General created a Special Deputy Inspector General 
who also chairs the Joint Planning Group where all of our 
offices are represented.
    Senator McCaskill. Right.
    Mr. Heddell. In fact, almost 25 agencies are represented. 
So that does happen. It is just not the same personalities that 
are sitting----
    Senator McCaskill. I understand. I am not implying by the 
fact that the five of you have not been in the same room 
together that your agencies are not talking to one another and 
not trying to coordinate.
    How many independent contractors have you hired relating to 
the work in Afghanistan or relating to reports or anything that 
you need to produce for Congress? Can anyone think of any 
independent contractors that you have hired?
    Mr. Carroll. As part our audit work, we hire both ourselves 
and we help the agency hire independent financial audit firms 
to conduct financial audits in Afghanistan. And also, since it 
is difficult for us to get out to do our field work in some of 
the more dangerous places, we have also hired local audit firms 
to go out and do site visits for us on performance audits.
    Senator McCaskill. OK. What about you, Mr. Bowen? When you 
prepare your--yours is not a pamphlet. Yours is a book on 
lessons learned, which I am a little embarrassed I have 
committed to memory. Was an independent contractor hired for 
that effort?
    Mr. Bowen. For ``Hard Lessons,'' no. This was done by 
government staff and printed by GPO.
    Senator McCaskill. This is awkward because I do not want 
you all to comment on General Fields. I do not want to put you 
in what is an awkward position for a professional auditor. But 
I have a lot of concern that someone would think it was 
appropriate to do a risk assessment and call it a risk 
assessment without an auditor on staff. Does that cause you 
concern, Mr. Heddell?
    Mr. Heddell. Without an auditor on staff?
    Senator McCaskill. Correct
    Mr. Heddell. Yes, it would cause me concern.
    Senator McCaskill. Does it cause you concern, Mr. Geisel?
    Mr. Geisel. Definitely.
    Senator McCaskill. Mr. Carroll.
    Mr. Carroll. Yes.
    Senator McCaskill. Mr. Bowen.
    Mr. Bowen. Yes.
    Senator McCaskill. I am curious. Has there been a sense 
that the leadership of SIGAR was not up to the professional 
standards that are required for this kind of very difficult and 
very important audit work? Are we the only ones that have an 
oversight capacity here? Do you all as auditors that are in a 
unique position to know whether or not the agency is standing 
up in a way that would reflect Yellow Book standards or 
Silver--and let me say for the record, the Yellow Book--I keep 
saying ``Yellow Book.'' For the record, I should explain that 
the Yellow Book is called that because it is yellow, but it is 
the book of standards for government auditors. And the Silver 
Book is the book of standards for government investigators.
    If you are working with another agency--and I do not know 
what the ethics are here, candidly. If you are working with 
another audit agency and you have a sense that professional the 
District are not being complied with, do you have a duty to 
report it to anyone?
    Mr. Geisel. I am allegedly the diplomat here, so I will try 
and answer. [Laughter.]
    The simple answer is yes. Let me give you two examples 
where it worked very well. We did a joint audit with the DOD IG 
on one of the most important facets of our presence in 
Afghanistan, and that is police training. That activity was 
carried out--well, it was funded under State Department 
authority, and it is going over to DOD. And our joint audit 
found a lot of problems, and frankly----
    Senator McCaskill. Was it your audit that figured out they 
were not sighting the rifles?
    Mr. Geisel. Yes, as a matter of fact. That was another 
audit, but that was our evaluation.
    Senator McCaskill. Go ahead. I am sorry to interrupt. I was 
just curious.
    Mr. Geisel. That is right.
    Senator McCaskill. Good work, by the way. That is fairly 
important that we hire someone who train the police who knows 
how to sight the rifles.
    Mr. Geisel. Yes. It is also important when we found that 
the dogs that were supposed to sniff for explosives were not 
trained to sniff the right explosives. But in our work with the 
DOD IG, there were slight differences of opinion, but we worked 
them out immediately. And I can tell you, without exception, 
there was mutual respect. I knew some of the DOD auditors, and 
I thought the world of them.
    Senator McCaskill. Well, I guess what I am asking is: If 
you work with an audit agency where you do not think 
professional standards are being met, do you----
    Mr. Geisel. I would pull out. Pure and simple. I would not 
hesitate. I would try to do it nicely, but I would just say, 
``We seem to have different objectives and perhaps different 
standards, and we cannot work together.'' I would do that in a 
heartbeat.
    Senator McCaskill. Anybody else?
    Mr. Carroll. Well, I would say that as SIGAR was standing 
up--and I think that--I cannot think of a case actually where 
we worked together with them on an audit. We have worked 
together with them on some investigations, and they have 
assisted us on some investigations. But we never worked with 
them together on an audit like State and DOD IG did on the 
police training. So we may have missed the boat there, but we 
were completely laser-focused on our work and not necessarily 
focused on what was happening at SIGAR.
    Mr. Heddell. Senator McCaskill, to correct the record, the 
Department of Defense Inspector General's office to my 
knowledge has never worked with SIGAR on an audit.
    Senator McCaskill. OK.
    Mr. Heddell. We have worked with SIGAR in law enforcement 
task forces, however.
    Senator McCaskill. OK. Before I turn it over to Senator 
Brown, do you have a comment on that?
    Mr. Bowen. Yes, we work very closely with a variety of 
permanent Inspectors General and other law enforcement agencies 
on investigations, and we have done joint audits as well.
    Senator McCaskill. With SIGAR?
    Mr. Bowen. No. With State.
    Senator McCaskill. Have you ever done any work with SIGAR?
    Mr. Bowen. No. Our jurisdictions do not overlap.
    Senator McCaskill. I understand. I just wanted to be sure.
    Mr. Bowen. Other than--I mean, no audit work. We were very 
closely supportive of them in their first year in their stand-
up, as evidenced in my submission.
    Senator McCaskill. Senator Brown.
    Senator Brown. Thank you, Madam Chairman. I just have a 
couple of questions. I know we may be voting in a minute.
    As you heard from my previous line of questioning, I am 
greatly concerned, as I know the Chairwoman is, on the 
allegation that there is money going to the insurgents, the 
Taliban in particular. What roles do you collectively have in 
helping to determine whether, in fact, that is the case and how 
we can stop it, identify it, who is responsible? That whole 
line of questioning, if you could just maybe--whomever, one or 
both or all.
    Mr. Heddell. Senator Brown, one of our primary 
responsibilities and concerns is not just simply money. It is 
the life and safety of our men and women in Afghanistan who are 
doing the fighting for us. So we look at things much broader 
than money. The money is extremely important, but, for 
instance, a tremendous amount of our work is focused on the 
train and equip mission of the Afghan national army and the 
police and determining what the success is that we are having 
with weapons accountability, for instance.
    Senator Brown. Yes, weapons, everything. I should not have 
said just money, but everything. The whole thing.
    Mr. Heddell. Yes, and that is something we do focus on. Are 
weapons getting to where they are supposed to go? Are they 
being put into the hands of the people that we want them to be 
placed in?
    We did a tremendous amount of work in Iraq in that respect. 
We are continuing to increase our focus in Afghanistan on those 
kinds of areas. So we are concerned about the money, and we are 
concerned about the amount of money, the remaining $14.2 
billion, for instance, that is going to go into Afghan national 
army and police training, and getting them to the capability 
levels that will enable the United States to achieve its goals 
in Afghanistan. So yes, we are very, very involved and focused 
on those kinds of issues.
    Senator Brown. Having been there, I am greatly concerned as 
well, and I am concerned that a lot of the folks that are 
supposed to be doing the training are not fulfilling their 
obligations with our coalition forces, too. That is a whole 
different story.
    But when I said funds, I should also say obviously weapons 
and supplies and, communications, the whole nine yards. So 
thank you for that.
    Madam Chairman, I really have focused on where I wanted to 
go in the hearing. I want to just say thank you for, collecting 
the money and finding out where the waste, fraud, and abuse is, 
and I think it helps. It enables us to justify where those 
funds are going. So, drive on.
    I have nothing further. Thank you.
    Senator McCaskill. Thank you, Senator.
    On SIGOCO, I have great respect for all of you who are here 
that work for State and DOD and AID. And I understand in some 
ways establishing SIGOCO in some ways feels a little bit like 
someone is permanently going to be on your turf. And I am not 
discounting your opinions about this because of that, but I do 
think that Mr. Bowen makes some points about--and I think that 
what we have heard today in the testimony about SIGAR is really 
in many ways to me depressing. Standing up an organization in a 
contingency is very difficult, and that is the one organization 
where speed is incredibly important. You all understand that 
your audit product has a very short shelf life in a contingency 
operation. It is very easy to waste a lot of money on an audit 
in a contingency operation if you cannot get it to the 
decisionmakers quickly enough. And so when you establish a 
Special Inspector General for Afghanistan and it takes 18 
months to produce the first audit on a contract and the audit 
portion of that report is four pages, that makes me weep. I 
mean, something is terribly wrong there.
    Now, was there appropriate expertise in place? Clearly not. 
Did it take them too long to get appropriate expertise in 
place? Obviously. And if we had a permanent Inspector General 
on Overseas Contingency Operations, we would not have had that 
lag time.
    Can't you all acknowledge that $5 million a year is a 
pretty good investment if we could keep a contingency operation 
Inspector General office, if we could stand one up and sustain 
one for the long haul? Because I got to tell you, the irony 
is--and some of you, I may have told you this before, that in 
speaking with somebody in the army who was involved in Bosnia, 
the lessons learned in Bosnia on contracting, they were not 
learned. We went back to the drawing board in Iraq, and by the 
time that Mr. Bowen arrived, we had a completely out-of-control 
Logistics Civil Augmentation Program (LOGCAP) contract with no 
oversight whatsoever. Nobody had any idea why it was so far 
over the estimate in its first year of operation, and it took a 
while. And I think that Cunningham is doing a much better job 
in Afghanistan than a lot of the folks were doing in Iraq. And 
I think we have made improvement. But I am just worried. I 
mean, I do not have confidence in this agency after this 
hearing today. And I have a sense that if we had a permanent 
office I would not have this sinking sensation that we do not 
have the right leadership and we have missed a lot of audits 
that should have been done.
    Comments?
    Mr. Heddell. Well, I will, Senator McCaskill. I certainly 
have great respect for my colleague, Inspector General Bowen, 
and I never discount anything that he says. But I am not 
totally convinced--and this is not turf issues for me. I have 
more than enough work. Quite frankly, I would take any help I 
could get. But I am not convinced that a Special Inspector 
General for Contingency Operations is the most effective and 
efficient way.
    There is a difference, if I may say, between the way we 
have set up SIGIR, Mr. Bowen's operation, and the way we set up 
SIGAR. When we set up SIGIR, the Department of Defense 
Inspector General provided 144 auditors and investigators, some 
full-time, some part-time, for a lengthy period of time. When 
the Special Inspector General for Iraq Reconstruction (SIGIR) 
was first set up as Coalition Provisional Authority Inspector 
General (CPA IG), the DoD IG detailed 27 individuals on a full 
or part-time basis to SIGIR. In total 138 DoD IG staff members 
provided audit, investigative, Hotline, information technology, 
payroll, travel, and other administrative support (full and 
part-time to the CPA, CPA IG and SIGIR. I am not saying that is 
why Mr. Bowen was so successful, but I think it got SIGIR off 
on the right foot.
    But on the other side of that coin, that was not done with 
SIGAR. I am not saying it would have been better. I am not 
suggesting that there still would not have been hiring and 
performance problems with SIGAR. What we heard today goes far 
beyond that.
    Senator McCaskill. The problems we heard today go far 
beyond just the ability to stand up quickly.
    Mr. Heddell. That is correct. But I think what we are 
talking about right at this moment is what is best for the 
future, and I think that, for instance, the response by the 
Inspector General community to Hurricane Katrina, which was a 
contingency operation, by and large was relatively effective.
    Senator McCaskill. Right.
    Mr. Heddell. I think we have the audit and law enforcement 
expertise in our community at large to respond to contingency 
operations very effectively. I think it is a little bit of a 
toss-up as to whether you go the Special IG route, but the 
inefficiency aspect of it is that if you do that, two things 
happen: No. 1, you do not have enough people in a Special 
Inspector General contingency operation on a full-time basis to 
be able to respond quickly; and, No. 2, the cost of maintaining 
a force waiting for a contingency to occur.
    So until we sit down and I guess figure it all out, to me 
it is not an efficient proposal.
    Senator McCaskill. I know all of you probably want to 
comment on that, and I have a vote that has been called, and I 
am not going to make you sit here while I go vote and come 
back, as much as I am tempted to, because I could go on a 
while. And I know--Inspector General Bowen and I have discussed 
this one on one before, and I am a little biased towards his 
opinion on this. But I certainly will go out of my way to have 
one-on-one conversation with you, Mr. Geisel, and you, Mr. 
Carroll, on this subject if we do not have time to get back to 
it.
    But I wanted to ask you, Mr. Carroll, you intimated that or 
referred to problems in working with the law enforcement end of 
SIGAR. Now, I find that fascinating since they have now had a 
CIGIE review of their law enforcement, and it was--as somebody 
who is a former prosecutor and former auditor, as I read the 
review of the law enforcement problems, I was really surprised 
that basics had not been done. Are they trying to assert 
primary jurisdiction even after CIGIE has said that they are so 
far our of compliance with the government standards of 
investigation?
    Mr. Carroll. Yes.
    Senator McCaskill. That is outrageous. That is outrageous. 
And I will follow up. I think our office needs to follow up and 
ask some significant questions. It takes a lot of nerve for an 
investigative agency to assert primary jurisdiction over AID 
after independent peer review has determined they are not in 
compliance with government investigative standards. And so I 
would be irritated, if I were you, if they were trying to step 
on you. I would really be irritated if they are trying to step 
on you after they are only one of 51 agencies looked at--of 52 
agencies looked at that were not in compliance with the 
government standards of investigations. So I am glad that you 
have indicated that to me.
    I have to make a vote by 6:15 p.m. Please, if there is 
anything that I have not asked that I should have, I implore 
you to give us that information as we look at this issue. You 
all are the front line of probably the most challenging audit 
environment that exists in the world in Afghanistan right now. 
The enemy we are fighting is, yes, it is Taliban, yes, it is al 
Qaeda, but it is, make no mistake about it, a culture of 
corruption. And the American people have no idea how much money 
is probably walking away from its intended purpose in 
Afghanistan.
    So please convey to the men and women who work for all of 
you, and we will probably have another opportunity at a 
hearing, Mr. Bowen, before the end of the line in Iraq, but 
please convey to all the people that have worked in Iraq what--
we spend a lot of time praising the men and women in uniform, 
as we should. And I do not think enough people realize that 
there are men and women that are putting their lives in danger 
with very difficult work in a very challenging environment. So 
please convey to all of your staffs the appreciation of the 
American people for the work they are doing. It is essential. 
It is very important to the safety and security of this Nation.
    So thank you for your attendance today, and this hearing is 
adjourned.
    [Whereupon, at 6:09 p.m., the Subcommittee was adjourned.]


                            A P P E N D I X

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