[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]



 
   ARE GOVERNMENT CONTRACTORS EXPLOITING WORKERS OVERSEAS? EXAMINING 
         ENFORCEMENT OF THE TRAFFICKING VICTIMS PROTECTION ACT

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

                                HEARING

                               before the

                SUBCOMMITTEE ON TECHNOLOGY, INFORMATION

                POLICY, INTERGOVERNMENTAL RELATIONS AND

                           PROCUREMENT REFORM

                                 of the

                         COMMITTEE ON OVERSIGHT

                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 2, 2011

                               __________

                           Serial No. 112-93

                               __________

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


         Available via the World Wide Web: http://www.fdsys.gov
                      http://www.house.gov/reform




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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

   Subcommittee on Technology, Information Policy, Intergovernmental 
                    Relations and Procurement Reform

                   JAMES LANKFORD, Oklahoma, Chairman
MIKE KELLY, Pennsylvania, Vice       GERALD E. CONNOLLY, Virginia, 
    Chairman                             Ranking Minority Member
JASON CHAFFETZ, Utah                 CHRISTOPHER S. MURPHY, Connecticut
TIM WALBERG, Michigan                STEPHEN F. LYNCH, Massachusetts
RAUL R. LABRADOR, Idaho              JACKIE SPEIER, California
PATRICK MEEHAN, Pennsylvania
BLAKE FARENTHOLD, Texas
                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 2, 2011.................................     1
Statement of:
    Klemstine, Evelyn R., Assistant Inspector General for Audits, 
      U.S. Department of State; Kenneth P. Moorefield, Deputy 
      Inspector General for Special Plans & Operations, U.S. 
      Department of Defense; Linda Dixon, Combating Trafficking 
      in Persons Program Manager, U.S. Department of Defense; and 
      Michael P. Howard, Chief Operating Officer, Army and Air 
      Force Exchange Service.....................................    88
        Dixon, Linda.............................................   111
        Howard, Michael P........................................   119
        Klemstine, Evelyn R......................................    88
        Moorefield, Kenneth P....................................    99
    Wyler, Liana, Senior Analyst, Congressional Research Service; 
      David Isenberg, independent analyst and writer; Nick 
      Schwellenbach, director of investigations, Project on 
      Government Oversight; and Sam W. McCahon, founder, McCahon 
      Law........................................................     4
        Isenberg, David..........................................    19
        McCahon, Sam W...........................................    72
        Schwellenbach, Nick......................................    49
        Wyler, Liana.............................................     4
Letters, statements, etc., submitted for the record by:
    Cummings, Hon. Elijah E., a Representative in Congress from 
      the State of Maryland, prepared statement of...............   141
    Dixon, Linda, Combating Trafficking in Persons Program 
      Manager, U.S. Department of Defense, prepared statement of.   113
    Howard, Michael P., Chief Operating Officer, Army and Air 
      Force Exchange Service, prepared statement of..............   122
    Isenberg, David, independent analyst and writer, prepared 
      statement of...............................................    21
    Klemstine, Evelyn R., Assistant Inspector General for Audits, 
      U.S. Department of State, prepared statement of............    91
    McCahon, Sam W., founder, McCahon Law, prepared statement of.    74
    Moorefield, Kenneth P., Deputy Inspector General for Special 
      Plans & Operations, U.S. Department of Defense, prepared 
      statement of...............................................   101
    Schwellenbach, Nick, director of investigations, Project on 
      Government Oversight, prepared statement of................    51
    Wyler, Liana, Senior Analyst, Congressional Research Service, 
      prepared statement of......................................     6


   ARE GOVERNMENT CONTRACTORS EXPLOITING WORKERS OVERSEAS? EXAMINING 
         ENFORCEMENT OF THE TRAFFICKING VICTIMS PROTECTION ACT

                              ----------                              


                      WEDNESDAY, NOVEMBER 2, 2011

                  House of Representatives,
   Subcommittee on Technology, Information Policy, 
Intergovernmental Relations and Procurement Reform,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:05 a.m., in 
room 2247, Rayburn House Office Building, Hon. James Lankford 
(chairman of the subcommittee) presiding.
    Present: Representatives Lankford, Walberg, Connolly, and 
Speier.
    Staff present: Richard A. Beutel, senior counsel; Molly 
Boyl, parliamentarian; Gwen D'Luzansky, assistant clerk; 
Cheyenne Steel, press assistant; Nadia A. Zahran, staff 
assistant; Richard Burkard, detailee; Jaron Bourke, minority 
director of administration; Paul Kincaid, minority press 
secretary; and Cecelia Thomas, minority counsel.
    Mr. Lankford. We are going to go ahead and get started. Mr. 
Connolly is on his way; he is in another hearing as well right 
now, so he will be back and forth a little bit. But we want to 
go ahead and begin at this time as well.
    The committee will come to order.
    The Oversight and Government Reform Committee exists to 
secure two fundamental principles: first, Americans have the 
right to know that the money Washington takes from them is well 
spent; second, Americans deserve an efficient, effective 
Government that works for them. Our duty on the Oversight and 
Government Reform Committee is to protect these rights. Our 
solemn responsibility is to hold Government accountable to the 
taxpayers, because taxpayers have a right to know what they get 
from their Government. We also work tirelessly in partnership 
with citizen watchdogs to deliver the facts to the American 
people and bring genuine reform to the Federal bureaucracy. 
This is the mission of the Oversight and Government Reform 
Committee.
    As a Nation, we have certain values that characterize us. 
We believe that each person has been endowed by their creator 
with certain rights, including life, liberty, and the pursuit 
of happiness. These are not rights given by men or confined to 
national boundary; they are unique to each person worldwide. 
That passion for freedom and our national security has taken us 
across the globe. In the process of doing the right thing, we 
must also be careful to do it the right way.
    At the height of our overseas contingency operations, we 
had hundreds of thousands of military personnel stationed 
overseas. While we have our differences of opinion on the 
current strategy or the way forward, we must remember there are 
tens of thousands of American men and women stationed abroad, 
and regardless of whether there are tens or hundreds or 
thousands of troops abroad, the support personnel required to 
ensure these military and diplomatic operations are effective 
continue to remain.
    Within the confusing maze of contractors and subcontractors 
who support our operations, there appear to be less than 
reputable foreign companies that engage labor brokers who 
apparently are accountable to no one. They exploit unskilled 
workers from impoverished backgrounds. We are told that these 
workers are taken advantage of in their unconscionably low 
wages, in their work expectations, and in their living 
conditions.
    The purpose of this hearing is to stop, ask the questions 
that will confirm or deny these accusations. These foreign 
workers are known as third country nationals [TCNs]. They are 
the workers who tend to the gardens, wash the dishes, prepare 
fast food meals, do the laundry for American embassy workers or 
military personnel stationed in the Middle East, Iraq, and 
Afghanistan. They come from countries such as India, Nepal, 
Bosnia, Pakistan, Bangladesh, Sri Lanka, and the Philippines. 
They provide what the military calls base support operations or 
they are used by embassies throughout the Middle East to 
perform the menial labor necessary to support embassy 
operations.
    According to various accounts, some of these workers have 
been robbed of wages, injured without compensation, subjected 
to sexual assault, or held in deplorable living resembling 
indentured servitude by their subcontractor bosses. Many are 
paid an illegal job broker fee equal to or greater than their 
final pay.
    Reports have suggested they are deceived about their work 
location or conditions when they are recruited. This can best 
be characterized as involuntary servitude or even labor bondage 
for the victimized workers. These unsavory labor practices are 
collectively called trafficking in persons. It is prohibited by 
the Trafficking Victims Protection Act of 2000, which 
establishes minimum standards for eliminating trafficking in 
persons around the world. In fact, the United States has 
numerous laws, policies, and contractor regulations already on 
the books to prevent human trafficking.
    The purpose of this hearing is to explore whether the 
United States, through its unprecedented use of contractors in 
war zones and contingency environments, has become an enabler 
of human trafficking or if we have knowingly turned a blind eye 
to trafficking. We also want to examine the role of contractors 
and their subcontractors in adopting these abhorrent labor 
practices. If our Nation is trafficking in persons, we must 
stop this practice immediately; apply every option with abusive 
contractors, including suspension, debarment, or prosecution; 
and take the appropriate steps to impose the law. This is not a 
case where clear law is lacking; it seems to be a case where 
enforcement is lacking.
    To examine the facts, we have two panels today. The first 
panel combines investigative journalists or lawyers 
specializing in human trafficking concerns, and an expert from 
Congressional Research Service to describe the problem in more 
detail.
    The second panel consists of representatives from the 
Inspector Generals Offices of the State Department, the 
Department of Defense, as well as representatives from the 
Department of Defense Human Trafficking Office and the Army-Air 
Force Exchange Service to recount their experiences with human 
trafficking issues and to offer some insight into what they are 
doing to prevent American taxpayer money from supporting these 
practices.
    I look forward to receiving some clarity and answers on 
this issue. There is no good explanation of why we would still 
have contractors using illegal recruiting fees, providing 
inadequate living conditions for TCNs, or violating a multitude 
of other clear human dignity values.
    With that, I would like to recognize Mr. Connolly for his 
opening statement.
    Mr. Connolly. Thank you, Mr. Chairman, and I agree with you 
that this is a matter of enforcement. This is a matter of 
values. There is nothing more abhorrent than taking away human 
autonomy. Human trafficking is unacceptable under any 
circumstances. War does not justify it; the mission doesn't 
justify it. We cannot and will not turn a blind eye to this 
practice. And as far as I am concerned, and I think eventually 
this Congress, Federal agencies will be held responsible, prime 
contractors will be held responsible when and if this practice 
occurs. It needs to be rooted out, stamped out, and ended. That 
is as fundamental an American value and a human rights value as 
exists on this planet.
    I am glad you are holding this hearing today, Mr. Chairman, 
and I look forward to working with you on a bipartisan basis to 
make sure we end this abhorrent practice.
    Mr. Lankford. Thank you, Mr. Connolly.
    Members may have 7 days to submit opening statements and 
extraneous materials for the record.
    We now welcome our first panel. Ms. Wyler is the Senior 
Analyst for the Congressional Research Service; Mr. Isenberg is 
an independent analyst and writer specializing in issues 
involving wartime contingency operations; Mr. Nick 
Schwellenbach is the chief investigator of the Project for 
Government Oversight; and Mr. Sam McCahon is an attorney in 
private practice and founder of the McCahon Law firm.
    Pursuant to committee rules, all witnesses will be sworn in 
before they testify. Would you please rise and raise your right 
hands?
    [Witnesses sworn.]
    Mr. Lankford. Let the record reflect the witnesses have 
answered in the affirmative. Thank you. Please be seated.
    In order to allow time for discussion, please limit your 
testimony to 5 minutes. Your entire written statement, of 
course, will be made part of the record.
    Ms. Wyler, you are first up. We would be honored to be able 
to receive your testimony at this time.

   STATEMENTS OF LIANA WYLER, SENIOR ANALYST, CONGRESSIONAL 
   RESEARCH SERVICE; DAVID ISENBERG, INDEPENDENT ANALYST AND 
WRITER; NICK SCHWELLENBACH, DIRECTOR OF INVESTIGATIONS, PROJECT 
 ON GOVERNMENT OVERSIGHT; AND SAM W. MCCAHON, FOUNDER, MCCAHON 
                              LAW

                    STATEMENT OF LIANA WYLER

    Ms. Wyler. Thank you. Chairman Lankford, Ranking Member 
Connolly, and distinguished members of the subcommittee, thank 
you for the opportunity to appear today before you on behalf of 
the Congressional Research Service. My testimony will discuss 
U.S. policies and efforts to combat international human 
trafficking among contractors working overseas and representing 
the U.S. Government.
    Trafficking in persons has been an issue of concern to the 
United States and international policy community for its human 
rights implications and as a prolific form of transnational 
criminal activity. Despite international commitments to 
eradicate human trafficking, recent reports suggest that the 
United States continues to face challenges in preventing it and 
related violations in the performance of Federal contracts 
overseas.
    These challenges are not new. Since at least the late 
1990's, U.S. contractors have been implicated in allegations of 
human trafficking and related violations in Bosnia, South 
Korea, Iraq, Afghanistan, and other countries around the world. 
These allegations have been of concern to policymakers because 
they risk tarnishing the reputation of the United States as a 
country that stands for freedom and human rights principles. 
They may also undermine U.S. diplomatic efforts to galvanize 
international support to combat human trafficking.
    In response to many of the allegations that have surfaced 
over the years, the U.S. Government has sought to prevent human 
trafficking in the context of a multi-tiered policy framework. 
This framework consists of international treaties, Federal 
statutes, policy directives, implementing regulations, agency-
specific policy guidance, and voluntary best practices. In 
their current form, U.S. anti-trafficking policies provide for 
a common definition of severe forms of human trafficking and 
related offenses. As of December 2002, the U.S. Government also 
established a zero tolerance policy against such trafficking 
which applies to contractors.
    The centerpiece legislation for the U.S. efforts to combat 
human trafficking is the Trafficking Victims Protection Act 
[TVPA] of 2000, as well as its three reauthorizations. The TVPA 
emphasizes a three-pronged policy approach to anti-trafficking 
that focuses on preventing human trafficking, protecting 
trafficking victims, and prosecuting traffickers. The TVPA, as 
amended, also contains provisions designed to prevent human 
trafficking in Federal contracts. Specifically, the TVPA's 2003 
reauthorization allows contracts and subcontracts to be 
terminated without penalty under certain conditions. These 
include situations in which a contractor engages in severe 
forms of human trafficking, procures a commercial sex act 
during the contract period, or uses forced labor in the 
performance of the contract.
    Implementing regulations require that contractors insert an 
anti-human trafficking clause into all solicitations and 
contracts. This clause covers, among other provisions, how to 
address violations, including the application of suitable 
remedies such as termination, suspension, and debarment. 
Additional executive branch regulations apply to certain 
contracts in Afghanistan and Iraq. For example, the U.S. 
Central Command's Joint Theater Support Contracting Command 
mandates additional provisions related to employee passports, 
recruiting fees, and living conditions, among others.
    Yet, despite this multi-tiered policy and implementation 
framework, allegations of trafficking violations and 
contracting practices that heighten the risk of trafficking 
appear to continue to take place. The U.S. Commission on 
Wartime Contracting has highlighted possible incidents related 
to human trafficking involving labor brokers, contractors, and 
subcontractors in U.S. contingency operations overseas. Several 
reports by U.S. Inspectors General Offices have also, in recent 
years, identified problematic contracting practices overseas 
that raise the risk of human trafficking and related 
violations.
    Some observers have begun to wonder why, after decades of 
strengthening United States and international policy against 
human trafficking, do such violations continue to occur. Is the 
existing legal and regulatory framework sufficient? Are there 
gaps in the oversight and enforcement of existing laws and 
regulations among overseas contractors? Do contractors and 
subcontractors, as well as those responsible for monitoring 
them, understand what actions are prohibited and how such 
contracts should be monitored? And to what extent are continued 
trafficking violations in contracts overseas a manifestation of 
broader challenges associated with managing and relying on a 
large contractor force to support overseas missions?
    These questions may warrant further exploration by 
policymakers and implementing agencies.
    This concludes my testimony. Thank you again for the 
opportunity to be here today. I look forward to your questions.
    [The prepared statement of Ms. Wyler follows:]

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    Mr. Lankford. Thank you, Ms. Wyler.
    Mr. Isenberg.

                  STATEMENT OF DAVID ISENBERG

    Mr. Isenberg. Chairman Lankford, Ranking Member Connolly, 
other distinguished members of the subcommittee, thank you for 
the opportunity to testify here today.
    I commend you for examining the issue of whether Government 
contractors exploit workers overseas. It is unquestionably a 
problem. Though it has come up elsewhere, it has not yet 
received the sustained attention it merits. The Commission on 
Wartime Contracting in Iraq and Afghanistan noted in its final 
report: U.S. contingency contractors, opportunistic labor 
brokers, and international criminal organizations have taken 
advantage of the easy flow of people, money, goods, and 
services to capitalize on the sources of revenue and profit. 
Their actions bring discredit to the United States and act as a 
barrier to building good diplomatic relations.
    This subject also means you have to look at the 
relationship between prime contractors and their 
subcontractors, which is another linked problem. ``It is 
often,'' to cite Winston Churchill, ``a riddle, wrapped in a 
mystery, inside an enigma.'' As proof of this, you don't have 
to look any further than last week, when the International 
Stability Operations Association, a major trade association for 
an industry, held their annual summit. One of their workshops 
was entitled Performance and Pitfalls of Subcontract 
Management.
    I am pleased to be here to discuss The Najlaa Episode 
Revisited report that I coauthored with my colleague, Nick 
Schwellenbach of POGO, which came out earlier this year. In the 
interest of full disclosure, I should mention, though I fully 
commend POGO for allowing me to come to them with the 
information and publishing the report, I don't speak for POGO.
    First, let me address why is this important. For years, 
industry advocates have been claiming that thanks to private 
military and security contractors, U.S. military forces have 
the best supplied military in any military operation in 
history. It is true that PMCs are now so intertwined and 
critical that the U.S. military simply can't operate without 
them. But it is not an unmitigated benefit. Many PMCs have 
problems implementing contracts. Some have committed outright 
fraud, as you know, thus wasting U.S. taxpayers' moneys and 
indirectly negatively affecting U.S. military operations.
    Second, our report documented various violations of the law 
and irregularities with regard to third country nationals. Some 
people may say this is unfortunate, but since nobody was 
wounded or killed, what is the big deal? The answer is twofold.
    First, as any competent military commander will tell you, 
wars are not fought and won by machine and tools; they are 
fought and won by people. Given how tightly integrated private 
military contractors are with regular military forces, treating 
people badly on the private side can adversely impact people on 
the public side.
    Second, there is a cost when contractors are improperly 
used and treated, and I am not talking about money. Although it 
is not widely recognized, the use of private contractors among 
the complex of national defense, security and foreign policy 
departments and agencies is so widespread and so wide in scope 
that their impact can be strategic, as opposed to merely 
operational and tactical.
    If you think I am exaggerating, consider the recent news 
that the United States is withdrawing its military forces from 
Iraq by the end of the year. This was not done because the 
Obama administration wanted to do so; it was done because it 
could not work out a deal regarding immunity for U.S. military 
forces. But given the events of September 2007, when Blackwater 
security contractors shot and killed 17 Iraqi civilians, no 
Iraqi government was ever going to be able to grant an immunity 
deal. Now, like it or not, that is strategic impact. In other 
words, there is a reputational cost when contractors do bad 
things or are treated badly.
    Third, while industry officials and advocates say they 
often welcome regulation, it often comes with the caveat that 
it should not be intrusive or burdensome. They note they 
already comply with existing law laws. While it is true that 
existing regulation could interfere with the proper functioning 
of the private sector, it is equally true that the 
unconstrained activities of the marketplace, especially in the 
chaos of battlefields and war zones, is a recipe for problems. 
In truth, free market and regulation can go together.
    Finally, contractor advocates also point to their own 
efforts to ensure ethical conduct, notably through codes of 
conduct. While this is commendable, and perhaps some day even 
useful, it is hardly sufficient. At the present time, their 
mechanisms for enforcement are largely theoretical and not 
resourced, and there are no people or money put behind them. 
Right now they operate on the Joe Isuzu principle, which is to 
trust us. My response is that we should heed the words of 
Ronald Reagan and trust, but verify.
    Finally, even if a company does have high standards for 
ensuring ethical conduct, it all falls apart when it comes to 
subcontractors. KBR has an extensive code of conduct, has a lot 
of resources it puts into implementing behavior for its 
employees, but when it came to dealing with its own 
subcontractor, it failed miserably.
    Thank you.
    [The prepared statement of Mr. Isenberg follows:]
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    Mr. Lankford. Thank you, Mr. Isenberg. Look forward to 
receiving questions as well.
    Mr. Schwellenbach.

                STATEMENT OF NICK SCHWELLENBACH

    Mr. Schwellenbach. Chairman Lankford, Ranking Member 
Connolly, and other distinguished members of the subcommittee, 
thank you for inviting me to testify today.
    The United States has been a global leader in combating 
trafficking in persons, yet our tax dollars are inadvertently 
fueling this human rights tragedy through our overseas contract 
labor supply chain. Not only is trafficking and exploitation of 
laborers a moral wrong, but it can spark a backlash from the 
laborers and their home countries, and could undermine the U.S. 
mission abroad.
    There have been some oversight improvements over the last 
several years, but there is a lack of enforcement. For example, 
to date, there have been no prosecutions for contractor-driven 
war zone trafficking.
    First, I will recount some stories of laborers in Iraq; 
then I will summarize public reporting of U.S. investigative 
and enforcement activity; third, I will recommend some ways to 
strengthen enforcement.
    In June, The New Yorker's Sarah Stillman reported on labor 
rights abuses against third country nationals on U.S. contracts 
in Iraq and Afghanistan, and she focused on the stories of two 
Fijian women, Vinnie Tuivaga and Lydia Qeraniu, who worked for 
the Army Air Force Exchange Service subcontractors in Iraq.
    Vinnie and Lydia were, like many others, lured by promises 
of good pay. They were told by a local recruitment firm in Fiji 
that they could each make between $1,500 and $3,800 a month in 
Dubai, in the UAE. After arriving in Dubai, they and other 
women discovered their true destination, which was Iraq. They 
could have quit, but they had gone into massive debt to pay the 
recruitment fees to be there. Quitting would mean no income to 
pay off this debt.
    But when they got to Iraq, Vinnie and Lydia and the other 
women further discovered that instead of making between $1,500 
and $3,800 a month, as they were promised, they would only make 
$700 a month, which was later further reduced to $350 a month. 
The contract they signed specified that they would work 12 
hours a day for 7 days a week, and that their vacation was a 
return ticket home.
    In addition, an AAFES subcontractor supervisor had been 
repeatedly sexually assaulting Lydia according to The New 
Yorker article. The allegations eventually ended up in the 
hands of both AAFES officials and the Army Criminal 
Investigation Command. Army CID told me last year, when I was 
working on another article, that they did not substantiate the 
allegations of trafficking and sexual assault. They would not 
tell me if they had actually interviewed the women. According 
to The New Yorker, Lydia and Vinnie both say that no one from 
the military or AAFES spoke to them about their sexual assault 
claims.
    In another case from 2004, several Nepali laborers believed 
that they would be working in a five-star hotel in Jordan. 
Cementing that belief was paperwork filed with Nepal's Labor 
Ministry for several laborers to work at that hotel. The 
recruiting fee charged each laborer meant that they and their 
families were deeply in debt. But the promises of lucrative pay 
made the debt seem like a good deal.
    Furthermore, the manager of the recruitment firm told the 
Chicago Tribune that he didn't mention anything about Iraq to 
the applicants. They believed they were going to Jordan. But 
after they arrived, the Jordanian brokers demanded that the 
Nepalis surrender 2 months' pay as a fee, in addition to their 
recruitment fee, and accept less than half the salaries 
promised them in Nepal, and that they go to Iraq. According to 
the Tribune, their families told them that they must go to Iraq 
to cover the loans used to pay a Nepalese broker $3,500 for 
each man, more than a decade of earnings for the average Nepali 
laborer.
    The Amman to Baghdad Highway, which runs through Iraq's 
Anbar Province, is dangerous even for convoys guarded by 
security details. But 12 Nepali laborers did not have the 
advantages of having a security detail; they traveled this 
route, were kidnaped by insurgents, held for weeks, and killed.
    I will skip an example.
    Looking at overall enforcement activity over the last 
several years, there have been a few investigations, but there 
were no DOD investigations into trafficking in both 2006 and 
2007, according to the DOJ. This section detailing DOD 
investigations is missing in 2008 and 2009 reports. In 2009, 
according to the DOD IG, there was one report of a preliminary 
investigative activity of a contractor in Iraq for labor 
trafficking, but prosecutors determined the facts and 
circumstances did not warrant further action.
    Over at the State Department, two investigations were 
opened in 2009 and closed in 2010, a State Department IG 
spokesman told me last year. He said both cases were 
unsubstantiated.
    So there have been a few investigations, but so far none of 
them have led to prosecutions.
    There was also a civil action where the DOJ joined a 
whistleblower lawsuit earlier this year and the company settled 
to ``end the litigation.''
    But what can be done to improve enforcement? Investigators 
clearly need the resources that they require. The SIGOCO, or 
Special Inspector General for Overseas Contingency Operations, 
may be one way to do this. They also need to be trained in 
investigating trafficking in persons violations, and 
jurisdictional ambiguities should be closed with Civilian 
Extraterritorial Jurisdiction Act.
    Thank you for this opportunity. I am open to questioning.
    [The prepared statement of Mr. Schwellenbach follows:]
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    Mr. Lankford. Thank you, Mr. Schwellenbach.
    Mr. McCahon.

                  STATEMENT OF SAM W. MCCAHON

    Mr. McCahon. Chairman Lankford, Ranking Member Connolly, 
members of the committee, thank you for inviting me to testify 
before you today and thank you for taking an interest in the 
practice of modern day slavery on government contractors, and 
thank you for your commitment to take decisive action in this 
area.
    I lived approximately 9\1/2\ years in the Gulf region, 
Kuwait, Iraq, Saudi Arabia. Trafficking in persons is not a 
unique phenomena to government contracts; it is par for the 
course in these countries, which is why the Department of State 
ranks them on tier 2 and tier 3 for trafficking countries. In 
support of our trafficking countermeasures, my colleague, 
Sindhu P.K., and I have collectively spoken with several 
thousand victims of trafficking on government contracts both in 
Iraq and back in South India.
    As an attorney who has spent a significant portion of my 
career investigating allegations of procurement fraud on behalf 
of the U.S. Government and corporations, I look forward to 
talking to you today about the dynamics of trafficking in 
persons on government contractors performed in contingency 
areas.
    I would like to focus and summarize three areas. The first 
I will describe the common schemes used by contractors and 
recruiters to exploit workers and reduce them to the status of 
indentured servants. Second, briefly describe the scope of 
trafficking on U.S. Government contractors and the inadequacy 
of Government efforts to date; and, finally, touch upon some 
mitigation measure that can be taken by the Government to 
abolish this practice.
    Although there are many companies engaged in trafficking on 
U.S. Government contracts in Afghanistan and Iraq, they use a 
tried and tested business model to perpetrate the fraud. The 
following steps are standard operating procedure for the 
traffickers and also the subcontractors and prime contractors 
to take kickbacks from the traffickers.
    First, subcontractor-prime contractor establishes direct 
contact with the recruiting company in the developing nation. 
The purpose of the personal contact by the subcontractor or 
prime is to solidify the kickback scheme.
    Second, arrangements are made for the contractor company to 
pay the recruiter for the services of recruiting, such as air 
fare, visas, cost of medical examinations.
    Third, the contractor and the recruiter agree to the amount 
of the kickback paid to the contractor for giving the 
recruiting firm the business. The kickback is typically 50 
percent of the money charged by the recruiter to the 
prospective employee. This is where the violation of the Anti-
Kickback Act of 1986 occurs.
    Fourth, the recruiter retains the services of subagents to 
solicit victims. This process facilitates the layering or onion 
skin effect in order to provide plausible deniability up the 
trafficking chain.
    Fifth, the recruiter will solicit victims from farming 
villages who are typically without resources. This category of 
victim is also less sophisticated concerning the fraudulent 
techniques used by recruiters.
    Sixth, the recruiter deceives the victim into believing 
that he will receive money far beyond which he will actually 
earn. Oftentimes, but not always, the location of the work site 
is misrepresented.
    The seventh step, the recruiter's agent informs the victim 
he will need to pay a fee between $2,500 and $5,000 in order to 
get the well-paying job and good working conditions servicing 
the U.S. Government. This action induces the victim to pay the 
high recruiting fee and will help ensure future compliance with 
the contractor's dictates because the victim will become 
indebted in order to pay the commission to the recruiter.
    Eight, victims will typically obtain the money from a loan 
shark or use their house or their dowry gold as collateral. The 
interest on the loan is between 35 and 45 percent. The money 
paid the loan shark must be provided to the recruiter or 
subagent prior to departure for the work site.
    Workers are not provided a written contract prior to the 
departure from their host nation. If they do receive an 
agreement once they arrive at the work site, it will not be 
written in a language they can understand.
    The 10th phase, once the victim arrives in the combat zone, 
he is typically housed for several months without pay and not 
permitted to call his family. When he does receive his first 
work and pay, it is typically 50 percent of what he was 
promised by the recruiter. He tells his employer what was 
promised by the recruiter, but the subcontractor or prime 
informs him that is a matter between the worker and the 
recruiter.
    By this time, the worker has missed monthly payments to the 
loan shark. He now pays approximately 50 to 75 percent of his 
monthly wages just to service the interest on the loan. Even 
though he knows he was deceived, he is helpless. If he speaks 
to anyone with the Government, he is terminated immediately and 
sent home. Often we found that the prime contractor instructs 
the employees that they are not allowed to inquire or report 
trafficking conditions of subcontractors, thereby completing 
the conspiracy of silence and mitigating detection of the 
crime.
    In response to the focal question of this committee about 
the effectiveness of the Tafficking in Persons Act on the 
process on contingency contracts, it is not had any deterrent 
effect.
    Several mitigation measures can be taken. I would be glad 
to address those in the questions.
    Thank you for the time to speak.
    [The prepared statement of Mr. McCahon follows:]
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    Mr. Lankford. Thank you for your testimony.
    I now recognize myself. I am going to do 6 minute question 
rounds. Are you okay with that?
    Mr. Connolly. Fine.
    Mr. Lankford. There you go, we just settled it.
    This is one of those moments where you think, okay, where 
do we start? All right, let me begin here. Do you feel like, 
anyone can answer this, that we have the right policies and 
regulations in place? Because this is not some new feature that 
we have never heard of; this has gone on now 20 years. All the 
way back to Bosnia they were very aware that this has flipped 
into our subcontracting and contracting process for overseas 
contingencies.
    At this point we have added new laws, added new 
regulations, added new policies, added new procedures over and 
over again, added new officers and lead in it; yet, we still 
have stories of this occurring. Do we have the right policies 
and procedures and regulations in place, in your perspective? 
And anyone can answer that at this point.
    Mr. McCahon. Chairman Lankford, members of the committee, I 
do believe we have the right regulations in place. The problem 
is transparency and reporting. There are not enough agents on 
the ground to report this conduct. It has to be the 
responsibility of the prime contractor. But now the prime 
contractor has no incentive and all the disincentive in the 
world to report the conduct. It makes the prime contractor look 
bad if they do report it, and they get no incentive for 
engaging in reporting.
    Mr. Lankford. Okay. I am going to come back to that. Anyone 
else have another comment to add to that? Mr. Isenberg.
    Mr. Isenberg. Mr. Chairman, I believe that the right 
policies are in place, but I believe that some of those 
policies and regulations are rarely used, in part due to 
opposition from the industry. For example, major trade 
associations, I have in mind the Professional Services Council 
and the International Stability Operations Association to name 
two, have been quite voluble in their opposition to the 
Government using its powers of suspension and debarment against 
contractors who do wrong things.
    Mr. Lankford. But do we have suspension and debarment being 
applied to people that are doing human trafficking? If we are 
aware that is happening on the ground, do we know of a case 
that a contractor has been suspended or debarred?
    Mr. Schwellenbach. There was one State Department embassy 
subcontractor, I believe in Jordan or somewhere else in the 
Lavant, that was terminated earlier this year, according to a 
State Department Office of Inspector General report, after the 
contracting officer discovered that there was a violation of 
the FAR for prostitution. Apparently one of the employees was 
being solicited by a manager of the subcontractor.
    Mr. Lankford. Okay, so one?
    Mr. Schwellenbach. That's all I know of.
    Mr. Lankford. As far as we know at this point? I mean, for 
a policy that, as Ms. Wyler referenced earlier, has come up 
again and again and again, these zero tolerance policy for 
this, why is it that I talk to soldiers coming back and ask 
them what it was like in the wire, and they tell me stories 
about TCNs over and over again in their abusive living 
conditions, in the way that they are treated on the ground, the 
recruiter fees, how they are trying to get out, they can't get 
home. I mean, those are the stories that I hear from soldiers 
when they begin to tell me about what was happening on the 
ground while they are in Afghanistan. Those are the reports 
that continue to come back.
    So if we have the right regulations in place, we have a 
zero tolerance policy, we have the options in the toolbox, 
suspension and debarment, what is holding us back to actually 
enforcing this on contractors and subcontractors so we can make 
this stop?
    Mr. Schwellenbach. I will weigh in here. I completely agree 
with my co-panelists here. And while I think there are some 
tweaks to law and regulation that would be beneficial, such as 
clearing up any ambiguity about U.S. jurisdiction over non-DOD 
contractors in overseas contingency operations. I think the 
biggest problem is commitment to enforcement of the laws and 
regulations on the books.
    I didn't get to it in my oral, but in my written testimony 
I recount the example of the Nepali laborers who were killed in 
Iraq on the Amman to Baghdad Highway. Attorney Martina 
Vandenberg, several years ago before a Senate subcommittee, 
remarked that the DOD IG, and this was several years ago, keep 
in mind, seemed to confuse the principles of civil and criminal 
law, and the IG said, well, we couldn't go after the 
subcontractor because there was no privity of contract between 
the U.S. Government and the subcontractor. But this was a 
criminal matter and, according to the Military Extraterritorial 
Jurisdiction Act, criminal jurisdiction extends to all tiers of 
subcontracting. So if the remarks by the then-acting DOD IG 
were correct, they were totally confused.
    Mr. Lankford. Well, let me clarify this as well. Do you 
have a perspective on what is an appropriate recruiting fee or 
these broker fees at this point? For someone to pay a $2,500 to 
$5,000 broker fee to someone in a very poor country, and then 
they go and they work and they receive less than that, than 
what they paid, that is difficult not to define that as 
slavery. That is very difficult not to say this is not some 
sort of debt bondage, that we put you in $5,000 worth of debt, 
and if you work for us in a year you will get your $5,000 back, 
maybe, unless you mess up or report what is going on, and then 
you will get way less than that and we will send you home.
    Is there an appropriate level you would say that is a 
recruiter fee?
    Mr. McCahon. Chairman Lankford, I believe that there is an 
appropriate recruiting fee; it is defined by the host nations. 
All of these nations that produce foreign labor have their own 
laws. Some say a specific amount, like Kenya, maybe $275; 
others will limit it to 1 month of the salary as a maximum 
recruiting fee for foreign laborers; which also creates a 
conflict within the U.S. Government contracts, which say that 
the contractors are abiding by all the laws of the host nation, 
wherever they are performing.
    Mr. Lankford. But not having to pay for their travel, their 
flight, all that stuff in transitioning, that is not an 
appropriate level? Obviously, that should be paid for in the 
contract.
    Mr. McCahon. And in many of the countries, Mr. Chairman, 
for instance, Kuwait mandates that the employer pay for those 
fees, and the housing and transportation over.
    Mr. Lankford. Someone, when we are going through the 
contract, we are aware of what it costs to move people into the 
country, what it costs for travel, what it costs for a laborer. 
So at some point we can say this is out there. We are not 
tracking it, but someone signed off on this contract with the 
details within it of what that money would pay for, so either 
that money is being skimmed off completely by an unscrupulous 
contractor or we are aware this is going on. But it can't be 
none of the above on that.
    With that, I would like to yield to Mr. Connolly.
    Mr. Connolly. Thank you, Mr. Chairman.
    As I said in my opening statement, taking away human 
autonomy is perhaps the most abhorrent crime imaginable, and it 
occurs with murder and it occurs with human trafficking. What 
you have described is a process of, the most charitable phrase, 
indentured servitude. And that is being charitable.
    Ms. Wyler, you noted that the 2003 TVPA directed agencies 
to cease contracting with firms that engage in human 
trafficking or which sexually abuse their employees. Is it 
correct that not a single case of trafficking or sexual assault 
has been prosecuted under this statute or the 19 other laws, 
executive orders, and DOD memos banning such trafficking and 
abuses?
    Ms. Wyler. Representative Connolly, thank you for your 
question. Unfortunately, issues related to the U.S. criminal 
justice system and the status of prosecutions in U.S. courts 
are beyond the scope of my expertise, but I am happy to share 
your question with my colleagues in the American----
    Mr. Connolly. Are you aware, Ms. Wyler, of a single 
prosecution?
    Ms. Wyler. As far as I know, according to the State 
Department's last two reports, there have not been 
prosecutions.
    Mr. Connolly. Right.
    Mr. McCahon, why? One thing I gleaned from your testimony, 
if I can interrupt, we have created a system of disincentive 
for reporting. The prime contractor gets dinged if he is 
diligent and says, you know, I have encountered a case here; I 
think we need to pursue it. He actually loses if he does that, 
if I understood your testimony.
    Mr. McCahon. I believe that is correct, sir. I do believe 
that is correct. Right now there is no mandate to report it, 
and if they do report the misconduct, it has a negative 
reflection upon them. To date, the only thing we have seen 
reported is when there has been such overwhelming attention to 
a given issue, as identified in The New Yorker and by POGO, 
that the prime contractor will take action.
    And if I might respond to the chairman's question, I think 
one of the problems why there is no suspension and debarment is 
people don't understand suspension and debarment. I was a trial 
attorney for the Army's Procurement and Fraud Division, 
Suspension and Debarment Branch. Suspension and Debarment 
Branch is not a criminal or civil matter, it is a business 
decision by a preponderance of the evidence, whereby the 
official makes the determination we don't want to do business 
with this company; and it is more likely than not----
    Mr. Connolly. Again, a disincentive. If I am a private 
contractor, debarment and suspension are not desirable goals.
    Mr. McCahon. That is correct.
    Mr. Connolly. So why would I want to risk that? And it 
seems to me we have the wrong set of incentives and 
disincentives in place if we want to really deal with this.
    Now, I asked Ms. Wyler, and maybe she is the wrong person 
to ask, but I am not aware of a single case being prosecuted. 
Are you, Mr. McCahon?
    Mr. McCahon. I am not of a single case, nor am I aware of 
any suspension or debarment.
    Mr. Connolly. So that must mean that our zero tolerance 
policy is working, is that correct?
    Mr. McCahon. I believe it is a zero tolerance policy on 
reporting the conduct.
    Mr. Connolly. Well, Mr. Schwellenbach and Mr. McCahon, we 
are talking about some very isolated examples, then, right? 
This is not a widespread practice. We are not talking about a 
lot of people, are we?
    Mr. Schwellenbach. My understanding is this could 
potentially impact thousands of laborers. I mean, the exact 
percentage of the third country national work force that is 
subjected to these kind of labor practices is quite large, 
although I am not sure if it is the majority or not. Sam might 
be more prepared to answer that.
    Mr. Connolly. Time is limited. Would you concur it is 
thousands?
    Mr. McCahon. I would say tens to hundreds of thousands.
    Mr. Connolly. Dear Lord. Okay, my goodness. So it is not 
some isolated, random practice. We are aware of it. We have a 
zero tolerance policy. We have 19 laws, executive orders, and 
DOD memos making it very clear we frown on this practice, we 
won't tolerate it if it is ever uncovered, but fortunately it 
has never been uncovered, at least not rising to the level of a 
single prosecution. Is that correct?
    Mr. McCahon. That is correct.
    Mr. Connolly. Well, then I guess I would ask, these are all 
contractors or subcontractors serving the U.S. Government we 
are talking about?
    Mr. McCahon. Yes.
    Mr. Connolly. So to what do you ascribe the apparent 
indifference of the U.S. Government and its prime and subprime 
contractors with respect to this abhorrent practice?
    Mr. Schwellenbach. Well, with regards to suspensions and 
debarments, Government agencies are often loathed to suspend or 
debar a contractor or subcontractor unless there is some sort 
of successful civil action or criminal prosecution, so it 
becomes this kind of Catch-22 situation: well, there is no 
prosecution or conviction or civil action, so we can't suspend 
or debar; and that is a misunderstanding of the suspension and 
debarment practice. As Sam mentioned, they can do what are 
called fact-based debarments to protect the interests of the 
U.S. Government if they can successfully document noncompliance 
with U.S. Federal acquisition regulations.
    Mr. Connolly. But we are in this system that protects 
itself.
    Mr. Schwellenbach. Exactly.
    Mr. Connolly. Not the victims.
    Mr. Schwellenbach. Absolutely.
    Mr. Connolly. Not human beings whose autonomy is being lost 
or compromised. Because I guess it is inconvenient or--other 
than, bureaucratically, debarments and suspensions are messy 
and complicated and people don't like them, but, I mean, your 
testimony is it could be tens of thousands, maybe even hundreds 
of thousands of individuals we are talking about in this victim 
pool serving the U.S. Government and its prime contractors, and 
we have not had, to our knowledge, this panel, not a single 
prosecution. The laws are all in place, the policies are all in 
place. We have zero tolerance. And what that system has 
produced is zero reporting.
    Mr. Schwellenbach. Zero prosecutions.
    Mr. Connolly. Zero prosecution.
    Mr. Schwellenbach. And there have been cases that have been 
presented to prosecutors, but they have declined to prosecute, 
at least two that I know of.
    Mr. McCahon. Yes, I believe Nick is correct, Representative 
Connolly. There was one case in 2009, one case in 2010 when the 
DOD IG surveyed all the four Federal law enforcement agencies 
on the ground, and they reported one case in each year.
    Mr. Connolly. A final question because I have 3 seconds. 
Does DOD take this issue seriously, in your view, given what 
you just described?
    Mr. McCahon. I believe that there are some elements in DOD 
that take it very seriously, Representative Connolly, but I 
think that the people that can make a difference don't give it 
enough attention.
    Mr. Connolly. Thank you, Mr. Chairman.
    Mr. Lankford. Recognize Mr. Walberg for 6 minutes.
    Mr. Walberg. Thank you, Mr. Chairman, and I thank the panel 
for being here.
    Mr. Schwellenbach, you cut short your descriptions or 
stories. I want to give you a little further opportunity to 
tell us some of those stories. I mean, you talked about the 
Nepalis who were captured and ultimately murdered. I guess we 
use that term. But also the fact that one of them was 
decapitated and the rest were murdered later on.
    Tell us a few more stories, because a panel like this, its 
purpose is to get the answers and problems, but I think it is 
also to give voice to those who have no voice.
    Mr. Schwellenbach. The third example that I wasn't able to 
recount in my oral testimony earlier was a case of alleged 
labor contracting or labor trafficking in Iraq with a DOD 
subcontractor or a State Department subcontractor that was 
involved in building the new embassy compound in Baghdad. The 
Multinational Force Iraq Inspector General did look into these 
allegations that First Kuwaiti was doing this, and according to 
an Inspector General memorandum from 2007, they stated that 
several laborers reported that fraudulent hiring practices were 
used during the recruitment; they stated that promises made and 
terms of the original contracts presented to them in their 
country of origin were inconsistent with the actual conditions 
regarding lower pay, longer hours, no days off of their 
employment in Iraq.
    The memo also details debt bondage that some of these 
laborers faced. A large majority of the workers from the Indian 
subcontinent incurred recruiting fees of up to 1 year's salary, 
which far exceeded the legal limits of the countries where the 
recruitment took place; and in some extreme examples third 
country national workers relinquished all pay, all pay, for 
between 9 to 12 months of labor. And if that isn't indentured 
servitude, I don't know what is.
    But that was the third example.
    Mr. Walberg. And that was in violation of the country of 
origin.
    Mr. Schwellenbach. Yes. They could not charge recruitment 
fees, but the labor brokers did anyway, and the laborers signed 
up with the belief that they would be making more pay when they 
eventually got to the country where they were going to do the 
work, and they often believed they were not going to Iraq; they 
were going to Dubai or some other non-war zone country.
    Mr. Walberg. How difficult is it to investigate human 
trafficking allegations?
    Mr. Schwellenbach. Well, if you don't talk to the victims, 
it can be very difficult, and that is one problem I have seen 
in a few of these investigations, is the victims say they were 
not interviewed by U.S. Government investigators. So that is a 
basic principle of criminal investigation, is you want to talk 
to the victim. I mean, they are a key witness.
    Mr. Walberg. So it is not difficult if you can talk to the 
witness, but if you choose not to talk to the witness----
    Mr. Schwellenbach. I don't want to minimize the difficulty 
of these investigations; they span continents, there is often a 
complex chain of subcontractors and labor brokers and 
recruitment companies. And sometimes I also think the 
investigators sometimes use a narrow lens when they look at a 
potential crime. They don't look at the procurement fraud 
elements of trafficking violations, and I think they would be 
wise to do so.
    Mr. McCahon. If I might, Representative Walberg, I also say 
that it isn't that difficult if you really take an interest in 
it. My colleague, Sindhu P.K., and I recently interviewed a 
dozen victims in the south of Indian Chunai and we interviewed 
many, many victims on the ground in Iraq. The problem is, and 
one of the problems with the DOD IG report, when you read about 
the people they interviewed, they never spoke to a victim; they 
spoke to Government personnel, they said they even spoke to 
some of the management of the contractors.
    Mr. Walberg. But not the victims.
    Mr. McCahon. But never the victims. And the victims also 
need to be protected, because we have had situations when we 
would speak to a victim and the next day they are on a plane 
home. In fact, we interviewed these dozen men in Chunai this 
summer, that is exactly what all of them said, they knew they 
couldn't speak to an American because, if they did, they would 
be put on a plane home, which meant no job, they still owned 
the loan shark, and some very serious consequences for them.
    Mr. Walberg. And they don't perceive that the DOD would be 
of any help or protection for them?
    Mr. McCahon. One of the things that we found was echoed in 
Sarah Stone's comments in The New Yorker, that please tell the 
American people, because if the American people know what is 
going on here, they will help us. And we heard that several 
times in our interviews. They believe that if the American 
people know how they are being treated, that we would help 
them.
    Mr. Walberg. Mr. Isenberg, what needs to happen to increase 
oversight and enforcement?
    Mr. Isenberg. Well, I would say that somebody within the 
hierarchy of the various executive departments needs to 
emphasize that this is a real problem. As an example, the 
person responsible for bringing to my attention, at 
considerable cost to themselves, what happened with Najlaa had 
originally tried contacting the U.S. Government directly. That 
person had sent letters and emails to Department of Justice, 
Department of Defense, USAID, Department of State.
    Mr. Walberg. With no results?
    Mr. Isenberg. No results except that earlier this year that 
person finally got contacted initially via email, more than 10 
months later, after that person had originally contacted that 
agency, to say we are in receipt of your email and would like 
to talk to you more about it. Since then there has been an 
interview of that person and phone calls, and presumably they 
are now looking at it. Where the status of that is, I don't 
know, but clearly there is no excuse, in my mind, for a 10 
month delay between receiving information and getting back to 
that person.
    Mr. Walberg. I thank you. Thank you for bringing light. 
Yield back.
    Mr. Lankford. Thank you, Mr. Walberg.
    Let me do a quick question as well. On the investigation 
side, I can fully appreciate this becomes quickly a he said-she 
said, where an investigator goes in, talks to a third country 
national who is terrified and says, I paid $5,000. There is a 
language barrier, there is all kinds of difficulty in 
investigation there. Then the subcontractor or the prime, 
either one, says, no, we didn't do that; no, our recruiters 
don't. Can you find that recruiter? No, they are just some firm 
we used overseas. So validating these things, I would assume, 
would be incredibly difficult to do. The problem is just the 
frequency of the number of stories, you would assume someone 
would rise up and say we have to start tracking this in some 
way.
    Right or wrong on that?
    Mr. Schwellenbach. You are absolutely correct, Chairman. 
Building an airtight criminal case can be quite difficult, 
especially when you have that kind of he said-she said 
situation. But I think if there was--there is certainly, I 
think, plenty of opportunities to build criminal cases, and I 
think a high profile criminal case that leads to successful 
conviction could have some sort of deterrent effect. And I do 
think, given the plethora of allegations out there, I think 
something could be made of at least some of those.
    Mr. Lankford. Right. But you go back again to suspension 
and debarment does not have the same threshold.
    Mr. Schwellenbach. Exactly. You have a lower----
    Mr. Lankford. At a minimum. So the tools and the options 
are out there to do something. The question is are we doing 
anything other than saying it has to be included in the 
contract, which even then, through the statistics, even the 
basic statement of the FAR and that we don't do trafficking in 
persons, that is not always included in contracts.
    Mr. Schwellenbach. Yes. As the DOD IG has found in some of 
its audits, all the contracts need to have this clause; 
sometimes the clause is just missing. But you are absolutely 
right, suspension and debarment could be a tool used to protect 
the Government's interest, and it is not used enough.
    Mr. McCahon. Chairman Lankford, I would also mention it is 
not as difficult as it might appear at first. What the 
subcontractor usually does is deny the representations made by 
the recruiter. One need only see who entered into the agreement 
with that recruiter to start their investigation. That is the 
person who has the responsibility.
    What we have found is oftentimes there is no paper trail. 
The contractors say, well, we don't really have a written 
agreement with the recruiter. We will say, well, how do you 
flow down the clauses, then, that are mandatory; which goes to 
the whole suspension and debarment. I think that it is 
difficult to prosecute these cases because of the 
jurisdictional issues and also the distance and language 
barriers. It isn't difficult to do a fact-based debarment.
    Mr. Lankford. Okay.
    Mr. Connolly, would you like to ask some questions?
    Mr. Connolly. It is exactly that area I wanted to ask you 
about, Mr. McCahon, because in listening again to your 
testimony, it seems to me that--well, first of all, this is all 
about money, so, frankly, going after criminal prosecution may 
be ideally a good thing to do down the road. But what we need 
to do is change the incentive-disincentive system, and it is 
all about money; for recruiters, for the workers, the lure of 
that money, and for the subcontractors who are getting paid by 
the U.S. Government through the prime.
    It seems to me that the system you described in your 10-
point sort of list, the weak link is the recruiting, 
potentially. If we really want to go after this practice, 
requiring documentation, working with the host government 
getting at deceptive practices, laying out in more contractual 
terms exactly what is expected and exactly what it is going to 
cost, and how we document that those payments are made or not 
made, or they are exorbitant or they are not.
    Could you talk just a little bit about that and what is the 
U.S. Government doing back in the host country with those 
recruiters?
    Mr. McCahon. I would be glad to address that, 
Representative Connolly. One of the things that the U.S. 
Government can do is mandate in the contract that every worker 
receive a copy of their contract prior to departing their host 
nation in a language that they understand, in their host 
language. Doesn't cost anyone anything. Because you hit it upon 
the head, the crux of this is deceptive recruiting. It is all 
deceptive recruiting about where they are going to work, how 
much money they are going to make paying the commission.
    Another thing that they could do is make the subcontractor 
required to compensate that individual 1 day after they depart 
their host nation. The men we talked to languished for months 
in warehouses until they can be pulled off the shelf like a 
widget and then supplied and put into the supply system. They 
get no money, only subsistence food. They are not making 
payments to their loan sharks or anything like that. So you 
could make the subcontractor require to be responsible and also 
make sure that these recruiting agreements are in writing. Very 
few of the people we talked to ever had a contract. So those 
few simple steps would mitigate this significantly.
    Mr. Connolly. And, to your knowledge, has there been such 
discussion with DOD in imposing such requirements so that we 
can try to get our arms around deceptive recruiting practices?
    Mr. McCahon. My colleague and I have forwarded a summary, a 
four-page memorandum on solicitation strategies and contract 
provisions that can be used. We forwarded it to DOD and 
Department of State for consideration.
    Mr. Connolly. When?
    Mr. McCahon. To Department of State about 15 months ago, 
and to the Department of Defense maybe 6 or 8 months ago.
    Mr. Connolly. And the reaction?
    Mr. McCahon. We have worked with the chief of the CTIPS 
operation at DOD and I believe they are committed to this, and 
we recently spoke at a conference, a CTIPS conference in August 
on the topic.
    Mr. Connolly. You have spoken about it at a conference.
    Mr. McCahon. Yes, sir.
    Mr. Connolly. But there has been no formal response in 15 
months to your State Department memo or in 6 months to your DOD 
memo.
    Mr. McCahon. Not to the State Department at all, sir.
    Mr. Connolly. Let me ask this question, again on the 
recruiting side. Obviously, when a recruiter--it is one thing 
to engage in deceptive practices on the financial end, but the 
purpose of your labor is a different matter. If I am recruiting 
and I tell you you are going to go to a five-star hotel and you 
are going to serve fancy dancy clientele, and you are going to 
be rich from the tips alone, and, instead, I am actually luring 
you into a prostitution ring where you are serving whoever in 
Iraq or some other war zone, presumably somebody at the 
receiving end knows full well what I am doing, and so do I. The 
only person deceived is the poor victim.
    Mr. McCahon. Yes.
    Mr. Connolly. What has been done to try to crack down on 
that practice, that aspect of human trafficking?
    Mr. McCahon. To my knowledge, Representative Connolly, 
nothing has been done. I spoke at a conference in 2007 
specifically entitled Things That Government Contractors Can Do 
to Mitigate Trafficking, and there was a major contractor who 
spoke ahead of me who was vice president of contracting, 
currently one of the LOGCAP contractors. His response, when he 
was asked what they were doing to mitigate trafficking, he said 
we have no privity of contract with the employees of the 
subcontractor, therefore we are taking no action; it is not our 
responsibility.
    So I think what we see is all the way down the trafficking 
chain people disavow the responsibility for it.
    Mr. Connolly. I have to say, Mr. Chairman, I am just 
stunned at this testimony, I mean, stunned, that in the name of 
the American people these practices have been allowed and we 
have turned a blind eye to them for either bureaucratic reasons 
or because we have what we consider to be more important parts 
of the mission. And it seems to me that whatever it is we are 
fighting for in Iraq and Afghanistan under the banner of our 
flag, allowing these practices compromises it all. It couldn't 
be more antithetical to American values what you are 
describing.
    I look forward to the testimony of the next panel.
    Mr. Lankford. As do I.
    Thank you, ladies and gentlemen, for being here as part of 
this first panel.
    With that, we will take a short recess to reset for panel 
number two.
    [Recess.]
    Mr. Lankford. We will return from recess.
    Thank you for resetting and for waiting. I assume most of 
you all were in the earlier panel as well and got a chance to 
enjoy some of the conversation that was occurring. I would like 
to go ahead and, pursuant to all committee rules, swear in the 
witnesses before they testify.
    Would you please stand and raise your right hand? Thank 
you.
    [Witnesses sworn.]
    Mr. Lankford. Thank you. You may be seated.
    Let the record reflect the witnesses all answered in the 
affirmative.
    In the second panel we have Ms. Evelyn Klemstine, the 
Assistant Inspector General for the Department of State. Thank 
you for being here. Ambassador Kenneth Moorefield, the Deputy 
Inspector General for the Department of Defense; Ms. Linda 
Dixon, the Program Manager for Combating Trafficking in Persons 
Office for the Department of Defense; and Mr. Mike Howard is 
the Chief Operations Officer for the Army and Air Force 
Exchange Service.
    I am grateful that you are here and looking forward to 
being able to receive your testimony and be able to hear what 
is going on. Obviously, your written testimony has already been 
submitted. That will be part of the record. Be honored to be 
able to receive oral testimony at this point.
    Ms. Klemstine.

STATEMENTS OF EVELYN R. KLEMSTINE, ASSISTANT INSPECTOR GENERAL 
 FOR AUDITS, U.S. DEPARTMENT OF STATE; KENNETH P. MOOREFIELD, 
 DEPUTY INSPECTOR GENERAL FOR SPECIAL PLANS & OPERATIONS, U.S. 
 DEPARTMENT OF DEFENSE; LINDA DIXON, COMBATING TRAFFICKING IN 
   PERSONS PROGRAM MANAGER, U.S. DEPARTMENT OF DEFENSE; AND 
MICHAEL P. HOWARD, CHIEF OPERATING OFFICER, ARMY AND AIR FORCE 
                        EXCHANGE SERVICE

                STATEMENT OF EVELYN R. KLEMSTINE

    Ms. Klemstine. Thank you, Chairman Lankford, Ranking Member 
Connolly, and members of the subcommittee, for the opportunity 
to discuss our Office's oversight of the Department's 
compliance with the Federal Acquisition Regulations, FAR 
Trafficking in Persons clause.
    OIG has actively conducted TIP oversight to include making 
it an area of emphasis for audits, inspections, and 
evaluations. Specifically, the objective of our October 2011 
audit on the Bureau of East Asian and Pacific Affairs, EAP, was 
to measure the extent to which Department personnel and 
contractors were complying with laws, regulations, and policies 
established to prevent and detect TIP activities on Department-
awarded contracts.
    While the audit did not find evidence of any form of TIP 
involving contractor employees or contractors, the Department 
must strengthen implementation of its zero tolerance policy 
regarding TIP. We found that Department employees in the Asia 
Pacific Region were not uniformly aware of what constitutes TIP 
activity, the penalties for TIP violations, where to report 
suspected violations, and whether the TIP policy applies to 
Department contractors.
    A general awareness survey was distributed to employees in 
the Asia Pacific Region to assess whether the employees were 
aware of TIP issues. One thousand, seven hundred two Department 
employees responded to the survey, which disclosed--that 46 
percent of the Department employees either were somewhat aware 
or not at all aware of the zero tolerance. Forty-three percent 
of the employees did not know where to report suspected 
violations and 79 percent of the employees had not received 
training about TIP.
    We also found that contractors in the region were not 
always aware of or complied with their obligations under the 
FAR clause. We visited 24 contractors whose contracts included 
the FAR clause and found that 83 percent had not notified their 
employees of the TIP policy and 92 had not informed the 
employees of the consequences of violating that policy. 
Additionally, six contractors hired subcontractors to perform 
services; however, no contractors had included the required FAR 
clause in their subcontracting agreement.
    We found that Department contracting officials did not 
consistently include the FAR clauses in contracts. Of 41 
contracts reviewed in the region, we found that 27 percent of 
them did not contain the clause and 8 contracts did not contain 
the correct version of the clause. Further, even when the 
clause was contained in contracts, Department contracting 
officials did not monitor contractor compliance with the 
clause.
    Inspectors also found that an embassy contract did not 
always include the FAR clause. In fiscal year 2010, inspectors 
reviewed contracts at 20 posts and found that 25 percent of 
them had contracts without the required clause. In fiscal year 
2011, teams addressed the same issue at 16 posts and found that 
19 percent of them had contracts without the required clause. 
When inspectors found contracts that did not include the FAR 
clause, embassy staff immediately began the process of 
modifying the contract.
    During the October 2011 audit, the Department issued a 
Procurement Information Bulletin [PIB], on Combating 
Trafficking in Persons, which requires contracting officers to 
ensure that all solicitations and contracts over the micro-
purchase threshold of $3,000 contain the TIP clause. The PIB 
also provides guidance to contracting officer representatives 
[CORs], on how to monitor TIP compliance. We expect the new 
guidance will enhance the Department process for monitoring 
contractors for TIP compliance.
    We recommended that the Department implement a policy in 
the Foreign Affairs Manual on TIP, expand the Department's code 
of conduct to prohibit TIP activities, and designate an office 
to which employees and contractors should report suspected 
violations. In addition, the Department should expand its TIP 
training to all Department employees.
    In response to the audit, the Ambassador-at-Large for the 
Office to Monitor in Combat Trafficking in Persons stated that 
his office found the report helpful if somewhat troubling, and 
there was undoubtedly a need for increased awareness and 
understanding of human trafficking in the State Department. The 
Ambassador generally agreed with all the report's 
recommendations and stated he was taking corrective actions.
    OIG also released an evaluation in January 2011 of six 
contracts in Arab states in the Gulf which assessed the risk of 
TIP-related activities. Although we found no direct evidence 
that contractors violated provisions of the FAR clause, we 
found indicators that increased the likelihood that a TIP 
violation could occur. Specifically, our team found that 77 
percent of contract employees interviewed had to pay fees up 
front during recruitment, which could indicate an increased 
risk of debt bondage, and that every contractor reviewed 
confiscated workers' passports. In addition, contract workers 
at all posts expressed frustration with inconsistent payments, 
confusing pay stubs, and withheld wages. More than 70 percent 
of the workers interviewed also reported that they lived in 
overcrowded, unsafe, or unsanitary conditions.
    TIP monitoring was ineffective because CORs did not have 
standard procedures to monitor the implementation of FAR. We 
recommended that posts strengthen TIP monitoring procedures and 
the Department provide detailed guidance on how to monitor 
contractors' practices.
    Negative contracting practices can affect foreign workers 
and reflect poorly on the United States. We believe that 
adopting a strong TIP program which includes mechanisms to 
increase employee awareness, report suspected TIP violations, 
and provide for a strong monitoring program of contractors will 
help TIP and ensure that foreign workers are treated fairly and 
within the law.
    Once again, thank you for the opportunity to present our 
work on this important topic. I am pleased to answer any 
questions you may have.
    [The prepared statement of Ms. Klemstine follows:]
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    Mr. Lankford. Thank you.
    Ambassador Moorefield.

               STATEMENT OF KENNETH P. MOOREFIELD

    Ambassador Moorefield. Good morning, members of the 
committee. Chairman Lankford and Ranking Member Connolly and 
distinguished members of this committee, I want to thank you 
for the opportunity today to discuss our oversight reporting at 
the Department of Defense Inspector General's Office with 
respect to trafficking in persons. I have also presented a 
written statement which I ask be submitted for the record.
    The DOD IG previously presented testimony on oversight 
efforts concerning the topic of human trafficking in 2004 and 
again in 2006. Our first assessment was initiated in response 
to a request from Members of the Congress to the Secretary of 
Defense, asking for an investigation into allegations 
concerning the U.S. military leadership in South Korea and 
whether or not they had been implicitly condoning sex slavery 
in that country. In addition to that project, DOD IG initiated 
another parallel assessment into allegations that the European 
Command activities in Bosnia-Herzegovina and Kosovo also had 
similar problems.
    In addition to the Command actions taken in response to our 
reports to prohibit and prevent sex slavery in these two 
environments, both assessments recommended strongly that the 
Secretary of Defense issue a policy statement that clearly and 
unambiguously set forth DOD opposition to any activities 
promoting, supporting, or sanctioning human trafficking, and 
the Department subsequently did that. Further, DOD established 
annual CTIP awareness training in 2004 for all service members 
and DOD civilians, which continues until today.
    In a followup initiative, the DOD IG Initiated an 
evaluation of CTIP efforts across all of DOD in 2005. The 
resulting report recommended that the Office of the Secretary 
of Defense develop CTIP policy and program guidance. In a 
response, the Department issued DOD instruction, Combating 
Trafficking in Persons, that assigned CTIP program 
responsibilities across the Department.
    Our most recent efforts were conducted as a result of the 
William Wilberforce Trafficking Victims Protection 
Reauthorization Act of 2008. This act, as you know, requires 
State Department, USAID, and DOD IGs to each report each year, 
in January, for three consecutive years beginning in January 
2010, on a sample of contracts or subcontracts under which 
there is a heightened risk that a contractor may engage 
knowingly or unknowingly in acts related to trafficking in 
persons.
    To accomplish this, the DOD IG has consulted each year with 
the State Department's Office to monitor and combat trafficking 
in persons, as well as the DOD CTIP Program Office. We selected 
four combatant commands to conduct these reviews: the U.S. 
Pacific, Central, European, and Africa Commands. To date, we 
have issued two of these reports, covering the Pacific and 
Central Commands, and the report on European and Africa 
Commands will be issued in January 2012.
    In the U.S. Pacific Command overview, we found the Federal 
Acquisition Regulation, the FAR clause, Combating Trafficking 
in Persons, present in 93 percent of the contracts. The DOD IG 
recommended in its final report that the Director, Defense 
Procurement, and Acquisition Policy modify contract writing 
software to ensure that the FAR CTIP clause was automatically 
included in all contracts, and this was accomplished.
    In the U.S. Central Command, we found the CTIP clause 
present in 79 percent of the contracts reviewed. The team did 
identify good practices had been taken by several U.S. 
contracting commands in Kuwait who had incorporated CTIP 
compliance items in their quality assurance reviews. The team 
found, however, that contracting officers in none of the 
commands had ready access to TIP violation information from DOD 
criminal investigative organizations. Providing timely 
communication of TIP-related indictment and conviction 
information to DOD contracting organizations remains a systemic 
challenge.
    For each reporting year of our investigations in the last 
two-plus years, the teams have received DOD criminal 
investigative data on possible TIP violations. Two TIP 
incidents have been reported so far. In both cases the 
contractor had dismissed the offending employees and there was 
no further judicial investigation taken or certainly judicial 
action.
    During our DOD field work, we have noted that 
nonappropriated funds were not required to include the FAR CTIP 
clause in their contracts. As a consequence, the Army and Air 
Force Exchange Service and Navy Exchange were included in 
assessments of our U.S. Central Command, European and Africa 
Commands, and in December 2010 the Navy Exchange Command 
Headquarters recommended changes inserted in DOD Instruction 
Nonappropriated Fund Procurement Procedure, which required 
inclusion of a CTIP clause in all nonappropriated fund 
contracts, and as of October, as of this month, that 
instruction revision process is still ongoing.
    I also want to report that the DOD IG has self-initiated an 
assessment of CTIP program compliance and performance among DOD 
components. So far, over 70 DOD organizations have been 
reviewed, and this report will also be issued in January 2012.
    Finally, let me emphasize that the DOD Inspector General 
remains committed to providing oversight support of the U.S. 
Government's zero tolerance policy against trafficking in 
persons. We will continue to evaluate DOD CTIP performance and 
compliance.
    On behalf of DOD IG, I thank you again for this opportunity 
to testify.
    [The prepared statement of Ambassador Moorefield follows:]
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    Mr. Lankford. Thank you.
    Ms. Dixon.

                    STATEMENT OF LINDA DIXON

    Ms. Dixon. Mr. Chairman, Ranking Member Connolly, and 
members of the subcommittee, thank you for this opportunity to 
discuss past and ongoing DOD efforts to combat trafficking in 
persons.
    The Department of Defense Trafficking in Persons, TIP, 
Program was designed to ensure that our military services, 
combatant commands, and Defense agencies have the necessary 
tools to stop it. Training is mandatory for all employees and 
is mandated by DOD instruction first published in February 2007 
and revised September 15, 2010. The instruction is directive in 
nature and established policies and assigns responsibilities 
for combating trafficking. The policy recognizes DOD's 
opposition to trafficking in persons, prostitution, forced 
labor, and any related activities that may contribute to the 
phenomenon of TIP. Engaging in trafficking in persons is 
incompatible with DOD core values.
    To help enforce the policy, heads of DOD components must 
designate a component Combating Trafficking in Persons, CTIP, 
Office of Primary Responsibility and they must assign a program 
officer. We maintain a list of all the components points of 
contacts within our office. We maintain this list and we also 
provide this information to our DOD IG when they conduct their 
periodic evaluations of the DOD CTIP program.
    DOD started training on TIP using a multimedia Combat 
Trafficking in Persons Program in January 2005. Our training 
consists of general awareness training, law enforcement 
training, and training for our leadership. As well, we also 
have PowerPoint presentations for our training. Our general 
awareness training is now available on mobile devices.
    An annual DOD CTIP conference has been held ever since 
2007. A CTIP workshop was held in August 2011. Best practices 
among our components are shared and we receive information from 
the U.S. Government agencies, as well as from non-governmental 
organizations at our conferences and workshops. Our DOD CTIP 
Web site, ctip.defense.gov, displays information regarding our 
trafficking in persons training, events, and links to other 
agencies' TIP Web sites.
    In response to early concerns about possible labor 
trafficking in subcontracts in Iraq, DOD took swift action. The 
first TIP clause was in the Defense Federal Acquisition 
Regulation supplement, DFAR, as an interim rule and was 
published in the Federal Register in October 2006. The clause 
required contractors to establish an awareness program to 
inform employees regarding trafficking in persons.
    The Federal Acquisition Regulation published a TIP clause 
in 2009 that required the contractor to notify its employees of 
U.S. Government's zero tolerance policy and to take appropriate 
action against employees of subcontractors that violated the 
policy. It did not require contractors to establish an 
awareness program for their employees.
    When the FAR rule was published, the DFAR rule clause moved 
to become program guidance for our contractors regarding DOD's 
zero tolerance policy and CTIP training program. A new DFAR 
requirement soon to be published in the Federal Register adds 
additional contract administration duties to maintain 
surveillance over contractor compliance with trafficking in 
persons for all DOD contracts.
    In December 2010, the Defense Incident Base Reporting 
System, DIBRS, was updated with the new FBI TIP offense codes, 
commercial sex acts, involuntary servitude, and prostitution 
offense, allowing the reporting of TIP offenses by our DOD law 
enforcement agencies. Human trafficking public service 
announcements [PSAs], two 30-seconds and two 15-seconds, aired 
on our Armed Forces Network from October 2009 to October 2010. 
DOD released four new PSAs in September 2011 that will air for 
5 years.
    Trafficking in persons is a form of modern day slavery, and 
DOD will do our part to strive for its total abolition.
    Thank you again for scheduling this hearing, and I look 
forward to your questions.
    [The prepared statement of Ms. Dixon follows:]
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    Mr. Lankford. Thank you.
    Mr. Howard.

                 STATEMENT OF MICHAEL P. HOWARD

    Mr. Howard. Mr. Chairman and members of the subcommittee, 
again, thank you for the opportunity to testify today. I am 
looking forward to sharing the measures taken by the Army Air 
Force Exchange Service to prevent human trafficking in 
Southwest Asia.
    AAFES is a joint military activity providing merchandise 
and services to active duty, reserve, National Guard, and their 
families worldwide. AAFES is responsible for 3,100 facilities 
worldwide in 30 countries, 5 U.S. territories, and 50 United 
States. We have 43,000 employees. Thirty percent of those are 
family members of the military active duty. Another 1 percent 
are military members on their part-time working after-duty 
hours. We take great pride in our employee relations, no matter 
where they serve.
    Combating human trafficking is a complex and challenging 
mission. The responsibility is substantial, but our policy is 
clear: zero tolerance. My report today will confirm that AAFES 
has implemented and is enforcing a comprehensive Combating 
Human Trafficking program throughout our contingency area of 
operations.
    AAFES runs exchange facilities in eight countries, spread 
over 71 locations in combat zones in the United Central Command 
area responsibility. The core of the AAFES team consists of 300 
direct hire associates; however, we have over 3,100 individuals 
that are third country nationals that are hired to provide 
additional services to the military. These manpower agencies 
and concessionaires are often third country nationals and they 
are an integral part of our team. In fact, without third 
country nationals we would not be able to provide world class 
support to our deployed troops and customers.
    Today I would like to highlight three essential elements in 
AAFES's fight against human trafficking: an enforceable bill of 
rights for third country national associates, consistent 
inspection in reporting to ensure compliance, and effective 
communication to increase awareness of command and the workers 
and planning for the future also.
    AAFES has an inherent responsibility and contractual right 
to ensure humane treatment of third country nationals working 
in our facilities. The first element in deterring human 
trafficking among the third country national population is an 
enforceable bill of rights. In 2008, AAFES developed the bill 
of rights, which contains non-negotiable aspects of working for 
the Exchange. The right to elevate complaints without fear of 
reprisal, to have a copy of the contract under which they are 
employed, to receive pay in a timely fashion, to leave their 
deployed location at any time. These are among the inalienable 
rights that each of the third country national workers working 
with the MPA agency has to have.
    One of the most important of these rights is the freedom to 
retain possession of their passport. The bill of rights is very 
clear: at no time will any official, either contractor or 
AAFES, will withhold a passport of a third country national 
worker. This bill of rights is part of every manpower agency 
and concession contract we have, which ensures AAFES has legal 
authority to enforce it.
    The second component of the AAFES program is frequent 
inspection and mandatory reporting to enforce the bill of 
rights, especially the right to maintain passports. AAFES 
leaders ensure manpower agencies and concessionaire contractors 
do not withhold passports of third country nationals working in 
our facilities. As a part of the policy, AAFES team leaders, 
our service business managers, food business managers, and 
other direct hire AAFES associates in leadership positions are 
required to conduct 100 percent inspections every month to 
ensure that the third country nationals of manpower agencies 
and concession contracts are in possession of their own 
passports.
    Leaders report results of the monthly passport verification 
inspections through the chain of command to the AAFES Regional 
Operations Center and the Contracting Officer Representative, 
documenting any contractor employees that do not or cannot 
present their passports. AAFES has a zero tolerance of 
violation of this policy. Corrective action to contractors may 
include a warning letter or a cure notice, as we call it, which 
gives the contractor the opportunity to address and rectify the 
issue; termination for default and/or referral to criminal or 
civil authorities for enforcement.
    Finally, effective communication and command level 
oversight is the heart of the AAFES Combating Human Trafficking 
program. To make certain AAFES managers and third country 
nationals understand Combating Human Trafficking policies and 
procedures, the AAFES bill of rights, posted in prominent areas 
in their workplaces, have been translated into 11 languages. 
The AAFES Inspector General conducts sensing sessions with 
third country nationals to collect independent feedback about 
the program and our education efforts.
    Metrics from the Combating Human Trafficking program are 
incorporated into AAFES' Balanced Scorecard Management program. 
The scorecard information regarding passport inspections, 
proper living conditions, communication efforts, and fair pay 
are measured and provided to AAFES leadership to ensure the 
program is implemented and enforced throughout the contingency 
area and to identify areas for improvement.
    I am pleased to say that the AAFES efforts to condemn and 
combat this serious crime has been successful. Now completing 
our third year of the program, AAFES has achieved these 
following results: Because of our efforts, third country 
national workers are now in possession of their own passports, 
several have been liberated from involuntary servitude and been 
able to return to their own home country as a direct result of 
this program.
    AAFES's Contracting Officer Representative in Kuwait and 
Qatar and UAE was cited in January 2011 by the DOD Inspector 
General for outstanding work in combating human trafficking.
    In the January 2011 report, the DOD IG inspection cited 
AAFES as an excellent example of Combating Trafficking in 
Persons awareness and contract quality assurance that merits 
being considered for replication.
    Regardless of our significant achievements, human 
trafficking still exists, and AAFES must and will remain 
vigilant in these efforts to combat it.
    We recognize the threat to basic human rights and the zero 
tolerance for it. AAFES does not have the power to eradicate 
this scourge throughout Southwest Asia. We do have the power to 
fight it to our best abilities so that our contract workers are 
not victimized. We make it clear to our contractors: if you 
want to do business with AAFES, then you will not engage in 
human trafficking AAFES does not have police powers; we cannot 
enforce contractors to do anything. What AAFES does have is 
power of contracting, which in many ways is more powerful than 
police authorities. The ability to take the contract away for 
violations of our policy is very persuasive; our contractors 
respond quickly.
    We might not be able to change the world, but we can and we 
do combat human trafficking. I look forward to your questions.
    [The prepared statement of Mr. Howard follows:]
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    Mr. Lankford. Thank you. Thank you for all your testimony.
    Let me say, first, you will find in Members of Congress and 
those that are included, they can all speak for themselves as 
well, we have tremendous honor and respect for the work that is 
done by DOD and the State Department. We are Federal employees 
as well. We get it. You are also, I am sure, when you got out 
of bed today, said I can't wait to go do a congressional 
hearing on this. You also understand you are getting the full 
heat for what is really happening beyond you. We understand 
that as well. My goal with this hearing today, though, is to 
find ways to get this to stop.
    Are any of you ready to go on record right now and to say 
there is no one in State Department or in DOD, that says there 
is currently no one that is being trafficked right now?
    [No response.]
    Mr. Lankford. We know this reality is out there. Whether it 
be one or whether it be 10,000. And it is working through the 
process to try to work through. We have 19 or 20, as Mr. 
Connolly mentioned before, policies and procedures that are 
major pieces that are there. You have all kinds of process 
pieces that are in place. The issue in our conversation today 
is how do we move from these things that are in place to this 
has gone away. We now have the things in line on that.
    So I want this to be a dialog today as we go through these 
questions, so let me just field some questions and go through 
some things.
    Mr. Howard, you mentioned you have the power of contracting 
and of making those decisions of, if a contractor is out of 
bounds, not doing contracts with him anymore. How often does 
that occur?
    Mr. Howard. Chairman Lankford, we have done six cure 
letters. The majority of these were for withholding passports, 
and the contracting management agency did the corrective 
action; there was no more disciplinary action after that. But 
it does, when we do that cure letter, it is the first step 
toward termination. If they did not adhere to that, the second 
one would be----
    Mr. Lankford. Okay, any others beyond just the passport 
issue on that?
    Mr. Howard. No, it is just the passport, the withholding 
the passport.
    Mr. Lankford. The reason I say that is I have talked to 
some military personnel coming back as well and saying that is 
a standard. If you work inside the wire, you have to have your 
paperwork with you; you have to have the designation on you. 
They need to know who is walking around.
    Mr. Howard. Yes.
    Mr. Lankford. So that is not only just, obviously, your 
requirement, that is if you are going to be on that base 
especially, that is their requirement as well.
    What about the next step of the issue of the recruiting 
fees and the brokers fees? Because that is where this begins. 
If someone is recruited and they are going to work for the 
State Department or the Department of Defense even secondarily, 
through AAFES or whatever it may be, and they are coming 
through the process, do we have verification from them or 
anyone holding a conversation with that person that is now 
working on one of our bases or one of our embassies how much 
did you pay to get this job?
    Mr. Howard. I cannot say that for the record. The 
discussion is there. We do ensure they have the contract, we do 
ensure that their fair pay is documented in the contract. But 
as far as prior to that, the fees and so forth, I am not aware. 
I could check back on that, take it for the record.
    Mr. Lankford. Okay. Because that is where, obviously, this 
begins.
    Mr. Howard. Right.
    Mr. Lankford. Do we have any kind of tracking in place that 
a subcontractor that has the recruiting responsibilities, that 
they are doing a contract with them that we can see is coming 
from their home country that shows how much they paid in 
recruiter fees? Is any of that in the chain at all?
    Mr. Howard. I would have to check with our procurement to 
make sure, and we can take that for the record.
    Mr. Lankford. Okay. The effective communication part of 
that, obviously, that becomes a big issue. Posting something 
and translating it into languages, that is a good start, but if 
they are fired for talking to American leadership, or an 
investigation begins and suddenly that person disappears, or as 
I have had conversations with military personnel that have said 
some of these bosses will just release a person for the 
slightest thing in their encounters with American personnel.
    This person, let's say, paid a $5,000 fee to be able to 
come, which they took out a loan for. They get there, they work 
for 3 months, they find out it is terrible, talk to an American 
and say that this is a problem, then they are gone. Now they 
have lost their $5,000, they worked 3 months as a slave in 
horrible conditions, and they are out before the reporting 
occurs.
    It is the tracking of all of that. Do you have a sense that 
any of that may be occurring?
    Mr. Howard. Well, we ensure that they get their monthly 
pay. We also ensure that they are aware of the contract. Our 
contracting officers representative in country visits sites 
regularly and talks to the associates and has a real good 
working relationship with the third country nationals, and I 
believe has a very good back and forth flow of information. So 
if one had seen any issues of that, it would have been brought 
to our attention, and she had no recollection of that.
    Mr. Lankford. Okay. It is a struggle when we hear so many 
stories that we have a zero tolerance policy, yet these stories 
continue to rise up still, and we are still seeing this as a 
practice of whatever scale that that may be. And I know that we 
can all have different numbers of what scale this may occur, 
but it is difficult for me to say we have had these letters 
that have gone out dealing with passports, but we are not 
dealing with recruiter fees, we are not dealing with housing 
issues, for instance, and are they in the 50 square feet 
required housing; just the basics of how we care for people 
that are caring for us.
    Mr. Howard. Chairman Lankford, we stress also the living 
conditions. If our own AAFES associates are in trailers, our 
third country nationals will be in trailers. If we are in 
tents, then the same thing. Whatever the military is in, we 
have that same living standard for our own associates, as well 
as our third country nationals.
    Mr. Lankford. Okay.
    Ms. Dixon, let me ask who is responsible for assuring that 
these contracts are fulfilled? Let me just give you an example. 
Someone that is on the ground, begins to get reports that they 
have recruiter fees, that their living conditions are not good, 
they are being mistreated, whether it is sexual abuse or 
whatever it may be. Who begins to follow through the process of 
assuring that the contractor is identified, that we don't have 
a continuing pattern of this occurring? Does that make sense?
    Ms. Dixon. I don't want to step out on I am not sure, but I 
believe it should be the contracting officer and contracting 
officer representative that monitor the contract. Those people 
should be the ones responsible.
    Mr. Lankford. Do they have adequate conversation time with 
the people that are on the ground, these third country 
nationals?
    Ms. Dixon. I can't really speak to that. I will definitely 
take that for the record.
    Mr. Lankford. That becomes the challenge. If the person 
that is responsible for overseeing is not interacting with the 
third country nationals to see if that is actually being 
fulfilled as promised, then we have a breakdown in that as 
well. And I am confident in the AAFES area and other areas 
these American companies that are there represented, whether 
they be fast food or product or whatever it may be, I am sure 
they would be mortified to know that some of the employees of 
their company in other countries working for American soldiers 
have the possibility of being in indentured servitude. I am 
confident none of those American companies want that to be able 
to get out or would want to be able to see it, nor would we, as 
American citizens and taxpayers, want to know that any of our 
tax dollars or our process of dealing with our own soldiers and 
the folks that are service members on that.
    There will be plenty of questions, we will have several 
rounds, get a chance to talk through, and we will have this 
ongoing conversation on that. I would like to be able to 
recognize Mr. Connolly for 6 minutes.
    Mr. Connolly. Thank you, Mr. Chairman. If I could just pick 
up on that last point.
    Ms. Dixon, I am not sure I understood your answer to the 
chairman's question. You said you would have to get back to us 
on the record. Your title is Combating Trafficking in Persons 
Program Manager. Do you get out in the field? Do you meet with 
contractors and subcontractors to satisfy yourself that this 
practice is not as widespread as testimony indicated?
    Ms. Dixon. Yes, sir, I do go out and talk to contracting 
officers. I have been invited to come and do--I try to do 
outreach training to----
    Mr. Connolly. Have you been to Iraq?
    Ms. Dixon. No, I have not. I have not been to Iraq.
    Mr. Connolly. And you are the program manager for Combating 
Trafficking in Persons.
    Ms. Dixon. Correct. I rely on our Inspector Generals in-
country, as well as----
    Mr. Connolly. Ms. Dixon, we just heard testimony that this 
is a widespread problem. We are talking about human beings who 
are being forcibly recruited and lured into employment on our 
behalf, and you have not made it your business to go and kick 
the tires and check the dipstick to ascertain to your own 
satisfaction that these reports are accurate?
    Ms. Dixon. No, I have not.
    Mr. Connolly. Do you think it might be your responsibility 
to do that?
    Ms. Dixon. Definitely.
    Mr. Connolly. Thank you.
    Ambassador Moorefield, I placed in the record this 
statistic, that not a single prosecution with respect to this 
kind of human trafficking has yet been brought by the 
Department of Defense against any contractor or subcontractor. 
And, again, you heard the testimony in the first panel. Unless 
you wish to contradict it, it is widespread. We are not talking 
about isolated examples, we are talking about tens of 
thousands, if not multiples of that. Help me understand, help 
this committee understand why not a single prosecution has been 
brought on this subject.
    Ambassador Moorefield. It is a fair question, Congressman 
Connolly. I only know of one case that was referred to the 
Department of Justice, and they disinclined to pursue it for 
lack of substantiating evidence.
    Mr. Connolly. I have limited time, I am sorry, Mr. 
Ambassador, but do you have any reason to dispute the testimony 
we heard from the previous panel that this is a widespread 
problem involving tens of thousands, if not as many as hundreds 
of thousands of individuals?
    Ambassador Moorefield. I can't verify or deny the number of 
persons that may be affected.
    Mr. Connolly. Okay. If we posit that that is even remotely 
accurate, the fact that we have five cure letters, no 
prosecutions, and one reference to the Justice Department, they 
declined to prosecute, might suggest to a layman, if not a 
Member of Congress, that we are not taking this subject 
seriously at all.
    Ambassador Moorefield. Well, I can only say that with 
respect to the justice process and the criminal investigative 
process that, and I am not trying to avoid your question, we 
are not directly responsible. I can consult with our 
investigative agency to find out what their belief is and get 
back to you as to why more cases have not been investigated to 
the point of being referred to the Justice Department for 
prosecution.
    Mr. Connolly. Like none.
    Ambassador Moorefield. One referred, none prosecuted, that 
I know of.
    Mr. Connolly. One.
    Ambassador Moorefield. Yes.
    Mr. Connolly. How many subcontractors are there, just to 
pick one country, Iraq? How many would you guess?
    Ambassador Moorefield. I am sure there are dozens and 
dozens.
    Mr. Connolly. Dozens? Perhaps many more than that.
    Ambassador Moorefield. Well, we have been scaling down, so 
I can't really say what it is today. It was one point, no 
doubt, hundreds.
    Mr. Connolly. Okay.
    Ms. Klemstine, you heard Mr. McCahon, in the previous 
panel, indicate that he had written with some suggestions about 
how the State Department might help deter this phenomenon with 
its contractors and subcontractors, and he wrote that letter 15 
months ago and has yet to receive a reply. Can you explain why?
    Ms. Klemstine. No.
    Mr. Connolly. Are you aware of the letter?
    Ms. Klemstine. No, I am not aware of the letter.
    Mr. Connolly. May I ask you, Mr. Chairman, with your 
indulgence, that we would like you to get back to the committee 
with an explanation and with a response to Mr. McCahon that is 
cc'd this committee?
    Mr. Lankford. Without objection.
    Ms. Klemstine. Would be glad to do.
    Mr. Connolly. I thank the Chair.
    In your testimony, Ms. Klemstine, if I understood you 
correctly, you said that human trafficking among State 
Department subcontractors apparently is fairly commonplace, 
particularly the fact that 77 percent of contract employees 
paid a recruitment fee, which ought to be a red flag. Doesn't 
necessarily prove there is human trafficking, but it is one red 
flag out there. And that passports confiscated and wages were 
stolen. And you also testified to the fact that the awareness 
level, even among State Department employees, was, frankly, not 
where we want it to be, nowhere near where we want it to be.
    Is State Department taking this issue seriously?
    Ms. Klemstine. I believe so, in reference to the response 
that we just received on our October report. I would say that 
prior to the October report, although our Department had, on 
several instances, disclosed potential TIP violations, the 
seriousness wasn't taken. However, recently, and I think a lot 
of it had to do with the survey that was actually sent out to 
employees that substantiated the fact that there was an 
awareness problem, really did bring the GTIP office to say, 
yes, we have a problem, now we have to do something.
    Mr. Connolly. My time is up, Mr. Chairman, and I do have a 
series of questions for Mr. Howard that I will revisit in the 
other round. Thank you.
    Mr. Lankford. Thank you.
    Mr. Walberg is recognized.
    Mr. Walberg. Thank you, Mr. Chairman.
    Mr. Howard, in your testimony you stated that, because of 
your efforts, several third country national workers have been 
liberated from involuntary servitude. In these cases, what 
actions were taken against the contractors?
    Mr. Howard. That is where the cure letters went into play 
and the third country nationals were returned to their country 
and the cure letters, to ensure that did not occur again, was 
done with the contractors.
    Mr. Walberg. There was no termination for defaults or 
suspension or debarment in the cases of these contractors?
    Mr. Howard. No.
    Mr. Walberg. How many contractors are you aware of that 
have engaged in these types of abuses?
    Mr. Howard. I don't have the exact figures. I would have to 
take one for the record and get back to the committee.
    Mr. Walberg. Appreciate that. You were here with the last 
panel and it was indicated that while there were hundreds and 
hundreds of allegations and incidences of contract or alleged 
contractor abuse, there were nationals that were sent back, 
that there were allegations made; yet, it was indicated that 
generally speaking, overwhelmingly speaking, Department of 
Defense, other governmental entities did not question the 
victims. Do you agree with that or do you reject that as being 
hyperbole?
    Mr. Howard. If we have the opportunity to question the 
individuals before they leave country, we do. But once they are 
out of country, we don't have the capability to.
    Mr. Walberg. So what you are indicating is that, generally 
speaking, they are out of country before you find out any of 
the abuse has taken place.
    Mr. Howard. Well, again, if there would be abuses, our 
contracting officer representative, who is talking to them all 
the time, our store managers, our general managers that are at 
each location every day, if they are aware of anything, they 
would take the appropriate action and contact our Inspector 
General also. So I am not aware of any.
    Mr. Walberg. Ms. Dixon, what is your policy on that? I 
mean, do you agree with the statements made earlier by the 
panel that very few, if any, of the victims were interviewed by 
the Department of Defense?
    Ms. Dixon. I can't speak to whether victims were 
interviewed or not. I know that attempts were made to interview 
victims; they tried to get in touch with victims to interview 
them.
    Mr. Walberg. Ambassador Moorefield, how do you respond?
    Ambassador Moorefield. Frankly, I am not aware from any of 
our oversight initiatives so far that we have determined 
whether or not they are systematically the prime contractor or 
is determining whether or not people were--their CTIP rights 
were violated before they left the country. We have been 
accompanying Defense Contract Management Agency and contracting 
officers on visits to camps where the laborers are kept or in 
their places of employment where interviews were conducted 
asking these sorts of questions. So far we have not determined 
that there was an identifiable CTIP violation.
    Mr. Walberg. I certainly would appreciate hearing 
subsequent information that Department of Defense and others 
are interviewing more of the alleged victims, that we are 
seeing some aggressive action taken there, because it seems 
like the evidence is leaving the scene and we are not gaining 
the opportunity to find ways of achieving success in this area.
    I would like to give my remaining time to the chairman.
    Mr. Lankford. Thank you. I receive that.
    Let me just ask a quick question, then we are going to 
continue to move on.
    State Department report that came out, the OIG report, 
January 2011, this year. Here's the statement that comes out of 
it: 77 percent of the interviewed workers stated they obtained 
their jobs by paying a recruitment agency in their country of 
origin. Of the 77 percent, approximately 50 percent of those 
workers said they paid a recruitment fee that totaled more than 
6 months contracted salary; 27 percent reported paying fees of 
more than 1 year's salary; and 11 of those 75 workers paid a 
recruitment fee that would take 2 years to pay off.
    They paid a recruiter fee 2 years. That is the length of 
their typical contract. When it listed out and broke out of 
those that were interviewed, the minimum and maximum, the 
average payment here, an average person coming in from 
Bangladesh, $2,383 for a recruiting fee.
    Here's my struggle. We have to move passed they have their 
passport; they could leave if they want to. They don't have the 
money to leave; they are in indentured servitude, in debt 
bondage to a recruiter that came, and I am not sure we are 
verifying that. We have to be able to move passed that.
    With that, I would like to be able to yield to Ms. Speier 
for 6 minutes for questioning time.
    Ms. Speier. Thank you, Mr. Chairman.
    And thank you all for participating.
    Let me ask this simple question. Is there a problem, in 
your mind? Ms. Klemstine.
    Ms. Klemstine. Yes.
    Ms. Speier. Ambassador Moorefield.
    Ambassador Moorefield. Yes.
    Ms. Speier. Ms. Dixon.
    Ms. Dixon. Yes.
    Ms. Speier. Mr. Howard.
    Mr. Howard. Yes.
    Ms. Speier. What tools do you not have that you need in 
order to make this problem go away?
    Ms. Klemstine. Well, I think in the State Department there 
are really three answers to that question. I think, first of 
all, there needs to be better awareness within the Department. 
Secondary of all, the contracting officer representatives need 
to be far more proactive in this area than they have in the 
past. And as you probably know, the State Department has 
suffered in the area of CORs on many of its contracts, and that 
is one of the reasons why our office, the IG Office, has been 
actively working with the State Department to increase CORs 
within the whole region. That has been a huge issue.
    The third area that I think would definitely help in this 
arena is to establish some type of hotline, a place where 
people can call if they feel that they are victims of human 
trafficking. Right now something like that doesn't exist, and I 
think that we need to, just like we have in the OIGs a hotline 
for people to call in things throughout the Department, I think 
we need one also on the contractor level so that people that 
are working in these conditions can actually report it; and it 
would give us on the investigative side some mechanism by which 
to go back and to really dig into these issues.
    Ms. Speier. All right.
    Ambassador Moorefield, what tools do you need?
    Excuse me. Ms. Klemstine, how many people do you have 
working specifically on this issue?
    Ms. Klemstine. On this issue? I have had two teams working 
on it. I am divided into two sections.
    Ms. Speier. Just give me a number.
    Ms. Klemstine. Probably about 10 people.
    Ms. Speier. Ten people?
    How about you, Ambassador, how many people are working on 
this issue?
    Ambassador Moorefield. I would say on the various teams we 
have sent out or are sending out, about 10.
    Ms. Speier. Ms. Dixon, how many in your office?
    Ms. Dixon. It is only two people in my office; however, we 
work----
    Ms. Speier. Is that including you?
    Ms. Dixon. Yes, it is.
    Ms. Speier. All right.
    Mr. Howard.
    Mr. Howard. We have 300 because all of our AAFES associates 
are directly involved in monitoring and being aware of what is 
going on, in addition to our oversight from our European 
headquarters and our headquarters in Dallas, Texas.
    Ms. Speier. Have you all read The New Yorker piece?
    Mr. Howard. Yes.
    Ms. Dixon. Yes.
    Ambassador Moorefield. Yes.
    Ms. Klemstine. Yes.
    Ms. Speier. Have you taken any action based on The New 
Yorker piece?
    Ms. Dixon. Yes.
    Ms. Speier. What action have you taken? You sent a cure 
letter?
    Ms. Dixon. I answered yes.
    Ms. Speier. Oh, Ms. Dixon. What have you done?
    Ms. Dixon. Contacted the DOD IG about further inquiries 
into the matter, looked at the previous inspection that was 
done, the evaluation that was done, and looked at the issues 
that were sent down on that previous inquiry, which was 
different from what was put out in The New Yorker.
    Ms. Speier. Okay. I have to tell you I am as frustrated as 
my colleagues on this panel. First of all, Ms. Klemstine, I 
have just been informed that there is a hotline; no one answers 
it, and that third country nationals don't speak English.
    Ms. Klemstine. I am not sure what hotline they are 
referring to because, as far as I know and based on the audit 
work that we have done, there has not been a hotline dedicated 
to TIP.
    Ms. Speier. All right, so here is this New Yorker reporter, 
Sarah Stillman, who spent a year investigating this. Retired 
General Stanley McCrystal says that the unregulated rise of the 
Pentagon's Third World logistics army is undermining America's 
military objective. So you have that issue. You have former 
Congressman Christopher Shays saying it is a human rights abuse 
that cannot be tolerated.
    There are references made that these workers, primarily 
from South Asia and Africa, often live in barbed wire compounds 
on U.S. bases, eat at meager chow halls, and host dance parties 
featuring Nepalese romance ballads and Ugandan church songs, a 
larger number employed by fly by-night, some contractors who 
are financed by the American taxpayer but who are often 
operating outside the law.
    Now, this is not like it is not happening under our noses. 
That is what is most offensive to me. These are on bases in 
these countries. We know that, moving forward, in Iraq, State 
Department is going to be employing more of these third country 
nationals.
    So are we just going to compound this problem or are we 
going to do something about it? I feel like our focus is on 
dotting Is and crossing Ts and making sure that people have 
their passports or have been informed about the 
responsibilities to inform, but we are not doing anything about 
the underlying problem, which is people are being enslaved, 
providing services, being told one thing and yet being offered 
something very different.
    And we are allowing these subcontractors to continue to 
operate. A cure letter is a slap on the hand. They should be 
booted out of there. They should lose the privilege to work for 
the U.S. Government forever. And we send them a cure letter, 
Mr. Howard? That is the extent of the penalty that is going to 
be imposed on anyone who is trafficking?
    Mr. Howard. These, again, were for holding on to passports. 
And we give a cure letter and if they don't abide by that, we 
would debar them and never do business with them again.
    Ms. Speier. Except that you did say that you believe there 
is a problem. And your response so far has been to send out 
cure letters.
    Mr. Howard. No. It is also working on a daily basis to 
ensure that the problems don't occur in our areas of 
responsibility.
    Ms. Speier. My time has expired.
    Mr. Lankford. Let me tell you a quick story. Then we are 
going to a different round, if you all have additional 
questions as well.
    Part of my own preparation and my own research on this, I 
sat down with an MP coming back from Afghanistan who handles 
internal security for one of the bases, and I am going to leave 
their name out of it. When I asked about the questions of third 
country nationals on that base in Afghanistan right now, there 
was a long hesitation and the response was, what would you like 
to know? We started talking about human trafficking and 
trafficking in persons. Their response was, I don't even know 
where to report it, but I know it is going on. This is an MP 
doing internal security on one of our bases. When I asked about 
living conditions, their response was we would never ever want 
to live where they live on base, never.
    They said that they had some of the companies that they 
work for, they would lose their position and would immediately 
be kicked out, which terrifies them because they have this 
massive loan back home they have to pay for; they have to stay 
and keep that job. If they don't stay and keep that job, they 
will never be able to pay off the loan, so they are terrified 
they are going to lose it at any point. If they ever interact 
with Americans in any way that their boss considers in any way 
questionable, that they are pushing toward that, they are just 
kicked out, which obviously they have now lost everything and 
have no chance of even gaining back what they paid into the 
system.
    This MP could identify this in the areas where prostitution 
was happening in sex trafficking.
    This is the reality that is on the ground right now, and my 
frustration is we know it. We have to find some way to stop 
this. A zero tolerance policy is not working. Failing to 
prosecute is not working. Cure letters are not working. Not 
doing debarments and suspensions of contractors, that is not 
working. What needs to be done? And I think Ms. Speier's 
question is a great question: What tool do you need in your 
toolbox to make sure that this stops happening?
    This violates everything in the American value; that we 
value the individual person. It is a person created in God's 
image and has inalienable rights no matter what country they 
are from. They are to be honored as an individual in the middle 
of all that. And to know that our State Department, which 
stands up for human rights around the world, has indentured 
servitude happening in our embassies is deplorable to me. This 
is the group that is standing up for American values worldwide. 
Yet, when these individuals return back to their home 
countries, all they can speak of is I worked for a year for 
nothing and lived in these deplorable conditions. This violates 
everything about who we are and what we do.
    And the challenge is we have to have back to this committee 
some suggestions that extend beyond posting something in the 
cafeteria or a hotline to call into; some way that we shift 
from we have talked about this, we put policies in place, to we 
suspend, debar, to where contractors understand completely this 
is not acceptable. Some path of documentation that begins in 
their home country, that if they don't come in with 
documentation saying how much they paid as a recruiter fee, and 
it is verified that is a legal amount to pay as a recruiter fee 
in that; some kind of pathway.
    I understand keeping their passport is a big deal, but if 
they have a passport and no way to get home, or they have such 
a large debt that they can't leave for fear they will never be 
able to catch up on it and pay it off, that doesn't matter, 
their passport is meaningless to them at that point, because 
that would be the worst thing for them to go home because now 
it is even worse; they have to go home and face the loan shark 
with no money.
    All these dynamics all wrap in the middle of this for us, 
and I am sure it does for you as well. This can't just be an 
issue that is only passionate for us; obviously, you live and 
breathe in this all the time. But it is simple, we have to move 
from the contracts that we put out to primes and sub-primes and 
all these contractors are out there has the right language into 
it. That is a good start, but just checking to see if they have 
the right language is only the beginning point; the real issue 
is do we have trafficking in persons that we are paying for 
with Federal tax dollars or that we are turning a blind eye to. 
That is the ending destination on this.
    Now, I want to just throw it open for just a quick moment 
and then we will go to Mr. Connolly for a comment.
    What response do you have at this point? What do you see is 
going to begin to make this shift? What will help us turn 
around? Any suggestion that you have that you would say this is 
what we are looking at, I think it will turn the corner on 
this?
    Ambassador Moorefield. Chairman, I am not sure I have a 
definitive answer; I think I have plenty of questions I have 
written down here that obviously we need to examine more 
carefully in our own inspection work.
    The judicial side is, frankly, a bureaucratic set of 
hurdles that I don't presume to understand.
    Mr. Lankford. But the suspension and debarment is a very 
low threshold.
    Ambassador Moorefield. No, no. But suspension and debarment 
of prime contractors is certainly something accessible to 
contracting officers and commands in the field, and I don't 
have a good answer yet. I am going to get one on why we haven't 
been more proactive in using it.
    Mr. Lankford. Can you give me a time on when you are going 
to get that answer? Because we would like to have a copy of 
that answer as well.
    Ambassador Moorefield. Sure. Well, we have a report that we 
are working on right now that is due to you in January, two 
reports, and one of them is a broader perspective look at 
issues across DOD; and that would be the obvious place to make 
sure we have done sufficient research and can address this.
    The other issue, as you know, is the subcontractor issue, 
which is beyond the contracting purview of contracting 
officers, and that is an extreme vulnerability, needless to 
say.
    Mr. Lankford. But if a subcontractor violates the rules, we 
can hold the prime accountable for it.
    Ambassador Moorefield. That is correct, and----
    Mr. Lankford. But we are not currently holding the prime 
accountable for it.
    Ambassador Moorefield. Not to the best of my knowledge, and 
not to the best of our oversight work yet. And I also don't 
have a good answer why that is not being used more 
aggressively.
    Mr. Lankford. Okay.
    Mr. Connolly.
    Mr. Connolly. Thank you, Mr. Chairman.
    It seems to me that maybe we have some legislative 
refinements required for this topic, but, frankly, it has to do 
with will and moral outrage. Maybe if more of us thought of it 
as our sister or our daughter there might be some reflection of 
moral outrage in the practice, and then maybe we would be 
motivated to make sure we are enforcing our own laws, 
regulations, memos, executive orders, and the like.
    It is not okay to turn a blind eye to this practice. It is 
not okay to treat it as a bureaucratic requirement that we can 
check off a box because people have been trained or made more 
aware. The object here is to cease the practice. It is a 
violation not only of human rights, but of everything America 
stands for. We fought a civil war to end this kind of practice, 
and yet we are turning a blind eye to subcontractors serving 
our Government, who are in fact engaged in involuntary 
servitude, and in some cases sexual trafficking.
    And we know what the problem is. And I am deeply disturbed 
that we don't seem to be seized with a mission here, and until 
and unless we are, we are never going to solve the problem. All 
the laws and all the executive orders in the world aren't going 
to solve the problem.
    Mr. Howard, I was intrigued by our bill of rights. It 
sounds like a substantive contribution to helping us resolve a 
very complex problem. When was that bill of rights promulgated?
    Mr. Howard. It was developed in 2008 and started to apply 
to our third country nationals in March, April 2009.
    Mr. Connolly. Okay. And how do we enforce it?
    Mr. Howard. We have monthly checks where the managers on 
the ground have to validate to us that all points of the bill 
of rights are being adhered to for our associates.
    Mr. Connolly. Our managers.
    Mr. Howard. Our associates, yes.
    Mr. Connolly. Gotcha. And that extends to subcontractors?
    Mr. Howard. We hold the contractor liable for the 
subcontractor, so we check all of the third country nationals 
on a monthly basis.
    Mr. Connolly. You heard the testimony of the first panel 
and the dialog we had. And let's assume, obviously 
inadvertently, but the system of incentives and disincentives 
actually works against us in the enforcement against human 
trafficking because all of the disincentives encourage a prime 
or subcontractor, frankly, not to report because he or she is 
at risk if they do.
    Mr. Howard. Right.
    Mr. Connolly. How can we fix that so that we are actually 
rewarding people who ferret it out and report it so that we can 
deal with it?
    Mr. Howard. I am not sure how you can reward the 
subcontractors. I do know----
    Mr. Connolly. No, no, the prime, the prime.
    Mr. Howard. I would have to take that back and think of how 
we would reward them. I do know that our associates, the AAFES 
employees, U.S. citizens, continually watch out for this and 
they will let our--we have a hotline for the Exchange and they 
will let the Inspector General for AAFES know if they see any 
violations at all.
    Mr. Connolly. My colleague referenced the New Yorker story. 
It documented the abuses of several beauticians from Fiji who 
were falsely lured by recruiters back home, over whom, 
apparently we have no jurisdiction or even interest, but 
ostensibly to go work in a hotel in Dubai, but in fact they 
ended up working for subcontractors serving the U.S. Government 
in Iraq. Is that correct?
    Mr. Howard. Yes, that is my recollection from reading the 
article.
    Mr. Connolly. They worked 12 hour days, 7 days a week; 
their passports were in fact held for some period of time, 
presumably against their will; and their wages, whatever they 
were promised, which was substantially more than what in fact 
they received, according to this article, were only $350 a 
month. To your knowledge, is that accurate?
    Mr. Howard. It is accurate in fact that the contract said 
$350 plus tips. And when our Inspector General reviewed it, the 
tips amounted to about $450, which took the pay on a monthly 
basis up to about $800.
    Mr. Connolly. Did AAFES ever interview these women?
    Mr. Howard. We attempted to, but they had already gone back 
to Fiji and we could not interview them. But we did interview 
additional associates at that site.
    Mr. Connolly. And did you corroborate what you understood 
to be their story?
    Mr. Howard. Yes. Well, no. What we found is that the 
beauticians that were working there said they all had their 
passports, that they enjoyed working there, and they had a few 
questions about their pay, but nothing about holding on to the 
passports or any sexual activity.
    Mr. Connolly. So you have reason, therefore, to doubt the 
narrative of The New Yorker with respect to these two women?
    Mr. Howard. All I can do is based on what our Inspector 
General did find during their research.
    Mr. Connolly. You indicate that your writ is limited in 
terms of sort of third countries from which these people are 
being recruited. But in your opening testimony I thought I 
heard you say you have a presence in something like 30 
countries?
    Mr. Howard. We are in 30 countries----
    Mr. Connolly. Thirty countries. But you are not in, for 
example, Fiji or Nepal, or places like that.
    Mr. Howard. No. This is where the manpower agencies go out 
and employ.
    Mr. Connolly. Would you agree, in light of the concerns we 
have about human trafficking, that figuring out some 
methodology, whether it is with AAFES or IG offices or maybe 
Ms. Dixon's office, if we can get passed two people staffing 
it, we ought to be addressing the place where people are 
recruiting because that is really the weak link in the chain, 
as Mr. McCahon indicated in the first panel?
    Mr. Howard. Based on what I heard today, yes, the root 
cause is right at the beginning.
    Mr. Connolly. All right. I would certainly, and I know the 
chairman and members of the committee would, welcome any 
additional thoughts you might have as you think about that in 
terms of how we might get at that, because I think if we don't 
get at that, we are never going to solve this problem. There 
are several links in the chain we have to get at, but that is 
certainly one of them.
    Thank you, Mr. Chairman.
    Mr. Lankford. With that, let me make one quick request. I 
am going to ask Ms. Speier if she would like an additional 
round of questions.
    Could the four of you independently put together a set of 
ideas of how to be able to resolve this that we could have by 
February 1? That would give you 3 months to be able to pull 
together ideas of how we move passed what we have in place to 
here are solutions to fix this, so that a year from now we 
don't have a hearing like this other than to say well done and 
be able to move passed that. Is that acceptable? By February 
1st on that.
    With that, Ms. Speier, recognize you for 6 minutes.
    Ms. Speier. Mr. Chairman, thank you, and thank you for 
giving the direction you just did. One of my biggest concerns 
about the hearings that we have here is that we show great 
outrage, the hearing is over, and business as usual. And it is 
also a problem on the issue of military rape in this country, 
where we have had 16 years and 18 hearings, and nothing has 
changed. And I fear that we will be in a similar situation in 
this arena as well if we don't stay on it.
    And I compliment you on making this request. I also would 
encourage you to have subsequent hearings. If we don't stay on 
this issue, it will continue without being addressed 
appropriately.
    I guess I would just like to understand, to you, Mr. 
Howard, when the Inspector General went and the beauticians had 
left, there still was a company, a subcontractor that had hired 
them, correct?
    Mr. Howard. Correct.
    Ms. Speier. And what happened to the subcontractor?
    Mr. Howard. Due to the fact we could not validate the 
accusations, nothing.
    Ms. Speier. Nothing. Did you show the subcontractor this 
article and say what is your response to this?
    Mr. Howard. I can't specifically say what the IG did or 
didn't say. I could get back to the committee on this.
    Ms. Speier. All right, I think, as you can tell, we are 
vitally interested in this issue. We expect that you are going 
to put metal to the pedal.
    Mr. Howard. Yes, pedal to the metal.
    Ms. Speier. Pedal to the metal, and take this on as if it 
was your own family member. I think that was a reference that 
my colleague had referenced. Because this is not just 
incompatible. I think that was the word Ms. Dixon used. This is 
offensive and violates every principle in our Constitution. 
Every principle. And it is only going to get worse because our 
use of third party nationals is increasing as we wind down in 
both Iraq and Afghanistan. So if we don't get this right, the 
problems are just going to explode, in my view.
    So, Mr. Chairman, I think at this point I will just yield 
back.
    Mr. Lankford. I do appreciate you being here today. As I 
mentioned before, I am sure this wasn't a fun day. It is not a 
fun day for us as well. Some of this was both out of a prior 
hearing with the Commission on Overseas Contingencies came and 
submitted their report. A small aspect of that report, which is 
not relevant to what they are doing, highlighted that this is 
an ongoing problem. There will be more that will follow up from 
this as well, and both your testimony and the previous panel as 
well.
    The prime issue is now if we have a contract in place and 
we know what the cost of the contract should be based on the 
travel of the people coming, the cost of the labor, the cost of 
housing; either these primes and subs are skimming off dollars 
and taking that dollar that is to be committed to workers or 
they are working on an additional kickback, which is also 
illegal, from the recruiter on the field, getting a cut back to 
the contractors, or were violating the basics of what is a 
legal recruiter fee in the country. It is just on and on and 
on. But they are all things that are discoverable.
    At this point it is moving from we have great rules and 
regulations to we are enforcing them and we are accomplishing 
that. We are going and asking the questions that we are afraid 
to ask, knowing what the answer might be. My concern is--and it 
is only my suspicion and concern. My concern is that we are not 
reporting it, we are not pushing it, we are not following 
through on this for fear that it gets out into the media and it 
becomes--it is easier to say we have had no prosecutions, 
assuming that means it is not occurring, rather than we have 
had 25 prosecutions because it is occurring.
    I think it is out. It is occurring, has been occurring. It 
has been addressed for the past 20 years just a piece at a 
time. Now we have to move it from it is being addressed in 
right policies, win contracts and right language, those are all 
good first steps, to it is completely eradicated from what we 
do. That is what we are looking forward to being in the final 
step.
    I appreciate your time and the effort you put into this. I 
look forward to getting a chance to read back the ideas that 
you are submitting back to us by February 1. And, with that, we 
are adjourned.
    [Whereupon, at 12:16 p.m., the subcommittee was adjourned.]
    [The prepared statement of Hon. Elijah E. Cummings 
follows:]
[GRAPHIC] [TIFF OMITTED] 71964.095

                                 
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