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





 DEFENSE DEPARTMENT CONTRACTING IN AFGHANISTAN: ARE WE DOING ENOUGH TO 
                           COMBAT CORRUPTION?

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

                                HEARING

                               before the

                   SUBCOMMITTEE ON NATIONAL SECURITY,
                HOMELAND DEFENSE AND FOREIGN OPERATIONS

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 15, 2011

                               __________

                           Serial No. 112-80

                               __________

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 National Security, Homeland Defense and Foreign 
                               Operations

                     JASON CHAFFETZ, Utah, Chairman
RAUL R. LABRADOR, Idaho, Vice        JOHN F. TIERNEY, Massachusetts, 
    Chairman                             Ranking Minority Member
DAN BURTON, Indiana                  BRUCE L. BRALEY, Iowa
JOHN L. MICA, Florida                PETER WELCH, Vermont
TODD RUSSELL PLATTS, Pennsylvania    JOHN A. YARMUTH, Kentucky
MICHAEL R. TURNER, Ohio              STEPHEN F. LYNCH, Massachusetts
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
BLAKE FARENTHOLD, Texas





                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on September 15, 2011...............................     1
Statement of:
    Motsek, Gary, Deputy Assistant Secretary of Defense (Program 
      Support), Office of the Under Secretary of Defense 
      (Acquisition, Technology & Logistics); Kim D. Denver, 
      Deputy Assistant Secretary of the Army (Procurement), 
      Office of the Assistant Secretary of the Army (Acquisition, 
      Logistics and Technology); and Brigadier General Stephen J. 
      Townsend, Director, Pakistan-Afghanistan Coordination Cell, 
      J-5, the Joint Staff.......................................     7
        Denver, Kim D............................................    14
        Motsek, Gary.............................................     7
        Townsend, Brigadier General Stephen J....................    23
Letters, statements, etc., submitted for the record by:
    Chaffetz, Hon. Jason, a Representative in Congress from the 
      State of Utah, prepared statement of.......................     3
    Denver, Kim D., Deputy Assistant Secretary of the Army 
      (Procurement), Office of the Assistant Secretary of the 
      Army (Acquisition, Logistics and Technology), prepared 
      statement of...............................................    16
    Motsek, Gary, Deputy Assistant Secretary of Defense (Program 
      Support), Office of the Under Secretary of Defense 
      (Acquisition, Technology & Logistics), prepared statement 
      of.........................................................     9
    Townsend, Brigadier General Stephen J., Director, Pakistan-
      Afghanistan Coordination Cell, J-5, the Joint Staff, 
      prepared statement of......................................    25
    Yarmuth, Hon. John A., a Representative in Congress from the 
      State of Kentucky, letter dated September 15, 2011.........    40

 
 DEFENSE DEPARTMENT CONTRACTING IN AFGHANISTAN: ARE WE DOING ENOUGH TO 
                           COMBAT CORRUPTION?

                              ----------                              


                      THURSDAY, SEPTEMBER 15, 2011

                  House of Representatives,
Subcommittee on National Security, Homeland Defense 
                            and Foreign Operations,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 11:19 a.m. in 
room 2157, Rayburn House Office Building, Hon. Jason Chaffetz 
(chairman of the subcommittee) presiding.
    Present: Representatives Chaffetz, Tierney, Labrador, 
Welch, Yarmuth, Lynch, Quigley.
    Staff present: Thomas A. Alexander, senior counsel; Robert 
Borden, general counsel; Molly Boyl, parliamentarian; Mark D. 
Marin, director of oversight; Rafael Maryahin, counsel; Sang H. 
Yi, professional staff member; Nadia A. Zahran, staff 
assistant; Kevin Corbin, minority deputy clerk; and Scott 
Lindsay, Carlos Uriarte, and Ellen Zeng, minority counsels.
    Mr. Chaffetz. The subcommittee will come to order.
    Good morning, and welcome to today's hearing, Defense 
Department Contracting in Afghanistan: Are We Doing Enough to 
Combat Corruption?
    Thank you all for being here. Our apologize on delays. You 
are all very busy with very important responsibilities, and I 
appreciate your patience as we had votes on the floor earlier.
    I would like to welcome Ranking Member Tierney, members of 
the subcommittee, and members of the audience for being here. 
Today's proceedings continue this subcommittee's efforts to 
oversee the billions spent in support of military and civilian 
operations in Afghanistan. Last year, this subcommittee 
conducted an investigation of the Defense Department's Host 
Nation Trucking Contract. The purpose of this contract was to 
supply our military through the use of private contractors. The 
idea was to remove this burden from our armed forces while at 
the same time promoting the local Afghan economy.
    Almost since its inception in 2009, allegations surfaced 
that warlords, power brokers and the Taliban would seek 
``protection payments'' for safe passage through tribal areas. 
According to those familiar with the contract, the result was a 
potential windfall for our enemy. In short, the American 
taxpayer had allegedly funded the same enemy our soldiers 
fought on the battlefield.
    While the investigation did not yield smoking gun evidence 
that this had occurred, the anecdotal evidence was substantial. 
At the same time the investigation revealed that the Defense 
Department's contract oversight was woefully inadequate. 
Despite whether the allegations could be substantiated, the 
oversight structure did not allow for swift and thorough 
review. These findings were released at a hearing last June at 
which the Pentagon leaders testified.
    As a result of that hearing, and the subcommittee's 
investigative report, the Defense Department established three 
task forces to examine these particular issues as well as 
corruption in general. Today we will hear from the Defense 
Department about its findings and its progress since last 
year's hearing. With the Commission on Wartime Contracting's 
recent revelation that anywhere between $30 billion and $60 
billion dollars has been misappropriated in Iraq and 
Afghanistan since 2001, it is certainly critically important 
that the Pentagon get this right. I hope it has made 
significant progress in this regard.
    I also want to commend my colleague, Mr. Tierney, for his 
great and tireless work here. He has done some good research in 
diving deep into this, and I am glad that we can continue on 
with the work that he initiated.
    I would now like to recognize the distinguished ranking 
member, the gentleman from Massachusetts, Mr. Tierney, for his 
opening statement.
    [The prepared statement of Hon. Jason Chaffetz follows:]



    
    Mr. Tierney. Thank you, Mr. Chairman.
    We have just marked the 10th anniversary of September 11th. 
It is soon going to be a decade since our forces crossed the 
border into Afghanistan. We entered that conflict for a cause 
and our brave men and women in uniform have largely 
accomplished the mission of ridding Afghanistan of al Qaeda and 
the international terrorists that were threatening the United 
States.
    I wanted to begin today by honoring and stating once again 
how proud I am of all those people that have given service to 
this country and I also want to thank all of you for your 
service to the country and to our soldiers, sailors, airmen and 
Marines whom you have supported.
    I asked Chairman Chaffetz to call this hearing to examine 
the problem of contracting corruption in Afghanistan. I thank 
him for doing so and for working with us on this issue.
    Last year, I led a 6-month subcommittee investigation of 
the major Department of Defense logistics trucking contract in 
Afghanistan. Our investigation found that the trucking contract 
had spawned a vast protection racket in which warlords, 
criminals and insurgents extorted contractors for protection 
payments to obtain safe passage. Our investigation further 
showed that senior officials within the U.S. military 
contracting chain of command had been aware of the problem but 
had done little to address it.
    In plain English, the investigation found that the 
Department of Defense's supply chain in Afghanistan relied on 
paying the enemy and fueling corruption in order to maintain 
our substantial military footprint.
    Following the subcommittee's investigation, General 
Petraeus established three task forces designed to address the 
problem of contract corruption and he issued new contracting 
guidelines to break down the silos between contracting and 
operations. These were important first steps.
    Since then, the Department has provided multiple briefings 
to the subcommittee staff, demonstrating substantial progress 
in identifying where the U.S. taxpayer dollars are going. I 
commend the Department for that ongoing effort.
    Unfortunately, the picture presented is not pretty. Recent 
news reports stated that the Task Force 2010 had specifically 
identified and traced over $360 million in contracting dollars 
in Afghanistan that had been diverted to warlords, power 
brokers, insurgents and criminal patronage networks. The task 
force also confirmed the results of the subcommittee's 
investigation, finding that many of the trucking contractors 
were in fact making illicit payments that ended up in the hands 
of the enemy.
    The Commission on Wartime Contracting looked at contingency 
contracting in both Iraq and Afghanistan, and estimated that 
upwards of $60 billion in U.S. contracting dollars had been 
lost to waste, fraud and abuse. I fear that these reports are 
only the tip of the iceberg. Much of the Afghan economy now 
centers around the United States and international military 
presence and logistics contracts, but a significant portion of 
those funds seem to end up supporting the Dubai real estate 
market rather than jobs in Afghanistan.
    At the top of the hierarchy, there are weekly reports about 
politicians, or brothers and cousins of politicians who have 
obtained multi-million dollar contracts with the U.S. 
Government. At the bottom of the hierarchy, the extortion of 
international contractors is a booming industry.
    Today, the business of Afghanistan is war. How can we ever 
hope to extricate ourselves from the war when so many Afghans 
benefit from the insecurity that is used to justify our 
continued presence? To my mind, we have crossed the tipping 
point at which the size of our military footprint inadvertently 
fosters further instability. Every additional soldier and every 
additional supply convoy that we send to Afghanistan further 
fuels the cycle of dependence, corruption and endless war.
    With that said, I want to focus today on the hearing on 
three basic questions. One, what is the scope of contracting 
corruption in Afghanistan; two, what is being done to address 
it; and three, how can we dramatically reduce it?
    Although I am skeptical about the design of the current 
U.S. endeavor there, today's hearing we will focus on practical 
solutions that hopefully can be implemented right away.
    Congress has also had an important role to play. This 
spring, I worked with the Armed Services Committee to include 
an amendment in the National Defense Authorization Act that 
would give commanders in the field more authority to 
immediately stop contracting with companies that undermine the 
efforts of our troops on the ground. I recently introduced a 
bill to establish a permanent inspector general for overseas 
contingency operations, one of the key recommendations of the 
Commission on Wartime Contracting. I encourage my colleagues 
here today to join me in that legislation.
    I am also working to draft comprehensive contingency 
contracting reform legislation to fundamentally change the way 
we do business in war zones.
    I want to close by reading from General Petraeus' counter-
insurgency contracting guidance, released in September 2010. He 
wrote, ``If we spend large quantities of international 
contracting funds quickly and with insufficient oversight, it 
is likely that some of those funds will unintentionally fuel 
corruption, finance insurgent organizations, strengthen 
criminal patronage networks and undermine our efforts in 
Afghanistan.'' Simply stated, we can't afford to fail at 
getting a handle on contracting corruption in Afghanistan. It 
is utterly unacceptable for any taxpayer dollars to ever make 
their way into the hands of those who would use them as a means 
to harm our brave men and women in uniform.
    So I appreciate your testimony here today, gentlemen. I 
look forward to our discussion and again, thank you, Mr. 
Chairman.
    Mr. Chaffetz. Thank you. Does any other Member have an 
opening statement?
    Mr. Lynch is recognized for 5 minutes.
    Mr. Lynch. Thank you, Mr. Chairman. I appreciate your 
holding this hearing.
    I want to associate myself with the remarks of our ranking 
member, Mr. Tierney, who has done yeoman's work, along with the 
chairman, on this issue, and his staff. I have had the benefit 
of traveling many times to Afghanistan, several times in the 
company of Mr. Tierney's staff on this issue. I just want to 
emphasize, or amplify some of what Mr. Tierney has said here. 
We have a lawless environment in Afghanistan.
    And while I understand the mission there and I understand 
the President's approach, there is still, I think, a wide 
distance between where we should be in terms of watching our 
money and resources in that country and where it is today. I 
honestly believe, having maybe eight or nine trips over to 
Afghanistan, and many times on this issue and on corruption in 
general, along with Kabul Bank, which is a whole other issue, I 
honestly believe at this point that corruption, corruption is a 
greater enemy and a greater threat to Afghanistan stability 
than the Taliban.
    I think the Taliban can be beaten, or co-opted. I think 
corruption in that culture, in that country, is a much tougher 
road.
    I applaud Mr. Tierney on his great work, and Mr. Chaffetz 
has been over there a number of times himself, they have done 
great work. And I see that DOD has made some changes in their 
contracting protocols, and that is good. But I don't think it 
is enough. I don't think it is enough. We have to get a better 
handle on this, and I think it needs to be a tighter rein and a 
greater concern for the theft, the theft of billions of dollars 
of American taxpayer money.
    The American people are doing a good thing. They are trying 
their best to help a country gain stability. But our kindness 
and our generosity is being abused in this case. And it needs 
to stop. It needs to stop, and we need to put systems in place 
that will prevent that abuse from continuing. We are partners 
in this. We are partners in this, the Congress and DOD. We have 
to make sure that we tighten up this system and address some of 
the concerns that Mr. Tierney has uncovered.
    Thank you. I yield back.
    Mr. Chaffetz. Thank you.
    Members will have 7 days to submit opening statements for 
the record.
    We will now recognize our panel. Mr. Gary Motsek is the 
Deputy Assistant Secretary of Defense for Acquisition, 
Technology and Logistics. Mr. Kim Denver is the Deputy 
Assistant Secretary of the Army for Procurement. And Brigadier 
General Steve Townsend is the Director of the Joint Staff 
Pakistan-Afghanistan Coordination Cell.
    Pursuant to committee rules, all witnesses will be sworn in 
before they testify. Please rise and raise your right hands.
    [Witnesses sworn.]
    Mr. Chaffetz. Let the record reflect that the witnesses 
answered in the affirmative. Thank you.
    In order to allow time for discussion, if you would please 
limit your verbal testimony to 5 minutes, and whatever 
materials and statement that you have for the record will be 
submitted in its entirety.
    So we will start with Mr. Motsek. You are now recognized 
for 5 minutes.

   STATEMENTS OF GARY MOTSEK, DEPUTY ASSISTANT SECRETARY OF 
  DEFENSE (PROGRAM SUPPORT), OFFICE OF THE UNDER SECRETARY OF 
 DEFENSE (ACQUISITION, TECHNOLOGY & LOGISTICS); KIM D. DENVER, 
DEPUTY ASSISTANT SECRETARY OF THE ARMY (PROCUREMENT), OFFICE OF 
THE ASSISTANT SECRETARY OF THE ARMY (ACQUISITION, LOGISTICS AND 
    TECHNOLOGY); AND BRIGADIER GENERAL STEPHEN J. TOWNSEND, 
  DIRECTOR, PAKISTAN-AFGHANISTAN COORDINATION CELL, J-5, THE 
                          JOINT STAFF

                    STATEMENT OF GARY MOTSEK

    Mr. Motsek. Good morning, Chairman Chaffetz, Ranking Member 
Tierney, members of the subcommittee. Congressman Lynch, I wish 
I had written what you just wrote. I rarely would ever say, I 
would like to align myself with your remarks as well.
    Thank you for this opportunity to appear before you today 
and discuss the efforts of the Defense Department to reduce and 
control contracting corruption in Afghanistan. This is an 
update to our testimony that we gave last June. And I hope we 
can in fact demonstrate that we have made some progress.
    Contractors continue to provide critical support to 
operations in Afghanistan. The use of local national 
contractors in particular is a key to the counter-insurgency 
[COIN] strategy, of our commanding general. They currently make 
up 47 percent of the DOD contractor work force in Afghanistan.
    There is no doubt that the strategy that promotes Afghan 
first carries risk. However, it is clear that the COIN strategy 
is essential to developing a stable Afghanistan.
    Recognizing the essential role of contractors since 
September 2010 has been noted previously. The commander of ISAF 
published counterinsurgency contracting guidance. This guidance 
stressed that everyone must understand the role of contracting 
counterinsurgency and how it could not only benefit but 
undermine our efforts in Afghanistan.
    Due in no small part to the concerns of this committee, 
Task Force 2010 was established by that same commander to 
address contracting corruption and its negative impact to that 
COIN strategy. The task force consists of individuals from 
uniformed services and includes civilian representative from a 
variety of contracting, auditing and criminal investigating 
agencies. The team most importantly includes contract forensic 
accountants who assist the task force in tracing money through 
the Afghan domestic and international financial networks. I 
need not remind the committee that is probably the toughest 
part of this job, as we all recognize.
    One of the key efforts Task Force 2010 undertook was the 
assessment of the Host Nation Trucking contract. We are 
thankful for this committee's June 2010 report which served as 
an important resource. The Host Nation Trucking Assessment 
looked at eight prime companies that supported the contract to 
evaluate the extent, if any, that the power brokers, criminal 
elements and insurgents have had on the execution of those 
services. I know that one of the specific concerns of this 
committee was our use of a particular private security 
contractor. During last year's testimony, I committed to 
ensuring action would be taken. Immediately upon departure from 
this committee, we suspended operations with that contractor.
    On August 4, 2011, the Army entered into an administrative 
agreement with that private security contractor that stipulates 
he will not provide convoy security for a period of 3 years. In 
accordance with this administrative agreement, we have ceased 
to use this security contractor for convoy security.
    There were a number of direct actions taken as a result of 
the 2010 Host Nation Trucking assessment. The most significant 
action was the contracting command's decision to execute a new 
contract vehicle to address the challenges we had with the 
previous contract. Specifically, the new contract vehicle 
expands the potential number of prime contractors, establishes 
new standards of conduct and a variety of ways of applying 
security.
    Due to the complexity of this new contract and to meet 
operational requirements, we continued to use Host Nation 
Trucking vehicle with additional controls until the performance 
could be started under the new contract which is tomorrow, and 
to address the concerns that you expressed with the Host Nation 
Trucking. We have put together a comprehensive strategy that 
should drive business away from the bad actors, enable smaller 
companies to prosper and to meet the vast arrays of our complex 
needs.
    With a potential of nearly $1 billion we must execute this 
program with care and vigilance. This is one of several actions 
taken by the Task Force 2010. Other additional examples include 
the debarment of 78 individuals or companies, the suspension 
and pending debarment of an additional 42, and the referral to 
the appropriate debarment official of an additional 111 persons 
or companies. We continue to pursue a wide range of corrective 
actions.
    However, we can't do this alone. As you are aware, Task 
Force 2010 is but a part of a larger organization that is 
operating that. Of course, challenges remain and our concerted 
effort to control corruption in contracting must persist. With 
the commander's commitment, which we now have without any 
doubt, and the participation of the international community, we 
will continue to make progress.
    I thank you and look forward to your questions.
    [The prepared statement of Mr. Mostek follows:]



    
    Mr. Chaffetz. Thank you.
    Mr. Denver, you are recognized for 5 minutes.

                   STATEMENT OF KIM D. DENVER

    Mr. Denver. Chairman Chaffetz, Ranking Member Tierney and 
distinguished members of the Subcommittee on National Security, 
Homeland Defense and Foreign Operations, thank you for the 
invitation to appear today to discuss Army efforts to reduce 
contracting corruption in Afghanistan.
    I am pleased to represent Army leadership, members of the 
Army Acquisition and Contracting Workforce and our soldiers, 
who rely on us for timely and efficient materiel, supplies and 
services in support of expeditionary operations. When our Army 
deploys, it depends on civilian support from contractors.
    As you are aware, the past decade has brought unprecedented 
challenges to contingency contracting. We have operated in 
theaters where the culture includes corrupt business practices. 
In spite of this environment, Army personnel supporting CENTCOM 
strive to uphold the integrity of the procurement process and 
our fiduciary responsibility to the American public.
    We appreciate congressional attention to contingency 
contracting by several amendments in the current version of the 
fiscal year 2012 National Defense Authorization Act, as well as 
the investigative reports last year on Host Nation Trucking and 
private security contractors.
    Oversight of subcontractors has been a significant concern 
of the contracting community, the audit agencies and Congress. 
In response, we have trained over 9,600 contracting officer 
representatives, CORs, instituted vetting procedures and 
increased transparency by mandating government approval of all 
subcontractors.
    CORs are on the front line of our contracting oversight as 
responsible stewards of American taxpayer dollars. In December 
2009, the Army rejuvenated our COR management and training by 
mandating that deploying brigades have as many as 80 soldiers 
trained as CORs.
    The vetting of Host Nation contractors is a key element in 
fighting corruption and ensuring security for U.S. warfighters, 
civilians and contractors, as well as the security of the 
reconstruction effort in Afghanistan.
    It has been a struggle to create a vetting process for a 
country that lacks universal identification criteria. Biometric 
identification, although time-consuming and still relatively 
new, provides the most reliable means to ensure security. The 
continued use of contractor vetting and biometric information 
reduces the risk to contracting with bad actors and creates a 
more secure environment.
    Let me take a moment to provide an update on how we have 
refined and improved our systems and precesses in respect to 
transportation contracts. Chairman Chaffetz, Ranking Member 
Tierney, we paid serious attention to the findings and 
recommendations from this committee's Warlord, Inc. Report. The 
National Afghan Trucking contract, NAT, addresses these 
concerns. This new transportation contract was awarded by the 
CENTCOM Joint Theater Support Contracting Command last month 
and includes stricter oversight and performance controls than 
the previous Host Nation Trucking contract, HNT.
    NAT ensures greater transparency into subcontracts, 
includes a code of ethics, significantly expands the number of 
prime contractors, ensures prior vetting and establishes a 
tiered rate structure based on security requirements and 
separates contracts into suites to encourage smaller and local 
companies to participate. The HNT contract ends today. 
Execution of the NAT contract begins tomorrow.
    The increase in the number of available contractors from 8 
to 20 on the NAT enables greater competition, leading to more 
work for companies that perform responsibly. It also provides 
the flexibility to suspend problem contractors as well as to 
facilitate the development of the trucking industry in 
Afghanistan.
    NAT incorporates congressional recommendations on the role 
of Afghan national security forces in highway security. NAT 
inventories actual trucking assets available to DOD on a daily 
basis, and it ensures transparency, vetting, past performance 
information of all contractors and subcontractors. As a result, 
NAT will reduce costs, pay only for services performed and 
incentivize timely delivery, resulting in improved oversight 
and performance.
    Army contracting continues to identify more effective ways 
to ensure that we get the most value for our contracting 
dollars and the most effective support for our warfighters. I 
cannot stress enough the complexity of managing countless 
requirements, overseeing tens of thousands of contractors and 
awarding billions of dollars in procurement in an environment 
that is already hostile on many levels.
    The endemic corruption in Afghanistan remains a challenge 
to our contracting personnel. It will take time to change this 
environment. The U.S. Army remains committed to the protection 
of the interests of the United States, our warfighters and our 
taxpayers through excellence in all contracting activities.
    Thank you for your continued support. I look forward to 
your questions.
    [The prepared statement of Mr. Denver follows:]



    
    Mr. Chaffetz. Thank you, Mr. Denver.
    We will now recognize Brigadier General Townsend for 5 
minutes.

       STATEMENT OF BRIGADIER GENERAL STEPHEN J. TOWNSEND

    General Townsend. Chairman Chaffetz and Ranking Member 
Tierney and members of the subcommittee, thanks for this 
opportunity to appear before you today to discuss our efforts 
to link contracting and the flow of U.S. contracting dollars to 
our counterinsurgency strategy in Afghanistan.
    The bottom line up front is we recognize we must see and 
address the challenges we face with corruption and popular 
perceptions in Afghanistan. Even as our supplies are flown to 
our warfighters, they arrive with good reliability, 
surprisingly little disruption and pilferage, and with low 
investment or loss in U.S. lives and battlefield resources.
    The focal point for our COIN strategy in Afghanistan is to 
deny terrorists safe haven and secure the Afghan people. Our 
effective management of our government's contracting dollars is 
essential to the success of this strategy.
    As you all know, after 30 years of war and social 
devolution, corruption is a tremendous challenge in 
Afghanistan. Congressman Lynch, you so eloquently said that 
corruption is a greater threat to the stability of Afghanistan 
than the Taliban. I would agree, and so would many of the other 
soldiers, sailors, airmen and marines that I was privileged to 
serve with in regional command just recently.
    Deterring this corruption involves an integrated effort at 
all levels, so we can see where our money is going to gain an 
awareness and a level of control over the unintended 
consequences of our spending. We have and will continue to take 
appropriate steps to reduce the effects of corruption and be 
good stewards of the American taxpayers' dollar.
    The U.S. military has greatly increased our understanding 
of the corruption problem and the unintended consequences of 
contracting dollars can have on our COIN effort in theater. 
This committee's Warlord, Inc. report was very helpful to that 
increased awareness and understanding.
    Since last year, you have heard here, we have taken a 
number of steps to combat corruption. We have established 
Combined Joint Interagency Task Force Shafafiyat, that is a 
Dari word meaning transparency. That has helped to map out the 
criminal patronage networks that exist in Afghanistan and to 
address corruption as a strategic problem.
    Task Force Spotlight has aided in tracking and enforcing 
procedures regarding private security companies and Task Force 
2010 has given us a better understanding of with whom we are 
doing business and providing commanders and contracting 
activities with the information they need to take informed 
action.
    I visited with Task Force 2010 just 3 days ago to see how 
they are doing. Under Army Brigadier General Ross Ridge, Task 
Force 2010's accomplishments include a detailed study of the 
Host Nation Trucking contract, which has led to identification 
of key changes they have been making to contracting practices. 
These have now been integrated into the new National Afghan 
Trucking Contract.
    This new contract will provide a better understanding of 
transportation service costs and significantly increase the 
number of prime contractors, which you have already heard. They 
have also identified individuals and companies for referral for 
debarment for not performing responsibly. Perhaps even more 
important than these actions they have taken in mitigation are 
the preventive actions that they have taken. Task Force 2010 
has implemented including working closely with CENTCOM's 
contracting command and to share information across the theater 
to include US Embassy Kabul, USAID, NATO and other partners. 
This vetting process helps identify high-risk contractors 
before agreements are entered.
    I have highlighted just a few of these efforts that DOD is 
making to counter the effects of corruption on our COIN 
operations in Afghanistan. These initiatives underscore our 
focus to overcome the significant challenges we face in 
Afghanistan and will help us improve how we are performing now 
and in the future.
    Thanks for your continuing support of our men and women in 
uniform and for this opportunity to appear before you today. I 
look forward to answering your questions.
    [The prepared statement of General Townsend follows:]



    
    Mr. Chaffetz. Thank you, gentlemen.
    I will now recognize the ranking member, as has been said 
before, who has really done some very important work on this 
subject. I will now recognize Mr. Tierney for 5 minutes.
    Mr. Tierney. Thank you, Mr. Chairman.
    Thank you for your testimony, gentlemen. I want to start by 
saying, look, your testimony highlighted the creation of Task 
Force 2010 and Task Force Shafafiyat. It is a major signal, you 
say, for showing how serious you are about attempting to 
understand all of the problems with corruption that are going 
on in contracting in Afghanistan. I think those are good 
efforts, I praised them in my opening remarks. But I do have a 
significant problem seeing any tangible evidence of them really 
being put into serious action at this point in time.
    Mr. Motsek, last year when you were in front of the 
committee, you did, as you said in your testimony here today, 
assure us that our concerns about Commander Rohullah and Watan 
Risk Management would be taken seriously and you start action. 
I understand that you did start action on debarment for those 
two individuals on that. In fact, the Army announced its 
suspension and debarment and made a big deal out of that fact, 
and I think it rightfully was. Task Force 2010 found that 
significant sums of money from that company had gone to 
insurgents while Commander Rohullah served as the principal 
security provider.
    Now, the findings of the committee, you understand first of 
all that our committee investigation was a committee 
investigation. It doesn't substitute for a Department of 
Defense investigation, or DOJ, is that right?
    Mr. Motsek. Sir, that is a source document. That is 
correct.
    Mr. Tierney. So I was a little disappointed when I learned 
that without further investigation, this went to a hearing and 
then the Army basically cut a deal with both Rohullah and the 
trucking company, the Watan trucking company. Mr. Rohullah 
claimed that he hadn't understood what was going on in the 
investigation, which I would propose is nonsense. But at any 
rate, I was disappointed that the Army hadn't done its own 
investigation and nailed down those facts in a way that 
wouldn't allow for that kind of a determination.
    Second, they let Watan off the hook by basically saying, 
well, you can't do any more with Host Nation Trucking 
contracting for 3 years. The company was already out of that 
business. So that wasn't much of a punishment on that basis. So 
you have, according to Task Force 2010, a warlord, a bad actor, 
maligned actor, Rohullah, now free to contract with the United 
States. And you have Watan free to contract with everything but 
an enterprise that they already decided to get out.
    I am not sure you could feel comfortable thinking that you 
fulfilled your promise to this committee. How do you feel about 
it?
    Mr. Motsek. Sir, when we came together, we said we would 
take under advisement, and I believe I used the term in your 
investigation. Anything that was in there that was actionable, 
we would deal with it immediately.
    And so the short-term solutions, as you recall, we had some 
issues with arming, which was the primary reason that we were 
able to suspend Watan Group at the initial outset. And we 
continue to march forward.
    Task Force 2010 did in fact do additional work with regard 
to both cases that you talked to. What is important in my mind 
to remember is that debarment by the Code of Federal 
Regulation, and your own excellent Congressional Research 
Service, shows this over and over again, should not be 
interpreted as punishment. Debarments are there to protect the 
interests of the United States.
    Mr. Tierney. Well, I will grant you that point. So how is 
the 2010's findings where the $1.7 million were made in 
payments by Rohullah, who received them and passed them on to 
maligned actors, they found in fact that he was not such an 
upstanding character himself. He was working in concert with 
Watan contracting company.
    So let's assume that what you say is true, you don't want 
to punish them. Let's protect ourselves from having contracts 
with them, and wouldn't that require debarment as a basis for 
protecting us to have to deal with these maligned characters 
again?
    Mr. Motsek. Again, the process, as you well know, you have 
an independent senior suspension debarment official that makes 
the judgment based on facts that are presented to him. Without 
reading too much into his decision, he believes, and he is the 
deciding official, that the interests of the government were in 
fact protected because you cannot go into, it is agreed that 
you will not go into additional contracts with them for a 
period of 3 years. If they try to go around the corner----
    Mr. Tierney. But he debarred them from doing business they 
had already given up, and there are a host of others. Watan 
Management Co. is basically the Popal brothers, right? Cousins 
to President Karzai? So let's just get it out on the table 
here, basically, they got themselves a deal by appealing this 
and they got Rohullah, basically a warlord of maligned 
character, off the hook as well.
    I don't find that satisfactory, I am sorry. I just don't 
find it satisfactory.
    And General Townsend, I appreciate your testimony but when 
I saw on page 2 that you said in some cases the Afghan populace 
perceives that our money is not positively benefiting Afghan 
people and instead is supporting power brokers and maligned 
actors, it is not a perception, is it? It is fact. Task Force 
2010 found in fact that money was going to maligned actors.
    General Townsend. That is fair. It is a fact that it is 
also a perception amongst the people.
    Mr. Tierney. Okay. So we will both get it down on that. But 
it is a problem that we have here, and it has to be stopped.
    The other part of this thing is that we have a serious 
issue on that. What are we going to do about it? We have the 
Task Force finding that basically tells us that we have 
choices. We have use of United States or ISAF forces to protect 
the convoys, but we really want to use them in other ways and 
don't have enough of them to put them in protection. Is that 
fair to say? Part of the theory on this?
    General Townsend. Yes, sir.
    Mr. Tierney. Two, you use the Afghan national security 
forces, except they are not ready and they are not able to at 
this point in time. Is that a fair statement?
    General Townsend. That is fair for now. We are working on 
that.
    Mr. Tierney. You are working on it, but it is a ways from 
happening. So what does that leave you with to protect the 
convoys and to get this done?
    General Townsend. For now, private security companies as we 
build the Afghan public protection force.
    Mr. Tierney. So we are right back to the same people that 
were involved in the problem that instigated the investigation. 
One of the things we found in the investigation was that there 
was little going on to actually oversee and manage these 
contracts. I know that some of your regulations have addressed 
that. But tell me a little bit about whether this is happening 
on the street. Are people going outside the gate and observing 
those convoys? Are they riding along on those convoys? Are they 
auditing and taking investigations and inspections to make sure 
that things on those trucks are getting from one point to 
another? Is there physically people out there doing it? Or are 
they just relying on reports and somebody's word that these 
things have been done?
    General Townsend. I wouldn't say that every convoy is 
observed or escorted. But I think significantly more of them 
now are than were a year ago.
    Mr. Tierney. Mr. Motsek.
    Mr. Motsek. Sir, if you recall, last time I was here, our 
biggest deficiency with regard to the PSCs were we were failing 
to follow our own procedures which required the dual licensing 
process as we recall, that if you are going to use a PSC it 
must be dually licensed in the country. And we had an arming 
and vetting procedure that we were supposed to follow. In this 
particular time, with regard to Watan as the subcontractor, we 
had failed to do that. Task Force Spotlight, under General 
Bohrer, one of her primary functions was to get her hands 
around that licensing and vetting process, which we should have 
done before.
    The other piece that has occurred since we discussed the 
last time is, if you recall, we had temporary rules in the Code 
of Federal Regulation regarding the use of private security 
contractors overseas. And they not only apply to us, but they 
apply to our sister agencies.
    Since we have met, we have been able to finally push 
through the final rules, which are a substantial improvement 
over the originals. So they were published about 6 or 8 weeks 
ago. That was not an easy process, to get them through the CFR, 
and that is my fault. But they are out there.
    So that process and those procedures are in place. The 
visibility, because of President Karzai's Decree 62 and the 
efforts to come up with the other option is driving this entire 
institution inside Afghanistan to a different standard right 
now. As you know, we are not going to be giving up PSCs as a 
nation overall. The diplomatic side of the house will continue 
to use them.
    So in retrospect, yes, in the short term, we will use them. 
But our intention is to have the options to use the other two 
alternatives.
    Mr. Tierney. Thank you.
    Mr. Chaffetz. The gentleman's time is expired. I now 
recognize myself for 5 minutes.
    Can we get a grip here on the dollars and I want to 
understand also what is being transported. Because my 
understanding is there is a difference as to what the actual 
physical materials that are being transferred. Do we have a 
sense percentage-wise, dollar-wise of what we think we have 
lost, what has been pilfered through this trucking process?
    Mr. Denver. If I could take that question, sir.
    Mr. Chaffetz. Yes.
    Mr. Denver. As it relates to the HNT contract, I would have 
to take the question for the record in terms of giving you the 
specific items. But we understand that about $700 million has 
actually been paid out.
    Mr. Chaffetz. When you say paid out?
    Mr. Denver. Paid to the contractors for their services for 
the transportation they provided. But we have about $145 
million in penalties and withholds that relate to lost 
equipment, pilferage.
    Mr. Chaffetz. Do we have a total value of what had been 
shipped and what had been lost, pilfered or simply didn't make 
it to its destination?
    Mr. Denver. I could take that for the record and get it to 
you, sir.
    Mr. Chaffetz. My understanding is, though, with the Task 
Force 2010 being stood up, that a number of items have been 
recovered. Do you know the value of what has been recovered?
    General Townsend. About $172 million in recovered losses.
    Mr. Chaffetz. And what would be included in the list of 
$172 million that was recovered?
    General Townsend. I think probably just about anything we 
transport, a piece of just about anything we transport on the 
roads, from unit equipment to general purpose supplies. To kind 
of get at your question of a second ago, we transport roughly 
1.5 million gallons of fuel per day in Afghanistan, and roughly 
half of our cargo is moving on the ground.
    Mr. Chaffetz. But there is certain cargo that is not 
transported via this.
    General Townsend. That is right. Some of the recent press 
accounts have talked about ammunition being transported in 
these convoys. And that is not the practice in Afghanistan. 
Ammunition is typically transported only in a U.S. military-
escorted convoy and not in convoys that are secured by private 
security companies or moving unsecured.
    Mr. Chaffetz. So with these private security companies 
providing the transportation and security, do we do sensitive 
electronics in those shipments, thumb drives and those types of 
things?
    Mr. Denver. I think we do have some electronics that track 
what the electronics do. We have in-transit vehicle 
transponders.
    Mr. Chaffetz. I am talking about the content of what is 
actually behind those.
    Mr. Motsek. Sir, the standard is no Class 5, no ammunition. 
And what we have is a class of supply that is called sensitive 
items. The simplest answer I would give you, things such as 
night vision goggles would not be permitted to be transported 
by them. Loaded computers would not be allowed to be 
transported by them. We could take it for the record to give 
you a larger list.
    Mr. Chaffetz. Would weapons be on that list?
    Mr. Motsek. No, they are sensitive items, they would not be 
transported by them.
    Mr. Chaffetz. Uniforms?
    General Townsend. Uniforms were transported in these types 
of convoys earlier in the effort. We have made large efforts to 
reduce that now because of problems.
    Mr. Chaffetz. Reduce that or eliminate it?
    General Townsend. I think probably the goal is to eliminate 
it, but I wouldn't say that we have eliminated that completely.
    Mr. Chaffetz. That is not too reassuring. I appreciate the 
candor, though. Medical equipment? There is a Wall Street 
Journal report that I would appreciate your familiarizing 
yourself with, it came out just in the last couple of weeks, 
talking about some of the horrendous and horrific situations 
that are happening in Afghanistan. The article is entitled 
``Afghan Military Hospital, Graft and Deadly Neglect.'' There 
are oversight issues there, but specifically I know we are 
talking about the transportation issues. I would appreciate it 
if you would look at this article dated September 3rd of this 
year as well.
    One of the other deep concerns here is that these, that we 
are not doing our job on the ground. And I recognize in the 
theater of war and all that is happening, there is an added 
degree of pressure that I am sure only those in theater can 
appreciate. But one of these reports said that often the 
containers were never counted or reopened once they got to 
their destination.
    What assurance can you give to this committee that you are 
actually solving that problem? Because it is pretty easy to 
tell, you should be able to tell what left and what arrived. 
And yet the reports we are getting are saying that that 
checkpoint at the end just doesn't happen when our men and 
women receive these materials.
    General Townsend. The ground truth out there is that the 
vast majority of everything that shows up at a base gets opened 
and checked, it gets received, it gets looked at. Is there a 
percentage of stuff that is moving on these lines of 
communication that doesn't get received or inspected? Yes, I 
would say there probably is. And I would just give you a simple 
vignette to describe this, one from my own experience.
    We found in a yard, we did a transition with the unit 
before us, we started inventorying everything on our base and 
we found this series of containers there locked up. So what are 
these containers? The last unit didn't take them with them. 
Well, we started opening them up and discovering parts that had 
been ordered over time, supplies that had been ordered over a 
period of time. So the unit ahead of us maybe hadn't even 
ordered it.
    So these things arrive and you do your best to account for 
your equipment, and now you start accounting for someone else's 
equipment that may be on your base. So that is kind of how it 
transpires.
    But yes, there is a tremendous effort for units to account 
for their stuff.
    Mr. Chaffetz. Well, and not just their stuff, but checking 
the manifest as to what was shipped and did it actually arrive.
    General Townsend. Yes, of course.
    Mr. Chaffetz. Mr. Denver, and then I will yield back.
    Mr. Denver. If I may, Chairman, let me talk a little bit 
about the process, what is happening and what we are doing in 
the contract to get our hands around the pilferage and 
addressing this issue. First, there is an understanding that a 
transportation mission request is sent to these contractors. 
Within that transportation mission request, it identifies 
exactly what is to be transported and trucks that we would need 
to transport further.
    Within the convoys, if there is sensitive equipment or 
equipment that can be pilfered, we actually seal these trucks 
so that if they are unsealed, we are aware of it when they get 
to destination. If we find a situation where that has occurred, 
if there is pilfering or if the seal has been broken, that 
results in a failed mission. With that particular failed 
mission, what happens is the contractor does not receive 
payment for that mission.
    The other thing that happens is they also, within the 
contract we have built a deduct that relates to their total 
mission throughout each month. And if there are instances of 
pilferage, we have percentage deducts that take off a deduction 
on their invoices for that monthly shipment. That would be 
withheld from their invoices.
    So we are taking a number of steps to identify that. The 
other thing we are doing I would say is with DCMA, the intent 
on the previous contract, we did not have a random inspection 
method. In the future, on the NAT contract, we will have DCMA 
at the gate, both origin and destination. But it will be 
random, so that we can conduct spot checks. Those spot checks 
would be based on what was shipped, the condition of the 
trucks. It would also involve security personnel being checked, 
that they are appropriate and they are badged and licensed.
    But the real answer here is, are we putting in the 
oversight. The oversight takes more than just contracting, it 
takes the Defense Contract Management Agency, it takes the 
contracting officer, it takes the requirement site.
    Mr. Chaffetz. And do we have a log of what is missing and 
the value of it?
    Mr. Denver. I would have to take that for the record and 
get that back to you, sir.
    Mr. Chaffetz. Thank you.
    Mr. Tierney. Would the chairman yield for a second?
    Mr. Chaffetz. Yes.
    Mr. Tierney. It is an appropriate time, I think, to make 
note of one thing here. I would like to have unanimous consent 
to put this on the record, if I could. This is a sheet the 
Department made available to us with respect to oil deliveries. 
It is a multi-page item. In the red, you see the amount or 
percentage of shortage on delivery. Basically it will tell you 
there is mostly zeroes. Zero delivered out of what should have 
been 100 percent, most zeroes on that, to significant 
occasions.
    Now, we are also told that $25,000 is the penalty they pay 
for not delivering a full load. Yet the value of this is over 
$40,000 on the street. So I am not sure we have our penalties 
aligned with the price on that. There are 1,100 trucks 
delivering oil that were pilfered, 5.4 million gallons of fuel 
gone, no explanation on that. So I hope that we are addressing 
that. I would just ask the chairman if we could put that on the 
record.
    Mr. Chaffetz. Without objection, we will enter it into the 
record.
    [Note.--The information in the report was not able to be 
reproduced legibly. The report can be found in the official 
record of the hearing.]
    Mr. Chaffetz. I will yield back and--yes, General.
    General Townsend. I would just like to put that into a 
little bit of context. You are right, fuel pilferage rates are 
higher than we want them to be. Overall, pilferage rates on the 
ground locks in Afghanistan is about 1 percent plus or minus. 
So that is overall context of what we are talking about here.
    Still, the level of our endeavor in Afghanistan, that is 
still a lot of stuff, 1 percent even. With fuel, it is as high 
as 15 percent. And part of that is, Congressman, what you just 
pointed out there about penalty may not be offsetting the 
actual street value of this commodity. And this is a discussion 
I had with General Ridge just about 3 days ago. He recognizes 
this and is working on adjusting that penalty.
    Mr. Chaffetz. Thank you.
    We will now recognize the gentleman from Massachusetts, Mr. 
Lynch, for 5 minutes. Or maybe a little more.
    Mr. Lynch. Thank you, Mr. Chairman. I appreciate that.
    I want to thank you for coming before the committee and 
helping us, like I said before, this is one team, one fight we 
are all trying to do the right thing here. We had an 
opportunity, myself, I believe the chairman and several of our 
staffers here, Mr. Alexander was there, Mr. Lindsay was there, 
I think Mr. Fernandez from my office was there. We went into 
Kandahar, and we went down that Route 4 that leads from 
Karachi, goes up through Quetta and then goes into Afghanistan. 
The major seaport there is Karachi in Pakistan and then these 
trucks leave. And the Pakistani trucking outfits take over at a 
place called Spin Boldak that we went into. That is controlled 
by a fellow by the name of, he is now General Razik.
    Now, they had threatened, if we went in there, to do 
oversight on the trucking operation, that they would shut the 
border down. There are thousands of trucks going through there 
in the course of a day.
    So when we on behalf of Mr. Tierney at the time, he was the 
chairman, went down there and inspected, they shut it down, 
just as they had threatened. So first of all, we couldn't 
refuse to go down there and do our jobs doing oversight. But he 
followed through on his threat and he shut the trucking center 
there, the border crossing, down until we left. We did as much 
oversight and inspection as we could, and then when we left, 
the oversight committee left, then he opened up the border 
again.
    And myself, we had a Stryker brigade with us, we didn't go 
down there by ourselves, God bless them. That is pretty tight 
control, when you can shut off the oversight of the U.S. 
Congress and DOD and the military did what they could to get us 
in there to do the oversight.
    But that vignette is one that troubles me greatly, that 
here we are, spending billions of dollars in taxpayer money, we 
go down there, we are elected by the folks that are actually 
paying the freight here, we go down to inspect what is going on 
there. And you have this, he is a general now, he was a colonel 
back then, he is a warlord, is what he is, Razik. And this is 
all sort of Taliban-controlled territory that we drove through 
from Kandahar down to Spin Boldak.
    I just have to tell you, it is a whole lawless area. If the 
guy can shut off Congress from conducting reasonable oversight, 
then what chance do we have of implementing a system where we 
actually perform due diligence on protecting the taxpayers' 
money? I just have great misgivings about this. Look, we have 
some leverage here, they need our help. We need to use that 
leverage to make sure that they operate by our standards. We 
shouldn't be operating under the wild west standards that they 
operate under. And that is sort of what is going on here.
    I have to say, I think it goes right from the top, from 
Karzai on down. It is just rotten from top to bottom over 
there. The goodness and the generosity of the American people 
is being abused. Here they are, trying to do the right thing, I 
know the President has a withdrawal plan there. But in the 
meantime, he is trying to do the right thing. The average 
Afghan over there is in a desperate strait, and we are trying 
to do the right thing from a humanitarian standpoint, we are 
trying to stand up that country so they can take care of 
themselves.
    But in the meanwhile, we are getting fleeced by the very 
people we are trying to help, or a certain portion of it. I 
don't think the average Afghan is really as malicious as these 
folks. But it is a game. It is a game. And now, in the economy 
that we have right now, we could never afford this, ever. But 
especially now it is just heartbreaking to see the resources of 
the American people abused and stolen in this fashion. And to 
have some two-bit warlord down there blocking off the U.S. 
Congress from doing its constitutional duty to make sure that 
the appropriated moneys here by the American people are getting 
to the source that they are targeted to, and spent in a way 
that is consistent with our mission, this just can't go on.
    And I appreciate what you are trying to do. I appreciate 
your tweaking the contract, going from 8 to 20. That is 
helpful, get a little competition. Next time I go down to Spin 
Boldak, am I going to face the same situation, where they are 
blocking the oversight committee from going in down there?
    Mr. Motsek. Sir, very possibly. You hit the nail, in my 
mind, in your opening comments, on the head. What we are doing 
in the core of this hearing has to do with a couple of 
contracts. But you hit the larger issue, and Congressman 
Tierney has raised it, as has the chairman, that this is a 
society that is based on 3,000 plus years of doing things this 
way, and 30 long years of war. And we are not going to change 
it overnight. That is the frustration we have.
    So the metrics of the number of convictions I have are 
interesting, and they are important. But the real issue is, the 
efforts, quite frankly, that the larger task force is doing to 
try and engage to change the tone, so that you have a judicial 
system that you can trust, you have a police system that you 
can trust, you have a leadership system that you can trust. And 
it goes back to Congressman Tierney's comment about who is 
related to whom and what is going on.
    That is not going to happen overnight. I think we all 
recognize that.
    Mr. Lynch. I don't think it is going to happen in a 
thousand years.
    Mr. Motsek. And it may not. But the fact that, and in no 
small part again, because of this committee, we are not taking 
the narrow view. The narrow view would have been Task Force 
2010 and Spotlight. But to have the overarching view, which 
pulls in our other partners, our international partners, it 
pulls in the ISAF side of the house. So we have to look at it 
directly.
    We get the right words, make no mistake. We get the right 
words from the senior leadership about the importance of 
corruption and controlling corruption. And years ago, we didn't 
even get the right words. My frustration, and I am sure 
everyone's frustration is the same as yours, is what is 
tolerable. My personal opinion is we are not going to eliminate 
corruption, we are not, in our lifetime. Our efforts right now 
should be centered on primarily controlling the corruption that 
we can control so that our interests in our dollars and our 
values and our resources are protected, as are our allies' 
resources.
    But I share, what happens to you is, you go in, and as soon 
as you leave, unless we have a presence there 24 hours a day, 7 
days a week, we take risks that that will transition back to 
exactly as you said. We all share your frustration. But I would 
say that the fact that we are looking broadly, and that is 
going to be very tough to measure. And as you know, I can't 
give you metrics that say that the executive branch of 
Afghanistan is now good because of these four metrics. The 
proof will be if we can reduce the numbers. The only number we 
will be able to show you is a reduction in the number, the 
dollar value of corruption. That will be the bottom line when 
we come before you again.
    Mr. Chaffetz. The gentleman's time is expired.
    I want to make sure that we have time for Mr. Yarmuth of 
Kentucky here. So we will now recognize you for 5 minutes.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    I am going to use part of my time to make a unanimous 
consent request to insert a document into the record. Last 
month, Ranking Member Cummings sent a letter to Chairman Issa 
requesting authorization for me to join a congressional 
delegation to Afghanistan, led by Senator Wyden. The purpose of 
the delegation was to investigate allegations of contracting 
fraud and corruption.
    As today's hearing demonstrates, this subcommittee has done 
great work on this issue. And given recent media reports, and 
the testimony we are hearing today, it is clear we must 
continue this oversight of this very important issue.
    As a member of the subcommittee, I wanted to join Senator 
Wyden's delegation to press U.S. officials for answers to 
exactly the kinds of questions we are examining today. That is 
why I was extremely disappointed that Chairman Issa rejected my 
request. His rationale was that Democrats from our committee 
should not be allowed to join bipartisan delegations unless a 
Republican from our committee also joins.
    This is a misguided policy that has no basis in House rules 
or policies. The policy established by Speaker Pelosi and 
continued by Speaker Boehner is that every foreign delegation 
must be bipartisan, and that it include a Republican and 
Democrat from each committee, I am sorry, not that it include a 
Republican and a Democrat from each committee. Senator Wyden's 
delegation meets this standard because it has another 
Republican House Member, Representative David Schweikert.
    Both the committee on House Administration and the Office 
of Interparliamentary Affairs have confirmed that this 
misguided policy is not the Speaker's but Chairman Issa's 
alone. So I am asking unanimous consent to include a letter 
Ranking Member Cummings sent to Chairman Issa this morning, 
requesting him to immediately reverse this policy. Thank you.
    Mr. Chaffetz. I am going to hold off on ruling on that. 
Would you mind if I had a chance to look at the letter, please?
    Mr. Yarmuth. Certainly.
    Mr. Chaffetz. You may continue.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    This conversation that Mr. Lynch has talked about, the mis-
use of taxpayer dollars and the waste of taxpayer dollars, 
American taxpaying dollars, that sometimes go to our people we 
are trying to help, and in fact, according to Task Force 2010, 
reports of Task Force 2010, it indicated that they have 
identified $360 million that has been diverted to insurgents 
and power brokers and warlords and so forth. Some of that 
money, presumably, funding the very insurgency that our 
counterinsurgency is designed to combat.
    So, General, as you talked about the counterinsurgency 
strategy, I would like to ask you, to what extent do you think 
these diverted funds are undermining the counterinsurgency 
strategy? And to what extent they are being used to attack our 
own troops, and do you think we are doing enough to make sure 
that we are not funding attacks on our men and women?
    General Townsend. Thanks for the question, Congressman.
    I had this conversation with General Ridge a couple of days 
ago. That $360 million that they have identified, that you 
cited there, is from a look at $31 billion of contracts. So 
that is a little bit of context there, $31 billion into $360 
million. That is still a tremendous amount of money, if it is 
correct, it is really bad.
    So I don't know how you can quantify how much of that money 
has actually, I think that money, part of it is probably going 
to just simple crime that would exist in any society. Some of 
that money for sure is going to, I think, the insurgency. And 
then how much, I can't quantify how much of that money is going 
to attacks against us versus some other insurgent purpose. It 
is clear to us some of that money is going into the insurgency 
and we have to do whatever we can to stop that. I don't think 
you can completely stop it, but we have to do whatever we can 
to minimize it.
    There is nobody in uniform over there who likes to hear 
that, first of all, everybody in uniform over there is a 
taxpayer, too. And they don't like to hear that our tax dollars 
are going into funding the guys that we are trying to fight. So 
I think that what I can say is that we have the processes in 
place, partially due to the efforts of this committee, we have 
the processes in place now to address it. But it would be hard 
to quantify, I think, how much of that money is actually going 
to the insurgency. Clearly, some is too much.
    Mr. Yarmuth. But you do have a strategy, or are working to 
develop a strategy for trying to determine where, how it is 
getting to the insurgents and stopping that?
    General Townsend. Absolutely. You have a couple 
organizations, Task Force Shafafiyat, that is their job, is to 
do the overall strategic anti-corruption effort. And they 
integrate the efforts of some of these other organizations like 
2010, they also integrate our efforts across not just the U.S. 
Government, the Afghan government and also our NATO and other 
partners there.
    So there are other organizations over there, the Afghan 
Threat Finance Cell, I attended a briefing with Chairman Mullen 
just about a week ago by the Afghan Threat Finance Cell. They 
are an intelligence organization, interagency organization. And 
their job is to delve into this and point folks out.
    I can tell you that they are certainly taking action there.
    Mr. Yarmuth. I would hope that to the extent that you can, 
you can report to the subcommittee as to progress you have made 
and of any discoveries you have made about how this process may 
be going on, and whether you have had any success in stopping 
it.
    Thank you, Mr. Chairman.
    Mr. Chaffetz. The gentleman yields back. Thank you.
    The gentleman had previously requested unanimous consent to 
insert into the record a letter dated September 15, 2011. 
Without objection, so ordered.
    [The information referred to follows:]



    
    Mr. Chaffetz. Now I recognize the gentleman from 
Massachusetts, Mr. Tierney, for 5 minutes.
    Mr. Tierney. Thank you.
    I want to stay on this topic a little bit here. Part of it 
is the money, nobody wants to lose the money, the taxpayers are 
like that. The larger part of it is, what is it doing to our 
operation in Afghanistan in terms of this counterinsurgency 
angle that we have taken over there. And one aspect of that, as 
I understand it from General Petraeus' own writings, is that 
corruption and feeding into corruption is not going to be 
helpful. It is one of the main things that has to not happen in 
order for the counterinsurgency to be effective.
    So the publicly available legal documents that were filed 
by Watan in the case they had said this: Watan argued that the 
alleged bribes were not bribes, per se, but rather facilitation 
payments. They argued that Watan had no choice but to pay 
Afghan government officials and other armed groups for police 
protection while Watan transported cargo for the U.S. military 
through Afghanistan's volatile war zone.
    General Townsend, do you agree that the security operators, 
the contractors, had no choice but to make those payments?
    General Townsend. I do agree that in many cases they don't 
have a choice, or they perceive that they don't have a choice. 
They perceive that they will be attacked if they don't make 
some of these payments.
    Mr. Tierney. And Mr. Motsek, do you agree with Watan's 
analysis that these so-called facilitation payments or bribes, 
as some of us might say, large sums of cash provided to 
provincial Governors, the local police or warlords, in order to 
ensure that trucks aren't bothered, do you think that is legal 
under U.S. law?
    Mr. Motsek. Clearly, it is not. It is clearly, and it is 
counterproductive to what we are trying to do. And again, it is 
part of the larger systemic problem that we have.
    Mr. Tierney. So here is what Watan's court filing goes on 
to state: ``The Army allowed and encouraged HNT contractors to 
do and pay whatever was necessary to assure convoy security and 
prevent loss of life. The Army engaged in the affirmative 
misconduct by encouraging private contractors to undertake 
activities that the Army only disavowed once they were exposed 
to the public.''
    Mr. Denver, was the Army aware of the apparently common 
practice of facilitation payments? And does it encourage people 
like Watan to make them?
    Mr. Denver. I am not familiar with whether the Army had 
that information. I would tell you this, in conversations when 
I had a meeting with the suspension and debarment official, I 
think he indicated the same that you have heard today, that the 
facilitation payments were necessary. So in that context, I 
would say when Watan came to the table and identified what they 
paid, in that context I would say that is when it became, we 
were aware. But I am not familiar with it as to whether we were 
aware prior to, sir.
    Mr. Tierney. In another court filing, Watan stated that the 
Army apparently made a policy determination that having its 
contractors pay for safe passage in money is cheaper than 
paying for that same passage in guns, bullets and bodies. The 
court filing goes on to call extortion payments the realities 
of Afghan society and the realities of this war. Do you agree, 
General Townsend, that it is simply the cost of fighting war in 
Afghanistan?
    General Townsend. I am not sure I would agree that it is 
the cost of fighting war in Afghanistan. It is certainly part 
of the landscape in Afghanistan. And we took extraordinary 
efforts, down even at the very low tactical level, every day, 
to try to root out, when we would hear a report that a 
checkpoint was charging passage fee, a toll, we would go 
investigate that and go to great lengths to try to find out if 
they were charging a toll and ways we could mitigate that.
    One example is we actually posted billboards beside some of 
these checkpoints that said there is no toll required to pass 
this checkpoint. Then you would have to deal with the Afghan 
literacy rate below 30 percent.
    Mr. Tierney. And the fact that somebody with a gun is 
standing there asking for a toll.
    General Townsend. Some guy with a gun is standing there. 
There is no argument from us that corruption is probably, the 
biggest victims I think are the Afghan people, even more so 
than the American taxpayer.
    Mr. Tierney. So the International Crisis Group wrote, I 
think saliently, there is a nexus between criminal enterprises, 
insurgent networks and corrupt political practices in 
Afghanistan. We know that there are a pile of relatives of 
people in high political offices that are involved in these 
contracts, that are subcontractors and making these payments or 
whatever. So my question is, in order to break that nexus, what 
prosecutions have happened? How many people have been 
prosecuted? How high up the chain? The Afghan people, do they 
see an example of some of these well-connected people actually 
being brought to the rule of law, or are they going to continue 
to be an impediment to our insurgency, counterinsurgency 
because they think the whole game is rigged and the government 
is as bad as the Taliban?
    General Townsend. I can answer that question, not in the 
context of what we are talking about here, trucking, 
corruption, but----
    Mr. Tierney. This is indicative. All that is just 
indicative of a much larger picture.
    General Townsend. Yes. Kabul Bank, for example. There are a 
number of officials that are under investigation with respect 
to the Kabul Bank situation, corruption practice there, 
incident there. I think we are hopeful that the Afghan 
government will prosecute some of those parties but it has yet 
to happen. But there are a number of investigations, over 20 
investigations in work with Kabul Bank. And we are waiting to 
see what they do.
    And we are, right now, the U.S. Government is conditioning 
some of our support to see the outcome of Kabul Bank.
    Mr. Tierney. Well, I would hope so. You just drive from the 
airport, where you land your plane, down to the capital and 
look up, and you can see houses up there that are well-heeled 
people living in that, and the regular Afghan people just 
really suffering and having a hard time making it. And they get 
it, too. I don't know how you ever get the confidence of them 
to support having this country come around and move in the 
right direction without doing more in that regard.
    So I think you have your work cut out for you. I think we 
ought to take a real hard look at our mission over there, and 
the prospects for accomplishing well-intended goals on those 
things without really addressing that issue the way it ought to 
be. I know it is political, I know there are people like the 
intercession, I understand, there are people into the Watan 
case and the Rohullah case or the Popal brothers or whatever, 
that is a good example of why people would be disgusted when 
somebody should have been debarred and should have been out 
there that all of a sudden they get a slap on the wrist and 
they are off and running. This is not good. Not good. And I 
think we have to be cautious of that.
    I yield back. Thank you, Mr. Chairman.
    Mr. Chaffetz. The gentleman yields back. I would now 
recognize myself for 5 minutes.
    Under the Host Nation Trucking, we had eight prime 
contractors. Six of those eight were found to have committed 
some sort of fraudulent behavior, be it fraudulent paperwork, 
reverse money laundering, excessive profiteering, aiding and 
abetting, unjust enrichment. So now the plan is, oh, instead of 
having just 8 prime contractors, now we are going to go to 20 
prime contractors. One of the criticisms of the Host Nation 
Trucking process was we had too many subcontractors, we 
couldn't keep track of them. And that sometimes people were 
paying themselves, only to pay themselves again and again and 
again.
    So how, what are you doing to alleviate this problem? 
Because you are expanding the number of contractors. And at the 
same time, what are you doing to make sure that those nefarious 
characters are not indeed just getting in line, but somewhere 
else under a different name?
    Mr. Denver. Sir, if I could take that question. I think as 
I indicated earlier, the real approach is ensuring that we have 
the right oversight. It is true that the number of prime 
contractors has expanded. In the new contract, it is 20 
contractors. And many of those prime contractors came from the 
previous contract.
    I can tell you that----
    Mr. Chaffetz. How many?
    Mr. Denver. I believe it is 11. Eleven total, play either 
in a prime or subcontractor capacity, sir.
    Mr. Chaffetz. And how many of those were previously found 
to have been involved in----
    Mr. Denver. None of those were found to have been involved 
in this. They are just 11 contractors that we know, they were 
subcontractors before that we know that they were, they 
conducted performance under the contract previously. But none 
of them----
    Mr. Chaffetz. My understanding is, in order to be 
considered as a prime contractor, you have to have access to 
600 trucks, is that right? I believe it is 600 trucks.
    Mr. Denver. It may be across the suite. I would have to 
take that for the record.
    Mr. Chaffetz. In Afghanistan, I have to believe that the 
universe of potential vendors here, or potential contractors, 
is fairly small.
    Mr. Denver. I have some information on the contracts. I 
would tell you that it is a growing industry. But when we went 
out with the contract----
    Mr. Chaffetz. Yes, we are pouring $2 billion in there. Of 
course. What percentage of the GDP, it is a growing industry 
all right. It is probably the most enriched industry there is, 
next to the poppies. But go ahead.
    Mr. Denver. Basically when we went out with the contract, 
we asked contractors to come in, the prime contractors and 
subcontractors to come in and identify what their capacity was 
in the contract. And I would tell you that there was sufficient 
trucking assets to be provided within Afghanistan from the 
Afghan firms. So it is a developing industry. I would actually 
consider it a positive, that we were able to grow the industry 
under the new contract and show some success. These new 
companies, or these companies now participating under the new 
contract have been vetted.
    Mr. Chaffetz. Are you here to assure us that nobody who has 
been found to be fraudulent in the past is involved in this new 
contract?
    Mr. Denver. No, sir. No, sir, I am not here to say that. I 
am here to say that----
    Mr. Chaffetz. Well, how do we get the assurance that that 
is the case?
    Mr. Denver. Well, I would tell you that there are risks 
associated with this. And the assurance that you have is that 
we are putting the oversight----
    Mr. Chaffetz. Are they or are they not allowed to 
participate in this new contract, if they are under suspension 
or have been found to be fraudulent in the previous contract?
    Mr. Denver. If they are under suspension, they are 
prohibited from receiving a contract award, that is correct. 
But if there are ongoing investigations, you have to let the 
due process run. Right now, I am not here to tell you that 
something couldn't happen in the future. But those companies 
that we made awards to were not excluded and were not 
suspended, sir.
    Mr. Chaffetz. I would like to continue to dive further into 
that. Let me real quickly, time is short, we are going to have 
to come up for votes here again. There are two programs, the 
Afghan First and the Direct Assist, something that the State 
Department is very adamant about pursuing. With those two 
programs, is there an overlap of contrast here that we think 
will become increasingly--we are asking for more oversight, we 
are asking for more accountability. And yet at the same time we 
have the State Department saying, you have to speed up the 
payments, you have to make these payment direct. You have to 
make sure that, and I see a conflict between those objectives 
under Afghan First and Direct Assist as opposed to what we are 
trying to do in making sure that the $2 billion plus is 
accountable.
    Yes, Mr. Motsek.
    Mr. Motsek. Sir, that segues into something I should have 
talked about earlier, and that is, the two pending pieces in 
the NDAA legislation are somewhat key to address your concerns. 
The fact that, I can't remember whether it is the House or 
Senate version, hopefully both pieces pass in committee, you 
will presumably give us the authority to delve deeper into 
those secondary, those tertiary contractors that we have never 
had before. Heretofore, as you know, we only had a legal 
relationship with the prime. If the law changes as in in the 
NDAA, we will be able to go deeper. That is number one.
    Number two, you are going to grant, if the law passes, the 
commander on the ground greater authority to take people off 
the table with frankly less legal proof that they are 
undeserving to continue or to operate with us, that we can 
actually use in our judgment process intel and a variety of 
other methods to make that assessment. Both of those pieces we 
talked about at the early testimony. We promised that we would 
bring you proposed legislation. And as always, it gets a little 
morphed as it gets on the Hill.
    But fundamentally, those two pieces are in the NDAA. They 
are somewhat key to Mr. Denver to be able to dig further into 
those secondary and tertiary contracts.
    The reality is, the trucking industry is a decentralized 
process. And the bulk of your truckers are owner operators, 
just like they are in the United States. And that is not going 
to fundamentally change. So these guys that get these contracts 
are able to pull together 600 or 450 subs, and they own 150. 
That is how they pull together the resources to make this 
happen. That is the reality of the business. It is the same way 
in the United States.
    The key is, as Mr. Denver has said, we are trying to vett 
that guy before he ever gets a chance to come to the table and 
not after the fact. Your legislation gives us greater ability 
to do that.
    Mr. Tierney. Will the gentleman yield for a second?
    Mr. Chaffetz. Yes.
    Mr. Tierney. Just on that point, I am looking at the 
Federal report, as early as the summer of 2009, there were 
frequent reports of subcontractors and middlemen who were 
paying contract money to warlords and the Taliban to guarantee 
safe passage for the convoys. The U.S. Army investigators 
prepared a briefing for senior commanders that bore the blunt 
title, Host Nation Trucking Payments to Insurgents. The 
investigators estimated that the going rate for protection was 
$1,500 top $2,500 per truck, paid by contractors and their subs 
to private Afghan security companies allied with warlords or 
insurgents or in some cases directly to militias or Taliban 
commanders. That is a military report.
    The military maintained that the Federal contracting rules 
did not require, and by some interpretations prohibited a close 
look below the level of prime contractors. That is a disgrace, 
that somebody in the Department of Defense would let out a 
contract that didn't let people go deeper into what was behind 
those contracts or the subcontract level. But the better quote 
was from somebody in the military who said, ``These people 
should be fired and sent home.'' The senior Defense official 
said of the military overseers, that attitude is crazy, what 
are they saying, it is okay to pay the enemy because they have 
better snacks, that the convoys travel unimpeded?
    I think everybody gets that now, I hope everybody gets that 
now. That kind of contracting is before first level law school.
    Mr. Chaffetz. We are now going to recognize the gentleman 
from Massachusetts, Mr. Lynch.
    Mr. Lynch. Thank you, Mr. Chairman. I appreciate that.
    Gentlemen, the Commission on Wartime Contracting, which is 
an independent bipartisan commission, recently published a 
report summarizing their work in Afghanistan and Iraq since 
2008. And based on their estimates, in the last decade, the 
United States has spent more than $192 billion on contingency 
contracts and grants.
    Of this amount, as much as $60 billion has been lost to 
contract waste and fraud. Mr. Motsek, do you think that is a 
reasonable estimate?
    Mr. Motsek. Sir, I think I hold the record for testifying 
in front of the commission. The answer is, based on the way we 
are discussing fraud, the answer is no.
    Mr. Lynch. What do you think is a better number?
    Mr. Motsek. I can't give you an exact number.
    Mr. Lynch. Okay, I don't want you to----
    Mr. Motsek. What I would have to----
    Mr. Lynch. No, I just had one question and you answered it. 
So that is good, we need to move on. We are short on time, I am 
sorry. I don't mean to be disrespectful, you have been very 
helpful as a witness.
    Here is my issue. Right now, the President has a couple of 
plans, one in Iraq, one in Afghanistan, where we are going to 
reduce our profile for the military and we are going to 
actually use more and more contractors. And so we have this 
problem. We have, at times we have had more folks under 
contract than we have had in the military. So as this trend 
continues, they have estimated that we are already over-reliant 
on contractors in Iraq and Afghanistan. And it is going to get 
more so as we draw our troops down.
    So they put it this way. The United States will lose much 
of our mission-essential organic capability. And also, it will 
create an Afghanistan rife with inflation and distorted 
economic activities. You have some bad incentives in there.
    How do we facilitate this transition with greater use of 
contractors? Eighty percent of these contractors are non-U.S. 
citizens. So we have very little control over that 
accountability, I guess is what I am looking for. And with 80 
percent of those who are under contract non-U.S. citizens, I am 
very concerned about this corruption, undermining the remaining 
effort that we are making in Iraq and in Afghanistan to 
stabilize both those countries.
    Where does that leave us? Where does that leave us if we 
are transitioning to a contractor-based, or contractor-centric 
operation?
    Mr. Motsek. Sir, we don't have the capabilities in the 
organic force today in many of the areas that we are 
discussing. You would have to grow the Department of Defense to 
make that happen. So that is the reality. So you are absolutely 
correct.
    The fact, we have already talked about the broad issues and 
what needs to be done. A microcosm, in my mind, to eliminate 
and to give competence to the local national is two-fold. 
Number one, with regard to Host Nation Trucking as an example, 
we are not going to pay in dollars any more. We are not going 
to pay in dollars. That is a blinding flash of the obvious. We 
pay in Afghanis.
    So now it is not question of dollars leaving the country, 
which has been a problem to begin with. The second piece, and I 
don't know how to resolve this in the short term and long term, 
but until you can have assured payment to the individual 
without payoffs on the way down, we have this problem with the 
police, we have it endemic in the government. Until you can pay 
the person directly their money, there is no confidence in the 
system.
    We have gone, through the international community, we are 
paying some of the police, we are paying them on their cell 
phone because it goes directly to the policeman and it doesn't 
filter down and lose those dollars along the way.
    So there are practical steps you have to take. But you are 
absolutely correct, it will be a contractor-centric 
institution. Iraq obviously, after December 31st, as things 
stand, absolutely.
    Mr. Lynch. Okay. Mr. Chairman, my time is just about 
expired. I do want to say one thing, though. Having spent 
enough time over there in Afghanistan, as bad as this situation 
is, it would be worse if we had U.S. personnel, military 
personnel providing security on these convoys. The body count 
would be totally unacceptable. So I appreciate the effort that 
you have made to straighten this mess out. Thank you. I yield 
back.
    Mr. Chaffetz. I am going to recognize Ranking Member 
Tierney for just a moment here, as we conclude. We have votes 
coming up on the floor.
    Mr. Tierney. Thanks, Mr. Chairman.
    Rohullah continues to be providing security on the road in 
Afghanistan to this day. Anybody look at the intelligence 
reports in our intelligence community about the background of 
this individual? No? All right.
    General Townsend. Sir, I would like to say this about 
Rohullah. Can't go into it a whole lot, but Rohullah is not off 
our scope.
    Mr. Tierney. I would like for you gentlemen to provide for 
us at some point in time in written form subsequent to this 
hearing the amount of prosecutions that are ongoing right now 
for this type of corruption and graft, as well as the amounts 
of money that have been recovered to date.
    Last, I just want to get an idea of who is responsible, so 
that when we look at this and try to evaluate later on, we can 
know who to call for witnesses and who to talk to. As I 
understand it, the trucking contracts now for oversight, it is 
the 419th Mount Control Battalion that are in charge of 
managing the contract, is that correct? Nobody here knows. All 
right. That is one problem.
    They report to the 143rd Expeditionary Sustainment Brigade, 
does that sound reasonable?
    Mr. Motsek. Sir, today, but they will transition, perhaps 
even before you have your next hearing.
    Mr. Tierney. That is going to change again?
    Mr. Motsek. It will change as units rotate. I would caution 
about using, we will find organizations for you and give you 
the hierarchy, I think that is what you are looking for.
    Mr. Tierney. Well, it is because what I have from the 
investigations that we did was that the contract signing is the 
immediate responsibility of the Baghran contracting center, 
regional contracting center, who reports to the principal 
assistant responsible for contracting in Iraq and Afghanistan, 
who gets authority from the Army acquisition executive or the 
Secretary of the Army. But a practical matter, from CENTCOM.
    So where do you gentlemen fit in in that chain?
    Mr. Motsek. The commander of JSCC----
    Mr. Tierney. Rather than using acronyms, can you----
    Mr. Motsek. The commander of Joint Support Contracting 
Command is Admiral Kalathas, he is my deputy and he is detailed 
there for a year to operate that.
    Mr. Tierney. So is he doing the regional contracting center 
in Baghran?
    Mr. Motsek. He owns that. He owns that.
    Mr. Tierney. And you work for him?
    Mr. Motsek. No, he works for me.
    Mr. Tierney. He works for you?
    Mr. Motsek. Normally, he has been detailed forward. If I 
could very quickly explain it. The Army is the executive agent 
for contracting in the conflict. We had to give the executive 
agency to someone, and it could have been a service, it could 
have been agency. The Army is the executive agent. They have 
tried many years to get away from that. They are going to stay 
the executive agent.
    And because of that, the Army acquisition executive, who is 
Mr. Denver's boss, is the ultimate responsible agent from the 
contracting standpoint. So the authority and the warrants for 
the people to operate under the Joint Contracting Command come 
via the Army to spend money. And so appeals and oversight, 
direct oversight of contractors, with very few exceptions 
within Afghanistan, are the Army's responsibility. I will give 
you the warrant diagram, sir.
    Mr. Denver. Sir, if I may take a moment to add to that. 
That is true, the OSD appointed the Army as the executive 
agent. The executive agency went to my boss. I am actually, 
detail those authorities for executive agency. And I have an 
organization that provides broad oversight, when you get into 
theater, Admiral Kalathas is the head of contracting activity 
in theater.
    Then he has two senior contracting officials that work for 
him, one for senior contracting official in Afghanistan, one 
for senior contracting official in Iraq. The senior contracting 
official Afghanistan oversees those regional contracting 
offices, the ones that you referred to. But that is the 
contracting chain of command for local authority, sir.
    Mr. Tierney. Well, then I suspect we will be seeing you 
gentlemen back here again, since you have responsibility.
    I want to thank the chairman again for working with us on 
this. I appreciate his hard work and leadership on this matter. 
Thank you all for testifying.
    Mr. Chaffetz. I want to thank you gentlemen for your 
commitment to our country, for your service. We do thank you.
    The Pentagon, the Department of Defense, has to get this 
right. The State Department has to get this right. We are 
talking about billions upon billions upon billions of dollars 
that unfortunately we know is going to fuel some of the very 
people that we are trying to suppress. That is totally 
unacceptable. The waste, fraud and abuse that is happening in 
the theater of war is unacceptably high. And we see that in 
report after report.
    I understand the difficulties, and I am trying to 
appreciate all the nuances in the difficulty of war. And there 
will be some small degree that happens in that theater. But 
when we hear about tens of billions of dollars in waste, fraud 
and abuse, it is unacceptable.
    One of the next hearings that we will have in this 
subcommittee will deal with what is happening in Iraq. Because 
we have to get the contracting part of the equation right. As 
the transition is made from the Department of Defense to the 
State Department, the State Department is looking to bring up 
something like 17,000 contractors. So the news clips may be 
that we are drawing down in Iraq, but the reality is, we are 
hiring up in Iraq to the tune of 17,000 contractors in an 
unbelievable amount of money. We have to get this equation 
right.
    I thank you all for being here. I appreciate the great work 
from Mr. Tierney and his staff, in a very collaborative effort. 
You are going to find Republicans and Democrats very united, 
working together on this. So at this time, this committee will 
stand adjourned.
    [Whereupon, at 12:45 p.m., the subcommittee was adjourned.]

                                 
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