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








      OVERSIGHT IN IRAQ AND AFGHANISTAN: CHALLENGES AND SOLUTIONS

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

                                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

                               __________

                            DECEMBER 7, 2011

                               __________

                           Serial No. 112-101

                               __________

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









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                      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 December 7, 2011.................................     1
Statement of:
    Heddell, Gordon S., Inspector General, U.S. Department of 
      Defense; Harold W. Geisel, Deputy Inspector General, U.S. 
      Department of State; Michael G. Carroll, Acting Inspector 
      General, U.S. Agency for International Development; Stuart 
      W. Bowen, Inspector General, Special Inspector General for 
      Iraq Reconstruction; and Steven J. Trent, Acting Inspector 
      General, Special Inspector General for Afghanistan 
      Reconstruction.............................................     7
        Bowen, Stuart W..........................................    51
        Carroll, Michael G.......................................    35
        Geisel, Harold W.........................................    25
        Heddell, Gordon S........................................     7
        Trent, Steven J..........................................    61
Letters, statements, etc., submitted for the record by:
    Bowen, Stuart W., Inspector General, Special Inspector 
      General for Iraq Reconstruction, prepared statement of.....    53
    Carroll, Michael G., Acting Inspector General, U.S. Agency 
      for International Development, prepared statement of.......    37
    Chaffetz, Hon. Jason, a Representative in Congress from the 
      State of Utah, letter dated May 17, 2011...................     3
    Geisel, Harold W., Deputy Inspector General, U.S. Department 
      of State, prepared statement of............................    27
    Heddell, Gordon S., Inspector General, U.S. Department of 
      Defense, prepared statement of.............................     9
    Trent, Steven J., Acting Inspector General, Special Inspector 
      General for Afghanistan Reconstruction, prepared statement 
      of.........................................................    63

 
      OVERSIGHT IN IRAQ AND AFGHANISTAN: CHALLENGES AND SOLUTIONS

                              ----------                              


                      WEDNESDAY, DECEMBER 7, 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 9:35 a.m., in 
room 2154, Rayburn House Office Building, Hon. Jason Chaffetz 
(chairman of the subcommittee) presiding.
    Present: Representatives Chaffetz, Labrador, Tierney, 
Welch, and Yarmuth.
    Staff present: Thomas A. Alexander and Richard A. Beutel, 
senior counsels; Brien A. Beattie, professional staff member; 
Nadia Z. Zahran, staff assistant; Paul Kincaid, minority press 
secretary; Adam Koshkin, minority staff assistant; and Scott 
Lindsay and Carlos Uriarte, minority counsels.
    Mr. Chaffetz. The committee will come to order and a little 
bit early, but we are well represented here. Appreciate it.
    I would like to begin this hearing by stating the Oversight 
Committee mission statement. We exist to secure two fundamental 
principles: first, Americans have the right to know that money 
Washington takes from them is well spent and, second, Americans 
deserve an efficient, effective Government that works for them. 
Our duty on the Oversight and Government Reform Committee is to 
protect these rights.
    Our solemn responsibility is to hold Government accountable 
to taxpayers, because taxpayers have a right to know what they 
get from their Government. We will work tirelessly in 
partnership with citizen watchdogs to deliver the facts to the 
American people and bring genuine reform to the Federal 
bureaucracy. This is the mission of the Oversight and 
Government Reform Committee.
    Good morning and welcome to today's hearing, Oversight in 
Iraq and Afghanistan: Challenges and Solutions. I would like to 
welcome Ranking Member Tierney and members of the subcommittee 
and members of the audience and certainly our panel for being 
here today. This is the sixth hearing addressing the 
accountability of taxpayer dollars in war zones.
    During this session, this subcommittee has examined a 
number of issues, including whether the State Department is 
prepared to oversee the surge and private contracting in Iraq; 
whether the State Department will be able to protect Government 
employees and contractors in Iraq after the military withdraws; 
whether USAID and the State Department can accurately track 
reconstruction projects and account for their expenditures; 
whether those projects can and will be sustained by the host 
nations; whether the billions handed to the Karzai government 
under the direct assist program can and will be properly 
overseen; and whether the Defense Department is working to 
ensure that taxpayer money isn't extorted along Afghanistan's 
supply chain.
    In October, the full committee heard testimony from the 
Commission on Wartime Contracting about its final report. The 
commissioners alleged that between $30 and $60 billion had been 
lost in Iraq and Afghanistan due to waste, fraud, and abuse in 
the contracting process. According to the Commission, this was 
due to ill-conceived projects, poor planning and oversight, 
poor performance by contractors, criminal behavior, and blatant 
corruption.
    This is unacceptable. While some may agree or disagree with 
our engagements in Iraq and Afghanistan, it is universally 
unacceptable to waste taxpayer money. In each of our hearings, 
witnesses have described the success and challenges, and 
oversight is a completed environment. Without a doubt, the task 
is difficult; however, it is critical that we get it right.
    Today, the inspectors general community will share its 
perspective together on one panel. The IG community plays a 
pivotal role in the oversight of Federal programs. Their 
mission is to promote economy, efficiency, and effectiveness in 
the administration of Federal programs, and to prevent and 
detect fraud and abuse. Its duties also include informing 
Congress of any corrective action that needs to be taken.
    In addition to Defense, State, and USAID, the Special 
Inspectors General were established to focus specifically on 
efforts in Iraq and Afghanistan. Each of these offices is 
present here today. While they have produced noteworthy 
results, significant challenges remain. We will hear about 
those today. We will also examine potential solutions.
    Ranking Member Tierney has introduced H.R. 2880, which 
seeks to disband SIGIR and SIGAR, and establish a special 
inspector general for overseas contingency operations. I 
understand that Mr. Bowen and the Commission on Wartime 
Contracting support this idea. I would like to hear the panel's 
view on that legislation and how such an office would interface 
with the standing IGs. The ranking member's legislation is a 
good beginning. I look forward to working with him and the 
agencies and the IG community to structure an effective 
solution.
    Before recognizing Ranking Member Tierney, I would like to 
note that the Defense Department and State Department, USAID, 
and SIGAR will not have IGs in January. In May of this year I 
wrote the President, asking him to move without delay to 
appoint replacements. That letter was signed by Senators 
Lieberman, Collins, McCaskill, and Portman, as well as Chairman 
Issa, Ranking Member Cummings, and Ranking Member Tierney. I 
would like to place a copy of this letter into the record. 
Without objection, so ordered.
    [The information referred to follows:]



    
    Mr. Chaffetz. To my knowledge, the President has yet to 
nominate any of these replacements. Nor has he responded to 
this letter. I find that totally unacceptable. This is a 
massive, massive effort. It is going to take some leadership 
and some help from the White House. These jobs cannot and will 
not be done if the President fails to make these appointments.
    Upon taking office, President Obama promised that his 
administration would be ``the most open and transparent in 
history.'' You cannot achieve transparency without inspectors 
general. Again, I urge President Obama and the Senate to 
nominate and confirm inspectors general to fill these 
vacancies, and without delay.
    I would now like to recognize the distinguished ranking 
member, the gentleman from Massachusetts, Mr. Tierney, for his 
opening statement.
    Mr. Tierney. Well, thank you, Chairman Chaffetz, and thank 
you all for being witnesses here today and helping us with our 
job. This hearing, obviously, is a culmination of a series of 
hearings that the subcommittee and the full committee have had 
with regard to Iraq and Afghanistan. We have heard from the 
Department of Defense, the Department of State on the 
transition to civilian-led mission in Iraq, and we have heard 
from the Commission on Wartime Contracting and suggested 
reforms to reduce waste and fraud in contingency operations, 
and we followed up with the Department of Defense to discuss 
the investigation that we started earlier on corruption in the 
Afghan trucking industry.
    These hearings continue to highlight the challenge of 
protecting the taxpayer funds from waste and fraud in our 
operations in Iraq and Afghanistan. In fact, the Commission on 
Wartime Contracting found that billions of dollars had been 
wasted by agencies that have little capacity to manage their 
contractors or to hold them accountable. Even worse, billions 
of dollars more have been dedicated to projects that were 
poorly conceived and are unsustainable by host governments. 
These findings are consistent with this committee's oversight 
of Defense contractors in Iraq and Afghanistan.
    Last year, I led a 6-month subcommittee investigation of a 
$2 billion Department of Defense trucking contract in 
Afghanistan. This 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. A followup hearing 
held by this subcommittee in September showed that the 
Department has made little progress in rooting out bad actors 
who undermined our anti-insurgency efforts in Afghanistan. We 
know now that many of these bad actors continue to serve as 
U.S. Government contractors.
    In response to these findings of billions of dollars of 
waste, fraud, and abuse, the Commission on Wartime Contracting 
made a number of important recommendations for Congress to 
consider. One key recommendation in their report was the 
creation of a permanent special inspector general for 
contingency operations. As the Commission stated, no entity 
exists with sufficient resources, experience, and audit and 
investigative capabilities to transcend departmental and 
functional stovepipes.
    Taking up this recommendation, I have introduced 
legislation that the chairman mentioned that would establish a 
special inspector general for overseas contingency operations. 
These efforts of the Commission, along with the special 
inspector general for Iraq reconstruction and the special 
inspector general for Afghanistan reconstruction, have shown 
the critical importance of realtime oversight in our overseas 
operations. We need to preserve the unique capabilities of 
these entities in a single, permanent inspector general with a 
flexible, deployable cadre of oversight specialists. I urge my 
colleagues to join me in this legislation.
    While that legislation is designed to address future 
contingency operations, this hearing is about oversight in Iraq 
and Afghanistan now. To that end, I would like to address 
recent findings by the Department of Defense Inspector General 
that shed light on some of the problems with one of our largest 
contractors in Afghanistan. That report reveals that the 
Supreme Group, the prime contractor on the multibillion dollar 
Defense Department's subsistence contract in Afghanistan is 
under investigation for hundreds of millions of dollar in over-
billing. I understand that there is now a criminal inquiry of 
the Supreme Group's over-billing.
    These allegations raise significant concerns about the 
Defense Logistics Agency and their ability to properly manage 
those large-scale contracts and to protect taxpayer dollars 
from waste and fraud. They also raise concerns about the use of 
no-bid cost plus contracts that are so common in contingency 
operations. As we speak, the Defense Logistics Agency is 
preparing to award a new $10 billion to $30 billion contract to 
provide food and supplies for our troops in Afghanistan for 5 
years.
    So I would like to hear from our inspectors general today 
about what more can be done to ensure that our Federal agencies 
are doing their job and properly managing the billions of 
dollars that are being spent in those two countries. I would 
also like to hear from you regarding what tools you have to 
ensure the companies who are caught over-billing the Federal 
Government for hundreds of millions of dollars do not have the 
opportunity to take even more taxpayer funds in the future.
    So I want to thank you all again for being witnesses and 
thank you, Mr. Chairman, for having this hearing.
    Mr. Chaffetz. Thank you.
    Members will have an additional 7 days to submit opening 
statements for the record.
    I would now like to recognize our panel. The Honorable 
Gordon Heddell is the Department of Defense Inspector General; 
Ambassador Geisel is the Department of State Deputy Inspector 
General; Mr. Michael Carroll is the USAID Acting Inspector 
General; the Honorable Stuart Bowen is the Special Inspector 
General for Iraq Reconstruction; and Mr. Steven Trent is the 
Acting Special Inspector General for Afghan Reconstruction.
    Pursuant to committee rules, all witnesses will be sworn in 
before they testify. Please rise and raise your right hands.
    [Witnesses sworn.]
    Mr. Chaffetz. Thank you. You may be seated.
    Let the record reflect that the witnesses answered in the 
affirmative.
    In order to allow proper time for discussion, we are going 
to ask that each member of our panel limit their verbal 
comments to 5 minutes. Your entire statement will be inserted 
into the record.
    I will now recognize the Honorable Mr. Heddell for 5 
minutes.

   STATEMENTS OF GORDON S. HEDDELL, INSPECTOR GENERAL, U.S. 
   DEPARTMENT OF DEFENSE; HAROLD W. GEISEL, DEPUTY INSPECTOR 
 GENERAL, U.S. DEPARTMENT OF STATE; MICHAEL G. CARROLL, ACTING 
 INSPECTOR GENERAL, U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT; 
 STUART W. BOWEN, INSPECTOR GENERAL, SPECIAL INSPECTOR GENERAL 
FOR IRAQ RECONSTRUCTION; AND STEVEN J. TRENT, ACTING INSPECTOR 
      GENERAL, SPECIAL INSPECTOR GENERAL FOR AFGHANISTAN 
                         RECONSTRUCTION

                 STATEMENT OF GORDON S. HEDDELL

    Mr. Heddell. Thank you, Mr. Chairman. Good morning, and 
good morning, Ranking Member Tierney and distinguished members 
of the subcommittee. Thank you for the opportunity to appear 
before you to discuss oversight efforts in Southwest Asia.
    As many of you may be aware, this will likely be my final 
testimony before Congress as the inspector general. Effective 
December 24th, I will step down as the DOD IG.
    In my first month alone at the DOD IG, I testified three 
times before Congress. Two of the three hearings dealt with 
critically important issues of oversight contingency operations 
in Southwest Asia. Noting that our Nation was engaged in two 
wars and that we had a pressing need to strengthen oversight to 
protect our war fighters and the American taxpayer, I 
immediately determined to make oversight of contingency 
operations in Southwest Asia a number one priority. As a 
result, I instituted a number of organizational changes to the 
structure and focus of DOD IG efforts and to increase our in-
theater presence, which is regularly augmented by our 
expeditionary teams.
    I believe strongly that an in-theater presence is 
absolutely essential to conducting oversight of operations and 
engaging with military and civilian leadership in theater to 
ensure that our oversight is meaningful and effective.
    In our audit division, I created the Joint and Southwest 
Asia Operations Directorate and the Afghan Security Forces Fund 
Group. Our audits in theater provide timely and relevant 
oversight, and our auditors now have extensive experience in 
conducting complex joint audits with other Federal agencies.
    In our investigations division, the Defense Criminal 
Investigative Service, DCIS, expanded its presence in Southwest 
Asia and today DCIS plays a major criminal investigative role 
in Southwest Asia by participating in key task forces that 
tackle complex fraud cases. The DCIS is already deployed 
worldwide and has the capability to immediately provide 
investigative resources to contingency operations anywhere in 
the world.
    Another division of the DOD IG, the Office of Special Plans 
and Operations [SPO], as we call it, has been a key contributor 
to providing oversight. SPO has significantly enhanced our 
capability to provide expeditionary teams to Southwest Asia to 
conduct timely evaluations and assessments, and to provide 
thorough outbriefs to field commanders enabling them to take 
immediate corrective actions.
    I also appointed a special deputy inspector general for 
Southwest Asia to coordinate and deconflict oversight efforts. 
My special deputy has worked extensively with all of the IG 
offices represented with me this morning. Today we are an 
agile, flexible, no-nonsense and aggressive oversight 
organization with the capacity to deploy rapidly anywhere in 
the world on short notice, and the DOD IG is prepared to 
respond effectively and aggressively in coordination with other 
Federal agencies and internal DOD oversight offices to address 
any future overseas contingency operation that arises.
    I would like to thank the subcommittee for the opportunity 
to discuss the work of the DOD IG, and I look forward to 
answering any questions that you may have. Thank you.
    [The prepared statement of Mr. Heddell follows:]



    Mr. Chaffetz. Thank you. And thank you again for your 
service, on your long career in the Secret Service and your 
work in the Defense Department. We appreciate your service and 
wish you nothing but the best.
    Mr. Heddell. Thank you.
    Mr. Chaffetz. We will now recognize the Honorable Mr. 
Geisel.

                 STATEMENT OF HAROLD W. GEISEL

    Mr. Geisel. Thank you, Chairman Chaffetz, Ranking Member 
Tierney, and members of the subcommittee for the opportunity to 
testify today about oversight of Department programs in Iraq 
and Afghanistan.
    Since standing up its overseas offices in 2008, the Office 
of Inspector General, OIG, has conducted 31 investigations and 
issued 27 reports related to Iraq, conducted 14 investigations 
and issued 22 reports related to Afghanistan, and issued 11 
reports of activities affecting Department program and 
transition issues in Iraq and Afghanistan. Our efforts during 
fiscal year 2011 resulted in more than $200 million in 
questioned costs and funds put to better use, $16.6 million in 
investigative recoveries, and 20 contractor suspensions.
    These results demonstrate the impact that OIG has achieved 
since establishing a presence in Baghdad and Kabul. As a result 
of congressional support, OIG has fulfilled its commitment to 
vigorously oversee the Department's transition and soon will be 
one of the few remaining oversight entities in Iraq.
    The challenges the Department faces in the transition to a 
civilian-led presence in Iraq are significant. DOD's planned 
withdrawals of its troops by the end of this month requires 
that the Department of State provide security, life support, 
transportation, and other logistical support that DOD presently 
provides in Iraq. Our Office of Inspections has issued two 
reports, a July 2009 inspection of Embassy Baghdad and an 
October 2010 compliance followup review which addresses the 
embassy's transition planning efforts.
    In response to our CFR, the Department appointed a 
Washington-based Ambassador in February 2011 to manage the Iraq 
transition process. We also issued reviews in August 2009 and 
May 2011 of the Department's efforts to transition to a 
civilian-led presence in Iraq. Both reviews found that the 
transition was taking place in an operating environment that 
remains violent and unpredictable.
    Our October 2009 report on the Department's transition 
planning efforts recommended that Embassy Baghdad develop a 
unified transition plan and assign a senior transition 
coordinator in Iraq, establish a work force plan to ensure 
timely completion of large infrastructure projects managed by 
the Embassy, determine what LOGCAP services and contract 
management personnel would be required, and verify resources 
needed to meet increased support requirements following DOD's 
departure. All of these recommendations have been closed.
    Our May 2011 report noted that Embassy Baghdad and the 
Department had established planning and management mechanisms 
to effectively transition to a civilian-led presence. It also 
mentioned that while the Department had made progress, several 
key decisions were pending, some transition planning could not 
be finalized, and progress was slipping in some areas.
    We remain concerned that some reconstruction projects were 
still experiencing delays and were not expected to be completed 
until mid-2012, and that establishing a viable diplomatic 
mission without DOD support and funding would require 
considerable resources, making it difficult to develop firm or 
detailed budget estimates.
    The Department generally agreed with and was responsive to 
the intent of the recommendations.
    Looking forward, we have 15 investigations related to Iraq 
and 9 related to Afghanistan. Our 2012 Iraq and Afghanistan 
oversight plans include 6 audits plus a proposed joint audit 
with DOD OIG of programs in Baghdad and Kabul. In Baghdad, we 
will look at the Worldwide Protective Services', WPS, contract 
for Embassy Baghdad, medical operations in Iraq, and the 
Department's oversight of the WPS task order for Kirkuk and 
Mosul. We have also proposed at DOD OIG that we undertake a 
joint audit of transition execution in Iraq, including 
implementation of the Baghdad Master Plan.
    In Kabul, we plan to audit the WPS task order for the Kabul 
Embassy Security Force, contracts to build prisons, and the WPS 
task order for Herat and Mazur-E-Sharif.
    For 2012, our Office of Inspections has planned inspections 
of the Office of the Coordinator for Counterterrorism and the 
Office to Monitor and Combat Trafficking in Persons. The Office 
of Audits is following up on its work in the region regarding 
treatment by contractors of third-country nationals and our 
Office of Investigations also is actively engaged on this 
issue.
    We will continue to provide the Department and Congress 
with a comprehensive spectrum of audits, inspections, and 
investigations of post-transition activity in Iraq and 
preparations for transition planning in operations in 
Afghanistan.
    Mr. Chairman, Mr. Tierney, and members of the subcommittee, 
thank you once again for the opportunity to appear today, and I 
am ready to answer your questions.
    [The prepared statement of Mr. Geisel follows:]



    Mr. Chaffetz. Thank you.
    We will now recognize Mr. Carroll, the Acting Inspector 
General at USAID.

                STATEMENT OF MICHAEL G. CARROLL

    Mr. Carroll. Thank you, Chairman Chaffetz, Ranking Member 
Tierney, distinguished members of the subcommittee. I 
appreciate the opportunity to appear before you today to 
describe our work generally and specifically in Iraq and 
Afghanistan. If I could, I would like to begin by explaining 
how we are structured, uniquely structured, I would think, to 
provide oversight of AID's programs around the world.
    Like the agency, the OIG is a Foreign Affairs Foreign 
Service organization, and more than two-thirds of our auditors 
and investigators are career foreign service officers 
permanently assigned to USAID OIG. So that worldwide 
availability gives us a great deal of flexibility to put people 
where they need to be when they need to be. In addition to 
that, even though we participate in the NSD 38 process, by 
statute, we are exempt from country staffing level ceilings.
    So while this has never been an issue, and I don't think it 
ever will be, we can put people where we need to put people, 
regardless of what the situation is on the ground with staffing 
ceilings in the different embassies. And, again, that gives us 
a great deal of flexibility, and over the past 8 years a couple 
of examples are opening country offices in Iraq, Afghanistan, 
and Pakistan; doubling the size of our staff in Pretoria, South 
Africa to oversee the Hilantos money for AIDS and infectious 
diseases in Sub-Saharan Africa; and then opening a satellite 
office, a smaller satellite in Port-au-Prince, Haiti to help 
the regional office in El Salvador oversee the humanitarian 
assistance and reconstruction of post-earthquake Haiti.
    So I think that regardless of whether it is a contingency 
operation or just a standard agency USAID operation, I think we 
are uniquely situated to do that work, to do the oversight 
work.
    In Iraq we started our oversight in 2003 with long-term 
TDYs, and then when the embassy got up and running and the AID 
mission got up and running, we established an office of seven 
auditors and two investigators. So we have been there pretty 
much with SIGAR right from the beginning and will continue to 
be there. As the trajectory on the Agency's programs in Iraq 
are sort of leveling off to a traditional country office 
mission operation at about $270 million for 13, we are going to 
reduce the size of the staff to two auditors, two 
investigators, move the additional people over to Egypt, where 
our regional office is, and then provide oversight of Iraq from 
Egypt and from Iraq.
    In Afghanistan, we developed a little bit differently. 
Clearly, the infrastructure wasn't available early on, so we 
were doing most of our work from the Philippines. We created a 
virtual country office in the Philippines and we were literally 
on the ground full-time in Afghanistan with auditors and 
investigators doing the work. But as the program increased in 
scope and complexity, we worked out with the embassy to put an 
office there and now we have seven auditors, U.S. direct-hire 
auditors, four Foreign Service national auditors, we have four 
American U.S. direct-hire investigators, one foreign national 
investigator, and we are probably going to put on one more 
foreign national investigator.
    So we are committed both to Iraq and to Afghanistan in 
providing audit oversight and investigative oversight of AID's 
programs in Afghanistan.
    So, with that, thank you for the opportunity to appear 
before you and I would welcome any questions you might have 
about our oversight activity and the opportunities to improve 
that going forward.
    [The prepared statement of Mr. Carroll follows:]



    Mr. Chaffetz. Thank you.
    We will now recognize the Honorable Stuart Bowen, who is 
the Special Inspector General for Iraq Reconstruction.

                  STATEMENT OF STUART W. BOWEN

    Mr. Bowen. Thank you, Chairman Chaffetz, Ranking Member 
Tierney, members of the committee for the opportunity to appear 
before you again and address our oversight work in Iraq, and 
also to take up the issue of improving oversight in contingency 
operations.
    I just returned 2 weeks ago from my 31st trip to Iraq over 
the last 8 years; met with my 10 auditors and investigators 
while I was there and we are busy still addressing significant 
issues regarding the substantial U.S. funds being expended in 
Iraq. It is true, the military is departing the end of this 
month. Our footprint is shrinking, but billions of dollars in 
taxpayer money is still being spent, and that money requires 
firm and effective oversight for the coming year and the years 
thereafter.
    On Monday we appeared before the House Committee on Foreign 
Affairs to address the largest expenditure planned for next 
year by the State Department, and that is the billion dollars 
for the Police Development Program. Real questions were raised 
about the preparation for that. Much work remains to be done to 
ensure that it can succeed.
    While I was in Iraq, I met with Ambassador Jeffrey, our 
Ambassador to Iraq, and Ambassador Sison, who is in charge of 
the Police Development Program, and they concurred with our 
findings and are taking action vigorously to implement them.
    However, I remain concerned about a couple of matters that 
occurred over the last month regarding our presence there, and 
one is a review process that the State Department has 
implemented to require us to vet the information that we 
normally get for our quarterly reports back through offices 
here in Washington, which will impede our responsiveness. You 
have come to rely on our quarterly reports for a quick truth on 
what is going on in Iraq, and we want to maintain that 
capacity. We hope that we can overcome that limitation.
    There has also been an investigation problem that I 
identify in my statement that is relative to our capacity to 
get information and carry out investigations. These raise 
continuing concerns about our capacity to execute effective 
oversight in Iraq.
    But I also want to address the Government's capacity to 
execute effective oversight in contingency operations. The 
Wartime Commission, in its final report a few months ago, 
rightly recognized that the United States can improve its 
ability to oversee contingency operations, recommending the 
creation of a special inspector general's office. In other 
words, permanizing what we have been doing, what my colleague, 
Mr. Trent, and his staff are doing in Afghanistan.
    And I concur with their recommendation because it will 
provide funds, savings of money in Iraq. That is the bottom 
line. In Iraq, Afghanistan, and all overseas contingencies 
going forward, the special inspector general for overseas 
contingencies would save taxpayer dollars. We have done that in 
Iraq, it is being done in Afghanistan; it would be done in 
future contingency operations.
    Let me take, very quickly, there are three objections to it 
that have been raised. One, it would be a layer of additional 
oversight. The opposite is true. The experience of SIGIR in 
Iraq has been that we have coalesced in focused oversight of 
the Iraq reconstruction mission and, as a result, have 
generated more effective work, more output, work that would 
have been more difficult to accomplish if there had been three, 
four, five inspector generals offices operating. Also, we 
created the Iraq Inspector General Council and, as Mr. Carroll 
pointed out, we worked very closely with AID from the 
beginning, and with State and with DOD over time, through that 
process to generate better work. It has been an effective 
catalyst to synergize oversight efforts in-country, not a 
layer.
    Second, the special inspector general for overseas 
contingencies would not sit fallow, as some have said, or 
waiting a contingency to happen. First of all, all you need to 
know is we have been in one of some form of another every year 
but two since 1980. The last 10 years we have been in the two 
largest in our history, in Afghanistan and Iraq. There is no 
doubt that the use of this office would be regular and 
necessary and, again, would generate savings of funds.
    And, finally, and this is the most important thing, would 
the expenses or the costs of this special inspector general be 
more or less than the current system that is used? And the 
answer is less. We have submitted a budget. It could operate on 
an effective, very limited amount for the time necessary until 
contingencies occurred and then would be directed by the 
Congress, at the Congress' call, to provide oversight in 
contingencies as they arise. It would be a tool for the 
Congress, a boon to the taxpayers, and save money in these 
times of $15 trillion debt.
    Thank you, Mr. Chairman.
    [The prepared statement of Mr. Bowen follows:]



    Mr. Chaffetz. Thank you, Mr. Bowen. I know we will have 
some more lively discussion about this proposal as well.
    We will now recognize Mr. Trent, who is the Acting 
Inspector General for Afghanistan reconstruction. Mr. Trent, 
you are recognized for 5 minutes.

                  STATEMENT OF STEVEN J. TRENT

    Mr. Trent. Thank you, Mr. Chairman, Ranking Member Tierney, 
and members of the committee. I am pleased to be here with my 
colleagues today to discuss ways to strength oversight of 
reconstruction in Afghanistan.
    As you know, the President has requested more than $18 
billion in the fiscal year 2012 budget to assist Afghanistan. 
If approved, this will bring total appropriations to $90 
billion, which is the largest rebuilding effort since the 
Marshall Plan.
    Congress created SIGAR in 2008 to provide oversight for 
this significant investment. Since then, our auditors and 
investigators have had a positive impact on the reconstruction 
effort. We have issued 49 audit reports and made 149 
recommendations that have led to great accountability and 
improvements in contracting and program management. Just this 
year, our auditors have identified nearly $70 million in funds 
that should be returned to the U.S. Government.
    SIGAR investigators have played an important role in both 
detecting and deterring fraud. The work has resulted in the 
recent successful prosecution of the largest bribery case to 
date from Afghanistan. This year, they produced $51 million in 
fines, penalties, forfeitures, seizures, and savings.
    However, I believe SIGAR can and must do more to strengthen 
oversight during this critical transition period in 
Afghanistan, so we are taking aggressive steps to focus our 
audit and investigative work on the most critical areas of the 
reconstruction effort. We have developed a fiscal year 2012 
audit plan that identifies five critical areas to successful 
Afghanistan reconstruction. They are private security 
contractors, Afghan governance capacity and sustainability, 
contracting, program results and evaluations, fraud detection 
and mitigation.
    We have also added inspections to provide timely 
assessments of infrastructure projects. These rapid reviews 
will verify if the work was performed correctly and achieved 
intended outcomes. Most importantly, this work can help 
determine if projects are sustainable. We are also adding a 
series of audits to examine contract expenditures. These audits 
will allow us to more accurately assess whether the U.S. 
Government has been billed properly.
    Along with our sister oversight agencies, we consistently 
coordinate to avoid duplicating each other's work. However, we 
know that we need a more comprehensive and targeted approach. 
Therefore, along with our colleagues, we are developing a 
strategic framework to guide the IG community's work in 
Afghanistan reconstruction. We intend to identify the issues 
most important to lawmakers and policymakers, and use these 
issues to drive the results of the IG community's work. SIGAR 
hosted the first meeting of this effort last week.
    Finally, SIGAR is taking a leadership role in holding 
contractors accountable in Afghanistan. We are expanding our 
investigative presence in Afghanistan to build criminal cases. 
We have 111 ongoing criminal investigations, 68 of which 
involve contract and procurement fraud. Criminal and civil 
legal proceedings, however, can take substantial periods of 
time, so SIGAR has also enhanced its suspension and debarment 
program to address the need for more timely and targeted 
actions. SIGAR is currently on track to make approximately 80 
suspension and debarment referrals by the end of this year.
    SIGAR is taking important steps to enhance oversight; 
however, the implementing agencies also have a responsibility 
to strengthen oversight of their own operations. During my 
recent trip to Afghanistan, I met with high level U.S. civilian 
and military officials to discuss what steps they are taking to 
improve contract and program management. I will continue to 
engage in these important discussions, which also help to 
better target SIGAR's work.
    Let me conclude by saying that we have listened closely to 
this committee's thoughtful questions about oversight and we 
are heeding your concerns. The Congress has provided enormous 
resources for Afghanistan reconstruction in a difficult 
budgetary environment. At SIGAR we are committed to ensuring 
that our oversight not only protects this historic investment, 
but helps U.S. implementing agencies produce better results.
    Thank you, Mr. Chairman, for giving SIGAR the opportunity 
to appear this morning.
    [The prepared statement of Mr. Trent follows:]



    Mr. Chaffetz. Thank you, and thank you all for your service 
and your commitment.
    I would now like to recognize myself for 5 minutes.
    Mr. Heddell, I am going to start with you. The Defense 
Contracting Auditing Agency I know is a little bit outside of 
your lane, but I would appreciate it if you would offer a 
perspective. The Commission on Wartime Contracting had 
indicated that there were some 56,000, 56,000 contracts behind 
in terms of auditing these contracts. Why is that? How can that 
be? How is it that DOD can be so far behind in this?
    Mr. Heddell. Mr. Chairman, my office has actually done a 
lot of work with respect to DCAA. I would just say generally, 
first off, that I think they probably are under-resourced and 
need help in that respect, but historically DCAA has been a 
very challenged organization. They do a tremendous amount of 
work for a lot of agencies, not just inside the Department of 
Defense, but outside the Department of Defense. In the last 3 
to 4 years, the DCAA has undergone some sweeping changes as a 
result of some fairly significant criticisms of their 
leadership, of their processes, and not meeting expectations.
    As a result of that, it has new leadership today with Pat 
Fitzgerald, who was the Director of Army Audit, and Pat has 
taken on a gigantic job, and with the work that my office has 
done to try to help them identify vulnerabilities in their 
management, in their processes, and how to be an effective 
organization. For the last 2 years, their focus has been, and 
this is Gordon Heddell talking, more internal than external.
    So while under ideal circumstances they would have been 
focusing outward, doing great work, doing lots of audits with 
very experienced and good leadership, they have had to focus 
inward to correct management deficiencies and vulnerabilities. 
I think that is partially a result of this backlog in audits, 
but not entirely.
    Mr. Chaffetz. My understanding, we have been participating 
a lot of hours and spending a lot of money and a lot of 
resources, as that expenditure has gone up. Help me understand 
what is happening with the actual auditors themselves, because 
you have been appropriated more money.
    Mr. Heddell. Absolutely. In fact, I have been a very 
fortunate organization. In the last 3 or 4 years, the DOD 
Office of Inspector General has been plussed up some $87 
million, Mr. Chairman. I doubt that any other IG can say that. 
So I am very fortunate. The Congress has been very supportive 
of me, and, for that matter, so has the Department of Defense.
    Mr. Chaffetz. But have you been spending that money?
    Mr. Heddell. No. The problem there is that the budget, the 
$87 million in plus-ups that I have received, have not been 
annualized. And what that means is that although I am very 
fortunate to get these plus-ups, I am not able to use that 
money to hire permanent staff. So I can hire contractors, I can 
do other things with that money, but because it is not being 
annualized by the Department, I cannot run the risk of hiring 
people and then having to RIF them the following year for fear 
that I don't have enough money in my budget to pay them. It is 
a problem.
    Mr. Chaffetz. Of that $87 million that you have gotten, how 
much did you actually spend?
    Mr. Heddell. Well, we have spent almost all of it.
    Mr. Chaffetz. But you are hiring outside contractors to do 
the work?
    Mr. Heddell. Yes, sir. We are hiring outside contractors. 
We are creatively doing work that is positive and meets the 
needs of both the Congress and the Department and the American 
people, but, for instance, in the early 2000's there were two 
things that happened that have come to haunt us today. One is 
that while we sent our military forces into Southwest Asia to 
fight two wars, there was a mistaken belief by many of the 
civilian agencies that they could fight those two wars in the 
continental United States, my own organization being one of 
those. And it wasn't until 3 or 4 years ago that we came to the 
realization you cannot do that; you must be present and you 
have to have the people in place, you have to have the 
footprint.
    The second thing that happened is that the Department of 
Defense's budget doubled to about $650 billion, and at the same 
time the contract acquisition and contract management work 
force, in fact, was reduced in size, meaning that we lacked 
thousands and thousands of needed contracting specialists that 
are not there to oversight these contracts; that are not there 
to raise their hand and say stop the assembly line, we are 
spending money that we are not watching, we are not surveiling 
it. So those are two major issues.
    Mr. Chaffetz. Well, thank you. I appreciate it. I think 
this highlights a multibillion dollar challenge and problem 
that we certainly need to address and fix because I think there 
is a definite need that is pervasive in the Congress, both the 
House and the Senate, to make sure that these types of 
functions are in place. But the way that the money is 
appropriate is obviously falling short and failing.
    I have overstayed my time. I will now recognize the ranking 
member, Mr. Tierney, from Massachusetts, for 5 minutes.
    Mr. Tierney. Thank you, Mr. Chairman.
    Mr. Heddell, I think you hit one major problem right on the 
head in the last part; I think we have seriously hollowed out a 
lot of our agencies in terms of keeping at least the personnel 
on board to oversee and to manage contracts. We find that 
repeatedly every time we have a hearing on that respect. If we 
are going to contract out, which is not always a good idea, but 
if we are going to do it, then at least we have to keep on 
board enough people to sort of manage these things well for 
everybody's benefit.
    In your report, Mr. Heddell, on the subsistence prime 
vendor contract for Afghanistan, you found that while Supreme 
Group provided the products that were required by the contract, 
the Defense Logistics Agency failed to provide sufficient 
oversight of contract cost and performance. Specifically, you 
found that the agency overpaid the vendor nearly $100 million 
in transportation costs, paid the vendor $455 million to 
airlift fresh fruits and vegetables without properly 
incorporating those requirements into the contract, and allowed 
Supreme to bill the Army over $50 million in costs for the 
wrong appropriation year.
    What recourse do you have as Inspector General when the 
agency fails to properly manage a contract and that failure 
leads to hundreds of millions of dollars in losses to the 
taxpayer?
    Mr. Heddell. Well, thank you, Congressman Tierney. 
Appreciate the question. Obviously, this is an example of just 
about how bad it can get, and clearly this happened. This 
contract was created back in 2005; it wasn't a well designed, 
well thought out contract, probably like many contracts during 
that period.
    Consequently, we spent some $3 billion on this contract 
and, as you said, we overpaid the prime vendor $98 million in 
transportation costs, we overpaid them $25.9 million in tri-
wall costs, the boxing, corrugated boxes and so on, and, as you 
indicated, $455 million in services to airlift fruit and 
vegetables from the United Arab Emirates into Afghanistan, 
without even including that in the contract. All of that is a 
result of not planning properly and designing a contract that 
was not in the best interest of the American people.
    Now, we have gone, my organization, to the Defense 
Logistics Agency and we have told them we want that money back, 
and the Defense Logistics Agency agrees with us. Beginning in 
October 2011, they began to make efforts to determine, first of 
all, what are the fair and reasonable prices that should have 
been charged. Imagine that. A contract created in 2005 and now, 
in December 2011, we are just now determining what should have 
been the reasonable and fair prices to pay.
    Okay, but they have agreed, Mr. Ranking Member, to do that 
and they are currently in face-to-face negotiations with 
Supreme, and the time line projection for a resolution on 
this--and I would never hold my breath and think we will get it 
all back--but a resolution for this is actually scheduled for 
December 9th, this week. So I am hopeful that when we talk 
again that I can say to you we have been able to recover a 
great deal of those funds.
    Mr. Tierney. Mr. Trent, you will recall that from the 
contracts that we looked at in the trucking situation in 
Afghanistan. The lack of vision or ability to look into the 
contracts, the subcontracts, and the finer detail of those were 
just never written into the contracts to begin with.
    So, Mr. Bowen, tell me, would a special inspector general 
for contingency operations help alleviate this problem of 
sending people in, getting part way down the road before you 
realize all these mistakes are happening?
    Mr. Bowen. There is no doubt about that for three reasons. 
One, there will be focus and preparation in place at the time a 
contingency begins for a special inspector general to deploy. 
Two, there will be a commitment to deployment. As my friend, 
Mr. Heddell, pointed out, there was a challenge, I think, at 
DOD, but also with the other IGs, in moving forward, in being 
there to do the oversight. One of the lessons from SIGIR is 
that you have to be there to do the work. A special inspector 
general's office would be hiring people who know that when they 
sign on, they are going to go and deploy and carry out 
oversight in the conflict zone.
    Finally, and this is a good example of how a SIGOCO could 
make a difference, cross-agency jurisdiction, something unique 
to a special IG that the institutional IGs don't have. That 
means I can dig in to problems like this and find out if it is 
DOD money being wasted or State money or AID money; however 
that money may be going away, we can get to it and get to it 
faster and, thus, save it.
    Mr. Tierney. Thank you.
    Thank you, Mr. Chairman.
    Mr. Labrador [presiding]. I will recognize myself now for 5 
minutes.
    Mr. Trent, the Obama administration has increased its 
direct assistance to the Afghan government from approximately 
$665 million in fiscal year 2009 to roughly $2 billion in 
fiscal year 2010. This program is designed to provide U.S. 
taxpayer money directly to the Karzai government for the 
purpose of carrying out reconstruction projects. Is it logical 
to assume that one of the most corrupt governments in the world 
will actually have proper stewardship of U.S. taxpayer money?
    Mr. Trent. It is a very good question, Congressman. SIGAR 
has conducted a number of audits and has a number of audits 
planned in the capacity development areas of the various 
ministries, MOD, MOI, in the coming year ARTF in the past, 
looking at, among other things, the capacity of the Afghan 
government to administer Afghan direct funds. We have a 
significant and serious challenge, as you point out, with 
corruption in the Karzai government in Afghanistan. The efforts 
with corruption in Afghanistan are almost insurmountable. 
Clearly, we need more of a concerted will by the government 
there and we need a much stronger and robust criminal justice 
system, which they simply don't have.
    So we are doing what we can to monitor those funds and we 
will continue to do that. I can't say if I am optimistic or not 
with regard to the corruption and the control of those funds.
    Mr. Labrador. Well, what should we be doing? I mean, if you 
are not confident, I am not confident either. What should we be 
doing? Because you said something about how we need a more 
robust criminal system. Well, they don't have one. They don't 
have the proper procedures; they don't have the proper 
oversight people. So what should we be doing?
    Mr. Trent. Well, I believe we are doing about all we can. I 
mean, we need to continue with our rule of law efforts there. 
We can't give up on that, notwithstanding the corruption walls 
that we have encountered with that. We have to continue to 
bring pressure wherever possible on the government itself to 
show a concerted effort in the area of corruption and prosecute 
some of their own ministers. We have to continue to conduct the 
audits and continue to work on the investigative side with the 
Afghan authorities that we can work with to pursue Afghan 
violators.
    Mr. Trent. Okay. Thank you very much.
    Mr. Bowen, right now the Police Development Program is the 
administration's largest foreign aid program for Iraq going 
forward, and there is some evidence that the Iraqis don't even 
want this program. Have you or your staff asked the Iraqi 
police forces if they need the $500 million a year program that 
the Obama administration is planning to spend on the Police 
Development Program?
    Mr. Bowen. Yes, Mr. Labrador, we have, and we reported on 
that in our last quarterly, noting that the senior official at 
the Ministry of Interior, Senior Deputy Minister Al Asady, 
said, ``he didn't see any real benefit from the Police 
Development Program.'' I addressed that with him when I was in 
Iraq a couple weeks ago and I asked him, did you need what you 
said? And his response was, well, we welcome any support that 
the American Government will provide us; however, my 
statements, as quoted in your recent quarterly, are still 
posted on my Web site.
    Mr. Labrador. So why is the administration still spending 
$500 million a year to provide this program?
    Mr. Bowen. There is a belief that security continues to be 
a challenging issue in Iraq, a well founded belief, I might 
add, given the events of this week, killings of pilgrims again 
on the way to Najaf on the eve of Ashra. The focus, though, on 
trying to address those problems has been a widely scattered, 
high level training program involving about 150 police trainers 
who, as we have seen again this week, are going to have a very 
difficult time moving about the country.
    Mr. Labrador. So what other problems have you found with 
the Police Development Program, if any?
    Mr. Bowen. Several. Mr. Labrador, we pointed out in our 
audit that one Iraqi buy-in, something the Congress requires 
from Iraq by law, that is, a contribution of 50 percent to such 
programs, has not been secured in writing or, in fact, by any 
other means. That is of great concern, especially for a 
ministry that has a budget of over $6 billion, a government 
that just approved notionally a $100 billion budget for next 
year. It is not Afghanistan; this is a country that has 
significant wealth, should be able to contribute, but has not 
been forced to do so in a program as crucial as this.
    Mr. Labrador. I know I have run out of time, but, Mr. 
Geisel, do you have some comments on this?
    Mr. Geisel. Well, of course, first of all, I am not going 
to second-guess my friend and colleague on what his people 
found and, of course, the people you need to bring up here are 
the people from the State Department to comment on what he 
found. I saw that the Department published a document, a 21-
page document that includes goals and measures of performance 
for the Police Development Program, but it is my friend's baby, 
not mine.
    Mr. Labrador. Thank you very much.
    I will give 5 minutes now to Mr. Welch from Vermont.
    Mr. Welch. Thank you very much, Mr. Labrador.
    I want to thank each and every one of you for the terrific 
work that you are doing. A lot of the situations that you are 
uncovering just reflect the impossible expectations oftentimes 
that Congress has, and if it were as easy as writing a check 
and having the police force in Iraq and Afghanistan be 
established, it would be no problem, and against, I think, our 
better judgments sometimes we spend this money and then, 
surprise, surprise, you tell us a lot of it is being wasted. 
But I really do applaud the work that you are doing.
    I am going to be introducing legislation that does trigger 
debarment proceedings for contractors that are convicted of 
violating the bribery provisions of the Foreign Corrupt 
Practices Act, and there is some debate between my office and 
the attorney general's office as to how strict that should be. 
That is a very critical tool for you. My view is that that 
debarment authority hasn't been adequately exercised in our war 
zones.
    Let me ask you, Inspector General Trent, I know that SIGIR 
does have robust suspension and debarment programs, but do you 
believe that DOD, USAID, and State are adequately and 
appropriately using the authority in Iraq and Afghanistan? And, 
if not, what are the barriers to its use and how can we work 
through them to ensure that taxpayer dollars are not getting 
ripped off?
    Mr. Trent. Well, Congressman, yes, we do have, I believe, 
an aggressive and somewhat effective suspension and debarment 
program in SIGAR, and I am somewhat aware of your pending 
legislation on the FCPA issue. With regard to my colleagues' 
use of suspension and debarments, I think suspension and 
debarments has been a tool available to contracting 
authorities, acquisition authorities, and inspector generals as 
far as their proposals for some time. In my experiences in the 
last several years in Southwest Asia, I have felt that we could 
increase that use, and when I came to SIGAR I took steps to do 
that.
    Mr. Welch. So it is an effective tool and should be used?
    Mr. Trent. Congressman, I believe it is a very effective 
tool, and I believe, in the Afghanistan case, it is a tool both 
in terms of corruption and in contract management and 
implementation.
    Mr. Welch. Okay. Let me ask you one more question because I 
don't have too much time. I just got back from Afghanistan and 
one of the people that we met from was from the attorney 
general's office and he was in the anti-corruption unit, and 
they were there training Afghan civil servants about how to 
detect corruption, and when I asked the attorney general how is 
it going, he said, well, we had to end the program. And I said, 
why is that? And he said, because when we were teaching them 
how to detect it, they were using the information to do it. So 
that is a real challenge that we face.
    But when we visited the commanders in Helmand and Kandahar, 
one of the things they were promoting was the development of 
the Kajaki Hydroelectric Dam, which cost about $475 million, 
and the benefits of it are obvious if it could be implemented; 
it would provide hydroelectric power, electricity, maybe some 
irrigation. But that is not coming out of their budget, it 
would be a supplemental expenditure. So it is not like the 
military would be taking that out of their ability to do their 
job, it would come from somewhere else. So I was a little bit 
skeptical because it is easy to promote the expenditure of 
somebody else's money.
    But, bottom line, that is a conflict zone and significant 
questions about whether this could be done, and my question to 
you is does it make sense at this point to ask the taxpayers to 
spend $475 million on a hydroelectric project that would have 
extensive transmission lines, all of which would be easily 
attackable by insurgents? Or does it make sense to put that on 
hold?
    Mr. Trent. Congressman, SIGAR has not looked specifically 
at the Kajaki Dam or conducted an audit on that. I believe my 
colleague at USAID has done some work in that area. We have 
looked at Kabul Power Plant and the energy sector with 
auditors, but specifically on Kajaki Dam we haven't, so I would 
punt that to my colleague at USAID I believe who has done some 
work in that area.
    Mr. Welch. Yes, sir. I am running on the edge of time here, 
but with the indulgence of the chairman.
    Mr. Carroll. Well, Mr. Welch, I think initially as to a 
political or administration question about the utility of going 
forward with the program, would you consider the difficult 
environment in which it would be implemented. We have done a 
couple of audits and, in fact, in talking to Ambassador Crocker 
this week, it seems to be a priority of the embassy and the 
government to move forward with that.
    It looks like, according to Ambassador Crocker, the Army 
Corps of Engineers is going to undertake a major part of the 
program and AID would also be responsible for doing some work 
at the Kajaki Dam. So primarily the problem up there has been 
security, and now it is getting very difficult to get 
contractors to even bid on the work when you consider the 
security situation up there. So overall is the power sector an 
important sector? Absolutely. But it is a very difficult 
environment to work in up there.
    Mr. Labrador. I will now give 5 minutes to Mr. Yarmuth.
    Mr. Yarmuth. Thank you, Mr. Chairman.
    I thank all of you for your testimony and appreciate the 
work you do also. We now face, because of the debt ceiling deal 
that we did a possible sequester of funds and a large amount of 
that sequester of funds beginning in 2013 would come from the 
Defense Department. Secretary Panetta has said that such a cut 
as projected under the sequester process would be devastating 
to the Defense Department and our security, and yet we listen 
to these stories and we have talked about essentially the 
inability to get a handle on these contracts in real-time.
    How are we going to know, Mr. Heddell, if the sequester is 
really going to have an impact on defense when we don't really 
have a grasp on the hundreds of millions and billions of 
dollars we are spending now?
    Mr. Heddell. Although I can't comment on the sequester, 
Congressman Yarmuth, I can tell you that in the last 3 or 4 
years I have seen significant progress in the inspector general 
community in terms of its oversight, and I have also seen 
progress with respect to the way the commanders. In fact, I 
just got back from Afghanistan myself and I have seen progress 
in terms of the approach that we are taking.
    For instance, this year one of the things that we started 
doing was assisting the MOD and the MOI, Ministers of Defense 
and Interior, with respect to core capabilities, meaning their 
ability to manage government, something we had not done before, 
so that we have a way of teaching them how to do it and then 
going back and making sure that they are accountable. So we are 
creating systems and processes. I can't assure you that that is 
going to work, but it is something we should have done before.
    The other thing, the inspector general community itself, 
which is a significant tool in overcoming so many of the 
challenges, 4 years ago, the statement that if you have seen 
one IG, you have seen one IG was really true. Today it is not 
true. Once the amendment to the Inspector General Act was 
passed a few years ago, what has happened is similar to what 
has happened in law enforcement; all of the big things now are 
done in task forces, they are done in teams. We have IGs now 
getting together to solve a common problem. You have law 
enforcement agencies working on task forces to address 
corruption.
    And, by the way, you mentioned or it was mentioned earlier 
the use of tools such as debarment. Well, that is a great tool, 
but you have to realize that what happens is when we debar a 
company in Afghanistan, what happens is they just go back and 
change their name and reapply and get a new contract. That 
happens over and over again.
    So the answer isn't simply debarment. And obviously we have 
had almost no success in prosecuting, using the prosecuting 
attorney in Afghanistan, so we have to find ways to influence 
the leadership to do the right things, and I think with the 
oversight community we have done that.
    Again, I can't comment on what the sequestering of funds 
might amount to. I know this Department is working only to 
accomplish----
    Mr. Yarmuth. I am more interested in the overall process. 
Obviously, this is broader than just Iraq and Afghanistan, but 
one of the things that has occurred to me recently is we have a 
world that is moving at 80 miles an hour and we have a 
government that is structured to run at 20 miles an hour, and 
it has taken us this long in Iraq and Afghanistan to even begin 
to get a handle on this. I mean, it seems to me we have a 
fundamental structural problem that we don't know how to keep 
up with the situations we find ourselves in.
    Mr. Heddell. We are habitually late, and I said that 
earlier in my testimony. When we had four military services 
fighting in Southwest Asia in 2001 and then in 2003, the 
civilian agencies were ``fighting that war'' back here in the 
continental United States. It took us until 2007 or 2008 to 
realize you cannot successfully fight a war unless everyone is 
involved, civilian agencies, and that we are ahead. It has 
taken us now 3 or 4 years to get there, but I think, sir, I 
think we are getting much closer to getting to where we need to 
be.
    Mr. Yarmuth. Thank you. I don't have an answer to the 
problem. Thank you very much.
    Thanks, Mr. Chairman.
    Mr. Labrador. Thank you.
    I am going to give myself 5 minutes and I am going to 
follow up actually on those questions. One of the things that 
is most frustrating to me as a freshman here in Congress is 
that there are some things that both sides agree on that we 
need to be working on and, yet, we are not doing them. I look 
at the Oversight Committee. I don't think there is a lot of 
difference. There might be some small differences between the 
two sides, but it seems like we can identify things like the 
$500 billion that we are going to spend in Iraq police force 
that they don't even want. We should be finding things in 
common that we could be saving on.
    If we could put a transparency here on President Obama. And 
I am not saying this, I am not using this to embarrass anybody, 
but President Obama has said on his Web site that he is 
committed to making his administration the most open and 
transparent in history. He wants a window for all Americans 
into the business of the Government, and that is something that 
I want. I actually agree with him on this issue.
    But yet this panel is representing the IG offices 
principally responsible for overseeing taxpayer money in Iraq 
and Afghanistan, and as of January 4th of next year four of the 
five offices will not have an IG. I am concerned about that.
    Now, I want everybody to comment. Do you know whether the 
President has nominated anyone to fill these vacancies? If so, 
who has been nominated? Have you made any recommendations and 
do you think the absence of permanent IGs will actually harm 
our efforts in oversight? And anyone can take this question.
    Mr. Heddell. I certainly would like to comment. Number one, 
I don't know the names, Congressman Labrador, of anyone that 
might have been nominated or who is being considered to be 
nominated. Number two, I can tell you that the nomination and 
confirmation process that we have is cumbersome and slow, and 
it has an adverse impact on the leadership of these 
organizations.
    Number three, when I took over as the Acting Inspector 
General in July 2008, the DOD IG at the very top had been 
vacant for so many years, over the past 10, 12 years, you can't 
imagine. So to run an organization using an Acting Inspector 
General as the leader is foolhardy. You can do it for a few 
months, but you cannot succeed over years and decades, and that 
is what has happened.
    Mr. Labrador. Does anybody know why that has happened? Is 
there any reason why? It seems like both sides would agree that 
we need a robust IG in all of these agencies. Does anybody have 
any comments on that? Mr. Carroll.
    Mr. Carroll. I can't comment on what the White House is 
doing, but I just want to assure you, on behalf of the USAID 
OIG, that one of the great things about working for Don 
Gambatista was it was truly a partnership between him and I. So 
as I moved into the acting role, other than the fact that it is 
a bit of a workload issue for me, the work goes on and the 
leadership philosophy continues. So I just want to assure the 
subcommittee that there will be no degradation in our 
effectiveness or what our work is going to be for as long as it 
takes for the President to make a decision on the AID job.
    Mr. Labrador. Okay. Now, I know that Mr. Bowen has been a 
staunch advocate of the SIGOCO. Is that something that the rest 
of the panel agrees is necessary? Do you think it is not 
necessary? If you don't think it is necessary, why? Mr. Geisel.
    Mr. Geisel. Well, I didn't volunteer, but I will still be 
happy to tell you what I think.
    [Laughter.]
    Mr. Labrador. You looked so willing to answer this 
question.
    Mr. Geisel. Well, I think in his testimony, the written 
testimony especially, my colleague made some very good points, 
and one of the key points is that the concept of SIGOCO and, 
for that matter, his own office, has had a wonderful advantage, 
and that is that they have hiring authorities and they had 
generous funding that the statutory IGs didn't have. SIGOCO is 
one way to approach it. Another way to approach that issue is 
to give us, the statutory IGs, those same authorities and 
robust funding.
    Now, I can't complain about funding because, since I came 
to the Department in 2008, Congress has plussed us up 
marvelously. But those hiring authorities, it would make a real 
difference. And I agree with what he said, those authorities 
are crucial to doing the kind of job that you would like us to 
do.
    Mr. Labrador. What concerns me about the idea is that it is 
something that we do here in Washington all the time, something 
isn't working and what we end up doing is creating a whole new 
agency or whole new department, instead of giving the authority 
to the people that are already in charge of doing it, giving 
them the responsibility. It seems like we do this in all of our 
agencies and then what we create is just another layer of 
administration and responsibility.
    So I just wish we could find a way to actually use the 
existing people that we have right now, the existing 
authorities, instead of trying to create new agencies. But I do 
understand his concern and I think we all share the concern 
that we should be saving taxpayer money for the American 
people. There are ways that we can agree to do it and we just 
need to get it done.
    Anyway, I will now recognize the ranking member, Mr. 
Tierney.
    Mr. Tierney. Timing is perfect on that.
    Let's explore this a little. I think it is a healthy debate 
and I appreciate everybody's position on that. The SIGOCO 
concept, the Special Inspector General for Contingency 
Operations would not be duplicative if it is carried out in the 
way that the legislation is drafted and the way it is intended. 
Currently, there is nobody responsible for contingency 
operations unless they are specially appointed. They are 
appointed on a case-by-case situation as and when it arises and 
the Congress decides to implement, and all of the existing 
inspectors generals have a handful doing what they are doing 
within their respective agencies.
    If you are Mr. Heddell, he has never had a moment when he 
hasn't had enough to do. The same goes for Mr. Geisel; same 
goes for Mr. Trent, Mr. Carroll. Their hands are full doing 
things within the area of their lane on that, and I suspect 
they could be busy for as long as they wanted to keep the 
position.
    So, Mr. Bowen, let's allow you to do some testifying here 
on that. The SIGOCO concept would be different in what ways? 
Would be non-duplicative in what ways? And what is the problem 
to get over Mr. Labrador's problem? You mentioned in your first 
testimony--I don't think Mr. Labrador was here, so let's 
reiterate it because I think it is healthy to know this, I 
think it is instructive.
    Mr. Bowen. Yes, Mr. Tierney. First and foremost, SIGOCO 
would be cross-jurisdictional. As hard as the Congress might 
try, as much as my friends and fellow IGs would like, they have 
to stay within their stovepipe to do their oversight, which 
means each of them have to be present, as my friend Gordon 
Heddell noted, in-country, carrying out oversight.
    But frequently, as we have learned in Iraq, as we see in 
Afghanistan, programs merge money, and when they merge money 
you are going to ultimately have different IGs attacking it or 
perhaps no one addressing it because of that merger. SIGOCO 
would allow that, that cross-jurisdictional power.
    Second, it would be the primary mission of SIGOCO to carry 
out this oversight. We know that had SIGOCO existed in 2003, we 
would have averted the waste of billions of dollars. We know 
that had SIGAR existed in 2002 we would have averted the waste 
of billions of dollars because of the aggressive presence of 
investigation and audit on the ground that would have been 
there.
    Third, you would have a staff that, when they sign up, they 
sign up to go to a conflict zone. That is not something that my 
friends and colleagues can require of their staff now. They 
can't say, hey, you are going to be going to a war zone to do 
oversight. And that was a problem, frankly, in 2005, 2006, 
2007, getting people to volunteer to go to Iraq, which was a 
very dangerous place, still is; Afghanistan is today.
    And, finally, as I said in my testimony, this would save 
money. That is the watchword for this era. This is the 
Oversight and Government Reform Committee. The latter rubric 
should be applied when it can be applied in a money saving way. 
SIGOCO would be one of those ways.
    Mr. Tierney. Thank you.
    I just remind my colleague that all of these different 
agencies, inspectors general for their respective agencies and 
departments, are busy all the time. So when you have a 
contingency operation, all of a sudden, now you have to somehow 
ramp up and try to do all the things you are doing that are 
consuming all of your time and go over to this other area. So 
rather than being duplicative, you are actually focusing 
another inspector general on a much needed area to do that work 
and to be constantly available in order to achieve it and to 
get it done. And I think that is an instructive part of that.
    There are other issues that you raised, but I think Mr. 
Bowen has sort of hit them on the head on that, so if can move 
from that a little bit on to the sustainability of projects 
that my colleagues raised earlier.
    The whole Wartime Contracting Commission, which, 
incidentally, we had to do legislation on to get over it 
because of the issues in contingency contracting, we had to get 
people in there and start looking at why things weren't being 
dredged out in the very beginning, their final chapter sums up 
the whole issue on project sustainability by saying that the 
Commission sees no indication that Defense, State, and USAID 
are making adequate plans to ensure that host nations will be 
able to operate and maintain U.S. funded projects on their own, 
nor are they taking sustainability risks into account when 
devising new projects or programs.
    Just for the panel, do we find that still to be the case or 
are there things being done to have them include sustainability 
risks in their projects as they move forward, particularly in 
Iraq as we move out of that area, but in Afghanistan and 
elsewhere as well? Whoever might want to volunteer on that.
    Mr. Carroll. As far as oversight of that question, in every 
one of our performance audits in Iraq and Afghanistan we have 
an audit objective for sustainability, and, to be honest, what 
we have found to date is that it is sort of a mixed bag.
    And I wouldn't say it is a very successful picture 
historically or even moving forward, but I think, 
realistically, to answer the question, yes, the agency is 
building in sustainability in the design of their projects, but 
you are dealing with the Afghan government, particularly going 
forward here, and that is going to be problematic, and we have 
been finding problems with sustainability in AID's programs in 
Afghanistan.
    Mr. Tierney. Would you consider for 30 seconds? Thank you.
    So the problem that we have with the Kabul power plant, 
where they decided to spend some $300 million of our taxpayer 
money and then decided, after it was all done, that they could 
get electricity cheaper from Uzbekistan on that basis, do we 
know why that happened or what we missed on that, and have we 
corrected that?
    Mr. Carroll. Well, I am not sure exactly why the embassy 
and AID decided to build that project and build it the way they 
did with diesel fuel that could or could not be shipped in, and 
then decided to move in a different direction. The way it has 
been described now is that the Kabul power plant is a fallback 
and a surge capacity to the larger infrastructure that they are 
putting forward. So I would say that from a sustainability 
point of view that maybe wasn't well thought out, but I think 
they have learned since that time.
    Mr. Tierney. Well, I think that is instructive. Do you know 
what the era was and have you done something to put in place 
that it won't be happening again? I think that is my charge to 
you, if you would on that. I guess you are not prepared to 
answer it today, but you can go back and find out just what 
happened. And this business about now it is a backup plan or 
something like that, that is just an excuse. You and I both 
know that and I think everybody on the panel knows that. They 
messed up, they got something that they didn't bargain for, and 
now they are going to try to find some reason for its existence 
on that. But we need to ask you to go back and find out what 
went wrong and put in place a plan to make sure it doesn't 
happen again and then, if you would, report to us what you have 
done. I would appreciate that.
    Mr. Carroll. I will do that, Congressman.
    Mr. Tierney. Thank you.
    Mr. Labrador. Thank you.
    I will now recognize Mr. Welch.
    Mr. Welch. Thank you very much.
    Two of the recurring questions about the expenditure of 
these moneys is whether, A, we have a reliable partner and, B, 
whether the security on the ground is adequate so that the work 
can actually be done, and both of those are huge impediments. 
And it comes into conflict to some extent with policy 
objectives where, let's say in Afghanistan, there is a desire 
to build a civil society.
    Mr. Carroll, I will ask you because your department bears 
so much of the responsibility for the implementation of some of 
these projects. It is a predicate question that should be asked 
and answered by some appropriate authority, whether a project 
has a reliable partner such that there can be a reasonable 
degree of confidence that it will be implemented.
    And I am thinking very much about the Iraqi police training 
that Mr. Labrador was asking about. Or is there a sufficient 
security situation so that the work can be done? That might be 
relevant to something like the dam project. And if you lack 
either or both of those, does it make any sense under any 
circumstances to do a Hail Mary pass on a major expenditure, 
hoping that it will happen just because we would like it to 
happen?
    Mr. Carroll. Well, AID, you are right, their meat and 
potatoes is civil society, is democracy and governments, it is 
health, it is education, it is all those programs. They do do 
reconstruction and they have done reconstruction in Iraq and 
they have done it to an extent in Afghanistan. And I think it 
wouldn't be news if I were to say that it is difficult to do 
development in the middle of a war, in the middle of a 
hostility, so it has been problematic, particularly on the 
reconstruction side, the infrastructure side. You know, Mr. 
Bowen and Mr. Trent have found that throughout Iraq and 
Afghanistan.
    You talk about reliable partners. You ask about reliable 
partners. AID historically has implemented their programs 
through non-governmental organizations, primarily, and a lot of 
those are U.S.-based, some international multinationals like 
the United Nation agencies and that sort of thing. So they are 
reliable partners.
    AID is now moving in a direction toward funding more 
development assistance through Afghan ministries and they have 
a process in place to do some capacity assessment of the 
systems in place and the ministries' ability to do the work, 
and as they convince themselves or as the data presents itself, 
they move forward or not on their program.
    So I would say that for the traditional AID programs, civil 
society, democracy and governments, health, education, that 
sort of thing, I think there re liable partners. I think there 
is a willingness on the behalf of the Afghan people to make 
these things happen.
    Mr. Welch. Let me interrupt you right there. See, that is a 
meaningless statement, the Afghan people. Who are they? Do you 
know what I mean? In a general sense the Afghan people are as 
desirous to have good things happen as we are, but there is not 
a structure, there is not a political implementation program, 
there is not sufficient security. I have met contractors who 
are confined to basically the embassy compound. And how do you 
manage a program? It would be like Mr. Bowen trying to have 
auditing all done about Iraq and Afghanistan, Mr. Trent in 
Afghanistan, from Capitol Hill. It just doesn't work.
    This is enormous frustration for you, but I think there is 
an illusion that Congress is the one that is primarily 
responsible because we have the money go out under 
circumstances where there is no practical possibility that it 
will be well used, and then we will get angry at you when you 
report to us that, hey, a lot of money went missing. So there 
is a predicate question here. We probably should be asking it, 
but I am wondering whether some organization like AID might 
have to certify that for this project we have a reliable 
governmental partner or we have sufficient security that it can 
be done.
    Mr. Carroll. They do that.
    Mr. Welch. All right, I yield back. Thank you very much.
    Mr. Labrador. Thank you.
    I want to thank the panelists for being here, for taking 
your time, for the work you are doing. Have a great day. Thank 
you.
    [Whereupon, at 11:16 a.m., the subcommittee was adjourned.]
    [Additional information submitted for the hearing record 
follows:]




                                 
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