[Senate Hearing 112-659]
[From the U.S. Government Publishing Office]



                                                        S. Hrg. 112-659

 THE COMPREHENSIVE CONTINGENCY CONTRACTING REFORM ACT OF 2012 (S. 2139)

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

                                HEARING

                               before the

              AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT

                                 of the

                              COMMITTEE ON
                         HOMELAND SECURITY AND
                          GOVERNMENTAL AFFAIRS
                          UNITED STATES SENATE


                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                             APRIL 17, 2012

                               __________

                   Available via http://www.fdsys.gov

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




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        COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

               JOSEPH I. LIEBERMAN, Connecticut, Chairman
CARL LEVIN, Michigan                 SUSAN M. COLLINS, Maine
DANIEL K. AKAKA, Hawaii              TOM COBURN, Oklahoma
THOMAS R. CARPER, Delaware           SCOTT P. BROWN, Massachusetts
MARK L. PRYOR, Arkansas              JOHN McCAIN, Arizona
MARY L. LANDRIEU, Louisiana          RON JOHNSON, Wisconsin
CLAIRE McCASKILL, Missouri           ROB PORTMAN, Ohio
JON TESTER, Montana                  RAND PAUL, Kentucky
MARK BEGICH, Alaska                  JERRY MORAN, Kansas

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


              AD HOC SUBCOMMITTEE ON CONTRACTING OVERSIGHT

                       CLAIRE McCASKILL, Chairman
THOMAS R. CARPER, Delaware           ROB PORTMAN, Ohio
MARK L. PRYOR, Arkansas              SUSAN M. COLLINS, Maine
JON TESTER, Montana                  JOHN McCAIN, Arizona
MARK BEGICH, Alaska                  JERRY MORAN, Kansas
                     Margaret Daum, Staff Director
                Brian Callanan, Minority Staff Director
                       Kelsey Stroud, Chief Clerk















                            C O N T E N T S

                                 ------                                
Opening statement:
                                                                   Page
    Senator McCaskill............................................     3
    Senator Portman..............................................     5

                               WITNESSES
                        Tuesday, April 17, 2012

Hon. Jim Webb, a United States Senator from the State of Virginia     2
Patrick F. Kennedy, Under Secretary for Management, U.S. 
  Department of State............................................     8
Richard T. Ginman, Director, Defense Procurement and Acquisition 
  Policy, U.S. Department of Defense.............................    10
Angelique M. Crumbly, Acting Assistant to the Administrator, 
  Bureau for Management, U.S. Agency for International 
  Development....................................................    11
Lynne M. Halbrooks, Acting Inspector General, U.S. Department of 
  Defense........................................................    28
Harold W. Geisel, Deputy Inspector General, U.S. Department of 
  State..........................................................    30
Michael Carroll, Acting Inspector General, U.S. Agency for 
  International Development......................................    31

                     Alphabetical List of Witnesses

Carroll, Michael:
    Testimony....................................................    31
    Prepared statement...........................................   114
Crumbly, Angelique M.:
    Testimony....................................................    11
    Prepared statement...........................................    81
Geisel, Harold W.:
    Testimony....................................................    30
    Prepared statement...........................................   108
Ginman, Richard T:
    Testimony....................................................    10
    Prepared statement...........................................    56
Halbrooks, Lynne M.:
    Testimony....................................................    28
    Prepared statement...........................................    98
Kennedy, Patrick F.:
    Testimony....................................................     8
    Prepared statement...........................................    44
Webb, Hon. Jim:
    Testimony....................................................     2
    Prepared statement...........................................    39

                                APPENDIX

Background Memo..................................................   130
Statements submitted for the Record:
    Center for American Progress Action Fund.....................   149
    Katherine V. Schinasi, Former Commissioner, The Commission on 
      Wartime Contracting in Iraq and Afghanistan................   152
    Charles Tiefer, Professor of Governmental Contracting at the 
      University of Baltimore Law School.........................   157

 
 THE COMPREHENSIVE CONTINGENCY CONTRACTING REFORM ACT OF 2012 (S. 2139)

                              ----------                              


                        TUESDAY, APRIL 17, 2012

                                   U.S. Senate,    
          Ad Hoc Subcommittee on Contracting Oversight,    
                    of the Committee on Homeland Security  
                                  and Governmental Affairs,
                                                    Washington, DC.
    The Subcommittee met, pursuant to notice, at 10:32 a.m., in 
Room 342, Dirksen Senate Office Building, Hon. Claire 
McCaskill, Chairman of the Subcommittee, presiding.
    Present: Senators McCaskill and Portman.
    Senator McCaskill. I want to welcome everyone to this 
hearing this morning.
    I know that Senator Portman will be arriving shortly. I did 
not want to keep our first witness waiting.
    My colleague, Senator Jim Webb, is here to give testimony 
about our subject today. As a brief introductory remark, I am 
not going to go into who he is and why he is here because I 
think most people know who he is. But I do want to say just 
about why he is here.
    When I came to the Senate in 2007, Senator Webb and I 
quickly found that we had a place we wanted to work on, and 
that was contracting and contingencies. His background in the 
military was a great asset to us as we put together the War 
Contracting Commission legislation, and he and I worked on it 
together and succeeded back in the day. Before Senator Warner 
had retired, Senator Warner, as the Ranking Member of the Armed 
Services Committee was a tough sell. I mean, people need to 
remember the context that this legislation was brought forward 
in. It was when President Bush was still President, and I think 
there was a fear that this Contracting Commission was a 
political exercise. And, of course, it was far from that. It 
was something that was really needed to take a hard look at 
what had gone wrong with contracting and contingencies and to 
build a body of work that could change the culture around 
contracting and contingencies for the long haul.
    I want to thank him for his friendship and his hard work on 
this issue and look forward to his comments today as we look at 
legislation trying to implement the recommendations of the 
Commission that we worked hard to create together.
    Senator Webb.

TESTIMONY OF HON. JIM WEBB,\1\ A UNITED STATES SENATOR FROM THE 
                       STATE OF VIRGINIA

    Senator Webb. Thank you very much, Madam Chairman and 
Ranking Member Portman and other Members of the Subcommittee. I 
know you have two full panels. I will be brief here. I would 
ask that the full written testimony that I have would be 
included at the end of my brief oral remarks.
---------------------------------------------------------------------------
    \1\ The prepared statement of Senator Webb appears in the appendix 
on page 39.
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    Senator McCaskill. Without objection.
    Senator Webb. Thank you. I am here to basically express the 
strongest support possible for the movement of this legislation 
that you, Madam Chairman, and I have worked on in different 
capacities for now, I guess, 5 years. At a time when the Senate 
is continually bogged down in symbolic votes rather than issues 
of governance, I am very proud of what we have been able to do 
on this issue since 2007. I would say it has been one of the 
great pleasures of being in the Senate, to have been able to 
get this legislation into place, the first round of it with the 
Wartime Contracting Commission and hopefully with this 
recommendation that will be implementing some of the findings 
of that Wartime Contracting Commission.
    As the Chairman mentioned, she brought a strong background 
in auditing to the Senate. I spent 5 years in the Pentagon in 
different capacities, including 4 years on the Defense 
Resources Board. One of my eye openers coming to the Senate was 
sitting on the Foreign Relations Committee in 2007 when we had 
a hearing on Iraq reconstruction programs with the State 
Department and they mentioned in their testimony that they had 
$32 billion in Iraq reconstruction programs that had been 
appropriated and were in some form of being put into play. And 
I asked, in a way that I would normally have asked if I were in 
the Pentagon years before, to see the contracts and the amount 
and who the contractor was and what the state of implementation 
was on these different contracts and they could not tell us. We 
worked with them for months and they could not tell us where 
$32 billion had been spent in a specific way where we could 
evaluate the results.
    That was one of the motivations that caused me to start 
working as avidly as I did, along with Chairman McCaskill, to 
see if we could not have the management structures in place, 
catch up with the realities of what had happened in the post-9/
11 environment of military commitments overseas. This is a 
particular problem in the State Department and the United 
States Agency for International Development (USAID). I do not 
think they had anticipated these sorts of programs before the 
situation that existed once September 11, 2001 occurred.
    We were very lucky, as Chairman McCaskill mentioned, to 
have the support of Senator John Warner when we were advancing 
this legislation through the Senate. He was my senior Senator, 
was a Republican. I had worked with him when I was a young 
Marine, my last year in the Marine Corps, when he was Secretary 
of the Navy. I had followed him as Secretary of the Navy. And 
he, by stepping forward and demonstrating that this was an 
issue with wide concern and from people like himself who had 
spent time in management positions in the Pentagon, really 
helped us push this over the threshold and into reality.
    We had a bipartisan Wartime Contracting Commission. I think 
they did a really fine job. I personally will say I am very 
disappointed that a lot of the findings have been sealed up for 
20 years. But the overall recommendations, I think, are 
something that we will be able to work on in terms of 
implementing legislation that get into management, policies, 
and how we bring rigor to the process.
    And I would like to emphasize here, as I did in our press 
conference earlier, that I believe, and I want to acknowledge 
that the great majority of the contractors who participated in 
this process since September 11, 2001, are not only reputable, 
but they have really done a very fine job in an environment 
that a lot of people had not anticipated. So this is not a 
piece of legislation nor was it a major goal of this process 
simply to bash wartime contractors. We cannot get along without 
them. This has been an effort to put the right kind of 
structure into place so that we can have efficiently run, well 
managed, and effective wartime contracting and operational 
contingencies now and in the future.
    So I was very pleased to have worked in detail on this 
legislation as it was developed. It has my strongest support 
and I thank Senator McCaskill for her untiring efforts here in 
order to bring good governance into this body.
    Thank you, Madam Chairman.

             OPENING STATEMENT OF SENATOR MCCASKILL

    Senator McCaskill. Thank you, Senator Webb.
    I will make a brief opening statement and then turn it over 
to my colleague, Senator Portman, for a brief opening 
statement, and then we will ask our first panel of witnesses to 
come to the table.
    On August 31, 2011, the Commission on Wartime Contracting 
(CWC) in Iraq and Afghanistan presented its final report to 
Congress. On February 29, 2012, Senator Webb and I introduced 
S. 2139, the Comprehensive Contingency Contracting Reform Act 
of 2012. This legislation is based on the findings and 
recommendations of the Commission.
    This morning, I have the honor of hearing the distinguished 
representatives of the Defense Department (DOD), State 
Department, USAID, and respective agencies' Inspectors General 
(IG) present their views on this important legislation. Based 
on their contributions and what we have heard from many of the 
stakeholders with whom I and the Subcommittee staff have met 
with over the last few months, and on the input of other 
Senators, we will revise the legislation and introduce a new 
version for consideration by the Homeland Security and 
Government Affairs Committee (HSGAC). This legislation will 
increase accountability for wartime contracting and transform 
the way the Federal Government awards, manages, and oversees 
wartime contracts. It will help ensure that the waste, fraud, 
abuse, and mismanagement that we saw in Iraq and Afghanistan 
will never happen again.
    I want to make a few points about today's hearing. First, 
we are here today to seek input from the Executive Branch 
agencies and Inspectors General because we want to get this 
right. The Subcommittee has previously met with contractors and 
other stakeholders regarding this legislation. However, major 
portions of this bill deal with accountability and 
responsibility for the government, and that is by design. 
Therefore, I encourage you to share any suggestions you have to 
improve this legislation.
    Second, this legislation builds on existing structures and 
rules to solve the problems identified by the Commission. S. 
2139 requires each agency responsible for wartime contracting 
to establish clear lines of authority and responsibility for 
all aspects of contingency contracting. It requires the 
Department of Defense, the State Department, and USAID to 
improve their training and planning for contract support and 
contingencies. The legislation reduces reliance on 
noncompetitive contracting practices and restricts 
subcontracting practices that have resulted in a lack of 
transparency and visibility.
    The legislation requires agencies to conduct risk analyses 
before relying on private security contractors (PSC) and to 
terminate unsustainable reconstruction and development 
projects. It also strengthens tools to combat human 
trafficking. This approach is pragmatic and will reduce the 
potential for waste, fraud, and abuse in future wars.
    Many of the witnesses today have already testified numerous 
times before this Subcommittee about lessons learned in Iraq 
and Afghanistan. I commend the Departments, particularly the 
Defense Department, for recognizing that they have shortcomings 
in implementing changes. However, the Commission concluded in 
its final report that, quote, ``meaningful progress will be 
limited as long as agencies resist major reforms that would 
elevate the importance of contracting.'' I want to put you all 
on notice today that such resistance is no longer acceptable.
    Today and in the weeks and months to come, we have an 
opportunity to make a real change in the way government spends 
money during wartime. It is not too late to prevent further 
waste in Afghanistan, and it is not too late to prevent the 
problems in Iraq and Afghanistan from occurring in the next 
war, whenever and wherever that may be.
    Everyone knows that contracting in a wartime environment is 
not going to go away. It will be here with our Nation in the 
future. It is imperative that we no longer make excuses, 
rationalizations, or hide behind existing structures to defend 
the gross inadequacies that our government has displayed during 
contracting processes in Iraq and Afghanistan. We must fix 
these problems now while the memory is fresh, while the memory 
of these failures are fresh, and before the harsh lessons of 
Iraq and Afghanistan are forgotten.
    I remember on my first trip to Iraq on contracting 
oversight, I remember being accompanied by a general, a high-
ranking general in the Army, and I remember the conversation 
where it was said, ``You know, we did a lessons learned after 
Bosnia. I just do not know what happened to it.'' I want to 
make sure that those same sentences are not uttered during the 
next contingency as we face contracting in the most difficult 
environment that contracting occurs, and that is when our men 
and women are putting their lives on the line for our security 
and our freedom.
    I thank the witnesses for being here today and I look 
forward to their testimony.
    Senator Portman.

              OPENING STATEMENT OF SENATOR PORTMAN

    Senator Portman. Thank you, Madam Chair. I appreciate your 
comments and I am pleased that our witnesses are experts who 
can give us some input, as you say, and it was good to hear 
from our colleague from Virginia, Senator Webb.
    It is an incredibly important hearing and it is an 
opportunity to examine the lessons we have learned from wartime 
contracting, from our experience over the last decade, 10 years 
in Afghanistan, 9 years in Iraq. And it is a chance to hear 
from witnesses on some of these reforms that are necessary to 
improve the stewardship of our taxpayer dollars in some very 
challenging environments.
    This past August, as was noted, the Bipartisan Wartime 
Contracting Commission issued their final report on its 
investigation of our government's use of contractors in Iraq 
and Afghanistan. In my view, the Commission came to a very 
troubling bottom-line conclusion. It was estimated by the 
Commission that out of the $206 billion we spent on service 
contracts in Iraq and Afghanistan, which includes everything 
from building military installations to training election 
workers, between $31 billion and $60 billion was lost to what 
they termed to be avoidable waste. So out of $206 billion spent 
on service contracts, between $31 and $60 billion lost to 
avoidable waste.
    It is a difficult environment. Winston Churchill once 
famously said, ``The only thing certain in war is that it is 
full of disappointments and also full of mistakes,'' and it is 
true. It is a tough environment. But when it comes to wartime 
contracting, we certainly have a responsibility to look back 
and understand what reforms are necessary to avoid making more 
costly mistakes.
    And this is not just a retrospective exercise, of course, 
because contractors are still very much engaged, particularly 
in Afghanistan, where the United States still has, as we count 
them, over 100,000 private contractors. Even in Iraq today, 
after the last U.S. troops returned home in December, the 
Departments of Defense and State maintain roughly 30,000 
private contractors. At this time of serious fiscal challenges 
and trillion dollar deficits, we must do all we can to avoid 
waste and to get the best possible value out of the taxpayers' 
dollar.
    The Wartime Contracting Commission along with a long series 
of Inspector General reports identified some of the issues we 
should be focused on. The challenges range from improving the 
use of reliable price information, which we will talk about 
today, to ensure that the government is getting a fair deal, to 
tightening restrictions on the use of non-competitive 
contracts, to strengthening oversight of subcontractors, who 
are too often insulated from direct accountability.
    In addition, looking ahead, one of my principal concerns is 
that of sustainability, and by that I mean how do we ensure 
that our work, reconstruction, development work, and so on, 
will last and be carried on by the Afghan and Iraqi government 
and the people of those countries. The issue is critically 
important because it is about making sure that our good 
investments do not go bad. That means we have to consider not 
only, for example, how many additional schools and health 
clinics we can construct, but who is going to sustain them. Do 
they have the medical professionals and the teachers to be able 
to sustain them and keep them going? On this issue, the Wartime 
Contracting Commission was not very optimistic, and I will look 
forward to hearing from our panel on what steps are needed to 
reduce this risk of future waste or, again, lack of 
sustainability.
    Of course, beyond ensuring that wartime contracting is 
fiscally sound, we have also got to ensure it is performed 
consistently with our deeply held values as Americans. On that 
score, it was concerning to see the Commission's report on what 
they called the tragic evidence of the recurrent problem of 
trafficking in persons (TIP) by labor brokers or subcontractors 
of contingency contractors. The report said that existing 
prohibitions on such trafficking have failed to suppress it. 
Labor brokers or subcontractors have an incentive to lure 
third-party nationals into coming to work for U.S. contractors, 
only to be mistreated or exploited.
    One of the Commission members, Dov Zakheim, a former Reagan 
and Bush Administration defense official, testified before the 
Armed Services Committee here in the Senate that these findings 
were, in his view, just the tip of the iceberg. And both DOD 
and State Department IGs have told us that we lack sufficient 
monitoring to have clear visibility into labor practices by 
contractors and subcontractors.
    As many of you know, that is why we introduced legislation 
recently. Senator Blumenthal and I are the original sponsors, 
but it is bipartisan legislation. We have been joined by 
Senator McCaskill, the Chair here this morning, as well as 
Senator Rubio, Senator Lieberman, Senator Collins, Senator 
Franken, and it is intended to strengthen the existing 
protections against human trafficking directly in connection 
with overseas government contracts.
    Broadly defined, human contracting means forced labor and 
other coercive labor practices that contribute to trafficking. 
It includes recruiting workers to leave their home countries 
based on fraudulent promises, confiscating passports to limit 
the ability of workers to return home, charging workers 
recruitment fees that consume more than a month's salary, and 
many other forms of abuse that were mentioned in the 
Commission's report.
    We should be clear that the overwhelming majority of U.S. 
contractors and subcontractors are law abiding and reputable 
and they are doing a good job in a difficult situation. They 
have made it a priority to ensure that abusive labor practices 
play no role in this challenging work they are doing in Iraq 
and Afghanistan.
    Our proposal is designed to ensure that the best practices 
adopted by those contractors become standard practice for all 
contractors, and they include requiring contractors to have a 
compliance plan in place and reporting and monitoring 
requirements to ensure that credible evidence immediately 
triggers an investigation and giving contracting officers more 
tools to hold violators accountable. I am hopeful we can work 
to make these commonsense and bipartisan reforms the law of the 
land.
    We have invested heavily to achieve the goal of building up 
civil institutions, functioning economies, and stable 
constitutional governments in both Afghanistan and Iraq, and 
our military men and women have done everything they have been 
asked to do and more in Iraq and Afghanistan. They perform with 
extraordinary skill and bravery under the toughest of 
circumstances. Getting this overseas contracting right, 
especially in the area of reconstruction and development, is 
critical to consolidating the hard-won gains that they have 
achieved.
    Madam Chair, again, thanks for holding this hearing. I look 
forward to hearing from our witnesses today.
    Senator McCaskill. Thank you, Senator Portman.
    If our first panel of witnesses would come forward, and 
while you are doing that, I will introduce you.
    Richard Ginman assumed the position of Director of Defense 
Procurement and Acquisition Policy (DPAP) in June 2011. Mr. 
Ginman retired as a Rear Admiral from the U.S. Navy after 30 
years of service in 2000. Prior to assuming his current 
position, he served as Principal Deputy to the Director from 
2008 until 2010, and Deputy Director, Contingency Contracting 
and Acquisition Policy, from 2010 until assuming the position 
as Director.
    Patrick Kennedy has served as Under Secretary for 
Management for the United States Department of State since 
2007. He has been with the Department of State for 39 years and 
has held positions including Director of the Office of 
Management Policy, Rightsizing and Innovation, Assistant 
Secretary for Administration, U.S. Representative to the U.N. 
for Management and Reform, Chief of Staff of the Coalition 
Provisional Authority in Iraq, and Deputy Director of National 
Intelligence for Management.
    Angelique Crumbly is the Acting Assistant to the 
Administrator for the Bureau of Management for the United 
States Agency for International Development. She is a member of 
the Senior Executive Service (SES) with more than 20 years of 
Federal service and has held several key positions at USAID, 
including Senior Deputy Assistant Administrator in the Bureau 
for Management and Director of the Office of Management, 
Policy, Budget, and Performance.
    It is the custom of the Subcommittee to swear in all 
witnesses that appear before us, so if you do not mind, I would 
ask you to stand.
    Do you swear that the testimony you will give before this 
Subcommittee will be the truth, the whole truth, and nothing 
but the truth, so help you, God?
    Mr. Kennedy. I do.
    Mr. Ginman. I do.
    Ms. Crumbly. I do.
    Senator McCaskill. Let the record reflect that all the 
witnesses have answered in the affirmative. Please be seated.
    We will be using a timing system today. We would ask that 
your oral testimony be no more than 5 minutes. Your written 
testimony will be printed in the record in its entirety.
    I am told that we have committed a protocol gaffe, Mr. 
Kennedy. That under the hierarchy of Under Secretaries versus 
Directors and Assistant Administrators that you should be first 
in the pecking order at this hearing, so we will call on you 
first for your testimony concerning your input into this 
legislation from the perspective of the Department of State.

    TESTIMONY OF PATRICK F. KENNEDY,\1\ UNDER SECRETARY FOR 
              MANAGEMENT, U.S. DEPARTMENT OF STATE

    Mr. Kennedy. Madam Chairman, I certainly defer to the Chair 
and you may please call upon the witnesses in whatever order 
you wish.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Kennedy appears in the appendix 
on page 44.
---------------------------------------------------------------------------
    Senator McCaskill. It is fine. You can go ahead, Secretary 
Kennedy.
    Mr. Kennedy. Thank you. Chairman McCaskill, Ranking Member 
Portman, thank you for inviting me to discuss the Comprehensive 
Contingency Contracting Reform Act of 2012. We share your 
desire to strengthen contingency contracting. Our review of the 
bill continues and we very much welcome, Madam Chairman, your 
request that we work with you. We have met with your staff once 
and we very much appreciate your invitation. We look forward to 
continuing to do so.
    This legislation builds on the important work of the 
Commission on Wartime Contracting, an independent, bipartisan 
panel that you, Chairman McCaskill, created with Senator Webb. 
The Department worked continuously with the Commission from its 
formation in 2008 until its sunset, gaining valuable insight. 
We have taken many steps to improve our contingency contracting 
based on the work of the CWC and other oversight entities and 
our own lessons learned. We are now engaged with the Government 
Accountability Office on its review of the Iraq transition, 
contingency contracting, and the CWC's final report. We have 
learned much from the Iraq transition, working closely with 
DOD, USAID, and interagency partners.
    On April 3, Secretary Clinton, addressing cadets at the 
Virginia Military Institute, described the Iraq transition as 
the largest military to civilian transition since the Marshall 
Plan. We are now taking the lessons learned in Iraq and 
applying them to contracting planning and execution in 
Afghanistan.
    State's centralization of acquisitions for goods and 
services in our Acquisitions Management Office, which together 
with its two regional procurement support offices handle over 
98 percent of our contracted dollars. This centralization of 
acquisitions obviates the need for the extensive additional 
policy guidance and oversight in a dispersed acquisition 
organization. We have hired 103 additional acquisition 
management staff since 2008 using our working capital funds, 1 
percent fee on all procurements. This has enabled us to devote 
37 contracting officers and support personnel to Iraq and 
Afghanistan, and we have trained and deployed more contracting 
officer representatives, with 1,080 certified contracting 
officer representatives (CORs) in 2011 and 1,200 total 
projected by the end of this year.
    To elevate accountability for contracting as called for in 
the Secretary's Quadrennial Diplomacy and Development Review, 
the requesting bureau must now ensure that adequate resources 
are identified early in planning. The cognizant Assistant 
Secretary must certify that planning and oversight is adequate 
for every service contract valued at an annual expenditure of 
over $25 million and also verify annually that oversight 
continues to be sufficient.
    We have also increased accountability by mandating that 
contract oversight work elements include in performance 
appraisals of technical personnel with contract management 
responsibilities. All CORs and government technical monitors 
(GTMs) must now complete a 40-hour training course, which we 
updated to be more interactive, skills based, and adult 
learning focused. A separate class session has been tailored 
for diplomatic security CORs who deal with local guards and 
other security programs overseas. All Department CORs 
supporting DOD-issued contracts for our Iraq mission take 
additional DOD training in the contingency environment and any 
other specialty training related to that specific contract. 
This ensures that State personnel managing DOD contingency 
contracts meet the DOD standard.
    To improve our suspension and debarment efforts, we have 
issued detailed procedures and provided training to grants 
officers and contracting officers. Suspension activities 
increased from no suspension in 2009 to five each in 2010 and 
2011 and 19 actions halfway into fiscal year (FY) 2012. 
Debarment activity increased from no debarments in 2009 to six 
issued thus far halfway through 2012. This increase is due to 
more active coordination between the Department and our Office 
of Inspector General (OIG) investigators, stronger referral 
activity, and improved processes and focus within the 
suspension and debarment office (SDO).
    Contingency contracts now require special vigilance against 
trafficking in persons, and initiatives have been undertaken at 
State to address TIP contracting issues. Contracting officers 
and CORs are trained as our front line in preventing contractor 
TIP and worker abuses. Contracting officers tailor specific 
oversight requirements on local, service, and contract type. 
Contracting officers travel overseas to monitor performance at 
the site and enforce TIP programs. In some locations, we have 
hired a direct hire program manager or a contracting officer 
representative lives onsite with construction and security 
staff at their housing areas. New solicitation language 
regarding recruitment includes recruitment plans, and 
submission of agreements has been developed to prevent 
maltreatment of workers. We continue to strive for zero 
tolerance of trafficking in all our contracts.
    The Department has taken a significant number of positive 
steps to improve our contracting function. As the CWC 
recommended, we have strengthened contract administration in 
conflict affected States through hiring and training adequate 
Federal personnel to provide strong governmental oversight of 
contractors.
    The bill you have introduced, S. 2139, has many positive 
elements and we look forward to working with you on contingency 
contracting.
    Thank you very much, and I look forward to your questions.
    Senator McCaskill. Thank you very much.
    I apologize for mispronouncing your name. Mr. Ginman, we 
will take your testimony now. Thank you.

     TESTIMONY OF RICHARD T. GINMAN,\1\ DIRECTOR, DEFENSE 
 PROCUREMENT AND ACQUISITION POLICY, U.S. DEPARTMENT OF DEFENSE

    Mr. Ginman. I have learned to respond to almost any 
pronunciation.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Ginman appears in the appendix on 
page 56.
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    Senator McCaskill. I know the feeling. [Laughter.]
    Mr. Ginman. Chairman McCaskill, Ranking Member Portman, I 
welcome this opportunity to discuss the proposed Comprehensive 
Contingency Contracting Reform Act of 2012, the impact the 
legislation would have on the Department of Defense.
    I have addressed the Department's position on each of the 
provisions in the proposed bill in my written testimony, so I 
am not going to repeat that now.
    Senator McCaskill, you and Senator Webb also cosponsored 
the legislation that created the Commission on Wartime 
Contracting, and I would like to thank both of you for your 
leadership on this important topic. The Commission's efforts 
spanned 3 years, and their August 2011 final report 
recommendations are the basis for many of the provisions of 
this bill.
    The Department maintains a scorecard to manage our progress 
against all of the Commission's recommendations. The Government 
Accountability Office is currently evaluating the Department's 
implementation of the Commission's recommendations and we have 
been actively providing information on our progress to them.
    The Department has been and continues to be focused on 
improving operational contract support. It has been a journey 
and we believe we are making good progress. The bill we are 
here to discuss today is another positive step in that journey.
    The Department of Defense concurs with many of the 
provisions of the bill, but we do have some concerns and we 
would like to work with the Subcommittee to resolve those.
    We are committed to enhancing contingency contracting and 
is in favor of legislative efforts to augment the ongoing 
Departmental initiatives to oversee contingency operations. We 
are especially appreciative of the 2012 National Defense 
Authorization Act (NDAA) coverage of no contracting with the 
enemy, access to subcontractor records in an overseas 
contingency operation (OCO), and the increased authorities 
provided to the reachback cell that supports the joint theater 
support contracting command.
    In closing, I wish to reiterate the Department's 
appreciation for your continued commitment to improving 
operational contracting. Like you, the Department is focused on 
meeting the warfighters' current and future needs while 
judiciously managing DOD's resources and balancing risk. Much 
has been accomplished, but, of course, challenges remain.
    Thank you for the opportunity to provide you the 
Department's reactions to this bill. I ask my written testimony 
be submitted for the record and I welcome your questions.
    Senator McCaskill. Thank you, Mr. Ginman. Ms. Crumbly.

 TESTIMONY OF ANGELIQUE M. CRUMBLY,\1\ ACTING ASSISTANT TO THE 
     ADMINISTRATOR, BUREAU FOR MANAGEMENT, U.S. AGENCY FOR 
                   INTERNATIONAL DEVELOPMENT

    Ms. Crumbly. Chairman McCaskill, Ranking Member Portman, 
thank you for the opportunity to discuss the potential impact 
of the Comprehensive Contingency Contracting Reform Act on the 
U.S. Agency for International Development. I will briefly 
summarize my remarks and ask that my full statement be entered 
into the record.
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    \1\ The prepared statement of Ms. Crumbly appears in the appendix 
on page 81.
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    Madam Chairman, Senator Portman, as you know, more than 
9,000 men and women of the USAID work to provide effective 
economic development and humanitarian assistance in support of 
U.S. foreign policy goals. How we improve our contracting 
practices, including in contingencies, directly impacts the 
success and sustainability of our mission. Accountability to 
Congress and the U.S. taxpayer for the funds we use is a duty 
and it is a duty that we take very seriously.
    In November 2011, when USAID Administrator Rajiv Shah asked 
me to lead the Bureau for Management, he did so because he knew 
that I was a career civil servant with more than 20 years of 
experience making things work at the Agency. Throughout my 
career, I focused on making our business practices more 
efficient and effective with the overall goal of enhancing 
performance while reducing unnecessary cost, so I understand 
the motivation behind this legislation very well. It addresses 
many of the management challenges highlighted in the report of 
the Commission on Wartime Contracting that you, Senator 
McCaskill, created along with Senator Webb. It also addresses 
some of the most important issues in our current engagements in 
Afghanistan and Iraq and those we could contend with in future 
contingencies.
    USAID has already begun to implement the lessons learned 
from Iraq and Afghanistan. Over the past 2 years, Administrator 
Shah has instituted one of the most comprehensive reform 
packages I have seen in my time with the agency. Our USAID 
Forward Reforms, as we have named them, are designed to ensure 
that we provide a more effective business model and deliver 
more sustainable and results driven development programs.
    Implementation and procurement reform is a key element of 
USAID Forward, and I want to note that this reform agenda is 
complementary to many of the recommendations of the CWC, so 
USAID has already made great strides in enhancing the oversight 
and accountability for our acquisition and assistance 
portfolio.
    For example, we are increasing transparency. We have been 
working actively with our Department of State colleagues to 
make foreign assistance data available to the American public. 
As a result, anyone can view USAID spending, including overseas 
contingency operations, online at foreignassistance.gov.
    We have been actively engaged in strengthening our 
oversight. In February 2011, we stood up a Compliance Division 
within the Bureau  for Management's  Office  of Acquisition  
and Assistance (M/OAA) to serve as the central repository for 
any and all referrals of administrative actions, including 
suspension and debarment. In just one year, the Division has 
issued 102 administrative actions and recovered nearly $1 
million in taxpayer funds, compared to eight such actions 
between 2003 and 2007.
    We are promoting enhanced competition. In 2010, we 
established a Board for Acquisition and Assistance Reform 
(BAAR). In its first year alone, the Board's recommendations 
resulted in a 31 percent increase in prime awardees, from 29 to 
38. This is significant because it means we are broadening our 
partner base and reducing dependence on any single 
organization.
    USAID has instituted several cost saving measures and our 
acquisition savings plan has yielded approximately $171 million 
in cost savings or cost avoidance since 2010.
    While we have had some difficult challenges in Iraq and 
Afghanistan, we have also achieved some significant successes. 
As Administrator Shah noted before the CWC, in Afghanistan, we 
have put more than 2.5 million girls back in school, helped 
rebuild the Afghan civil service, aided farmers in growing 
legitimate crops, and assisted in dramatically improving health 
care, particularly among women. In Iraq, we have made 
significant contributions toward diversifying the economy and 
promoting women's participation in the market.
    With regard to your legislation, my written statement 
details comments and concerns that we have on specific 
provisions of the bill and I am happy to address any particular 
section that you wish. But I would like to take this 
opportunity to compliment you and your staff for your 
leadership on this issue and your willingness to engage in a 
dialogue because we all share the same goal, enhanced 
accountability in overseas contingency operations.
    Again, thank you for the opportunity to be here today and 
for your support of USAID. I look forward to our discussion.
    Senator McCaskill. Thank you.
    I am going to really try to make an effort today to take 
off my typical hat in this Subcommittee, where I am kind of 
tough on folks and try to point out inadequacies and make a 
point by using the power of almost a cross examination, and I 
am going to really try--because I really do want this to be 
about how we can get this legislation in a place that it is not 
going to be just something that is ignored or that is checking 
a box that we are completing the work of the Wartime 
Contracting Commission. I really want this legislation to be a 
framework that is workable for your agencies.
    And so I want to underline my sincerity about getting your 
input, and whether it is today in the give-and-take of this 
hearing or whether it is by members of your staff sitting down 
and slogging through the difficult process of going through 
phrases and going through sections of the bill and double-
checking. What I do not want to have happen is for us to get 
this legislation passed, in its entirety or partially, and then 
have a hearing several years down the line and realize that 
nobody paid much attention to it.
    So this is your opportunity, and with that will come the 
danger that I hope I or somebody who will sit in this chair 
will not let you off the hook or your agencies off the hook in 
a few years when you say that legislation just was not 
workable. I do not want those words to ever come out of the 
mouth of you or your successors in yours jobs as it relates to 
improving contracting.
    So with that, let me get started on what is one of my--I 
have several overarching concerns about this, but in the 
interest of time, I am going to hone in on some of my, quote-
unquote, ``favorites,'' and I mean that sarcastically.
    Let me start with debarment and suspension. I think the Air 
Force has provided such a good role model for everyone as it 
relates to suspension and debarment. I was interested to hear 
in your testimony, Ms. Crumbly, about how you all have really 
stepped it up in terms of looking at performance on contracts 
and whether or not a suspension or debarment is something that 
should be considered.
    Just to give you some big numbers, according to the Defense 
Department, over a 5-year period, we had--let me get the exact 
numbers, because I want to make sure I get it right--in 2011, 
the Defense Department found that over a 10-year period, the 
Department had awarded $255 million to contractors who were 
convicted of criminal fraud, and $574 billion to contractors 
involved in civil fraud cases that resulted in a settlement or 
judgment against the contractor, many of whom were never 
suspended or debarred. In 2011, the General Accounting Office 
(GAO) reported that the State Department had only had six 
suspension or debarment cases with over $33 billion in 
outstanding contracts. Now, look at Air Force. Air Force had 
367 suspension or debarment actions in a single year last year. 
The State has had six in 5 years.
    The Air Force suspension and debarment officer is 
independent from the acquisition chain. So somebody who is 
involved in acquiring stuff is not involved in determining 
whether or not there should be a suspension or a debarment. The 
State Department SDO does not have those attributes. The State 
Department's suspension and debarment officer has other duties 
involved especially also in acquisition.
    Why do you not speak to that, Secretary Kennedy, about any 
resistance or reluctance you might have to separating out the 
suspension and debarment officer from any duties particularly 
related to acquisition. It is kind of hard to be in charge of 
buying something or buying services and then turning around 
later and say, I really screwed up and gave it to a bad guy. It 
seems to me that separating that duty makes so much 
commonsense, and I am curious as to your input on that.
    Mr. Kennedy. Senator, I fully agree with you, but I believe 
that is the process that we have in place at the State 
Department now. We have a head of contracting activity, a 
senior career Senior Executive Service civil servant, who is 
responsible for all of our contracting activities. It is her 
responsibility to buy and it is her warranted contracting 
subordinates who do all our buying.
    We have a separate Senior Executive Service career civil 
servant who we call our Procurement Executive. He has no 
responsibilities to actually buy anything. He sets the policies 
and the practices of the State Department but does not engage 
in buying. He is in charge of the suspension and the debarment 
activity.
    So we fully agree with you, Senator. We believe that it is 
absolutely correct to split the duty of buying from, in effect, 
the duty of oversight with due respect to our Inspector 
General, who also has the larger oversight framework. And so it 
is our Procurement Executive who is the debarment official and 
who, thanks to his good work, we have increased the number of 
suspension and debarments significantly, as I outline in my 
testimony. So we agree with you, Senator.
    Senator McCaskill. So in our briefing, we were told that 
Corey Rindner is in the Office of Procurement Executive (OPE), 
an office that also assists State in contracting for supplies 
and services. That is incorrect?
    Mr. Kennedy. He writes the policies, ma'am. He does not buy 
anything. He is a warranted contracting officer, yes, but he 
does not procure any goods or services for the State 
Department. We have hired--and it was actually my predecessor 
who hired him--someone with wide and deep experience in 
contracting, because who would better know how to set policies 
and to discover when you should suspend or debar someone if you 
do not have that background. But he does not engage in 
procurement activities.
    Senator McCaskill. Would it make sense for you to have 
somebody full-time just on suspension and debarment? With the 
amount of money that is being contracted by State, would it not 
be better to have someone whose full responsibility was just 
suspension and debarment?
    Mr. Kennedy. He has staff assisting him, and that staff is 
a professional staff, and so we believe that we have 
constructed a pyramid in the Procurement Executive of 
professionals who know how to write the regulations so that we 
can hold contractors responsible, and then implement a full-
fledged suspension and debarment program should it become 
necessary for us to take that action. So we believe that we are 
complying with both the letter and the spirit of what you put 
forward because we agree with you. It is our responsibility to 
ensure that every single taxpayer dollar is administered and 
used to the best interest of the national security of the 
United States.
    Senator McCaskill. OK. I am hoping that we can get you to 
have somebody that is at the top of the organization of 
suspension and debarment. I do not know whether you need 
assistance under him, but who has just that responsibility, 
because we think it is that important in terms of setting the 
tone. But we can talk about that going forward.
    Another one of my big problems is sustainability in terms 
of projects, and I have a--we tried to do our greatest hits 
list here for this hearing and this is examples of waste, 
fraud, and abuse on projects in Iraq and Afghanistan. I think 
if I asked all of you to guess three or four of the projects 
that would make this list, I am hopeful that you would know 
what they were without me reminding you, because it is not 
good. And I think that the notion that we have actually done a 
full-bore sustainability analysis is just not borne out by the 
results of many of these projects and I think it is very 
important that this legislation include something that requires 
a certification on sustainability.
    I know under the Foreign Assistance Act, USAID is required 
to have a certification. That is because AID traditionally has 
been the one doing these projects, and as we know, it is a 
whole new world out there with Afghanistan Infrastructure Fund 
(AIF) and with, what I call the Commander's Emergency Response 
Program (CERP) and Son of CERP and, the way CERP has morphed 
into something far beyond what was explained to me when I first 
arrived in the Senate.
    In a report by the International Security Assistance Force 
(ISAF), which I previously discussed, there is no persuasive 
evidence that the commander's emergency response program has 
fostered improved interdependent relationships between the host 
government and the population, arguably the key indicator of 
counterinsurgency success. This legislation would impose a much 
more rigorous review of these projects, and I have circled 
several of them.
    I have a USAID project in Afghanistan which is the power 
plant, $300 million power plant. Clearly whatever certification 
was required, it was flawed, because that is not sustainable. 
I've got the Khost and Gardez Road in Afghanistan. I have the 
water treatment plant that the State Department did in Iraq, it 
was almost $277 million that we know the Special Inspector 
General for Iraq Reconstruction (SIGIR) found was operating at 
only 20 percent of capacity because of the failure of the Iraqi 
folks to knowing how to operate or maintain it. I have the 
Fallujah water waste treatment system, which was a State 
Department-Defense Department joint project.
    Is there any argument or push-back from any of you on the 
sustainability front that this has been a failure and that even 
going--as we speak, we are building things in Afghanistan that 
will not and cannot be sustained?
    Mr. Ginman. So clearly, at least from the Defense 
Department perspective, we have not always covered ourselves in 
glory on this area, and you have listed those examples.
    In August, we did create the Afghanistan Resource Oversight 
Council (AROC). I think we are in our fourth or fifth meeting 
of that. It has been chaired by Alan Estevez, the Assistant 
Secretary of Defense for the Logistics and Material Readiness 
(L&MR) and basically filling in just as the principal deputy. 
Mike McCord is the principal Deputy and the CFO. And by Jim 
Miller, who, in his current acting role, has continued to be 
the Chair. And sustainability has clearly been on the topic and 
the agenda in each of those meetings for what we can do or not 
do.
    I think when Mr. Kendall testified before the Senate before 
with General Bash, they expressly talked about what we had 
attempted to do, to go in, particularly in the Corps of 
Engineers when we were evaluating projects, to ensuring the 
sustainability. It was an issue that was discussed and 
addressed.
    And I know as the CERP projects currently come through and 
are reviewed at the OSD level, over $1 million, we are asking 
the question up front, what is the sustainability.
    So have we done it well in the past? No, Senator. Are we 
attempting to do a significantly better job as we go forward? 
Yes. Do I think we have put the structures in place to ensure 
that we can do a better job? I think we have done that, as 
well.
    Senator McCaskill. I guess my biggest problem with this is 
that I know and understand that our military is the best in the 
world, because there is nothing--there is no mission they 
cannot accomplish if we set our minds to it and put the power 
of the resources of this country behind it.
    And it feels like, to me, that in some room somewhere there 
is not an acknowledgement that we are using fairy dust to 
really justify what this country can do when we leave and what 
they are capable of doing when we leave. Now, I am not even 
talking about the security forces. I am not even talking about 
creating an army for a country that has never had a centralized 
army. I am not even talking about creating police forces that 
are capable of sustaining the rule of law after we leave. I am 
just talking about who is going to pay to fix the roads. I am 
just talking about who is going to operate power plants. I am 
just talking about who is actually going to have the technical 
expertise on these water projects.
    It is just hard for me to imagine, with the gross domestic 
product (GDP) of this country, once you take out the huge 
influx of American dollars, they do not have any money. I mean, 
is somebody being brutally honest about going forward with 
these reconstruction projects as it relates to the reality of 
what this country is once we are gone?
    Mr. Ginman. So again, from the ARPC perspective, I mean, 
those three individuals are consciously looking at what are the 
current projects that are there, what do we think the long-term 
tail is. CSTC-A/NTM-A, the people who are, in fact, overseeing 
the training of the military forces and the ability to do it, 
are participants in that discussion. I mean, from my 
standpoint, I think we have the right people together to, in 
fact, attempt to address that question and can we, in fact, 
afford it, and then how is it going to be paid for in the 
future.
    Senator McCaskill. We are building highways for a country 
that does not even have a highway department. I mean, they do 
not even have any revenue to support their highways. They have 
no--there is no fuel tax. There is no tax out there that would 
sustain a highway, and it is just--I just think that this 
certification included in this--what about the others in terms 
of sustainability, and then I will turn it over to Senator 
Portman. Is there anything that you want to add on the 
sustainability? And, Ms. Crumbly, how did this power plant get 
built? I mean, who decided a dual-fuel $300 million power plant 
was a good idea in Tarakhil? I know that is not what it is 
typically called. I do not know if I am pronouncing it right.
    Ms. Crumbly. I call it Kabul power plant.
    Senator McCaskill. Yes. I always say it is in Kabul 
somewhere, so----
    Ms. Crumbly. Exactly. In essence, it was an interagency 
decision to move forward with the power plant. And I do want to 
note that the power plant is working in terms of performing at 
peak or surge capacity. I know we were talking----
    Senator McCaskill. Yikes. Three-hundred million dollars 
for--that is one expensive generator in an emergency.
    Ms. Crumbly. No, I understand, and we have turned it over 
to what they call DABS or the Afghan utility portion of the 
government. So we are looking at how that can be sustainable in 
the long term. So it is meeting some needs in the country.
    You noted that the Foreign Assistance Act requires that we 
focus on sustainable development, and we do that in USAID 
programs. It is a key factor for consideration whenever we are 
developing program or projects.
    I would say that we have had some work to do and we have 
taken seriously the CWC recommendations and, in essence, we 
have put together a sustainability policy in Afghanistan. And 
actually, I was talking with the Deputy Director of our Office 
of Acquisition--I am sorry, Afghan and Pakistan Affairs, and he 
noted that when he was out in Afghanistan recently, they are 
implementing the sustainability policy at the provincial 
reconstruction team level. So we are taking it seriously. We 
are, indeed, putting policies into place and we are looking at 
the longer-term sustainability in Afghanistan.
    Senator McCaskill. Anything from State, Secretary?
    Mr. Kennedy. I would agree that there, clearly, are issues. 
We have tried to do a lot in very difficult environments, and 
obviously we have not succeeded completely. I think my two 
colleagues have addressed that.
    The major State Department activity in this regard is our 
police program. We are working very carefully with both the 
government of Iraq and the government of Afghanistan to ensure 
that we are providing them the kind of training that they need 
and the kind of training that will have a long-term positive 
impact in their police programs. We have a senior State 
Department officer who is assigned in both Iraq and Afghanistan 
as the coordinator for foreign assistance to make sure that we 
are focusing on sustainability.
    Senator McCaskill. OK.
    Mr. Kennedy. But it is just as the Admiral said. There is a 
lot that we can do better and I believe we have learned our 
lessons.
    Senator McCaskill. OK.
    Mr. Kennedy. And we welcome the dialogue, as you suggest, 
on how we can ensure that sustainability is institutionalized 
and carried forward.
    Senator McCaskill. Let me know if there is anything about 
the sustainability portions of this legislation that you think 
are not sustainable.
    Secretary Portman--Senator Portman. [Laughter.]
    Senator Portman. I have had a lot of titles. I cannot keep 
a job. But it has never been Secretary yet. [Laughter.]
    First of all, thanks for getting into the sustainability 
issue. I did not get to hear the entire dialogue, but I think 
that is a critical part of what needs to be done, as we talked 
about in the opening remarks. I know you also talked about 
enforcement, suspension, debarment, and other ways to have 
enforcement play a more credible role.
    I want to talk a little about database of pricing 
information, which is something that is in Senator McCaskill's 
bill and it has also been talked about by the Wartime 
Contracting Commission, and a number of the IG reports have 
talked about it, as well. It is basically how do you get a fair 
price, and competition, I think, is the best way. But another 
way, of course, is to ensure that we have a database of pricing 
information that is transparent, that is accessible, and that 
is one that the agencies and departments can rely on.
    One dramatic example is a report that came out of the 
Special Inspector General's office in July last year which 
found that one Department of Defense contractor was charging 
$900 for a control switch that was worth $7. In some cases, the 
IG found contractors overloading the government with markups 
ranging from 2,300 percent to 12,000 percent. So we have, 
again, had plenty of examples of this brought forward by IG 
reports and by the Commission itself. And again, enhanced 
competition is a powerful tool, but I would like to hear from 
our witnesses about the feasibility of a more systemic way to 
approach this issue, tracking pricing information to ensure 
that contracting agencies are getting a good value.
    Mr. Ginman, if we could start with you, that would be 
great. I understand DOD has established a pilot program under 
the Director of Defense Pricing, and the notion here is to 
create a more transparent and accessible, again, accurate 
database on prices. Can you talk about the status of that 
program and whether you think it is working? Is it producing 
savings?
    Mr. Ginman. Certainly. So I will start out that the 
Department agrees unequivocally that competition is the best 
way to get good pricing. The pricing database, or the pricing 
effort pilot that is under the Director of Defense Pricing is 
born from, frequently, we do not have good competition, and it 
is an effort to--what is it we need to do to be able to put 
into the hands of contracting officers when they are 
negotiating with companies the information they need.
    So examples I would give, the Director, from his former 
life he speaks, he frequently, when he would negotiate missile 
buys with the Army, Navy, and Air Force, he would be the one 
person at the table that, in fact, understood what the entire 
Department was doing because the Army, Navy, and Air Force did 
not speak with each other well and understand. So the thought 
process behind the information that we are gathering is to put 
in one place, so when a Navy contracting officer is doing a 
missile buy or buying a ship, whatever, for that particular 
company, they can turn to this database and find what was the 
last negotiation that was done, what were the overhead rates 
that were there. They can turn to the Defense Contract 
Management Agency (DCMA) again in one place from an overhead 
rate structure.
    It is interesting when I know that an overhead rate for a 
company is 20 percent this year, 21 percent the next year, 22 
percent the following year. What I really want to know is, so 
tell me how they executed to that rate, so that if, in fact, 
not a 20, 21, or 22, what they actually executed was 18, 19, 
and 20, I would like the contracting officer to understand when 
they are negotiating the contract that, in fact, they under-
executed what their rate is that they are bidding, so that you 
are putting the contracting officer on at least fair footing 
with equal knowledge that is there.
    We have created, it is called the Contractor Business 
Analysis Repository (CBAR), and I apologize that I cannot do 
the acronym, but it is a database where we will put up all of 
the business clearances that are done. We will put up all of 
the pricing information, all of the rate information that is 
available to us so that when you are negotiating with any of 
the major defense contractors, you will be able to go to this 
one place and see what has everybody else done before you. What 
did they actually negotiate? What were their examples?
    I would say, from the way the legislation is written, and 
asking in ways that it be changed, that we are a little leery 
that the way it is read is that this is, tell us pricing 
information. So if I am buying, port-a-potties, what was the 
price we paid for port-a-potties? I do not think that is what 
you are intending. So that what we are attempting to do is when 
we do not have the forces of competition behind us, what we 
will have is the ability to provide the contracting officers 
with tools. We are going to make it available--we have agreed 
that we will make it available to the Office of Federal 
Procurement Policy (OFPP) and to any other agency that is 
dealing with those that has the appropriate need to be able to 
see this information.
    We believe--let me step back. When I started doing this as 
a Lieutenant JG in 1973, we expected contracting officers to be 
skilled pricers. Probably in the--about 1990 coming forward, as 
we downsized within the Department, we more or less gave away 
the pricing capability within the contracting community. So 
while today we have pockets of people in various commands, we 
do not have a strong skill set.
    So one of the other parts of the pilot project that is 
there is creating in DCMA groups of people that are experts in 
pricing and knowledgeable of the specific major companies so 
that when the different contracting officers are negotiating, 
they can turn to this group of experts to help.
    We have also, not part of the legislation, but we have also 
reintroduced what we call mid-level training courses to get the 
1102 community to again regain the skills that are necessary to 
be able to adequately price contracts. It is not----
    Senator Portman. Admiral, let me interrupt you just for a 
second. We have a vote in 5 minutes and have to run over there. 
Although the Chair and I are very fast, we are going to have to 
take off here in a minute.
    If you could get back to us in writing with how you think 
the pilot is working, it sounds like you have three or four 
good ideas that are agency-wide that have potential, but tell 
us how you actually think it is working, that would be helpful.
    And then to the other panelists, any thoughts, obviously, 
on this issue of the pricing database and how to be sure that 
we are getting a fair price, as was talked about by the 
Commission.
    And then, second, on the trafficking bill with regard to 
the provisions in the McCaskill bill, if you could get back to 
us in writing, just give us any comments you have.
    And again, I apologize. I am going to run to the floor to 
vote. I appreciate you being here today and I thank the Chair 
for holding the hearing.
    Senator McCaskill. And what I will do is I will ask you all 
to hold. I will run over, vote quickly, and come right back. I 
just have a little bit more for this panel and then we have the 
remaining panel of the IGs. I will be right back. [Recess.]
    I would like to look at subcontracting as an area that I 
would like your input on. There has been--and especially, I 
would like you to speak before you all leave the stand about 
whether or not you think any of the limitations we have put in 
here on suspension and debarment or on limitations on 
subcontracting, if you think they are workable in a 
contingency. Do they cause you pause, especially if you 
consider the waivers that we--the provisions that we have in 
there, the 6-month lead time before any of these requirements 
would go into effect, the noncompetitive requirements that we 
have in here.
    Let me start with that. Do any of those cause you all 
problems as it relates to contracting in wartime?
    Mr. Ginman. So, Senator, the one tier, I think is a 
problem, and I think what the Commission on Wartime Contracting 
was really trying to get to was why were we unable to break out 
work that was under the Logistics Civil Augmentation Program 
(LOGCAP) expressly and to go through that, and I think that is 
a good question. But then the translation of that to one tier, 
from our perspective, in any scenario, wartime or not, is just 
simply unworkable. I mean, I cannot imagine a situation with 
almost anything we do that I could get to a single tier of 
subcontracts in doing it. So we think there are ways that can 
be rewritten that will get to what I believe the Commission was 
really trying to get to and the objective that would help, and 
we are happy to work with the staff to come up with those 
words.
    Senator McCaskill. Well, as you know, we had a Tamimi 
problem in the LOGCAP contract where we have kickbacks with 
KBR, and that is one of those large duration wartime contracts 
that is kind of the poster child for contracting gone badly. 
The Khost Trucking contract, with the multiple layers of 
subcontracts, really had a security risk associated with it as 
it related to where the money was going. And clearly, we 
figured out that some of the money was going to the bad guys.
    So what we are looking for here is we do not want to get 
away from the efficiencies that subcontracting might provide, 
but we have to really get to a much more transparent situation.
    Mr. Ginman. So expressly with Tamimi, and in my opening 
oral statement, the legislation that the NDA gave us in 2012 
that grants this as an overseas environment for access to 
subcontractor records, where they refused to provide records, 
that legislation should open the door for us to be able to go 
and demand those records and get them. Task Force 2010, which 
is really the group that is trying to follow the money and get 
there, they really wanted that legislation and we very much 
appreciate the Senate's help in providing that legislation to 
us. So I am hopeful that we will not face Tamimi again, at 
least from a standpoint of not being able to get the records, 
that legislation has now given us the authority to go get it.
    Senator McCaskill. And what about the recompeting contracts 
more frequently?
    Mr. Ginman. Well, I think the Department's position writ 
large is we prefer shorter length periods of contract. But in 
all instances, it depends. What is the scenario I am in? What 
is the frequency with which we want to turn over contracts? I 
mean, the express example I gave in my written testimony was as 
we were pulling out of Iraq and we were looking at recompeting 
some task orders, the Combatant Commander came in and said, I 
mean, I can focus us on getting out of Iraq or I can focus on 
transitioning contractors. I would much prefer to focus on 
getting us out of Iraq. Could you please just leave the 
contractors in place? So we did that.
    Senator McCaskill. Would that not be a waiver situation 
under this?
    Mr. Ginman. I think----
    Senator McCaskill. Is that not envisioned with the waiver? 
I would think that would be just custom tailored for a waiver 
situation, when you would document that there was an either/or 
here and that moving people out was more important than 
recompeting at that particular juncture.
    Mr. Ginman. Yes. I mean, we have basically said for all our 
contracts, particularly in those where the technology moves 
quickly, we do not want contracts that exceed 3 years. I mean, 
that has been the Department's position. If we are in sole 
source contracts, we would like to find ways to get the 
competition. But if I am in a scenario where I cannot get the 
competition, I am going to have a lot of waivers. I mean, if I 
really am in a situation of sole source, it is going to be sole 
source for an extended period of time, then you would see a lot 
of waivers to go do that.
    I mean, the waiver provision certain provides the out, but 
I think that length of term of a contract is truly dependent. 
Tell me where I am. Tell me what the opportunities are. Tell me 
the technology of what I am buying. And then tell me how well I 
can price it.
    The other issue we have with long contracts is it is 
difficult to price effectively for a long period of time at a 
fixed price. So we look for shorter contracts.
    Senator McCaskill. You just know----
    Mr. Ginman. Yes.
    Senator McCaskill [continuing]. That if a contract is more 
than 3 or 4 years old, that someone is on the bad end of it.
    Mr. Ginman. Yes.
    Senator McCaskill. Now, in some instances, it may be the 
contractor. Unfortunately, not often enough. I mean, I should 
not say that. I do not want the contractor to be on the bad end 
of it. I am focused on saving the government money, so I think 
that the more frequent recompetes--and I know that there is a 
culture that kind of weighs against recompeting because it is a 
pain to compete. This is not like an exercise that everyone 
looks forward to, either the ones bidding or the ones running 
the competition.
    And clearly, I mean, the notion that KBR was a noncompete 
came from Bosnia. Everyone then turned to Halliburton KBR 
because they had done it in Bosnia. And it was, like, everybody 
is sitting around, who can do it? Well, we know they can. They 
were in Bosnia and they got it noncompete and made a huge 
amount of profit off that contract, much more than they needed 
to make had we been more aggressive about overseeing it.
    Mr. Kennedy. Senator, if I may----
    Senator McCaskill. Yes.
    Mr. Kennedy. We are in favor, absolutely, of full and open 
competition, and all the points that you made are absolutely 
correct. But if I could just posit one scenario. The State 
Department has put out, in effect, competitively bid, a number 
of master contracts and then we issue recompetitively bid task 
orders once we have qualified a group of companies. We would 
want to make sure that nothing in the exact legislation could 
be interpreted to mean that we would have to back away from 
that activity. We go out. We note something either on food 
service or security service or whatever, go to a number of 
major companies, competitively bid, then award and put them on 
the master list, and then we award them task orders.
    We would not want this limitation to say, well, since that 
contract is, in effect, over 2 years old, you cannot then issue 
a task order that is valid for more than 1 year. That would set 
us back, because we are trying, as you have put forward almost 
in the preamble of your legislation, to make sure that we have 
planned. And so one of the steps that we are taking to plan for 
the future is to have master contracts in place, competitively 
bid, that then we can utilize them, having obtained the best 
price, and issue task orders.
    Senator McCaskill. I am curious, how long do you envision 
the master contracts being in place?
    Mr. Kennedy. Five years, ma'am. And then we issue task 
orders that would run the duration.
    Senator McCaskill. And was the security contract a master 
contract at the embassy in Kabul?
    Mr. Kennedy. No. That is one of the steps we have taken 
since then, to put this into place.
    Senator McCaskill. OK. So there was not a master contract 
with subs----
    Mr. Kennedy. No. Those were individually bid.
    Senator McCaskill. OK.
    Mr. Kennedy. So we want competition. We want to do the 
best. But we want to make sure that our planning that has led 
to a contract in place would e available to us given a fluid 
situation.
    Senator McCaskill. OK. Ms. Crumbly, could you speak--in 
response to a report by the Senate Foreign Relations Committee, 
your administrator wrote, in Afghanistan, quote, ``now includes 
a subcontractor clause in new awards that permits USAID to 
restrict the number of subcontract tiers and requires the prime 
contractor to perform a certain percentage of the work.'' Have 
these changes been implemented?
    Ms. Crumbly. Yes, they have.
    Senator McCaskill. And so they are in every contract now in 
Afghanistan?
    Ms. Crumbly. That is correct and the limitations are to a 
two-tier subs, so----
    Senator McCaskill. Two tier?
    Ms. Crumbly. Two tiers, exactly. We found that is what 
works operationally best in Afghanistan----
    Senator McCaskill. And have you found any problem with 
having the two-tier requirement? Is there anything that you 
think that, in terms of value of competency, that you have 
sacrificed for a two-tier limitation?
    Ms. Crumbly. I would say not as yet, but we need time to 
see the implementation----
    Senator McCaskill. How long has this been in place?
    Ms. Crumbly. I want to say within the last 6 months? Mm-
hmm, 6 months.
    Senator McCaskill. Kudos, and I would be very anxious to 
see if you hit any bumps----
    Ms. Crumbly. OK.
    Senator McCaskill [continuing]. Because that seems 
reasonable to me----
    Ms. Crumbly. Mm-hmm.
    Senator McCaskill [continuing]. That you can restrict the 
number of tiers and requires the prime to do something other 
than taking a cutoff the top.
    Ms. Crumbly. Right.
    Senator McCaskill. We have a lot of those around, too many 
prime contractors that just take a cutoff the top. That just 
means that they are managing the contract because we are not in 
a position to manage it ourselves. I would like to see those 
kinds of contracts go away.
    Let me now turn to a broad-based question. What is not in 
this legislation that you think should be? Should we go further 
in any places? Have we adequately addressed training? I worry 
that we have not gone far enough on training. Obviously, we 
hollowed out the acquisition force in the 1990s and paid a dear 
price. Think of the money that we lost because we had nobody 
minding the store in contracting. It is just mind boggling.
    I mean, this is what is so hard about funding our 
government, because what sounds good in the short run, in a 
budget cycle, we do not have a tendency to think in decade-long 
implications. And I think that we have to be very careful as we 
go toward a much leaner government, which we must do, and 
toward a Defense Department where DOD does not get everything 
it asks for, in fact, is looked upon to find savings many 
places.
    I think I know the concerns. Your staffs have visited with 
us. We know where your concerns are. Is there any place that 
you would like to see us go further than we have or to clarify 
something that is in the legislation that you do not think is 
clear? And if you do not have anything for the record today, I 
certainly will take it in a followup after the hearing.
    Mr. Ginman. Well, so things that particularly concern me is 
in the area of past performance, not giving--when the 
Commission made this recommendation, we objected to it then and 
it is in the legislation--not giving contractors an opportunity 
to rebut negative past performance. We use the past performance 
for other contractors to make decisions when they award going 
forward. Anything that is negative requires the contracting 
officer in that competition to go out and ask industry, explain 
to me this negative past performance. So I can do it one time 
up front or I can have 10 people afterwards do it. So from my 
standpoint, not giving the contractors an opportunity, if there 
is negative past performance, to rebut it is only setting us up 
downstream where a contracting officer fails to do what they 
are supposed to do and go ask. It becomes a protest risk and we 
would do much better to give them an opportunity up front, and 
particularly if for whatever reason it was an unfair statement. 
Letting one level above the contracting officer to have the 
authority to say, all right, I have looked at what the 
contractor said, looked at what the contracting officer said, 
this is what I think the final answer should be, it just makes 
sense to us.
    Senator McCaskill. Secretary Kennedy.
    Mr. Kennedy. I think that there are two issues that I think 
I would like to see in the bill and one that I have some doubts 
and will communicate that to your staff.
    But on the two that I would like to see, at times, lowest 
price is not the best value for the American taxpayer. And so 
we have had some legislative exceptions from time to time 
allowing us to award contracts on the basis of best value, 
because the best value over time actually does result in a 
lower price than just the first bid and that. And so that is 
something we would be interested in discussing with you and 
your staff.
    The second is that the ability to use direct hiring 
authority, to hire 1102s, to hire professional contracting 
officers, that authority legislatively expires on the 30th of 
September. As we are trying, as you rightly say, to regrow the 
contracting community, anything that would enable us to bring 
in a new generation and get them trained up as fast as we can 
is of very great interest to us.
    The one issue that we will be discussing with your staff 
that we are concerned about is in the section on security 
contracting, there is a statement that the Combatant Commander 
in the theater has the final say on all security activities. 
That is of great concern to us because that substitutes the 
judgment of the Combatant Commander for that of the Secretary 
of State in determining what is the best way to ensure that the 
diplomatic and consular and assistance programs are protected 
as opposed to the Combatant Commander, who is focused on 
protecting the troops and engaged in force projection rather 
than force protection. And so that is the remaining large item 
of concern.
    Senator McCaskill. OK. So you have a sincere fear that the 
Combatant Commander would perhaps view the protection of the 
State Department's personnel as not mission specific enough in 
terms of his decision--his or her decisionmaking power?
    Mr. Kennedy. That is correct.
    Senator McCaskill. OK.
    Mr. Kennedy. And the charge of the Secretary of State in 
what is usually known as the Inman legislation, the Omnibus 
Diplomatic Security Act----
    Senator McCaskill. Right.
    Mr. Kennedy [continuing]. That vests the responsibility for 
protecting of civilian employees overseas in the Secretary of 
State.
    Senator McCaskill. And I want to followup on a previous 
statement you made. It is my understanding that the State 
Department's worldwide protective services umbrella contract is 
10 years, not 5 years.
    Mr. Kennedy. There is a base contract and then we award 
these task orders for no more than 5 years.
    Senator McCaskill. OK, but the umbrella contract that they 
can be awarded under is not 5 years, it is actually 10 years, 
correct?
    Mr. Kennedy. Yes. Right, but the task orders are 5 years.
    Senator McCaskill. That seems like a long time.
    Mr. Kennedy. Because the pricing, as my colleague, and as 
you both referred to, you want to make sure that the price is 
always best. The price is determined in the task orders that 
are awarded, and so that is where we ensure that the quality is 
still there and the price is in the best interest of the 
government. And so you have the master. You have qualified the 
firms to compete for the task order.
    Senator McCaskill. Well, and this is getting a little far 
afield and I will not go too far in the weeds on this, but I 
would love to spend more time, your staff with the staff of the 
Subcommittee, working on this, because I, frankly, I am not 
sure that we should ever not have private security forces at 
embassies in a contingency. I mean, I think there is a strong 
argument that can be made, if we are in a country where we are 
fighting a war, that the security of that embassy should be by 
our military and not by Third World nationals that are being 
hired by a subcontractor under a 10-year umbrella contract. I 
mean, obviously, we had bad things happen in Kabul, as was a 
subject of a different hearing here. And I am not saying that 
is a fault of the contracting that went on, but I just think 
that if we are in a contingency, I think that the people of 
that embassy could be best protected by American military.
    Mr. Kennedy. We would certainly, and we benefit greatly now 
and over time with cooperation from our military colleagues. 
But we also know that the U.S. military is exceedingly 
stretched. And when I first served in Iraq in 2003, the U.S. 
military was protecting the civilian contingent. But over the 
course of time, as the demands on the U.S. military increased, 
they could not and did not have the resources to protect us.
    I have less than 2,000 diplomatic security special agents 
and officers for the entire world, 285 embassies and 
consulates, plus their responsibilities for security protection 
of foreign dignitaries in the United States. And so I am caught 
in a bind here. I am required to ensure that we can continue 
diplomatic and consular operations, not only in war zones or 
zones of conflict, but also everywhere else in the world, and 
the ability to do that is constrained by my internal resources 
and the resources that the DOD is able to put at my disposal. 
And the compromise there is to do, I think, the better job that 
we are now doing with more training and these master contracts 
that will have a better quality control so that we avoid the 
problem that you alluded to in Kabul 2 years ago.
    But I would note, just as an aside, the U.S. Embassy has 
been attacked twice in the last 6 months and it is that same 
security personnel who have done heroically in defending the 
U.S. Embassy against both the attacks, both the one this past 
Sunday and the one several months ago.
    Senator McCaskill. But that is a new contractor.
    Mr. Kennedy. No, it is the same one.
    Senator McCaskill. I thought EODT was terminated.
    Mr. Kennedy. EOD has been terminated, but EOD never 
started. The previous contractor that was involved with a small 
unit of specific people, those individuals were replaced, the 
upper level management replaced. The company is still there and 
will be there until the new contractor arrives.
    Senator McCaskill. I did not realize that. So Armor is 
still there under the British contract.
    Mr. Kennedy. Yes, ma'am.
    Senator McCaskill. OK. And, Ms. Crumbly.
    Ms. Crumbly. I would like to support the points raised by 
my fellow panel members, but I also want to note, as Under 
Secretary Kennedy mentioned, he has a working capital fund that 
is able to supply a steady stream of resources to support his 
acquisition assistance workforce. We, too, are requesting that 
authority. So if there is a way to go further and have support 
for that working capital fund authority for USAID so we have 
that steady stream, I think that is important for us.
    One other thing I did want to correct, in terms of the 
subcontracting, while we are at the two tier, we do have the 
flexibility or an approval process where the Assistant 
Administrator for the Bureau would approve it if you go beyond 
those three. So we do still want some flexibility on 
subcontracting, so I did want to note that, as well.
    Senator McCaskill. Yes, and I think we have--every place 
that we have said, this should be the rule, we put in waivers. 
And so what we are looking for is a change in what is the 
primary conduct of contracting and contingencies. And, 
obviously, because it is a contingency and stuff happens, there 
are going to be times that waivers will be necessary. But at 
least if waivers are necessary, that means you are going to get 
documentation, which is one of the challenges we have had in 
this area.
    Well, I want to thank all three of you. I know that in some 
ways I have been a broken record on this subject for 5 years, 
but I have a tendency--I am going to try to be kind to the 
institution that I am lucky to serve in. Sometimes this place 
has the attention span of a kindergarten class, and I have 
noted that things like this, once they move off the front 
pages, have a tendency to fall through the cracks. And so I 
have really tried to stay on this and want to get this across 
the finish line in terms of getting these changes into law and 
monitoring the continued progress as we cleanup contracting and 
contingencies.
    One thing I would let you know, Mr. Ginman, is that I did 
have an amendment to pull all the AIF funds out of Afghanistan 
and have them to into the United States Highway Trust Fund. 
People did not think I was serious. I was serious, and the 
reason I am serious is the projects that are now on the board 
for AIF, which is the morphing of CERP into infrastructure by 
the Defense Department as opposed to AID, that has 
traditionally done all this work, is that the projects we have 
ongoing now are not going to be completed until 2014.
    So if we are adding additional resources for the next 
fiscal year, that means we are starting new projects. And I 
have not yet gotten from the Defense Department what they are 
envisioning what these new projects would be. And what I am 
envisioning is if we are starting new infrastructure projects 
in Afghanistan as we are trying to pull out of Afghanistan, 
then we may end up with that reality that I think is very hard 
for Americans to understand, that our military would, by and 
large, be gone from Afghanistan, but we would have a full force 
of contractors that we would be paying on the ground for years 
to come on projects that we really would struggle to provide 
the security necessary for completion under that scenario.
    So I continue to wait to find out what this new $400 
million that has been requested is supposed to be building in 
Afghanistan over the next 2, 3, 4, 5, 6 years, and hope you can 
spread the word over there that I am drumming my fingers 
waiting for that information.
    Mr. Ginman. Yes, ma'am.
    Senator McCaskill. OK. Thank you all very much for being 
here. [Pause.]
    I will introduce these witnesses. The first witness is 
Lynne Halbrooks. She became Acting Inspector General for the 
Department of Defense in December 2011. She joined the 
Department of Justice as an Assistant U.S. Attorney in 1991 and 
has served as General Counsel for the Special Inspector General 
for Iraq Reconstruction, and General Counsel for the DOD 
Inspector General. Prior to her appointment as Acting Inspector 
General, she served as the principal Deputy Inspector General.
    Harold Geisel has served as the Deputy Inspector General 
for the State Department since June 2008. He has more than 25 
years of experience with the State Department and previously 
served as Acting Inspector General in 1994.
    Michael G. Carroll has served as Deputy Inspector General 
for the U.S. Agency for International Development, USAID, since 
February 2006. Mr. Carroll is a member of the Senior Executive 
Service with more than 26 years of government service. Prior to 
his appointment, Mr. Carroll served as the Director of 
Administration for the Bureau of Industry and Security in the 
Department of Commerce.
    It is the custom of this Subcommittee to swear all 
witnesses that appear before us. If you do not mind, I would 
ask you to stand.
    Do you swear that the testimony you will give before this 
Subcommittee will be the truth, the whole truth, and nothing 
but the truth, so help you, God?
    Ms. Halbrooks. I do.
    Mr. Geisel. I do.
    Mr. Carroll. I do.
    Senator McCaskill. We will ask you to try to hold your 
testimony to 5 minutes. I must say that the attention you will 
get today is much less than your colleague Brian Miller will 
get this week, but that is probably a good thing. I am not sure 
that we will have any injuries of TV cameramen trying to follow 
you down the hallway. If you are going to talk about Las Vegas, 
warn me ahead of time because--and I joke about this, but I 
must say, every once in a while, something happens in the world 
of Inspectors General that highlights your work. And for most 
of the time, your work is done in the shadows. No one pays a 
whole lot of attention. Unfortunately, sometimes the agencies 
do not pay a whole lot of attention.
    It is very important to me that we get this legislation 
right from your perspective because you are the front line. And 
while there may be a hit every once in a while that gets the 
bright glare of camera, you toil away most of the time in 
relative obscurity. Most Americans have no idea what Inspectors 
General are and they do not realize the work you do. They do 
not understand the capacity you have to look after your 
interests. And they certainly do not get to watch those small 
but important battles that you wage every day with people who 
lead your agencies toward a goal of more accountability, 
transparency, and saving the taxpayers money.
    So as I always try to say to Inspectors General that I am 
honored to deal with in these hearings, thank you for your many 
years of service in this area. You are great examples of public 
servants that are painted with a broad brush, overpaid, 
underworked, too many of you. There are not enough of you and 
you will never hear me say that you are underworked or 
overpaid. So thank you, and we will begin with you, Ms. 
Halbrooks.

 TESTIMONY OF LYNNE M. HALBROOKS,\1\ ACTING INSPECTOR GENERAL, 
                   U.S. DEPARTMENT OF DEFENSE

    Ms. Halbrooks. Thank you, Chairman McCaskill, and thank you 
for your appreciation for the IG community's work. That means a 
lot to us. Thank you today for inviting me to express our views 
on the Comprehensive Contingency Contracting Reform Act of 
2012.
---------------------------------------------------------------------------
    \1\ The prepared statement of Ms. Halbrooks appears in the appendix 
on page 98.
---------------------------------------------------------------------------
    As the Acting Inspector General at the Department of 
Defense, oversight of contingency operation remains my No. 1 
priority. I am committed to continually refining and improving 
our oversight approach.
    Last week, I was in Afghanistan and had the opportunity to 
observe firsthand how the oversight organizations currently 
plan, coordinate, and deconflict audits and assessments. At the 
most recent Shura oversight meeting that I attended, IG staff 
from Defense, State, USAID, the Special Inspector General for 
Afghanistan Reconstruction (SIGAR), the GAO, and local command 
IGs discussed critical oversight challenges and exchanged 
information in a productive and collaborative manner.
    I also met with senior commanders there to determine how 
the DOD IG can continue to provide the best independent and 
objective oversight of contingency operations in Afghanistan. 
The senior commanders understand the need for transparency and 
oversight, and the men and women serving deserve to know that 
every dollar spent for their health, safety, and security is 
spent efficiently and effectively. I believe that the 
organizations that do oversight and the commands are working 
well together to make this happen.
    To make this effort even more effective, we at DOD IG have 
a special Deputy Inspector General for Southwest Asia (SWA) who 
functions as the authoritative source to plan, coordinate, 
deconflict, and facilitate effective oversight. He also serves 
as Chairperson of the Southwest Asia Joint Planning Group, 
which is the principal Federal interagency forum to promote 
coordination and cooperation for comprehensive oversight. This 
group meets at least quarterly, and is comprised of 
representatives from over 25 DOD and Federal oversight 
agencies, functional components, and command IGs.
    We as an oversight community have developed considerable 
experience in conducting timely and relevant audits, 
inspections, and investigations of overseas contingency 
operations. At DOD IG, we have the capacity to deploy anywhere 
in the world and are prepared to respond effectively, of 
course, in coordination with other Federal agencies and 
internal DOD oversight offices, to address future contingency 
operations overseas.
    With this background, I would now like to discuss the 
Comprehensive Contingency Contracting Reform Act of 2012. 
Overall, I support the legislation and, in general, support the 
provisions of Section 103 of the bill, which calls for a lead 
IG in overseas contingency operations.
    Based on the strong working relationship that has evolved 
between the Department of Defense, State, and USAID IGs, I do 
not believe there is a need, as the bill is currently written, 
for the Chair of the Council of Inspectors General on Integrity 
and Efficiency (CIGIE) to designate a lead IG in a contingency. 
Given that the bill defines a contingency operation as, quote, 
``a military operation outside the United States and its 
Territories and possessions,'' I believe the legislation should 
recognize the Department of Defense Inspector General as the 
lead IG. Alternatively, a determination of the lead IG could be 
made based on the amount of funding appropriated to the 
respective agencies.
    Congress mandated in Section 842 of the National Defense 
Authorization Act of fiscal year 2008 that the DOD IG, in 
conjunction with multiple Federal IGs and DOD oversight 
agencies, issue an annual comprehensive oversight plan for 
Southwest Asia. I recommend the Subcommittee consider similar 
requirements to develop a joint oversight plan under the 
direction of the lead IG that would include a focus on 
strategic issues and contingency operations oversight.
    I would also like to work with the Subcommittee further to 
refine the reporting requirements in the proposed legislation. 
While compilation of data on obligations and disbursements is 
primarily a management function, an IG can add value by 
independently analyzing this data. Therefore, we believe a 
requirement to compile the data should be assigned to each 
Department and the IGs should review the quality of that data 
as part of their oversight plan and use it to inform their 
work. We believe that a semi-annual or even annual reporting 
requirement would provide Congress with meaningful data and 
necessary transparency.
    Finally, the provision in the bill authorizing the lead IG 
to employ annuitants and other personnel on a temporary basis 
will definitely enhance our ability to move the right people in 
country quickly to establish an immediate overseas presence. 
However, I believe the special hiring authorities would be most 
effective if they are not time limited.
    With the few changes that I have outlined above, plus a 
funding mechanism to resource the hiring of additional staff, 
the proposed legislation would be an efficient, effective way 
to ensure independent and comprehensive oversight of future 
overseas contingency operations.
    Thank you for your support of the community. I appreciate 
the opportunity to testify today and express our views and look 
forward to answering any questions you might have.
    Senator McCaskill. Thank you. Mr. Geisel.

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

    Mr. Geisel. Thank you, Chairman McCaskill, for the 
opportunity to discuss our views on strengthening oversight of 
government contracts during contingency operations. I ask that 
my full testimony be made part of the record.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Geisel appears in the appendix on 
page 108.
---------------------------------------------------------------------------
    We commend the Subcommittee for its leadership and tenacity 
in developing this critical legislation. Madam Chairman, we 
believe that S. 2139 is a positive effort to ensure that 
statutory IGs have the tools needed to provide efficient and 
effective oversight in the most challenging overseas 
environments.
    The effect of the bill's provisions on OIG would be broad, 
positive, and certainly manageable. OIG agrees with and 
supports Sections 101 and 103 in the bill with three suggested 
revisions. First, we recommend a small but important revision 
to Section 101. We suggest an automatic percentage-based 
funding mechanism be included in the operations budget for IG 
oversight. IGs will need immediate additional funds to offset 
the unforseen and unbudgeted costs of doing business in a 
contingency environment. A model for these mechanisms can be 
found in the American Recovery and Reinvestment Act, where 
funding for all of the involved IGs was provided to oversee the 
Act's significant new appropriations.
    Second, Section 103 of the bill would mandate that the 
Chair of the Council of Inspectors General on Integrity and 
Efficiency designate a lead IG for the contingency operation 
and resolve conflicts of jurisdiction between the participating 
IGs. We suggest that at the onset of a contingency operation, 
the relevant IGs would first determine which agency is expected 
to have the largest share of the operation's funding and that 
agency's IG would become the lead IG. It would then follow that 
the agency with the next highest level of funding would become 
the operation's associate IG.
    In recent years, the statutory OIGs worked well together to 
oversee contingency operations. For example, conflicts on 
jurisdiction and work deconfliction have been resolved 
efficiently by both the Southwest Asia Joint Planning Group and 
the International Contract Corruption Task Force for work in 
Iraq, Pakistan, and Afghanistan. These groups, which are 
comprised of all IGs working in these countries, meet quarterly 
and have been a success. This approach would save time and 
simplify the process during the hectic period at the onset of 
the contingency operation.
    Last, we support the provision for semi-annual IG 
reporting. We do suggest one adjustment, that this reporting be 
scheduled to coincide with the IG's semi-annual reporting 
cycle. However, the quarterly reporting provision in Section 
103 would mandate that IGs provide detailed financial data, 
specific obligations and expenditures, a project-by-project, 
program-by-program accounting of incurred costs, foreign 
investment revenues, seized or frozen asset information, agency 
operating costs, and detailed contract and grant financial 
information. All of this data resides in the Department or 
agencies, not in OIGs. We suggest the participating Departments 
provide a periodic stream of data to Congress and to the 
participating statutory IGs. We can use this information on a 
semi-annual basis to better plan and prioritize our oversight 
work.
    Finally, our recent successes in OIG are a result of the 
increased confidence in our work and the resulting 
congressional funding increases appropriated since 2009. These 
increases have enabled our OIG to increase audit inspection 
reports by more than 56 percent. Similarly, suspension and 
debarment actions based on our referrals have increased 
dramatically, from zero in 2008 to 17 in 2011. And today, we 
are operating in five overseas offices, from Cairo to Kabul. So 
when Congress provides the necessary funding, we deliver good 
results.
    That said, when you set out to rebuild an organization, 
take it to new regions, and modernize its approaches, it is not 
always about the money. That is why we appreciate your efforts 
to provide the new hiring authorities and the legal framework 
adjustments that support more effective law enforcement.
    Thank you, Chairman McCaskill, for this opportunity, and I 
am prepared to answer your questions.
    Senator McCaskill. Thank you very much. Mr. Carroll.

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

    Mr. Carroll. Chairman McCaskill, thank you very much, and 
Senator Portman and distinguished Members of the Subcommittee. 
Thank you for inviting me here today.
---------------------------------------------------------------------------
    \1\ The prepared statement of Mr. Carroll appears in the appendix 
on page 114.
---------------------------------------------------------------------------
    You may recall my impassioned plea the last time I 
testified before you in November 2010 on behalf of the 
statutory IGs. I said then that you had what you needed right 
here and nothing in the last 18 months has changed my mind on 
that. So this is truly, I think, a step in the right direction, 
the legislation not only on behalf of the agencies for 
performance and accountability, but also giving us the 
resources and authorities we need to do our job in a 
contingency operation. So I really appreciate this opportunity 
today.
    I would also like to thank you for the inclusive nature of 
the deliberative process, working with your professional staff 
on both sides. They have been really open to our suggestions 
and I would like to think that is reflected in the bill, that 
there are not a lot of major changes that we think need to be 
made. I think it is well down the road to be where it needs to 
be. We just have a couple of issues that we just want to nail 
down, if I could.
    As it relates to Section 103, I agree with my colleagues 
that based on the way you have defined a contingency operation, 
it is clear that DOD IG--it is clear to me that DOD IG would be 
the lead IG in this particular case, and then whether it is AID 
IG or State IG on an associate IG basis. So we do not see a 
need for CIGIE. If, somehow, that came to pass that CIGIE was 
part of this equation, then we would hope that there would be 
some committee that the three of us participated in that would 
be able to inform the CIGIE committee on whatever needed to be 
done. But we do not think there is a need for CIGIE, a role for 
CIGIE in this process.
    On the funding and the authorities, as you know, we are a 
foreign service organization and our auditors and investigators 
are stationed around the world. We just want to make sure that 
the authorities for rehired annuitants and dual compensation 
waivers not only address Title V employees, but address Title 
XXII employees, as well, retired Foreign Service Officers, so 
we could then reach back to our cadre of retired auditors and 
investigators to be able to do the job.
    There is one aspect not in the legislation that I would 
like to propose, and I know you asked that question to the 
previous group of witnesses, and that is based on our 
experience in Pakistan, we have had great success with a 
national hotline on the Kerry-Lugar implementation, and I can 
share the stats we have and the successes we have had with you 
and your staff and I would like to possibly work with you to 
include something like that. I have talked to my colleagues. In 
principle, they agree. We could work through the jurisdictional 
issues and that sort of thing with no problems. But I think it 
would enhance the oversight of whatever the programs are in a 
contingency situation.
    Related to the agency and the agency's oversight, on 
suspension and debarment, as it currently is written, there is 
an automatic trigger for suspension and debarment if there is 
an indictment and I would say that we should talk about that. I 
think there are times when an agency has demonstrated already 
that they have addressed the issues that we brought up in our 
investigations, even though they admit there may be an 
indictment on a criminal or civil referral. So I would ask that 
you just consider the possibility of that being a case-by-case 
basis rather than an automatic trigger.
    And I think from an agency point of view--I am not here to 
advocate on behalf of the agency, but I do endorse what Ms. 
Crumbly said. I think the agency has made huge strides since 
our audit of 2009 that was borne out of a bit of frustration on 
our part about how the agency was proceeding with our 
referrals. So I think the AED case in Pakistan is a great 
example of the agency stepping up and being able to make the 
hard decisions, even when it impacts potential program 
implementation.
    On TIP, which is very important to Senator Portman, I just 
wanted to let you know that, recently, we have met with the 
agency personnel responsible for trafficking in persons. We are 
attempting to, with our colleagues at State and DOD, to come up 
with a training package for our auditors and investigators 
because this is not in our sweet spot. We are contract 
procurement fraud investigators and auditors, and so this is 
different than what we normally do. So we want to create a 
training package that we could implement at the Federal Law 
Enforcement Training Center (FLETC) and at CIGIE, the IG 
Academy at CIGIE, that would train our auditors and 
investigators.
    And I can also let you know that both for sustainability 
and TIP, they are standard audit provisions and audit 
objectives in each one of our audits, regardless of whether it 
is in Iraq, Afghanistan, Pakistan, Haiti, wherever. Those are 
two audit objectives we are always going to have in our audits.
    So with that, I appreciate the opportunity again and look 
forward to answering any questions that you might have.
    Senator McCaskill. So it looks like that all three of you 
agree that in contingency, the three of you should work 
together with DOD as lead.
    Mr. Carroll. Yes.
    Senator McCaskill. And there is no reason to do the CIGIE 
decision and all that, that both State and AID acknowledge that 
if it is contingency, then in reality, the vast majority of the 
resources that are going to be brought to bear are going to be 
coming out of the Defense Department. Therefore, in any kind of 
decision as to risk and work, it is all yours, Lynne.
    Ms. Halbrooks. Yes, ma'am. [Laughter.]
    We are ready to step up and assume that responsibility. I 
think that the last few years have taught us all as an 
oversight community a tremendous amount about how to work well 
together, and I think we would be able to respond quickly and 
effectively.
    Senator McCaskill. And let me just say, I think I should 
point out for the record that none of you are the official 
full-time appointed and confirmed IGs. I guess you are, Mr. 
Carroll.
    Mr. Carroll. No, I am not. I am acting right now----
    Senator McCaskill. No, you are not, either.
    Mr. Carroll [continuing]. And my authority is running out--
--
    Senator McCaskill. Yes. That is right. So we do not have 
SIGAR. We do not have DOD. We do not have State. And we do not 
have AID in terms of an appointed and confirmed Inspector 
General. And let me say, in case anyone is--let me disabuse 
anyone of the notion that I am not willing to criticize the 
White House. I find it appalling that these people have not 
been appointed. There is a long list of qualified people to 
hold these jobs, and I am sure that some of you are on those 
lists, if not all three of you. And I do not understand why 
this is taking so long. I mean, if you look at the world of 
Inspector Generals and the money that is being spent, how these 
positions can go vacant for this period of time is beyond me, 
and I am hoping that the White House gets busy and starts 
announcing the appointment of some Inspectors General.
    Let me ask about suspension and debarment. As you know--I 
mean, what this legislation is trying to do is move a boulder, 
that there has been cultural reluctance on suspension and 
debarment. There has been cultural reluctance to not give 
performance bonuses in government as it relates to contracting 
and there has been a cultural predisposition to not suspend or 
debar, with the exception of the Air Force. I do not know what 
they are drinking at the Air Force, but I like it that they are 
aggressive about suspension and debarment.
    So we are trying to encourage aggressiveness. Now, 
obviously, this is controversial, because several people have 
said they do not like the automatic suspension or debarment 
upon criminal indictment. Should we not, at a minimum, require 
an assumption that there would be a debarment that would 
trigger a requirement to document why not?
    Mr. Carroll. Yes.
    Mr. Geisel. Yes.
    Senator McCaskill. Ms. Halbrooks.
    Ms. Halbrooks. Yes. I think memorializing the 
decisionmaking would be fine, yes.
    Senator McCaskill. I do not know, and I am not saying that 
we would change the legislation at this juncture as it related 
to that, but there clearly have been bad actors where there has 
not even been a ripple. It seems to me that a criminal 
indictment of a contractor should be an event that requires 
some folks in that agency to take a hard look, do some 
scrubbing, and figure out what the problem is, and if the 
problem is an isolated bad employee, that be documented 
thoroughly with some kind of formalized process. Do you 
envision you all being engaged in that process? Would it make 
sense to have a justification for non-suspension or debarment 
in light of criminal or civil fraud, that be forwarded to the 
Inspectors General?
    Ms. Halbrooks. I would want some time to consider that 
option in a little more detail, but it would definitely sort of 
change the culture of the suspension and debarment programs, 
which typically are not about punishment. They are about making 
business decisions and making sure the Department is working 
with responsible contractors.
    I can say that I think in the case of a criminal 
conviction, at least from the point of view of our IG agents, 
the Defense Criminal Investigative Service, we do play a role 
in that we are the referring entity often for a potential 
suspension and debarment and we do not just wait until there is 
a criminal conviction. One of the remedies in our tool kit is 
to make a referral to the suspension and debarment authority.
    I do not think that we need to play a role in management of 
that program. We should oversee it. We issued a report in July 
2011 on the Service agencies and the Defense Logistics Agency 
(DLA); and DLA was actually fairly aggressive in the sample 
that we looked at in terms of taking the contracting officers' 
recommendations and proceeding. So I think that we have a role. 
I do not think it is oversight of the specific decisions that 
the SDO authority makes, but I do think that as a referring 
agency, we can help to ensure that the Departments are 
promoting the suspension and debarment program and training the 
contracting officials properly in the process and how to make 
those referrals, absolutely.
    Senator McCaskill. What about limiting the amount of time 
for contractors to respond to past performance reviews? Do any 
of you believe that makes sense? Do you have any problems with 
that? That also has received some attention from folks, that 
they think that allowing contractors to respond to past 
performance reviews before they are submitted to the 
government's database, lowering that from 30 days to 14 days is 
unreasonable. Do you all have any view on that particular 
provision?
    Ms. Halbrooks. I do not have any view today, but we could 
certainly look at that in more detail and provide you our 
opinion.

                       INFORMATION FOR THE RECORD

    We believe that 14 days should be a reasonable amount of 
time for the contractor to review and comment on the 
performance reviews that are done by the government contracting 
officer representative and should not place an undue burden on 
the contractor.

    Mr. Geisel. I would like to look, as well, and give you 
something in writing, but I would point out that you have used 
a word repeatedly which I think is very useful, and--well, two 
words which mean the same, actually, and that is waivers and 
documentation. And that is really what we are looking for, yes. 
A good law will always have provisions for what are we going to 
do now, this is different, but it has to be documented. So many 
people are much more inclined to do the right thing if they 
have to sign their name to a piece of paper.
    Senator McCaskill. Right. And besides that, it provides an 
audit trail, right?
    Mr. Geisel. Right. I like----
    Senator McCaskill. I remember. I liked it when we found 
documentation. This is a good day for an auditor.
    Mr. Geisel. I like----
    Senator McCaskill. When there is no documentation, it is a 
problem.
    Mr. Geisel. I like saying that to the former Auditor 
General of Missouri.
    Senator McCaskill. There you go.
    What about you, Mr. Carroll, on past performance problems 
and whether or not the contractor should be given time to 
respond before it goes into a database?
    Mr. Carroll. I think that they should. What the agency does 
with that information is up to them. I would think 14 days, 30 
days, there is really not a material difference there and I do 
not think it would have a material impact on an agency, or on a 
contractor or an agency, so I think giving them the benefit of 
the doubt, giving them the extra 16 days, whatever it would be, 
I do not see a downside to that.
    Senator McCaskill. OK. For the State Department, the State 
Department continues to say that it does not need the 
structural or organizational changes envisioned by this 
legislation. They have also said that they can meet any demands 
that arise in a contingency by relying on the working capital 
fund. Do you believe that they are correct, that they do not 
need any organizational or structural changes, from your 
position as the Inspector General for the Department?
    Mr. Carroll. I definitely feel that they need tweaking. One 
point that came out here that I would like to speak to them 
more about is, for example, whether they need a separate 
suspension and debarment official. What they have now, I agree 
with what Under Secretary Kennedy said, that the current person 
who is in charge of suspension and debarment does not have a 
role in the acquisition except in the most general way. But I 
think anything we can do to encourage the Department to focus 
on suspension and debarment is good, and we have seen progress. 
I think I would give the Department the benefit of the doubt, 
but I would hold them accountable.
    Senator McCaskill. OK. You all mentioned this in your 
statements, and I assume that all of you think that it would be 
a good idea to have a percentage-based funding requirement for 
Inspector Generals in contingencies, just as we did for the 
American Recovery and Reinvestment Act (ARRA), that we would 
set aside sufficient resources to keep track of the money as we 
appropriate the money.
    Mr. Geisel. Madam Chairman, I would point out that when I 
came to OIG on June 2, 2008, and since that time, thanks to 
what I assume is the good work we have done, Congress has 
doubled our resources. And as a result, we have been able to do 
a much better job. And the best way to ensure that we do not 
have what happened in Iraq, where there was a big delay until 
we got the resources, to have an automatic mechanism, I think 
serves everyone well. And it enables us to buildup, but it also 
forces us to go down again when the----
    Senator McCaskill. Right. That is what I like about it, 
because it does not build the agency beyond the capacity that 
is needed permanently. It does it as it relates to the 
contingency, and it also allows you to really buildup a body of 
expertise in this area, which has always been the argument for 
SIGAR and SIGIR. I mean, I went around and around with some of 
you about this in the past, that having that body of expertise, 
having a special Inspector General for contingencies. But if 
you did that, some of the people you hire in connection with 
that are just by the nature of the agencies going to stay on 
and would be there with some kind of history as it relates to 
contingency contracting going forward. So I do think it makes 
sense.
    And we all know that for every dime we spend on auditors, 
we get back a dollar----
    Mr. Geisel. More.
    Senator McCaskill. Or more. I just use dime and dollar 
because it is safe and I am conservative because you have to be 
able to back it up, right? So that is why I think it is very 
important that we do not--as we cut the size of government and 
spend less money in government, we have to make sure that we 
maintain a robust oversight function in these agencies because, 
frankly, it would be very hard for us to do our work without 
you all. I do not think people realize that you are so many 
times the communication that provides the oversight that 
Congress performs.
    Is there anything else that we have not addressed in the 
legislation that you all want to speak to before we close the 
hearing?
    Mr. Carroll. If I could just go back to suspension and 
debarment for a second, the IG by its very nature just loves 
independence. I think that is what makes us so effective. And 
so we do endorse--I know we are at odds with the agency on 
this, but we think that the S and D official should, in fact, 
be very independent of the political decisionmaking process in 
the agency.
    Senator McCaskill. Yes. I mean, with all due respect to 
Secretary Kennedy, even if the person in charge of SDO at State 
is not buying anything, they are helping write the policies 
that are telling them how to buy it. So if those policies 
failed and allowed some bad actors to be included in 
contracting, I think it is harder sometimes to hold that mirror 
up. So I am going to continue to push for that independence in 
the Suspension and Debarment Office that I think that is 
dictated by the legislation and that makes sense in terms of 
functions of an SDO official.
    Anybody else? Yes, Ms. Halbrooks.
    Ms. Halbrooks. I just wanted to add that while I agree with 
Acting Inspector General Geisel that funding is a critical 
element to ensure that we get started in oversight quickly on a 
contingency operation, I think that the parameters of the 
legislation that require coordination and coordinated planning 
and reporting by a lead IG will be effective, as well. As that 
funding takes a while to gear up, the DOD IG, because of our 
size, has the agility to immediately plug a trained group of 
auditors into a contingency. So while the funding is critical, 
the language in the legislation that I think in some ways 
documents the coordination and collaboration and the lessons 
learned in the past contingency operations oversight will go a 
long way to ensuring that there is no gap in oversight when one 
begins.
    Senator McCaskill. Yes, Mr. Geisel.
    Mr. Geisel. I, of course, agree with my colleague from DOD. 
I would also point out that one other very important part of 
the legislation should be our ability to use Title V and Title 
XXII annuitants because they have just what you were talking 
about, that very necessary experience. And if we can get them 
quickly when we need them, it will be a great help to getting 
the right people who can do the job.
    Senator McCaskill. OK. And I think Mr. Carroll mentioned 
that previously, that we needed to be able to get at that 
workforce, which makes sense.
    Well, I want to thank all three of you for your great work 
and for being here today. I am continuing to work on this 
legislation. If anything else you think we need to be working 
on as we tweak it and adjust it and get it into final form that 
hopefully we can get at least part of it enacted in the defense 
authorization bill this year--that is our goal--so we continue 
to improve it. I think we have some great input from you today. 
I think it is very clear that we can make a change in terms of 
how we provide for the lead Inspector General in contingencies 
and I think that will work out very well.
    So thank you very much for that, and onward. If you have 
good reports coming, do not forget to let us know. Thank you.
    Mr. Geisel. Thank you.
    Senator McCaskill. The Subcommittee is adjourned.
    [Whereupon, at 12:44 p.m., the Subcommittee was adjourned.]



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