[Congressional Record (Bound Edition), Volume 147 (2001), Part 19]
[Senate]
[Pages 26299-26300]
[From the U.S. Government Publishing Office, www.gpo.gov]



                          MONEY SPENT UNWISELY

  Mr. SESSIONS. Mr. President, one thing we need to do a better job of 
in this Congress--and we do have oversight and appropriations authority 
for all moneys that are expended--is to make sure that those moneys 
have been spent wisely, efficiently, and that the taxpayers' interests 
are protected with the same degree of fidelity that homeowners and 
families protect theirs, as small business people protect theirs. We 
don't always do that. We spend such big sums of money that sometimes we 
think small matters are not that significant.
  I had the responsibility a few years ago as Attorney General of 
Alabama to take over an office that was financially out of control. We 
had a huge debt facing the office the year I took office. We had to 
reduce personnel, substantially cut back on all kinds of things, and to 
reorganize the office. When it was over, even though we had lost some 
good people--no career people, thank goodness, but almost a third of 
the office, those who were political appointees; that office has never 
gotten close to the same number of people that it had--what we found 
was that working together we actually improved productivity. We did a 
great job. The people worked hard. They reorganized. They had a new 
vision.
  We have a false impression that money is the only thing that answers 
a problem around here. Always the answer is, just give it more money. 
And we in Congress say: We did what we could; that is somebody else's 
problem.
  I have initiated a program I call ``Integrity Watch.'' It is a 
program in which I take time periodically to analyze bad fiscal 
management expenditure practices in our Government and to highlight 
those. The one today I take no real pleasure in. It was a sad, 
confusing story, but it is appropriate for the taxpayers to know the 
final outcome, to see what has happened, to be aware of how much it has 
cost us in expenditures.
  Many people remember the decision by General Shinseki, Chief of Staff 
of the Army, to change the berets to give everybody a black beret. He 
set a deadline of this year, only a few months away from that date, and 
he had to find a whole lot of berets in a hurry. Under the Berry 
amendment, the Federal law requires that all clothing items be 
manufactured within the United States except in times of armed 
conflict.
  What happened with the deadline that was given was, the Defense 
Logistics Agency, that had been delegated the authority way down the 
line to grant waivers of the Berry amendment, found itself in a 
position where they did not have sufficient American manufacturers to 
meet that deadline. And so based on this artificial goal by the Chief 
of Staff of the Army, General Shinseki, they set about to get the 
berets wherever they could. They issued waivers and started getting 
berets from all over.
  They got 925,000 of them made from China, by the Communist 
government. Other countries were called on and agreed to manufacture in 
this rushed process. When that all became public and there were 
complaints about the beret decision to begin with and all these factors 
came up, there was quite an uproar. The result was that the military 
admitted that they had not complied at least with the spirit of the 
Berry amendment, that they should not utilize the Chinese-made black 
berets, worth $6.5 million, and so they stored them. They paid for 
them. They stored them. So we now have 925,000 black berets valued at 
$6.5 million not being utilized. Hopefully, some other army in the 
world might buy them from us, but we are certainly going to take a big 
hit on that.
  Another thing that we learned: Some of this information came about as 
a result of my request to the General Accounting Office that does 
audits for the Congress and other agencies to determine how moneys are 
being spent. We just got this audit back earlier this week. The General 
Accounting Office report indicates a number of other things that 
happened.
  GAO declared that the military, in order to meet its deadline, chose 
to shortcut normal contracting procedures. They found, for example, 
that

[[Page 26300]]

the defense logistics agency awarded the first set of contracts without 
competition.
  According to the contract documents, all the contract actions were 
not completed because of ``an unusual and compelling urgency.'' The 
real urgency was the self-imposed deadline they set.
  It also goes on to point out that these rushed up contracts hadn't 
worked very well. Not only were they being done substantially outside 
the United States by foreign suppliers in violation of congressional 
acts, but they weren't being performed well and had to be canceled.
  The Denmark military equipment supplier which manufactured black 
berets in Romania agreed to supply 480,000 berets. Only 90,000 have 
been supplied, and the military canceled the order for 350,000.
  Another one was a Bernard Cap Company, which is manufacturing the 
berets in South Africa but with Chinese content. They contracted to 
supply 750,000 berets. The cancellation has now taken place, and 
442,000 were canceled.
  A third contract was with Northwest Woolen Mills to have the berets 
manufactured in India. The number purchased was 342,000; the number 
delivered was 56,000; the quantity canceled was 235,000.
  Every time the military has to go through a cancellation of a 
contract, it costs us money. We all know that. That was bad management. 
A lot of things happened that I think were not good. I am, however, 
quick to say that the Assistant Deputy Secretary of Defense, Paul 
Wolfowitz, early on had a study and review done of the compliance with 
the Berry amendment. And what they concluded was that he would direct 
an order, throughout the Defense Department, requiring compliance with 
the Berry amendment, directing that any waiver authority could not be 
delegated below the Under Secretary of Defense for Acquisition. That is 
what the problem was in this case.
  It required that no waivers be granted without a full analysis of the 
alternative because it is easy to say there is no supplier in the 
United States. But had the Defense Department really searched it out to 
make sure that is true? Had they considered other possibilities? He 
directed that it be done. He achieved revisions throughout the 
acquisition regulations which govern our military forces as they make 
acquisitions. There are complex regulations and he revised them to make 
sure there would be no further violations of the Berry amendment. In 
the course of all this, he uncovered at least three cases in which the 
Berry amendment had apparently been violated. No one had even raised 
it, and no analysis or waiver had been done. They just went on and 
purchased military apparel outside the U.S. without any kind of waiver 
authority.
  Now, the Chief of Staff of the Army came under a lot of criticism, 
and I think he told the truth. He was frank when he discussed why he 
did what he did and why he believed it was important. I think he made a 
mistake. He did not argue with people about it. He explained why he did 
what he did, and he believe he was justified. So I hope that is a 
learning experience there.
  It is not enough that we just complain about waste, fraud, and abuse. 
My little program, called Integrity Watch, is designed to ask in some 
detail how can we make it better. Do we need legislation to be passed? 
Do we need regulations to be changed? Do we need to cut off funding? 
What do we need to do to improve a situation? In this case, I would say 
the Berry amendment is adequate. It does the task. What the problem was 
a cavalier attitude about how it should be administered. I also think 
there was an unnecessary rush to produce the berets, and it cost us a 
considerable amount of money, a $26 million total contract price. So I 
believe the actions of the Defense Department in reinvigorating and 
highlighting the need to enforce the Berry amendment, to raise up the 
level of the personnel of the Defense Logistics Agency before anybody 
can grant a waiver, will probably solve that.
  So I don't think legislation is needed. I am certainly not of the 
view that we need to pass legislation to direct how the Chief of Staff 
of the Army decides emergency matters. I hope through this experience, 
however, that he will have learned a lesson, and those who work with 
him will have learned a lesson, that sometimes it is better to go slow, 
not to set deadlines and goals that are too fast because the costs can 
be paid by the taxpayer and you can end up with problems such as we had 
in this case. You can end up with a situation where a nation is 
supplying berets that we don't intend to use. You can end up with a 
situation where contracts, because they were rushed, got canceled and 
where it cost more money and ended up delaying distribution of the 
berets.
  I think this is worth highlighting. I appreciate the GAO for doing an 
objective and fair analysis of the situation. It was not a bright day 
for the Department of Defense. In fact, it was a clear error--a kind of 
problem that should not have occurred. But it did occur. I believe we 
have all learned from it and, hopefully, in the future, this will be 
avoided as we go forward with the additional procurement we will be 
facing to make sure the men and women in uniform have the equipment, 
clothing, and resources they need to do the important jobs with which 
they are challenged.
  I thank the Chair and yield the floor.

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