loss, enormous waste. .. >> the -- according to the congressional research service, we are now spending when we add in the regular budget, the supplemental bills and we are getting ready to voted on another supplemental bill, here, with in -- either this week or a few days from now, and, yet in the emergency appropriations, and then all of the money they throw into the omnibus,

according to the crs we are spending more on defense than all the other nations in the world combined and it seems to me that, you know, a lot of it is john rated because the defense contractors hire all the retired admirals and generals and then they call it this revolving door at the pentagon but, somebody is going to have to -- i don't think that we can just keep on wasting and blowing money in the way we are doing. but, the only question i have, you say, mr. thibault at one point in your testimony, you say that there are a number of new projects that -- in the pipeline and you mentioned this $30 million dining facility. how many rough guess, how many other new projects are going on, or -- talking about? >> i can't answer that question. because that is our immediate action on our next -- we are doing the analysis and we know it is $2 billion, what we want to do is touch those projects to look the at them and see if they

make sense and that is where you need people in theater. it just happened that this was shared with us, when we happened to visit that base. and, you know, there are a couple hundred bases in iraq, we visited three or four of them, and there is obviously a need to, one, do the analysis, and, then, two, look at the high-dollar items and ask those questions, does this make sense with the drawdown of iraq. >> so, do you mean, by saying that, that you have only visited three or four and there are hundreds of bases, so is the $2 billion just the tip of the iceberg estimate? or is that -- >> no, that is what is in the pipeline as approved construction projects. and, it is kind of interesting, this project, this example, of the dining facility, right next to it -- and they needed to feed 4,000 individuals, they upgraded it because, they had a lot of problems with it, the existing one and spent $3.6 million,

well, that had just occurred. and, what happened is the paperwork that showed all of the problems that led to this upgrading the cafeteria and be sure it could serve the proper number never made it into the planning documents for the new construction, so they still thought they had this dilapidated dining facility. and, the only thing i can think of and it is this importance of the chairman, you have to go out and look at it. you have to spend the time in the country, because if we hadn't, none of that would have come forward, you can just do an analysis of paperwork because it would have said dilapidated facility, need to build it and the paperwork would say, makes sense and it had been renovated and we will have two great dining facilities. >> and also, it is done at a time of -- before the agreement between iraq and the u.s., when we would depart, so, as it -- excuse me, as it turns out, we'll have this new wonderful dining facility for about two years. >> is it the same contractor doing both the repair work and

the new facility? >> yes, sir. in this case. >> so they never spoke up of course and said, what are we doing here? mr. lynch. >> thank you, mr. chairman. mr. shays, welcome back before the committee, great to see you. and thank you all for your great work. i have been over -- haven't been to iraq as many times as mr. shays has but a am up around a dozen now and one of my jobs before a came to congress, i spent a lot of time on construction sites. i haven't -- a construction engineering degree and i am surprised that we get as much work done in iraq and afghanistan, given the contract arrangements that we have. i have seen just horror shows. i visited a lot of construction sites. in iraq, and afghanistan. and you know, i frank think stewart bowen, the special -- former special inspector general

for iraq reconstruction did a fantastic job, but from my visits to afghanistan, i think that the situation there and the inspector general in afghanistan is far less able, he's newer, his team is newer, but far less able to police the contracting situation there, so, i am very apprehensive about our ability to lose money. in afghanistan and to waste it. just through incompetence as well as through fraud. one of the earliest hearings we had in here, back in 2003, 2004, on iraq, i asked the director for the dcaa, the defense contracting audit agency, i said, how many contractors -- excuse me, how many auditors do you have in iraq? and he said we don't have any.

and at this point, we had -- are spending billions of dollars there. billions. and i said, how does that work, then? and he said, well, we are auditing our work and our contracts in iraq from alexandria, virginia. which explained why, you know, it is reflected in your own report, but explains why we are having such a problem here. and, now, i read, again, from the committee's memo, that we have got four folks, four individuals, in afghanistan. in the whole country. who are spending billions of dollars there and we have two at bagram air force base and two down in kandahar. and that is it. if we don't get a handle on that with boots on the ground and people competent enough to review these contracts, this is criminal. it is criminal.

you know, there is nobody who would operate like this on a -- in a private basis, if we were spending, you know, private corporate dollars, this wouldn't be happening. i think it is happening only because we are spending taxpayer dollars, and people feel that it doesn't have to be you a it to that great degree and we are servably sloppy in iraq and afghanistan, and we have to tighten up our act. what do you see this is greatest need, in terms of getting some accountability on the ground? we can't continue to operate this way. in terms of the contracts going out, without tight enough accountability standards. or recognizable standards. you know, i went on the jobs in iraq where, you know, just from walking on the jobsite, you see substandard materials. i try to talk to the workers there. i had an iraqi interpreter with

me. turns out they are all from india and you have 60% unemployment in iraq and why the heck are we bringing in foreign workers, god bless folks from india but you ought to put people follow iraq to work and it seems there are to requirements in the contracts that would help the overall cause of putting people to work and stabilizing that country but from your own attendance and observation on the ground what do you think needs to be done first and fastest? >> i think the first thing we need to do is to encourage the department of defense to make this one of their highest priorities. we have spent in contracting in $103 billion, in afghanistan, $20 billion. in kuwait, $18 billion. and in the other countries, supporting iraq, and afghanistan, $12.7 billion.

$154 billion. and what we know is we don't have enough contract office representatives. we don't have enough quality assurance representatives. we don't have enough log cap support officers, we don't have enough people watching the contractors. we have 70% of our contracts go to subcontractors. our law in this country makes it a requirement that we can only oversee the subcontractor by going through the prime. and, so we have to get the information secondhandled. i think we need to reexamine that and 70% of the dollars i mentioned are actually going to the subs. we have another issue, and that is, if it is afghan employees, or iraqi employees, they -- we have to deal with those governments. and there are certain protections and hoops we have to jump. and it would strike me that if we are going to spend all our dollars there, that we should

have greater ability to oversee the contracts that are done by the in digits foljgits -- in di folks, paid for by us. >> at one point in your report you have an example of cutting through the prime and going to the subcontractor making that person the prime and that is having better capacity in our own standard and not having to rely on the contractor so they don't take a cut and i think, you pointed to one of the instances, the subcontractor jacked the prices up and then the prime went out and doubled it and passed it along and took it all off the top and i think you are exactly right. and i hop you continue to look at that aspect and share it with us. and page 9 of your report you have a sidebar and talks about cracks in kabul. and you have a new kabul compound, where it -- supposedly u.s. forces in afghanistan headquarters, where mr. -- general mccrystal will be sitting except he won't because there are structural cracks and improperly plumbing and

incorrectly sized sewage systems and broken and leaking pipes, and sinking sidewalks and other construction defects. how does that happen? that somebody signs off on a project like that, and we end up getting tagged for the bill and have and newsable building on that. >> one of the -- an unusable building on that. >> one of the things, is accountability and how does that happen. in this particular instance, u.s. corps of engineers. >> i cannot hear you. >> in the instance, the united states corps of engineers signed off, that this $18 million contract by a turkish construction company was adequate. and it is interesting, because, it talks to our methodology and when we were there we interviewed the senior, happened to be a major, individual, that inherited the building. actually, you talk about rework, great example of rework. because, as these repairs are ongoing, the logistics contractor, essential to do it so they can had been tate this,

kbr, is doing hutch of the work the turkish company -- came in and voided the warranted, because they came in and approved everything. and the only way you could physically approve it is to not be physically there. because, in just this list, where we asked for an information paper from the responsible personnel, major issues, septic, electrical, ceiling tiles falling down. 250 missing. fire alarm system and these are big deals, power generator, kitchen exhaust. >> who -- was kbr responsible for managing the work in that turkish outfit. >> no. no. that was a separate contractor. >> and the prime -- >> yes, sir, kbr came to the rescue but that is all rework. >> so, now, do we know whether or not the army corps of engineer official who was responsible for that was ever dismrinld. >> no, we don't and that is the accountability issue. somewhere -- and that is

commissioner shays' point, i think, we have to start identifying who is responsible. and not just -- >> absolutely. >> not just that individual but someone is reviewing and training his workload and i think it goes up a little higher. but my suggestion, in t process, is, we have seen military accountability. in situations, but we just have the not yet seen where these situations occur, someone said, why and if they are in the meantime -- >> i would think that that company no longer does business with us but i forthey do. >> they do, sir, they do. >> and that is one of the things you'll be investigating as well, what kind of a process we put into place to make sure when it happens they don't do any more business with us and people be held ash continuable for it. are you getting enough ac to the information of the people you need as a commission or do you feel you need the assistance of any committee in congress? are people being responsive, helpful, obstructionist? >> i would say that we have had the need to explain in detail sometimes why we need

information. but, by and large, department of defense, department of stated, has supported us. where we -- department of state has supported us. where we are really straining is your point about getting into country. our first two trips were delayed about a month because of conflicts in schedule. they did it. the trips went off well and they supported it. u.s. cent -- centcom and we have a need for four other trips and they are saying whoa and we have to find out -- will they allow to us go in and do the job, if we cannot go out and look at the records there we will fail. >> it speaks again to your presence in-country, if necessary and you'll work with our committees and the committee of the senate and we'll try and help you with that. >> as soon as we have a delay, yes, sir. >> and mr. chairman, i would like to say, it is very helpful for your encouragement we be in iraq and afghanistan. i remember that the inspector general of dod said he didn't need to be there. and our -- your committee made him go. and we benefitted from it.

--? benefitted where we go, not like we are going there for vacation and certainly isn't a place we want to be but you do, as i think chairman thibeault mention aid couple of times you see things on paper might present themselves entirely differently and work on that. so, we are conscious of that and want to work with you and make that ham. will you talk a little bit about the challenges where the contractors or the subcontractors are third country nationals, or host country nationals, and the problems those present, and what we will look into in terms of trying to resolve those issues, challenges? >> charles? >> when we have followed -- there have been audits which we have followed up. as noted, the prime contractor may be kbr but the work or the dining facilities that are being run or the other work that is being done, is done by a third country company like first

kuwaiti trading company or tamimi and the audits there know that those subcontractors may well get away with overcharging. because, it is not that much in kbr's interest and it doesn't even have the business systems to create competition under it. the overcharges in the subcontractor then get passed up with a factor for award fees and a factor for overhead, until it comes to the treasury. we are facing the legal -- commission is trying to figure out the legal chal and it is a new one and you do not find it as a problem in the domestic united states. this is a -- but its is a big one in theater where we are and we are trying to look at what can be done to increase the ability to say, audit third country companies. >> i want to emphasize, so we have the government that is supposed to oversee the contractors, and we have less than half of what we need, they

aren't specialists, they have to be taught and then they are asked to leave sooner than the contractor who is still there, and then, we have dcaa, point out that most of the technology that the contractors use is outdated, inaccurate and not helpful and doesn't provide the right information. so, then when we want to get the information, we are getting it from a -- from the company itself, that can't provide really well-documented information. >> do our contracts not require these contractors to have updated technology with certain specifications that would service our needs. >> they are required to have it, but they don't have it. >> okay. that is -- i wants to be sure. that is something we'll be chasing down. mr. flake. >> thank you. mr. thibault, can you cite specific examples of services? >> [inaudible]. >> all right. sorry about that. sorry about that.

can you cite specific examples of services that can be provided under a different contractor, under a logcap 4 and why you believe that switching contractors might be able to yield better results or... better costs. >> yes. the way the contract is strucked tour now, sir -- construct toured n-- structured now, sir, every contractor is supposed to be bid out for those contractors, dyncorp international, fluor and kbr and the early results are, that is a good thing for the government. in terms of price and cost, and that competition. those are the three organizations, now, that is a long help running contract, also. the problem is, is 90.plus percent of the current charges are with this old contract, which is a sole supplier, and one of our emphasis -- and i will point out that i think it was general odierno identified

the same issue, which is, get on with the competition part of logcap 4. you know, we are just -- you know, lots of planning, lots of effort, and it is not happening to the extent that it should. >> thank you. the pace of withdrawal in iraq, you mentioned the report, some of the challenges that presents us with. what are some of those challenges? the rapid pace of the withdrawal that we have? somebody else want to take that? >> sure. i think that there are a number of factors. and centcom is planning for this, whether they've done enough planning, whether that plan is moving at a pace that is going to accommodate the downsizing and the ramp-up, we don't know yet. >> specifically, what opportunities are there for abuse or fraud or waste, with rapid withdrawal? >> i think as troops are

withdrawn from iraq, as an example, we are probably going to have to rely on contractors to remain there, to close down those bases, or to pass them onto the iraqis. and, one difficulty that was brought to our attention, for example, just shows a lack of planning, and forethought on this, is they pulled out the air-conditioning units in buildings that were going to be passed to the iraqis and then had to go back and reinstall them again. because they just didn't think enough about when they took the equipment out, that it would still be needed because the iraqis were going to take over that. but, the -- all of the decisions on reset, which equipment gets sent back here, for rehab, which is going to go to the reserve components, which will be

scrapped, which will be turned over to the iraqis, all of those planning decisions are currently being made by cents com-- centc but, again, i'm not yet comfortable that there are not a lot of holes in that planning process. >> and i might add, as an example, when we were on one of the bases, the military enlisted person, that is going to be involved in some of that support activity pointed over and said look at all of those containers and i haven't opened them and i don't know what is in there and that is the point, we accumulated material, and now we are going to have to inventory it, while the military, you know, it is dwell time, they are given 90 days to get out of there will leave in 90 days, but the outcome is contractors are going to have to go out there and figure it out, because there will be very sensitive equipment and you can't just give it to them and so the important point is, as we see a decline in the military, there is not going to be a proportional decline in the

contractors, and in fact it might go this other way depending on the activity. 600,000 line items have to be tracked. >> we all know we need contractors. we had one contractor for every six military in the revolutionary war and now it is one for one and this irony is, as we get out of iraq we may actually have more contractors than we have military. and, we have a -- to dispose what we call white property, property in the hands of the contractors, but owned by the u.s. government. and, then we have items on base that no one knows whose responsibility it is, and i want to review the list, that mr. grant, commissioner grant talked about. we can donate it to the anybodying government, return it to the united states and use it elsewhere in iraq or move it to afghanistan. transfer it to other u.s. government agencies, and sell it, and if it has no commercial value, scrap it. we are asking people to make those decisions and they may not

know what is needed in another base. so, they may decide that we should give it away, when we will purchase it somewhere else and -- or bring it from the u.s., to afghanistan. when it was in iraq and we could have gotten it from there. >> it just speaks to the need for more coordination and cooperation. >> it is worth it to ship it home? it is simple to say, well, give the to the iraqis and maybe that is the right decision. one -- to follow up on commissioner shays' first point, i think we need to think hard as does the subcommittee, there is an inherent implied concern that we have too many contractors. whether we do or the not, i am not prepared to answer that. and the joint staff is in fact -- has a task force looking the at what things are appropriate to be contracted out. and, it goes to inherently

governmental and those things. but, how did we get to this point? and, then, you know, what decisions were made by the services, what decisions were made by osd? by omb? and by the congress. that get us to this one-to-one ratio or whatever it may be. but, i think more important, is what are the options? do we increase force structure? within dod and state? so that we have not just the contracting oversight expertise but we have folks to do some of these jobs that are now being done by contractors. do we change the emphasis within the services to push more things into the sustainment force? out of the operational force? do we provide just less services?

or less quality services? or do we just accept the fact that this is the way we are going to go to war. and i think those questions we need to focus on. in addition to waste, fraud an abuse. >> that was a large part of the formation of this -- as you know from reading your own charge in the legislation, that is a piece of the work we very seriously want to have done, mr. duncan. >> mr. chairman, just one last comment. i think we have far too many contractors when i read that we have 240,000 contractors in the two arenas, afghanistan and iraq put together an 80% of them are foreign nationals. it seems to me that this is just a gravy train of money for these defense contractors, number one and for all of these

contractors, and i think almost anybody in this country, almost any average american, would say that it is ridiculous. that we are still spending all of this money, hiring all of these foreign nationals, and doing all of the -- committing all of the waste, fraud and abuse, allowing it to go on over there, and i think it is really, really sad and it is really shameful, really. thank you. >> i think the other question that we asked, or part of this question we asked was, what is inherently a governmental responsibility and what is not and that is the number, all right? what are we doing with some of these people and are they doing a job that should only be entrusted to somebody that is, you know, a u.s. citizen? or a member of the armed services. or in some respect responsible up the chain here. security strikes me as one of those things, very much, you know, who is protecting whom within these countries and that is something we have had hearings on in the past but we are looking forward to your

in-depth work on that issue. to help us inform, you know, of the many definitions of inherently governmental responsibility, which are the ones we'll settle on and then how we'll make the determination, and colonel green i agree. nobody has really discussed what is the proper number of contractors out there. and, you mentioned, the different ratios over time, 1-to-1 and went up and down and now it is where it is but the fact of the matter is at some point the argument we have heard, when it wasn't really, anything we could do about it at this time and different people were running the military in the white house before our day was it was cheaper. to contract it out, i don't think there is any evidence of that at all and certainly would be helpful to have somebody explore that aspect of it, how could it possibly be cheaper when we look at these numbers and this degree of difficulty that has been going on. the other part of that -- so we have to get this numbers right and' assignment, who should be doing what correct and need to have the right management an oversight in place that gets back to the capacity issue that you are talking about, and reported there and will be

critical, if you can help us with that. but, in that vein, we have people stationed in over a thousand bases, all over the world. that is not counting afghanistan, iraq and kuwait and all of the places servicing those two theatres right now. over a thousand bases, elsewhere. that for some reason we seem to incapable of reviewing, and deciding whether the hell they deserve to be there, should be there, what is that are function and are they hadding something of value to our national security interests and what are all of the people that are there doing and can't you take some of them and train them, some of them may have technical expertise, some may have the ability to be trained to do certain aspects, whether sitting -- instead of sitting at base for a reason that was valid maybe 25 or 30 years ago and may not be valid today and we'll look into that issue separately but it is something to note here, and prioritize and the other is national guard and the reserve has expertise, particularly in security and other areas, where, maybe a better identification of who is in these forces and their deployment, will put them in the proper position, will be easier

to train, police officers and things of that nature, for security on that basis, and so somebody in the management structure of the department of defend and state, has to be looking at these issues in a much more sophisticated and better way on that. even the corps now developing, hopefully will be helpful but will not happen as quickly as we wanted. let me wrap up my question on this with the defense acquisition university aspect of it. did anybody think of putting it on a disc? so that you didn't necessarily have to connect when you were doing that are or is that beyond the defense university's capacity to conjure? :