tv Prime Ministers Questions CSPAN August 12, 2009 7:00am-7:30am EDT
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statement, when you said our systems are regularly viewed and approved by the government, that was dcma, and if you did dcaa it more likely say our systems are regularly approved and disapprove by the government and of all the things i have heard today i think that is the most telling, because, it does illustrate the problem that we had and it was mr. -- the comment and i thank him for really making it clear and the only reason i'm repeating it in the midst of other things like you are under oath and the team and all that, i don't want his pafk point -- basic point to be missed. i'm wrestling with the fact that somehow we had this conversation with mr. zakheim and to whafrm
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referring to the charts and they are all yellow and somehow it seems like a matter of fact conversation, they are all yellow. well, we just disagree and so, therefore, case closed. i almost feel like -- i'm the youngest of four boys and i tell people my oldest brother is this smartest, excuse me, the most intelligent and i'm the smartest and it's because i learned from all the mistakes my brothers made and so i didn't make the stupid mistakes they did and probably did a few others but i learned a lot, you know? and so i'm thinking mr. walters on the dais are the newer kids on the block and they learned from the bad habit i think kbr got into and that was, basically, go with dcma and forget dcaa and we'll just tough it through. and i think the better approach is even if you disagree try to comply and i think that is one of the lessons i'm seeing happen
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here. we all support contracting. we all know that it is indispensable and if we voted in congress to have the military be the tip of the spear we don't want them to be cooks, we may not wanted them to be security guards in every instance, maybe in some we would. we don't want them building buildings, don't want them doing things that contractors can do. so we don't need to be sold on the need to have contractors but what i need to be sold on is that there will be general outrage with what has happened in the past and somehow what i have been hearing is well, that is the way we did it. i have been stunned to learn and i'm naive about this subcontractors are not really -- you have to go through the prime and 70% of all the work is through subcontractors, how convenient. i'm stunned by the fact that people can put in three hours of -- or four hours as a
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contractor, on plumbing or electrical work, and charge for 12. that is an outrage and what i have asked people about it, they say well, that is the way we do it. why we might have 12 plumbers when we only need 2. and we charge for 12. and then when i'm asking people why it happened they said, well, it is in the crack and they have to be on duty, you know, 12 hours at a time. what i want to ask each of you, if you were -- i'm going to give you choices. if you -- and maybe not the work you do but tells me your mentality. if you were asked to build a new dining facility when you had just renovated one right there, and you know the troops are leaving, would you renovate that new dining facility or tell the government, are you sure you want me to do this? because... you don't need it. i'd like to know, if you had 12 people assigned to do the job of
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two, would you say, well, we have 12, that is what the contract is, or would you come back proactively and say, we only need two. and by the way, we don't need to charge you for 12 hours, we'll have one person of the five that are there, on call and the other three will only put in an eight hour day. i wanted you to tell me what your approach would be with the government. and i'm going to go down the line and have you respond. >> well, the way we would approach that is, in your first example, if we are -- if there is a dining hall facility there and we are asked to build one next to it, clearly, we'd ask if that was what was necessary. only because, we are taxpayers, too and stewards of the taxpayers' dollar. if we are directed to do it under the task order and we're contracted to do that, of course we'll build that facility. in your other example, if we are -- we have multiple servicemen
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assigned, electricians assigned, whatever the example is, and we don't have sufficient people, we're not going to charge for work not performed. but, again we're new kids on the block and this is a philosophy and clearly we always go to our contracting officer or their representative and ask, are you sure you wanted us to do this? so clearly that is a philosophical approach of, hey we have to protect the taxpayers' dollars. >> sir, we do the right thing. we are a significant piece of our business is training and mentoring and we work ourselves out of business over time, that is the intent of a big piece of our begin. so we're used to working through a program, working down work scope to try and do the right thing. over the last year i can give you examples of where we have laid people off on cost-plus
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programs trying to get costs out of the system so that we could have and tlifr to the government a more cost-effective, better value system. so in the example that you raised it is a hypothetical example, but to me that doesn't pass the goofy test, doing the right thing we come forward and say that is not something we'd be interested in doing. >> mr. walter? >> with respect to your examples, sir, that is a case where the government is speaking with one voice would be great. under our contract we did renovate a dining facility. and we did what we thought was a fantastic job on that dining facility. at the same time under separate contract, or separate agency, they requested, sent out a solicitation to a number of groups and said we'd like people to bid on this particular work. we bid on that work, and we won, through a separate organization of the company.
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so having one government agency working or one voice working there, would have helped to avoid any potential concerns, that you would have on that. >> two dod agencies. >> two different dod agencies, yes, sir. >> could i just -- >> one department. >> it was the dod that was tasking you with that and probably the army both cases, right. >> correct. >> so, was the arm in both cases and nobody from kbr went to anybody senior in the army and said, what in god's name are you doing? >> we did not have the visibility into the details. we didn't know what the planning was. we were... >> you knew -- excuse me, may i? you knew that they were going to -- they are asking for a new facility, you new you had just ven investigated a facility. you are going to tell me you know nobody in therapy to go to and say what is going on here, to save the taxpayers money. >> the way kbr has been forced to set up the log cap contract
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is we are in the allowed to be able to set up marketing per se with the people that we have on log cap, they do what they are told to do by the customer in tlee theater. >> this isn't marketing. this is not marketing. this is going from a senior official such as yourself, to a senior official in the department of the army, and saying, this is nut, this is nothing to do with marketing in fact it is the opposite of market and walking away from something and i don't understand why you guys simply did not go to the under secretary or the deputy under secretary or a four star or three star and say, do you in the army realize what you have just done. >> with all of the publicity and the information that is out there today, it make it seem as though that is a crystal-clear question and should be answered. at the time, this was -- the dining facility that was build was built under a corps of
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engineer contract, to provide a building one of many types of construction, that we have done throughout theater when we have bid on. >> can i ask or point out, haven't you had criticism from several award fee boards that you don't proactively seek cost savings? s the answer is yes, by the way. >> i would have to go back to the award fee. >> it is yes? >>. >> let me end mr. walter with this question: is there anyone, fired either who worked for kbr or was a kbr sub as a result of the work of the tiger team? sn>> i'll repeat it again. >> i'm trying to think. >> i want you to understand and it's not a trick question, something we want on the record, is there anyone fired either who worked for kbr or was at kbr -- was a sub as a result of the
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work of the tiger team? >> i will have to check on that and get back to you, sir. >> how long do you think that would take. >> i should be able to get it done within the ten days you have requested. >> why don't you get it in the next five days, because you'll be able to go back to your office and someone will know. if you get that back in the next five days that would be appreciated. >> i'll be happy to do that. >> thank you. technology. i want to wrap up what we were saying before, i had a reason to ask you that. obviously about your personal role, because, again, my history over a long time is when a ceo and a chief financial officer with no disrespect for all the positions in the company take a personal interest in contracting financial issues and the like including interfaced with the government at all levels, and
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your chief financial officer, the dcaa manager, person, she said that she met regularly, whenever she had an issue she'd pick up known and talk to your chief financial officer. now -- not the government compliance, you know, deputy director or something like that. even though, they go to that person, the person is critical. and he said that has helped a lot. so i share that. i just have a couple of items, mr. walter, i would ask you to -- i think that we agreed on commissioner gustitus's question, relative -- was there any discussion about the company's ability to feed and house troops? that was there any that they would deny work, couldn't do the
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work, due to a whiffle, and when we visited, on two or three indications -- and maybe they are given to others, i have seen correspondence and i don't know the who said, what said, that said that something along the lines that if they withhold statements specifically that the company could be put under financial stress, i believe those are the words used, and that so-and-so and so-and-so in the company, and this was written, and it was signed by someone in the company, it -- could impact our ability to -- i'm making this part up but means the same thing to house and feed, so, i would ask you, in your research on this for the record, go back and take a look and see if it's there, i'm not trying to box you in.
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>> and i won't be boxed. i will find the answer. >> because i have seen it, and, you know, we all have files and pickup fold,and i have it somewhere in a pickup folder. part of why i let in -- part of why i ledden with the question to mr. balhaus, is -- just be candid, after our last hearing, we got quite a letter from the president of kbr. and we as a commission discussed it and i got -- too strong a word but not beat up a bit for not jumping up and responding quickly and we talked about it and the point that, because there were numerous items in there that we could have gone back and forth and clarified and got into this proverbial pithy contest about well, you really said this but it could have been this or that is not correct or something like that, so, i was
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consciously sitting on my hand as i was getting pummeled and then times elapsed and we wrote a letter to your president after about a month and it has been out there, i'll make a number up, 6 or 7 weeks, and we said to him, you know, we'd be glad to discuss anything that is of concern to you, but we'd really like to meet with you. the commission want to meet with you, the president. because we would like the opportunity -- and i'm paraphrasing, to get a constructive dialogue going and made that offer in the letter. we've heard nothing back. now, i am -- what i'm trying to make the pointed is if you take any other message back, in this -- i know that, you know, it's sort of -- has been bill walt your day and i commend you for that, for standing up there and staying calm and giving good
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answers, but it is that we would like to engage, kbr is an important supplier, we'd like to work with and understand that, you know, we're trying to be prospective, sometimes you live in the past, or in the the present with issues in order to identify what can be done in the future. and we'd like to do that. so if you would take the message back, i have seen the individual sitting behind you shaking his head back and forth and running back and forth and i'll be glad to e-mail the letter asking for that session. >> if you could, because with everything with the war time commission, as i said in my written testimony, we have made every effort to try to be as cooperative and provide as much information to the commission as we have. we met with you in kuwait, we met with you in iraq and i have no qualms about that. i have a lot of opinions that i want to share and i have. but as for alert that came in from the commission, to our president, i have not seen that. >> it was signed by the two cochairs, myself and mr. shays
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and i accept that you haven't seen it but like i said, if you take a singular message back from this, we are trying to engage in constructive dialogue and we are going to ask, for is from you, mr. methot and no disrespect and you both are knowledgeable about the company but we'll be asking the same thing. and there is a reason. it impacts us and we'd like to get a feel for it. it is really important to us. so, if you could take that back, i'll be glad all morning -- we have a hearing tomorrow, tomorrow afternoon to e-mail that to you. >> okay. >> all right. thanks, that's it. >> mr. thibeault -- >> oh, another five minute, thanks for giving me your five minutes, buddy. >> okay, mr. methot, i am -- mostly would like to give you questions for the record after wards. i think you are about -- you are
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about to face the transition in afghanistan, and we studied this one in kuwait and it was hell and everyone agreed, one of the few agreement on all corporate sides and the government side, they all agree afghanistan was going to be really hell to have a transition in, so, i'm curious about your plans. and also, the process of becoming a government contractor. are you going to follow the -- follow the route over the waterfalls into the, you know, your two -- or are you actually going to take the trouble to learn government contracting and set things up right and they both thought they would and neither of them did. okay. questions for the record. i have a -- mr. walter, i have a request for you to provide information to mr. sternly. the last page i didn't get to of -- has this chart and i will not question you in die tail about it. just the range of movement of kbr people, looks like a big mutual, doesn't it, until you
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look, the area between 20,000 and 21,000. and not even the whole area. it is like a very small movement. now what we would like is if you would arrange mr. sternly could get the weekly briefing that you already give the pco on personnel, this is not one. dget more week think weekly briefing on pcl and if he could talk -- the personnel people on the par, nout, although, you are welcome to have somebody in the room, not that kind of thing, the par can only be understood by people immersed in it and we want to understand it and he want to understand it. agreeable. >> agreeable. >> okay. third, we had questions from the other -- my fellow commissioners and i feel i let them down because you have to ask questions about your transition,
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in kuwait, and these are sort of -- i'm not sure what the format will be but they are for both mr. balhaus and mr. walter. first of all, the notion that you fired people when they were going to quit or when they were going to work for the other company, that is nonsense, as in any transition between an incumbent and next contractor, the people who are doing the work want to though whether they'll be able to keep their jobs when thou new contractor comes in and want to be able to ask, if you are coming in, will i be able to work for you and there are places e where the income begin and new contractor are lake a really involving do and the same people do the work and we know that in government contracting, i hope you know that and i teach that the university of baltimore law school and me student know it. are you familiar with the situation? you are firing people who wanted to know, will i be able to keep my job. we got the first hand, a person taken, lee thompson's deputy, time mark and he also was asking the question about and telling us about what happened with the computer records and the paper
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records that were destroyed, and came across the ocean to be there and he said yes, we removed press pie terry information and i don't want a qfr and the main records on vehicles, come off it and we might went fa the people with more stars on their shoulder than me decide this, not qfr on the subject and might be a briefing or briefing to our staff, where the people who actually did this transition, teal with the actual issues we got from very responsible government officials. are you agreeable to something like a staff briefing on those subjects. >> yes, i am. >> mr. balhaus. >> can i make. i am agreeable and can i make one comment. >> yes. i don't have much time. >> 57 seconds. i think staff briefings are very useful and i like getting program reviews from my team, but on something like the kuwait transition i actually went in country myself and met with tommy marks, and was there the
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week of june when this transition went into effect and i saw the challenges our team faced and the issues that we had, but the remarks and the feedback i got from our team was very positive and i went and met with tommy and he was positive also, but he gave us some issues and concerns that needed to be worked out, issues that had happened on the transition and concerns looking forward, so while i am agreeable to the staff briefings i personally think there is a lot of value to going in country and -- >> i did. >> now i want to find out about things that have been denied here. okay. by people who are the not first line and last thing for you mr. walter,running out of time, the 15% withhold in '05, suppose are able to find the mist tear yes letter in which -- mysterious letter, the contracting officer when maude or really the suggestion it would have strategic impact, vague but strategic effect, does he say, give me a rough order of magnitude, didn't give him a
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rough order of magnitude, you gave him alert, useful to go over his or her head and if we find the mysterious letter would you allow our staff to interview this officials, if they are still around who are involved in the letter? i don't want top, oh, there is a letter and yept to play you are under oath, it is about finding out if there was such a letter how it could be generated and become lost in the mists of time. >> i believe we are talking about the same thing, that commissioner thiebeault talked about and i said i would try and find the information. >> i'm saying if there is alert and we interview -- can we interview those who were involved in it. >> i don't see why we wouldn't be able to do that if they are still with the company. >> thank you. >> just by the nature of having a congressional commission and meeting in this room in a public dialogue, can come across as -- a certain way. but, part of the -- part of the
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charter of this commission, at least as we interpret it, is to let people know how significant the contribution of contractors is to american objectives. and i think it would be surprising to the great majority of americans to know 1400 contractors have been killed in this current war. can you, mr. methot tell us, have any fleur employees went killed. >> no, we have not had any employees killed. >> how many kbr employees. >> i don't have the exact number. but... >> microphone. >> i don't have the exact number but it is over 100 but i'll get you this exact number. that so is something we take seriously and we don't want to misrepresent the number but it does cross multiple contracts,
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not just the log cap contract we are talking about here. >> right. right. mr. ballhaus. >> sir we have lost 65, including 12 from one of our joint ventures and you'll note from our written testimony it is up -- we lost an employee last week who had a hafrt -- heart attack in kandahar. >> an easy, sort question, end of the day softball question but i don't want to under emphasize the point that contractors, employees, are sacrificing and being killed in the current conflict as well and you cannot find that in a box in the "washington post" as easily as you might in -- the number of troops that have been killed but i don't want to it go unremarked today in the context. thanks. >> thank you. >> thank you. not to beat a dead horse but i have to make this one point which is that dcma and dcaa did agree on one important item back
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in 2004. and that was their analysis that halliburton could actually financially back kbr on the 15% withhold, that was an issue as to whether kbr could sustain itself through the 15% withhold and halliburton was under contract to back them and those two agencies agreed halliburton could and would do that but in the they went on to say they thought that the 15% withhold would likely be passed onto the subcontractors. and that that would affect the troops. so i want somehow those two agencies got the notion there was going to be some effect on that with hold with respect to the troops, so that is just an fyi. looking at withholds, i want to talk to each one of you about what the significance of a withhold is. we are pushing here for the agencies to be more aggressive in using withholds, business
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stipulations cannot be deemed adequate we have to use withth withholds, a carrot or stick to try to make this happen and the question is, what effect do withholds have on you? i know that is a general question because it obviously, depends upon the size of the withhold, let's say a significant withhold. what does that mean to you, mr. methot. >> i can tell you, it gets our attention right away. and it happened to us before and i think, ms. stevenson testified to that this morning. and, we are working hard, to resolve issues, that that -- they brought up. >> mr. ballhaus into i think the term used this morning was a sledgehammer and i agree and it doesn't have to be a big withhold to catch a contractor's attention. we have on one program, a two-and-a-half million withhold that has been with us for 7 months and in this instance is a case where we believe we have properly responded to all of the
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concerns that were raised back in february, yet, there is no response and indication of how the withhold will end. that is one that not only is like a sledgehammer kind of leaves a bitter taste in our mouths. but, in terms of a carrot or a stick to hold contractors accountable, i absolutely support it. >> mr. walter. >> i agree with bill on those point. kbr's withholds we have faced over time have been on specific items. for those items that we have -- may have raise aid question, we have a -- agreed in some circumstances not to bill the government for costs and other ones we have -- we're going through the entire process be where we believe the costs were incurred reasonably and legitimately and we are pursuing those, as for a system, withhold, if there is going to be a change the way the rules are written so that there is a system withhold, what i do ask is that we make sure that as i
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said in my testimony, we do have subjective standards, objective standards that we can measure those against. >> do you believe there isn't a law behind right now, behind a withhold on -- inadequate business system, is that kbr's opinion? >> that would be our opinion. >> your lawyer is saying... that would be your opinion there is not sufficient regulatory authority? >> okay. can you rephrase the question. >> i didn't skit -- is there sufficient regulatory authority to -- for the government to exercise withholds with respect to inadequate business systems? sn>> with the experience i have had i have not seen that it is there and as i've read through
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the regulations i don't see it there. >> it doesn't surprise that you have not seen it. it is there, since your business systems have been approved by dcma. let me just piggy back briefly on what commissioner shays said, which is, going to this responsibility of contractors to seek cost savings and i just wanted to make sure that -- ask you, do you believe that you have an affirmative duty to the government to seek cost savings on behalf of the government whether or not it is explicitly stated in your contract? >> absolutely. >> yes. >> yes. >> okay. good to hear that and let me just close quickly by saying, mr. ballhaus i want to put you on notice we are really gratefully concerned about this major cost increase on the task order, on log cap 4, the 70%. the
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