make -- the planning process, we were bringing a lot of experts, we were bringing a lot of data, we were looking at health, we were looking at education. this legal question, it's very, very or important, but we didn't do that much on it. i will say that at the end of the day from the planning perspective we think there has to be a government agency, and we think the fcc in a lot of cases is the right government agency that has the just diction to make sure that -- jurisdiction to make sure that broadband is everywhere, to make sure there are policies to insure it's affordable, make sure there are policies that assist with low-income folks, that make sure that we're supporting schools and health care facilities with connectivity. there are a variety of things, you know, we need, we need to make sure that spectrum is available. there are a variety of things that really, i think most people would agree government has an appropriate role in doing those things. so, you know, look, lots of people expressed lots of different concerns. we think the plan points in the

right direction, we think it's on the right side of history. as to what the job is that needs to be done and other people are going to discuss who is best suited in government to do that. >> host: last question. >> host: well, then the next step for the commission is to develop a timeline for doing all of the proceedings that are needed to implement the plan. >> guest: yes. >> host: what factors are shaping that timetable? is it what's most urgent, most impact and biggest bang for it, and resources? >> host: does congress need to approve the plan? >> guest: congress does not need to approve the plan, but we took the view that in designing this plan wherever we could we were going to have the fcc do it, not go to congress. very quickly, in terms of implementation there's a variety of different things that need to be done. we worked from the very beginning with all the different bureaus and in terms of an implementation schedule, so you're balancing resources, you're balancing priorities,

some things you want to start now but are going to take a long time to do because they involve processes that are very data-oriented. some things can be done more quickly. so you'll see that when you see the actual implementation schedule. >> host: the national broadband plan is available at c-span.org/communicators. thanks for being with us.

>> in 2006 the united states began transferring some terrorist detainees from guantanamo bay to terrorist deradicallization programs in saudi arabia, and since then some program graduates have returned to terrorist activity. a forum, now, on these deradicallization programs and how they work. from the heritage foundation here in washington, this last about an hour. >> good afternoon, thank you for joining us here at the heritage foundation. i'm john, directer of lectures and seminars, and it's my privilege to welcome you to our auditorium and, of course, to welcome those joining us on our heritage.org web site as well as those watching on the c-span network. we would ask everyone to make that courtesy check that cell phones have been turned off as i remind our internet viewers and others that questions or comments can be sent to us at any time e-mailing

speaker@heritage.org, and we will, of course, post the program on our heritage home page later today for your future reference. hosting our discussion this morning is mr. stimpson, senior legal fellow in our center for legal and judicial studies. he is a leading expert in military law, military commissions and detention policy. prior to joining heritage, he served as deputy assistant secretary of defense where he advised the secretary on detainee issues worldwide including, of course, guantanamo bay, iraq and afghanistan. he has also served four years as assistant u.s. attorney for the district of columbia, previous to that he was a homicide prosecutor in maryland and a domestic violence prosecutor in san diego. he served three active duty tours in the navy and continues to serve as a judge advocate general, reservist in the navy. he is currently a commander and serves as a military judge.

please join me in welcoming my colleague, cully stimpson. [applause] >> thank you, john. welcome. this week i had the opportunity to speak to some distinguished, seasoned citizens about u.s. detention policy. and in that audience were several world war ii vets. and during the question and answer period, one of the vets noted that during world war ii we had over h 00 -- 400,000 nazi p.o.w.s here in custody h the united states, and no one would have ever thought of releasing them during war. and it just seemed rather common sense to him and his peers in that room that no one would want to do that during wartime. that's exactly what we're doing today. now, i'm sure a lot of people

agree with that gentleman, that we should not be rearming the enemy, committed islamic jihadists, during wartime. of course, that's exactly what we did during the bush administration for a variety of reasons, and that's exactly what the obama administration is intent on doing as well. those detainees that people usually focus on are those who were or are at guantanamo. but this policy also existed in iraq, in afghanistan and, nevertheless, people tend to focus on people at guantanamo. in afghanistan today under the leadership of task force 435, military commanders are developing sustainable reintegration and combatant disengagement programs that, in time, will be transitioned to the government of afghanistan

for their use after the military ends detention operations. as many of you know, saudi arabia began his deradicallization program in 2004, and when i was in office with several of my colleagues hour here today -- who are here today, we started sending guantanamo-based saudi detainees back to the kingdom to their deradicallization program in 2006. now, according to published reports the recidivism rate for that program is around 20% or so. give or take. and many think that that number may be on the low side. three of those men have made their way to yemen and occupy senior leadership positions in the al-qaeda organization in the arabian peninsula, most notably al-qaeda's second in command who is believed to have

been behind the 2008 attack of the u.s. embassy, abraham is the islamic thought leader responsible for approving terrorist operations and muhammadal harvey became an a-cap field commander. now, after the christmas day bombing attack or terrorist attack here in the united states when we discovered the yemen connection and after many of us urged the obama administration to stop transferring any more of the 90 or so gitmo-based yemenis back to yemen, the administration announced it would temporarily suspend those transfers. to many people, that was a common sense move. the government of yemen has shown no real ability to mitigate the threat that returning gitmo grads pose and have not yet established a credible deradicallization program although there is movement toward that.

indeed, two key bombers in the u.s.s. cole bombing were convicted by yemeni courts yet are free men today. now, today on this panel in this room we're going to set aside politics. so let's just take that out of the equation and focus on and try to do a deep dive on the programs themselves. do they work? how do they work? what do they have in terms of actual classes, teaching, philosophy, et? etc. and hopefully before the question and answer period our panelists will offer their opinion about whether we should continue as a matter of policy using these programs. now, our two panelists are friends of mine and are uniquely qualified to discuss this topic.

marisa porges is an international affairs fellow at the council on foreign relations where she is researching efforts to deradicalize detainees in custody. she has firsthand knowledge of these programs -- she didn't attend them -- and has been to saudi arabia five times and spent three weeks in yemen this past fall, and many seek her advice on these matters. more to the point, from 2006 to 2008 marisa served in the office of the secretary of defense as an adviser to the detainee affairs. she worked for me and alan and others in that office. her responsibilities included negotiating with foreign governments on detention issues and coordinating u.s. government issues to repatriate detainees from guantanamo bay and afghanistan. she moved from dod to the

treasury department office of terrorist financing and financial crimes and developed strategies to combat money laundering, terrorist financing and other illicit activities. she also had the privilege and high honor of serving on general petraeus' u.s. central command assessment team advising on counterterrorism in the arabian peninsula. she's a navy officer, and she received her ba with honors in geophysics from harvard university and a masters with distinction from the london school of economics. david ross who i had the pleasure of taking a round-trip ticket, round trip to guantanamo with in, i think, october of 2006 is the directer for the center of terrorism research at the foundation of defensive democracy. he's a ph.d. candidate in world politics at the catholic university of america. he's the author of several

studies about radicalization and home grown terrorism including home grown terrorists in the u.s. and u.k. and an empirical examines of the -- examination of the terrorism process. a variety of consulting work including work on live hostage negotiations and training for the u.s. military and federal and state law enforcement. of course, he's testified before congress and his writings on the war on terror have been published widely, and you can see him on tv quite often. he has published four monographs, the one that i was the most intrigued by is my year inside of radical islam. with that, i turn it over to ma race ca because lady -- marisa because ladies go first, and we'll ask her to make some comments followed by david and then we'll have some questions and answers. marisa porges.

>> [inaudible] >> wherever you want. >> thank you. thank, everyone, for being here today. it's a great opportunity to talk about an issue which myself and those who have worked closely on detention topics have looked at for a number of years now but which, thankfully, has now become part of the wider public debate both on detention and counterterrorism issues. so i'm going to start my talk by defining some terms. my former life as a naval aviator i would have said that's just silly, but as an academic we have to do it now, so let's look at the confusing topics of derad sal case and counterradicallization. we're here to talk about deradicallization which are efforts to work with individuals who have been picked up, have already committed acts or are professed to be sporting terrorist organizations or have exhibited that we are supporting these organizations. what are we doing with them to try to rehabilitate them, change

their mind set or their behavior so that if and when they're released, they won't be as significant a threat? and this should be thought of distinctly from witherradicallization which are vulnerable populations, think the somali diaspora here in u.s. or in yemen, and try to fore stall futcher radicalization and the long-term effect that has. they are mutually supportive, but we really need to be precise when we're looking at how to evaluate programs and think when we're looking at deradicallization really what's going on with those we have in custody and what can we do about it. so what can we do about it? how do you even develop a program like this? over the past fife or ten -- five or ten years, people have been trying to develop a theory behind the programs and have come up with two camps so that there's a spectrum here.

on one side we have individuals who think it's an ideological goal, that we should be focusing on changing individuals ideologically, his beliefs and approaching a program from that direction. think religious dialogue, religious debates and really a focus on the belief system behind the activities. at the other end of the spectrum are those who think it's really about changing behavior. a program that is developed along this path will focus more on disengagement, trying to change an individual's activities, look often like a rehabilitation program in a federal prison. at the end of the day, programs typically fall some place in between depending on the country involved, the circumstances of the individuals involved, but it's important to see the spectrum because when we evaluate programs, inherently we look at, well, which camp is really working and what where sd we put the program in between?

at least when i look at them, that's how i'm assessing them. so how, what are the questions? what do we need to be considering when we're looking at a few programs? and i'll go over some broad ideas at play, then we'll talk about a few programs. first of all, we have to consider what is the goal. is it a tactical counterterrorism goal? are we primarily concerned with those we have in custody and that's it? or is it a broader effort as part of an effort to stabilize the country involved or a broader counterterrorism, counterinsurgency campaign? you know, and that will, of course, play out in terms of how we're implementing the program, how we talk about the programs and how the public is either involved or not involved in the program's activities. another essential question to ask is how, what is attainable and pragmatic on the timeline involved for those who are holding the individuals? this is something of a u.s.

policymaker we always need to be consider rate about, concerned with when you're trying to figure out, well, how long does it take to change someone's mind? are we more effective if we're only changing behavior? if we have a deadline involved because we know we have to release somebody at some point? perhaps they have a sentence already and they will be walking out the door one day. what are the capabilities? do we have the resources we need whether it's therapists, the right interlocutors, do we have the clerics, the mullahs, the individuals who understand the customs of those in custody who can forward the idea and make the program effective? and, of course, this brings us to one of the key factors, who's running the program? is it a government-run program solely? is there nongovernment or public support? are the families involved and if so, how? and is it a non seq. lahr or secular community?

now, cully and i know from our time looking at this effort from a u.s. standpoint we're concerned with we're detaining individuals in another country. we're a non non-secular outside country, whereas if you're looking indonesia or in singapore, you have a government working with their own citizens. so these are the factors that end up making the determination of how a program is developed and ip presented. implemented. but lastly, the final factor which is perhaps the most critical and, i think, which david will talk about as well what are the factors of radicalization involved with those we have in custody? how are we to understand those that we are holding and wanting to work with, how did they get there? what paths did they follow to commit or join with a terrorist organization? this is still a widely-contested debate, but factors that are of

concern and have interplay to be the sources of radicalization include ideology, economic motivations whether they're joining, you know, the paycheck that comes with being a member of some of these organizations, roqual grievances. this has become a serious factor in which al-qaeda in the arabian peninsula is using citizens' local grievances against the local government as a way to recruit more members, or is it concern for u.s. policy in the region and, in if so, how can we address those in a deradicallization program? with that basic overview when we're picking elements of a program, i'm going to quickly touch on two programs that are interesting for, you know, for both their failures and successes. as was mentioned earlier, i've spent extensive time looking at a variety of different programs.

you often hear about the saudi program, it's the most well known and spoken about, so i'm not going to touch on that in this talk. we can cover it in q&a if people are interested. i'm going to focus on a program in yemen and a program in afghanistan. the former, the program in yemen, is ironically was the first program in the arabian peninsula to be established which given the current state of affairs in the country is a bit curious, but it was run from 2002 to 2005 to deal with mujahideen who had returned from afghanistan and had been seen to reengage in violent illicit activity and were back in but were not of the same criminal minds as those that were already there. it was a heavily religiously-focused program. it falls into the camp that thought it was primarily an ideological game. run by a supreme court judge who

worked with three to engage in a duel, he called it. really it was a matter of trying to change the detainees' minds when it came to how they understood islam and how they understood being a muslim citizen in yemen. the claims that are made officially are 98% success. we're looking where the rubber hits the road, did it work, 98% success is the quoted number. if you dig a little deeper, my estimation is it was hardly a success at all. it worked with just over 360 individuals who were released after signing somewhat of a parole agreement, and many were seen to return to the fight either in supporting through support activities or actually picking up arms, and a few of them returned to iraq and became freedom fighters there and were picked up or killed later. but the most interesting thing

is when you talk to people who went through the program and of note when i met with a former senior member of al-qaeda who had gone through the program, had come out the other side not really changed, has since reformed his ways which is why i was able to sit and talk with him for a couple days when i was there, but it's interesting to hear him discuss how, you know, somewhat of -- it was a one-note wonder. it was a very cursory program, not very robust, but it also touched only on the ideological component, and it really left out some of what was needed to help a detainee who was released a prisoner reintegrate into society after the fact. though there was discussion of support mechanisms, that really wasn't the focus of the program, and in his estimation and as well as in mine it became one of the central faults of the program which is now defunct though they're trying to start a new one. now, compare that to what's going on now in afghanistan.

afghanistan is likely the newest program out there. it was started last fall with, for detainees in u.s. custody at the bagram detention facility and is part of the new effort by general mcchris call to re-- mcchrystal to recast counterinsurgency efforts. and here we see a program that's being developed more in the camp of focusing on disengagement and rehabilitation. they offer classes to the detainees that number about 800 right now. it works with all the detainees, and they offer classes, english classes, dari classes, they try to teach skills, they also give art classes which is an interesting way of reinterpreting the saudi program which relies on art therapy to work with the detainees, and they also do give a nod to the religious component as well. so now they might end up in the middle of spectrum because they do have a mullah who comes in

and talks with the detainees every day and engages them in a religious debate. it's too early to tell how it works. it's too early to mark a recidivism rate. it's only been around for 6-8 months or so and it's still growing, but thus far if you're thinking in the broader spectrum, it's deemed a success. having met with two ex-detainees and a few ex-taliban when i was there in december, they would say, yes, we still have issues with detention efforts prior, early in, early on in u.s. engagement in the country, but we appreciate what's going on now and how it's changed. those who are coming out of the prison now, they have skills they bring back to their villages, they engage differently when their village elders, and they appreciate the fact that those individuals are less likely to return to terrorist activity because of this. and this brings me to what my overarching conclusion is with

these programs, and that's how these fit into broader strategies for dealing with terrorists. in afghanistan as a particular example where deradicallization is a tool within the broader detention environment and the task force involved is using it as a tool within the broader counterinsurgency efforts so not just a tactical tool to deal with those we have in custody, but a tool that supports a broader strategic effort. and i think this is the important part. that deradicallization should be part of a broader strategic counterterrorism effort. it is part of a broader counterradicallization effort in saudi arabia. the saudis are fully committed to worrying not just about those they have in custody, but those that are the peers, the friends, the brothers, the family of the detainees. they are concerned with further radicalizing those on the outside by means of their actions when the detainees are

in custody. so, and they are firmly committed -- i remember when i met with the prince a few years ago now actually and he said, i'm concerned with what happens when the individuals get let out, the ten, the twenty, the hundred, but i'm more concerned with the thousands more that are being radicalized by their perception of how we're holding and treating those we have in custody because those are the terrorists of the future. and that's my concluding thought, that we need to look at deradicallization as a strategy within broader counterterrorism efforts. it's a tool that should be used with, tactically but a tool that has greater strategic implications, frankly, than how we are doing with the few that we have in custody. and so i fully support these efforts, and i think that they should be expanded where possible or made more robust in countries where they're needed, but it's really to look at the

broader goal of forestalling radicalization in the future, drain the swamp as it were of terrorists that will be coming down the line and working with how we can make deradicallization one piece of the broader counterterrorism tool. so with that i would just leave us with a thought that perhaps we need to realign our goals when it comes to deradicallization fully supporting the idea but trying to understand them within a broader spectrum of policy options. thank you. [applause] >> so marisa draws a very relevant distinction at the outset in her speech, and that's the distinction between deradicallization and counterradicallization. deradicalization comes at the back end of a process. deradicalization occurs after somebody has been engaged in terrorism and you're trying to get them away from it in some

way. either through actually changing their ideas or else through disengagement. whereas counterradicallization is an effort that comes at the front end where you're trying to prevent a community from tilting over into support for terrorism. and the reason why i returned to the very first distinction that she made is because this actually goes to the level of risk that you confront. if you think about a counterradicallization strategy, there's very little risk if it fails. like, for example, obama's speech in cairo. that was serving multiple purposes, but in one way it can be grouped into u.s. counterradicallization efforts by presenting a different face of the united states within the middle east. if you fail at counterradicallization programs in general, it's basically zero risk unless you're so ineffective that you end up creating more terrorists. in general, if you fail, you just end up spending money unnecessarily, and you end up

right where you started whereas with deradicallization you actually can face concrete risks. that's not the case, of course, for all ce radicalization programs. for example, you have some programs that are more informal or at a mosque level such as a program that was recently announced within toronto that was serving a function in between when someone has adopted a radical ideology and actually resorts to terrorist violence. basically trying to break that linkage between accepting radicalism and actually acting on it. but ultimately, if that program fails, that deradicallization program, then you're back where you started without the program. on the other hand, deradicallization programs can pose a danger in a certain circumstance, and that is when you're taking people who are convicted terrorists and putting them into a program where they're being released and allegedly being deradicalized.

i put that risk forward as a calculus because it goes to the rest of my speech which is how do we think about deradicallization policies? now, i'm not against them. i'm not going to say we shouldn't use them. i agree, actually, with what marisa said, that counter, that deradicallization strategies should be embraced as part of a broader effort against terrorism. but i think we need to understand the risks that are attendant to them and in particular the way these programs are studied and the way these programs are understood and debated. i think we have one significant blind spot, and that blind spot is ideology. i'll talk about that at some greater length, but first i want to point out one other important factor in the way that we discuss and understand these programs, and that is that researchers face significant wariers -- barriers in evaluating these programs. ..

why and if government organizations are run in such a program, they are only just now releasing the data that they need to make public. we have gotten to see some of the output of these programs in terms of recidivism rates and the like. some programs also, i should point out, are quite a bit more transparent. singapore's deradicali singapore's deradicalization program, for example, is highly transparent in that it posts information almost right away from the ministry of home affairs which announces releases, changes in status, and renewals of charges which allows researchers to have a pretty good sense of at least the outputs of the singaporean program.

my own analysis in this area as was pointed out is more on the front end. it's how people radicalize. and part of what i studied in that regard is the role of ideology and radicalization. now, marisa and i are on the same page that ideology is certainly not the only driving factor of what brings people to terrorism. there's multiple -- what researchers call push factors as well as pull factors. that is things like discrimination, or angers over foreign policy and the like might serve as pushing someone toward joining a radical group. and likewise, there are certain pull factors which might draw someone towards the embrace of terrorist violence. now, astonishing to me within this area there is a question over whether ideology plays any role at all. there are some researchers who strongly argue that it doesn't. and so a large part of the study that was held up deals with the question by a quantative analysis.

basically looking at things that we can measure externally that link people's radicalization specifically to an ideology. it quantifies that to make the argument that it's far too early to remove ideology from the picture as something that draws people towards terrorism. now, because i believe that ideology is an important part of the radicalization experience, one of the common themes which runs through my work is the need for scholars to take seriously the ideology that drives people to groups like al-qaeda. and i believe this in general serves as a significant blind spot, something which i hope to show. some researchers tend to have a flippant attitude towards understanding ideology. either believing it's somehow dangerous to probe or else offensive to do so or else in other ways giving it short shrift. but i believe that it is impossible in most cases to evaluate the majority of these programs without looking at

ideology seriously. and i should state also that i think there are some exceptions to that. for example, in afghanistan, where you have much more of an insurgency situation, i think that's a program where much more broad-based approach can actually take ideology out in certain cases because of what we know about the components of the afghan insurgency as opposed to, for example, to transnational jihadi groups like al-qaeda where you have a different sort of person joining them. but looking at the yemeni program, i think marisa did a good job of outlining how religious dialog and persuading people of one's ideas about religion is absolutely vital to the success of the program. without, you know, aftercare so to speak that is letting people in jobs or drawing families in it's really going to be these ideological debates that is key to the success or failure on the committee of religious dialog and i share marisa's view that this program has been a failure. the saudi program which she talks about is much more comprehensive.

it draws in families. it provides extensive post-release support such as, for example, landing people in jobs. providing them in some cases is housing, with cars. basically, it's good to be the kingdom. it's good to have the kingdom of saudi arabia's resources. but also a large part of it is of indeed ideological. christopher bussek who's written extensively about these programs has written about how suspects in the view of those running the program were misled by extremists and strayed away from, quote-unquote, true islam. and so part of the program -- one of the key parts is a counseling program that tries to correct misunderstandings by re-enforcing the state version of islam in saudi arabia as a means of deradicalizing individuals who have gone in the program. prisoners are expected to go through the rehabilitation program, to renounce their previous beliefs and then they're given the kind of

assistance i spoke of before, jobs, cars, apartments and the like. but to me, a review of the scholarship shows where people end up ignoring the ideological factor even though it's so important to these programs. one example of this comes in the book i recommended before "leaving terrorism behind" in which the chapter on yemen in discussing the work of the judge who's been the most visible face of the committee on religious dialog made a very questionable claim to the researchers that they uncritically repeated. and i quote, the judge has made it clear that there is only one verse in the koran that permits muslims to fight nonbelievers as an act against of self-defense in oppression. it's not a religious discussion of the koran or islam at large. but even those who have a cursory knowledge of the koran knows it's not true. there's not one single verse. off the top of my head i can think of four verses that do that. and this isn't a factual matter.

like the verses either is in the koran and they're not. and researchers uncritically repeat something that is factually incorrect is indicative to the degree in which they're ignoring ideological arguments. his claim wasn't true but they are repeating it because he said so which shows they are not actually engaging the religious text that these people are supposed to be debating in the first place. likewise, to get to the saudi arabian program, there were a few quotes from the same book that i mentioned which i thought to be a little bit interesting. one of them -- the saudi arabian program it says presumes that the suspects were abused, lied to, and misled by extremists into trag away from true islam and if the state wants to help prisoners return to the correct path it continues. the counseling program seeks to correct this misunderstanding by reintroducing and re-enforcing the official version of -- the official state version of islam.

now, the reason these struck me as being a little bit remarkable is because those who are familiar with the official saudi understanding of islam, that is the wahhabiism that's taught by the state. number one, this is one of the most intolerant brands of islam in the entire world. without question towards other sects, towards other faiths, and the like. that's something that you get at both a state level as well as an individual level. and the second thing is when you look at the ideology of a group like al-qaeda, you have bruce rydell, who's known expert in this subject who wrote about osama bin laden he said something that i agree with. for bin laden, he wrote, the islam of mohammed wahab. it's living up to the principles of the faith they both claim to share. now, if you look at the history of saudi arabia, the state version of islam that they

propound creates an inherent systemic problem to them which they've dealt with in a rather peculiar way. and that is they have a very austere version of islam which the monarchy cannot live up to because they live in the real world where you have to engage in diplomacy and compromise on certain things. and so as a result, for decades they've been trying to channel aggression abroad as opposed to focusing it on the monarchy. a number of analysts and peter bergen in his book "holy war, inc." uses this phrase, realpolitik after the saudi currency. they spend a lot of money trying to create aggression abroad so that it's not aggression at home. one of the things which is an unfortunate outcome of a state with very little civil liberties and a set of ideals that the state cannot ever live up to. now, the reason i bring this up at length is not to say that the saudi rehabilitation program cannot work. perhaps it can.

but one question you get into is the debate has people have strayed from the official version of islam that creates a question how much people's minds are changing. and moreover, if we're looking at predictively with what's going to happen with this program understanding this ideology better is key to making predictions. so in saudi arabia we have a history of people undertaking jihad outside of the kingdom. well, perhaps if people are being inculcated in official saudi islam, one thing we could predict is that you will get a high recidivism rate. a high recidivism rate not directed at the kingdom but rather directed elsewhere like, say, against u.s. forces in iraq. that's something basic that comes from this ideological understanding. and so to that extent that's where marisa and i part ways on one issue. this is something she didn't raise in her speech but in foreign policy she argued that perhaps the best strategic solution is transferring yemeni

gitmo detainees not back to yemen and i agree with her there. we should not transfer them back to yemen, but she says to saudi arabia. and i'm not convinced of that particularly for prisoners who actually are the kind we want to release, who aren't really as radical as some of those who we are most concerned about will inculcating them in wahhabi ideology which is exactly what the program purports to do will end up making us safer or will it make us less safe. quit using all of that to think there are multiple factors that draw people to terrorism. but as long as researchers are not paying attention to the ideas that drive terrorism and the ideas that are actually at the heart of these programs, we will have a blind spot. and i think we already have examples of how that blind spot makes us less safe. unless the situation changes, i think that we're going in with stewards of the deradicalization programs who are not actually looking at the big picture.

thank you. [applause] >> now is the moment that you all have been waiting for. your opportunity to ask an actual question. and i would simply ask that in doing so, you wait until the microphone comes to you. you tell us your name and your affiliation and then please to the extent possible ask an actual question. and i will reserve the right to rephrase your comments into a question. so who has a question. we'll start here in the front. >> hi, i'm deborah from front page magazine. this is for debbie. could you comment a little bit about the senate hearings on the deradicalization programs and i specifically have a question about -- a question i keep hearing them ask, which sounds ridiculous to me, which is they keep asking how radical is it's

okay until -- let me see how to word it. i don't want to ramble. give me one second to collect my thoughts. they keep asking at what point is radicalization going to turn into something violent where we have to stop it? that seems to me to be the wrong question. and i just wanted your comments on that. >> i actually think it's the right question. and i think it's a very difficult question to answer because there's clearly a gap between radical beliefs and terrorism. and this is something that, you know, our nation is founded upon. the first amendment is based upon the idea that there's a difference between radical beliefs and actually undertaking violence which is why you have people advocating, you know -- you have anarchists, you have communists and islamists. we have a whole variety of people who gets to express their opinions. and you'll have a lot of people who are somewhere along the path. like the nypd study on radicalization which has been

much criticized puts it as a four-step process. beginning with preradicalization, going through indoctrination into what they describe as the jihadi ideology and then self-identification with it and then finally jihadization. where you end up undertaking violence. and the vast majority of people who starts down this path towards radicalization end up at some point turning back. now what is the gap between radicalization and violence? that's something researchers are looking at. and it's an important question. i don't know that there have been satisfactory answers to that propounded. but i don't see a problem with asking it and i think indeed it's one of those of things that we really need to know much more about. >> marisa, you want to comment? >> my one comment to follow on the thought you can be radical without being a violent. to clarify a bit when i was talking radical and focusing on rehabilitation, i would argue that you actually have to be

closer to the rehabilitation focus than the ideology. because as they just said you can be radical and have radical thoughts without committing to joining a terrorist group or committing terrorism. so perhaps we should be most concerned with the actions and the activities and the ideology. also recognizing that there are subset that are ideologically committed and likely will never have their minds changed. so i think in terms of bringing it back to the deradicalization standpoint i think just that question is really important when we're trying to figure out how to develop a program and what a program should look like on the outside. >> question, this lady was next. >> i'm teri hart, a private consultant. my question is, would one or both of you please explore in greater detail the use of art therapy as deradicalization, counter-radicalization, the pros, the cons, the origins, the success rates. thank you. >> and marisa, do you want to

tell them about the nice ark work which you showed me that one of the detainees did? >> the results of complimenting a detainees painting skills when i was last there a few times ago was i now have a painting by one of the saudi detainees hanging on my living room. -- living room wall. the program -- the first instance of the program that i've seen were looking at the saudi example, it was used as another way to get at the psychological source of the detainees radicalization or any mental issues he might have and so the way it's played out there is really using a ph.d. -- you know, trained at penn state art therapist who goes and works with the detainees to try to get them to paint their emotions. i mean, it sounds a bit silly but you see over the course when they show their artwork of how they're trying to release some of the emotions that will be the sources of the radicalization or the violence of the detainees.

yeah, i mean, you can doubt it and it might be a smoke screen and it looks pretty cool and it's a good way to give another outlet for the detainees when they're in custody. but i think, you know, there's the therapeutic element of it but there's also just the idea of keep the detainees busy and ganged and giving them something they can do to express themselves while they're in detention. this is the element of it that's being implemented now in afghanistan. when i was last there they were just -- rather in december, they were just starting to implement programs to give the detainees other lessons, other skills, other options when they were in custody. and having recently spoken to the woman who's in charge of these efforts, she started bringing in string -- the thread that they use to make certain jewelry, beads, things like that in afghanistan. and the detainees are now given the opportunity to make little trinkets, make things they can give their families, their wives and even sometimes the guards when they develop a rapport.

and it's really interesting to note that she's seen the most effect these efforts have had with the most violent and radical of the detainees in custody in afghanistan. the detainees in bagram who have historically been the most violent against the guards, historically been the ones the most committed, the ones that do not profess to ever change their mind much less, you know, beyond the path towards rehabilitation, when they've been given these opportunities suddenly they have -- they're -- they engage better with the guards. they -- there's less violent activity when they're in their cells, you know, interacting a little better in the detention environment and so now you see a side benefit of these programs. i mean, first you have the program's goal of deradicalizing the individual. maybe the bigger strategic goal how it paints a new picture of detention and is a counter-radicalizing tool but you also have the side benefit of making detention efforts a safer -- you know, safer for both the guards and the detainees.

because now their behavior has improved. so i think it does play into many different elements and depending where and how it's implemented but it is an interesting concept to explore. >> daveed, you want to comment? >> i've been to saudi arabia and they have unlimited resources so if they want to throw money at it whether it works or not, they're basically not -- they can't really waste money, right? by the way, i should say that's not mockery of your point, marisa. i think you're making some very good points. it struck me as just, look, you have so much money, you can give them cars, you can give them apartments you might as well give them art as well. >> in the back and here in the front next. with this gentleman. >> a couple of questions, actually two, if i may. >> your name please and your affiliation. >> i'm with the international institute of strategic studies. a couple of questions to get to the point of the success of the programs. one of the things that there's been a lot of controversy over

is of the recidivism rate and what you describe as recidivism. you quoted 20% and there's studies that's 14 and there's people who say it's as low as 4 or 5% rate depending on what you're talking returning to violent acts as opposed to just to anti-u.s. ideology and stuff like that. so again, to sum up, you know, how would you define recidivism basically? and the second thing that gets to that is, you were just discussing the spectrum that you're on basically. and so should we maybe change the terminology away from deradicalization to kind of what you just used now which is rehabilitation which, you know, is -- and this goes to the idea of the success. is the success just to move them away from violent acts or is it to move them away from violent acts and also radicalization? and so, therefore, if we're --

terminology is important in that respect, you know, are we just trying to -- rehabilitate them away from violent acts as opposed to radicalization? >> sure. okay. to go ahead, this is actually one of the points that i wanted to raise. you had john brennan's kind of famous remarks on this where he compared the recidivism rate of 20% -- this is when he was speaking at nyu at the islamic center and said, you know, people sometimes use that figure 20% and say, oh, my goodness 1 out of 5 detainees returned to some type of extremist activity and then he countered the american penal system -- the recidivism rate is up to something like 50% as far as return to crime so 20% isn't that bad. now, i completely disagree with that. and first of all, to look at what constitutes recidivism, i think there's a good question about that.

because a lot of the recidivism evidence -- we're basing it upon pentagon figures. like from open source information, i can't get the 20% figure. i mean, there are some very well known cases like that was talked about in the introduction that we can definitively say went through the program and they're resivists but, you know, the program says and nobody is seriously challenging this that the recidivism rate to extremist activity is about 20%. now, i think -- the reason why i have a problem with brennan's remark in this regard is first of all it's 20% right now. the figure is likely to rise over time because it's just the people who have already been -- but the second thing there's been a little bit of an apples to oranges comparison when you look at a 20% rate and say it's not that bad. you're comparing it to the overall recidivism rate from

everybody within the penal system in the united states including both violent and nonviolent forms of crime. whereas, terrorism is an inherently violent activity. now, if you look at the broad scope of deradicalization programs some of them have low recidivism rates. such as singapore that has done quite well. but i think it's important not just to keep this in the context of islamic terrorist deradicalization. for example, you can look at colombia where the auc was demobilized and the rearmament rate there for people from the auc, which was an armed militia, was only 5% for people who were collectively demobilized and it was even less for people who demobilized individually. so compared to that, it seems that the bulk of current deradicalization programs or rehabilitation programs just aren't doing that well. and that's something that certainly needs to factor into the analysis when we're thinking about where do you send detainees?

what is our policy for people who have been arrested on the battlefield. >> marisa, can you pick up on his other point and that is the choice of language which i think is -- >> it's a great point. and i've spent a lot of my time and research trying to think of exactly how to reframe and changing the name is part of it. and i haven't come up with a better name so if anyone is out there who has a suggestion, pass it on. you're right. is it reforming the terrorists? i don't think it's reprogramming. i don't think it's necessarily deradicalizing. unfortunately, rehabilitation may ignore entirely the ideology which as daveed mentioned is a part of it. he with might differ how much a part of it really. but it's someplace in between. so i don't know if there's the perfect word out there as of yet. but it is a good point that we have to sort of rethink our understanding of these programs. just to follow up on the recidivism issue, not to dispute the numbers or how we're

measuring them per se but i would argue recidivism should not be the bottom line of how we're measuring them. it's right, over time more will return to the fight. not just because there is more out there and because the process of someone returning to bad things takes times, but because we're letting out worse and worse people in some instances because over time for political reasons and legal reasons, you know, more hardcore individuals might be released from custody. and also because these are -- it takes a long time to measure something like this. a program that's been around for a couple of years and has released a handful of people there's no way to tell. i think we really need to look at how we're assessing the people in custody and how the program is making an impact wider than the tactical aim of the individuals in custody. so that gets back to my strategic point of, you know, looking at it from a strategic perspective. on the singapore thing, this is where security comes into play. there is an element which neither of us actually mentioned but we all need to remember that security efforts are a tool as part of these programs as well.

in saudi arabia and? -- and in singapore which is a heavily secured state and they are using that as part of the tool for post-release. >> do you all agree -- this is an interim question which you can answer or incorporate into this gentleman's question. do you all agree that we're one large terrorist attack away from a departure from using these programs if it's proven that a person we had in custody who went through a rehabilitation program conducts and effectively carries out a large scale terrorist attack in the united states? you hear that. i hear that. i'm sure you hear that. in your research and when you're out on the road. and we'll go to this gentleman. >> thank you very much. my name is ali, the center from democracy rights in saudi arabia. i want to thank the head of the foundations for keeping these events going on.

but keep this issue on the front. because it's not going to go away. marisa, i'm here because a friend of yourself insist that i should come here and i haven't met your friend yet. i'm from saudi arabia. i know a little bit about the country and the way religion is used. i'm very aware that who was the head of the al-qaeda in yemen went through this rehabilitation process. i'm also aware that the rest of these rehabilitated people -- because, any program -- it's reprogramming. they are programmed to kill so they get -- but not the saudis. you are reprogramming to keep killing other people but not us. that's what it is. i'm aware of the -- i don't know if you're all aware of that. the rest of the people who --

not to all of them. the rehabilitation program are actually used by the saudi interior ministry to fight, kill, incarcerate or keep it alive in saudi arabia. so those who escape to yemen or go back to where they are before, they are being used by the saudi authorities to control the minorities. my question is, what is the difference and the objectives -- and i agree that one of you mentioned that there are more reasons for terrorism and other than just religion. religion is a tool used because the saudis -- the only thing they know is religion. so they are being brainwashed from childhood until they die. the question i have is, i'm talking about what objectives.

what is the difference between the objective of the saudi government-controlling family, religious clerics, and bin laden groups? the reason i'm asking this, they believe that they should be no women's rights, no human rights, no religious freedom, no rigs for religious minorities. both of them do that. what's the difference? what's the difference between people -- >> we'll leave this program now to go live to capitol hill where the bipartisan commission on wartime contracting is holding a hearing on planned reductions in the military contractor work force in iraq. hear testimony from defense department officials in charge of contractor oversight and representatives from a major contracting firm kbr. this is live coverage on c-span2. >> robert henke, katherine schinasi and professor charles tiefer, we are here to talk

about transitions in iraq march 20 was the seventh anniversary of the u.s. british and other allies invasion of iraq. they have lasted almost twice as long as the american civil war or u.s. involvement in world war ii. american involvement in iraq will continue for many more years in the form of political engagement and support for good governance and economic development. but the end of our active military involvement there is in sight. the president has directed that american military forces in iraq be reduced to no more than 50,000 by the end of this august. and our agreement with the government of iraq calls for american troops to be out of the country entirely by the end of 2011. the u.s. troop drawdown already underway is welcomed news. it reflects significant success based on hard work, bravery, and

sacrifice by coalition and iraqi forces, federal civilian employees, contractors, and nongovernmental organizations. extremists and terrorists still lash out at military government and civilian targets. have become less of a threat to the government of iraq. conducting the drawdown of forces, however, is not a simple task. like turning down a thermostat. thousands of troops must be redeployed. thousands of contractor employees must be reassigned or released. hundreds of military bases have to be closed or handed over to the iraqis. millions of items of equipment, whether military or acquired by contractors and now government-owned must be moved, donated or scraped. the bulk of this work will fall to contractors who have been a vital part of u.s. operations in iraq from the outset. the department of defense expects that contractor

employees in iraq will exceed 70,000 in august, 2010. that would be about half the contractor count of august, 2009, but still nearly 1 1/2 times the u.s. troop strength target for august. contractor employees have outnumbered military personnel in both iraq and afghanistan. this reflects the reduction in the size of the u.s. military since the end of the cold war as well as the extent of support services required for contingency operations. those services include construction, dining facility and laundry operations, base security, transportation, equipment maintenance and much more. we don't expect contractor employee numbers to decline in rigid lockstep with reductions in troop numbers. some minimal number of people is needed to operate a dining facility, a certain number is needed to guard a base perimeter. even if the garrison is shrinking.

and some staffing flexibilities to meet demands. nonetheless the contract to military ratio expected in august is looking carefully at our contractor planning and management arrangements. the historical record shows that the united states went into iraq assuming quick victory, swift handover of power, and rapid exit and had, therefore, made no plans for contracting managing and auditing large scale logistic security and reconstruction support for a long stay. after seven years of sacrifice, at enormous cost, we are examining whether planning and management of contracting for the drawdown is adequate and effective. kbr expects to have about 30,000 employees in iraq by late summer of this year compared to more than 60,000 in march, 2009. but the planning to synchronize contractors drawdown with military needs does not appear to be as advanced as the military's planning for removing its own personnel and property.

part of the reason for that may be that the u.s. military has yet to make key decisions that will affect contractors drawdown plans. it appears the government is not giving contractors adequate guidance on events to deploy work forces appropriately. we need proper mechanisms to ensure contractors are drawing down their personnel in iraq consistent with the reduction of military forces and with operational requirements. the military needs the right number of contractors and the right places as the drawdown continues. but taxpayers need assurance that contractors don't have unnecessary staff hanging around, accidentally or by design without work. and still drawing pay. this hearing will also inquire whether a satisfactory transition is occurring in iraq

between version 3 and version 4 of the multibillion dollar logcap contract for logistic support. as we have seen in earlier hearings, logcap iii is competitively awarded, single vendor contractor upon which orders for work are drawn as needed. under this contract, the sole vendor, kbr, inc., has collected $50 billion in the past three years far more than anyone had anticipated when our iraq involvement had began. work continues under logcap iii but the intent is to transition new work to logcap iv contract which has three vendors, kbr, floor and dyncorp each of whom must offer a new task order under the contract. the aim is to sharpen competition on price and performance.

on february 26th kbr won the first task order competition for logistic support postal support and theater transportation. kbr could collect as much as $2.3 billion under this one task order. such big expenditures raise such big questions about government requirements, business planning and contract oversight. for example, why has the transition taken so long? and does it still make economic sense to conduct the transition? this close to american military's exit from iraq? we have two panels today, one panel will comprise senior officials. the other will feature two executive says representing kbr whose employees account for half of all contractors in the country. we are interested in the government panel's view on planning and management -- and managing contractors during the drawdown and the logcap transition.

we look to kbr for its view of those matters, its plans and procedures for downsizing the iraq work force and its recommendations for improving the contracting process. we also want to explore what appeared to be alarming data revealed in audits by the defense contract audit agency. and the inspector general of the department of defense. those agencies reviews of kbr's corps logistic support services including tactical vehicle maintenance on logcap iii work order found the utilization rates at or below 10%. when army regulations require at least 85%. for the year ending august 31st, 2009, the dod ig calculated that this underutilization met that 4.6 million of the 5 million

charged for this work at the balad base in iraq, 92% of the cost was not necessary. a waste. kbr reported its labor utilization rates but the ig's report says the army did not adequately review the data or require corrective action. we want to know why. we also want to ask kbr about its sense of responsibility for managing a work force that was clearly too big for the work being done. this case study raises serious questions about overhaul contractor performance and government oversight. our first panel has three witnesses. each with deep and direct knowledge of the issues that concern us today. lieutenant general james h. pillsbury, deputy commanding army command. the department of defense agency, that department of defense agency is responsible for much of army contracting including logcap and systems

support contracts being used in both iraq and afghanistan. patrick fitzgerald, director of defense contract audit agency, dcaa. dcaa is working at the request of the defense contract management agency dcma, to determine whether kbr is reducing its work force in iraq commensurate with the military drawdown and the descoping of work of logcap iii. james loehrl, executive director and principal assistant responsible for contracting u.s. army contracting center rock island, which is part of the army's sustainment command. logcap iii and logcap iv are under his jurisdiction. our second panel has two witnesses representing kbr, incorporated. they are executives involved in operations who can address our concerns about the company's performance and the adequacy of government planning and oversight of their projects.

doug horn vice president operational maintenance and logistics government and infrastructure. guy labow principal program manager at logcap iii middle east and central asia north american government and defense. we've asked our witnesses to summarize their testimony five minutes to allow adequate time for questions and answers but given the length of my own statement i'll be a little flexible here. the full text of their statements will be entered into the hearing record and posted on the commission's website. we also ask that witnesses submit an additional information -- any additional information they may offer to provide and responses to any questions for the record within 15 business days following this hearing. the commission appreciates the cooperation of our -- all our witnesses and looks forward to an informative session. the iraq drawdown and contract work under logcap are operations of enormous importance to america's war fighters,

taxpayers, and national security objectives. today's hearing will help us judge the status of those operations. and identify areas that need improvement. so with that, i've introduced our witnesses. i'd like them to stand and i'll swear you in. so you solemnly swear or affirm that the testimony you will give today will be the truth, the whole truth and nothing but the truth. note for the record, all our witnesses have responded in the affirmative and i think we'll start with you, general. i think -- there a button there? then push it. >> oh? >> is it red? >> yes. chairman thibault, shays and members of the commission thank you for the opportunity to comment on the progress in

supporting the iraq drawdown. i am lieutenant general jim pillsbury and i have a short opening statement. my official written statement has been provided earlier to be included as part of the record. amc is a global enterprise with more than 66,000 military and civilian employees located in 48 states and 127 countries. i would like to share with you some of amc's recent accomplishments in contracting support and direct support to the responsible drawdown being conducted in theater. the progress in army contingency contracting operations is a direct result of our aggressive implementation of the recommendations in the 2007 council report and this commission's intensity to ensure compliance. the report recommended the army do several things including first increase the stature of military contracting personnel. we did this as the army established five general officer positions within the contracting corps to provide the experienced senior leadership critical to the future of our contracting efforts.

the army has also established an nco career field that will ensure our ncos will have a career path in which to excel. second the report recommended we restructure and restore responsibility to facilitating contracting and contract manner in expeditionary operations. we did this as amc implemented a number of restructuring efforts that included the establishment of the army contracting command and subordinate commands and the expeditionary support command and mission and installation contracting command. each of these organizations is dedicated to ensuring professional, ethical, efficient and responsive contracting within the army. thirdly, it was recommended that we provide training and tools for contracting in expeditionary missions we have done this in enhancing the training in the contracting work force and acquisition support staff to build the skills necessary to better support the war fighter and better manage contracted support. to do this the army has acquisition training courses including instruction in 16 officer and noncommissioned officer courses incorporated contracting operations in

planning into the battle command training program and combat training centers. and included operational contracting support scenarios for contracting officers representatives cors during mission readiness exercises prior to deployment. also i just left out of fort leavenworth this weekend where i talked to the class that all students regardless of branches get 10 hours of contracting training at the command at general staff college. in addition to require defense acquisition university training for cors the army has added required ethics training to better train cors for deployments, the acc has developed a cr training program provided to units prior to training to strengthen the army's ability to oversee performance. the army offered an execution order to all commands requiring the commanders determine the numbers of cors they will need in theater and train to fill those positions but at a minimum each brigade combat training

must have 80 trained cors with lower numbers for smaller units. in 2009, amc conducted a comprehensive assessment to enhance its visibility of contractors on the battlefield. out of this assessment we developed a tool and i believe the commissioner is aware of spot the synchronized operational trainer and we are working to bring spot on. and regarding the amc role in the iraqi drawdown we are operating in direct support in iraq and army central as they conduct a responsible drawdown. we have focused our efforts in four areas. property accountability. total asset ability and for equipment and material thus ensuring velocity throughout the boss. my boss tasked me to lead the reset task force. this task force is physically located in kuwait embedded in the headquarters and help synchronized movements of equipment out of iraq back to conus or onto to afghanistan.

we acknowledge the concerns raised by the gao in its november 2009 testimony for the adequately of training for the use of contractor, oversight and property disposition during the drawdown. we have moved aggressively to remedy by developing a drawdown that ensures proper levels of support, effective oversight and responsible property did i position. working in theater we have established a deliberate process for identifying equipment excess two requirements we can redistribute within the theater used to meet other requirements or provide to other countries. roughly one-third of the equipment and one-half -- >> general, you can read a little slower. i will give you a little more time. >> yes, sir. and one-half of the tactical wheeled vehicles in afghanistan from the surge has happened in iraq. in closing we are supporting u.s. iraq and command and remains thoroughly engaged with all of our stakeholders to ensure an efficient, effective drawdown of forces from iraq.

we are fully committed to maintaining the highest standards of public stewardship while supporting the requirements of our nation's war fighter on the battlefield. i thank the commission for the opportunity to highlight amc's role in the iraq drawdown and i look forward to your questions. >> thank you, general. and we appreciate all your service to our country. thank you. mr. fitzgerald? >> chairman thibault, chairman shays and he members of the commission thank you for the opportunity to appear before you today. as requested i will highlight our initiatives in support of the contingency mission and.an update to our october, 2009, report on kbr's staffing during the iraq drawdown. i assumed the duties of the director of the defense contract audit agency in november, 2009. previously i served as the auditor general of the army and led the u.s. army audit agency. during my more than 30 years of government service i have held a

wide variety of headquarter and field assignments with the u.s. army. dating back to may, 2003, dcaa has supported contingency operations with approximately 240 auditors. who have volunteered to serve in iraq, kuwait and afghanistan. we also support the contingency operations at multiple fieldhouses. in february 2010 we have issued 3,000,000 reports in support of in-theater contracts reporting total exceptions of about $17.5 billion. as requested i would like to take this extent to briefly update the current initiatives we are taking to remain we remain responsive to the war fighter and the taxpayers needs. the first initiatives involves increasing the number of resources we are devoting to contingency operations. in 2010, we have made significant increases.

for example, we have increased our presence in afghanistan from four auditors in the spring of 2009 to 17 today. and we have also doubled our work force devoted to logcap contractors in the u.s. from 55 in 2009 to roughly 110 this year. secondly, we are re-assessing contracting workload into theater to ensure we are knowledgeable of the risk and provide the appropriate oversight. as part of this process by key executives and i have met with general officers in theater and army material command leaders to understand their field work and i remember ares. we believe we are seeing some positive effects from this areas. as our level of involvement has increased in recent months. thirdly, with respect to contractor business systems we are revising our process for evaluating contractor business systems in response to the concerns raised by the gao. our revised approach will result

in increased transaction testing while ensuring that deficiencies are reported on a real time basis. in january of this year i've directed my staff to resume the necessary business system audits at contingency operators. we are committed to evaluating their corrective actions in a timely manner. our last initiative is to increase our emphasis on economy and efficiency audits. during physical year 2010 we are on track to incur over 12,000 hours performing audits in iraq, afghanistan, and kuwait, which is about 240% increase from our prior years. we continue to find opportunities for improvement. for example we recently reported in an audit requested by the defense contract management agency that kbr could avoid approximately 21 million in

future costs by descoping excess labor and capacity under the core logistic services maintenance function. we also recently suspended about $1 million where an audit revealed that kbr was slow to reduce personnel at several dining facilities as directed by the contracting officer. we will continue to evaluate the effectiveness and efficiency of contractor operations during the drawdown. lastly i will provide an update on dca's report that reviewed kbr's labor operations in iraq in light of the military drawdown. the report concluded that kbr was ineffective at managing their staffing levels during the planned drawdown. we estimated that a more effective management of kbr's work force could potentially save the government approximately 193 million. in response to our report kbr briefed the army and dcaa on the latest drawdown plan. the february 23rd plan calls for

an overall staff reduction of about 38% through august, 2010. we have initiated a follow-up review of kbr's plan. although we have not drawn any conclusions to date, we are evaluating the specific aspects of the plan to obtain a thorough understanding of the plan's assumptions and the basis for those assumptions. for example, kbr proposes a supported head count of about 189,000 in august 2010, which is significant higher than other government estimates of about 105,000. also about 60% of kbr's planned staff reductions occur within the final month of the current period of performance, july, 2010, to august, 2010. we will issue our follow-up report as soon as we complete our audit. in closing, i want to assure you that dcaa is committed to providing the necessary audit coverage of overseas contingency

operations to protect the public's interest. supporting this effort is my top priority. i would also like to say i'm very proud of dcaa's highly skilled, hard-working and dedicated auditors who support our critical mission day in and day out. i appreciate the opportunity to testify before you today. and look forward to answering your questions. thank you. >> thank you, mr. fitzgerald. mr. loehrl, i said lo-rell it sounded kind of nice but your name is loehrl but thank you. and you're on. >> chairman thibault, chairman shays, members of the commission with your approval i'll present a short oral statement and ask that my written statement be entered into the record. it is my privilege to be here representing the united states army material command as well as the service members and civilians supported by the logistics civil augmentation program, logcap. i thank you for the interest in logcap and the attention you are paying to the services we provide.

it is important to stress that logcap is a critical worldwide army augmentation program. the program has grown rapidly over the years from 2001 to the present from a peacetime value of approximately $55 million to an annual value of nearly $6 billion. its mission is to provide critical logistics and life support services to our fighting forces freeing them to focus on our core mission combat. in mid-2004 the arm began developing a strategy to incorporate lessons learned during all the previous logcap contracts while enhancing our ability to support future efforts. this strategy formed the preliminary objective -- the primary objectives of the new logcap iv program which is to reduce program risk, increase capacity and incentivize contract performance. after extensive coordination with the department of defense, sister services, combat and commands and industry, the army determined the best acquisition

approach was to competitively award a single logcap contract in three logcap performance contracts. the logcap support contract was awarded to circle on february 15th, 2007, to obtain support services such as planning, requirements generation, cost estimating, logistic management and management analysis in support of the logcap program in contracting offices. in addition, the army awarded three indefinite delivery and indefinite quantity logcap performance to dyncorp copper international, fluor and kbr on june 27th, 2007. performance on those contracts did not begin until april 17th, 2008 after protest to the government accountability office were resolved. 12 task orders have been awarded including nine task orders performance and three task orders for project management offices. $1.8 billion has been obligated under the logcap iv contracts

76% of the logcap work has been competent actively awarded under logcap iv services and transition from logcap iii to logcap iv services are awarded. in june, 2007, the army developed its overarching transition authority and by country progressing from the small scale operation in kuwait to what at the time was expected to be a relatively stable operation in afghanistan till the largest and most complex operation in iraq. the army began its transition efforts as planned conducting fair opportunity competitions for the kuwait logcap requirements. we awarded the task orders by december 2008 but were delayed to moving to transition of the work by a series of protests. the government accountability office dismissed or denied all the protests allowing the army to proceed with transition activities, transition was completed in june, 2009. while working to awarded the

kuwait task orders we began our transition for completing our requirements in afghanistan. the task proved larger and more complex due to the change in u.s. policy concerning the mission of the armed forces in afghanistan. the afghanistan transition involved implementing forward-operating base banding, price matrix and change management mechanisms into our afghanistan solicitation. the afghanistan north and south area of responsibility task orders were awarded in july 7th, 2009. the actual physical transition of work from logcap iii to logcap iv is now underway. in the north 2758 fobbs successfully transitioned in the souter 15 of 31 fobbs have that state. the transition due to the planned drawdown of forces. as the force structure in iraq changes we continue to work

closely with the theater commander to assure our contractor work force is properly sized and that our strategy for competing in the iraq requirements is consistent with the projected future state of operations to that country. we awarded the first logcap iv task order in iraq on february 26th, 2010, to provide logistic support services, theater transportation and postal operations to kbr. we are analyzing to determine our best course of action given the drawdown of forces in iraq while concurrently drawing down logcap iii in iraq. a january 31st 2009 general odierno dropped by to 5% of quarter. logcap iii is ahead of that goal. in conclusion let me assure the army material command understands these critical logcap contracts. we continue to collect lessons learned and make improvements and adjust along the way to ensure mission success in

protection of the interest of the u.s. government and taxpayer. it is my honor to lead the contracting team in achievement of these goals. again, thank you for inviting me to speak with you today. >> thank you, mr. loehrl. we're going to begin -- i'm going to go last and my chairman is going to go first. we're going to take 8 minutes, maybe a little more each and we'll do a second round as well. so with that, mr. thibault. >> great. thank you, gentlemen, for coming up here and testifying in front of the commission. much appreciated. i want to get a couple of things out of the way early. i'm really focused on all of you but i'm especially focused on the comments made by general pillsbury. the secretary and the army, my perspective, are absolutely to be commended for addressing some of the short-term needs with what may be intermediate-term

solutions but nonetheless the actions to address staffing and training of the eyes and ears on the ground. i want to get that out on the record. the secretary has identified staffing as a priority. no overnight solution in bringing qualified people. but that's very positive and maybe we'll talk a little bit more about it. general pillsbury, out of those five general officers that were approved about a year ago, how many are on board? >> sir -- excuse me. sir, the acc is still headed by mr. parsons as you well know. but the two subordinate commands are commanded by army brigadier generals. so two of the five right now, sir. >> okay. i just want to make that point. that it's been about a year. i could state and i will state if the army chief of staff had a

very significant priority, absolute priority -- and i realize this isn't a combat mission but this is 50% of the cost or more, i would recommend that that get a little pressure. >> that's an observation. can we for the record and staff will probably come up and running up to me afterward and say we already gave that to you. but i'm very interested in obtaining the commission -- the commission obtaining a copy that you referenced and that seems like an excellent step. >> that was in november of '09. >> great. and i would like to talk before i move elsewhere i think the that you -- i'm on a tangent today of efficiency and economy. because i think we're addressing a lot of the quality issues and the like but i'm going to be talking about the management and efficiency and economy and you mentioned property asset and equipment. well, one of the areas that has

started to come up in the last six, eight, ten months of testimony is labor and equipment utilization. not management of the property so much. certainly defense contract management agencies, expertise of property and equipment they could probably look at efficiency and economy as well as accountability taking an inventory. being sure that it's properly moved to where it's supposed to be moved which is critical to the war fighter in afghanistan and everywhere else. but i'd really like to encourage based on the inputs that this commission has heard from many including mr. fitzgerald today that the subject of labor and equipment utilization, you know, really take a front seat. and i'd ask you for your consideration of that. in fact, for the record, i'd ask you for your consideration and feedback, you know, in the 15-day period on your reaction to that. and is that something that seems to make sense?

>> sir, the numbers are -- if the numbers are true, which i don't doubt they are, then it's very disturbing. certainly we do not wish to have 90% contracting maintenance capabilities sitting idle. >> right. and there are other. you know, dcaa may not be right but they've pointed to in a fairly narrow period of time -- i think it's seven months but i could be wrong, 193 -- from january to august, 193 million that they believe could be saved through better planning. so i just think that's a aaa priority. mr. loehrl, i'd like to switch to you and put a couple things out there in a presentation and then i'm basically going to ask you so what's going on? >> okay. >> i'm looking at the -- what you call the peb performance evaluation board that is critical with all contractors in terms of how much award fee.

and contractors pay attention as you know better than me. to award fee boards. and i'm looking at the -- we were just given the most recent one a couple days ago or whatever. but i'm looking at the one that i've had an opportunity to look at in some detail, which is to september, 2009. and i'm looking at kbr. and i'm looking at cost control because efficiency and economy, as i said, is sort of a singular focus for me. if you look at it it's green, yellow and red. and the titles are very good, good and adequate. and they have a red on cost control. which is average. very good, not adequate but average. and it's kind of interesting because i know dcaa has drawn criticism because in their reports they go adequate, partially and adequate, inadequate and then they changed it and all that. but adequate is the best you could get. and here average is the worst you can get.

and i highlight that because it says here in your definition of it, the criteria definition to a level that is minimally acceptable. well, i propose and i'm going to read a few of them to you that your comments go beyond minimally acceptable to something below that. but that's the criteria. for example, under the area of cost, board feedback cost control, kbr not capturing descope acl's on financial reporting. mr. fitzgerald talked about descoping. cost data was not updated in a timely manner. that's a pretty big deal. not proactive in improving maintenance utilization by reducing manpower. that's overstaffing. ...

>> on subcontracts, subcontracts are huge cost driver. billions of dollars in total. it says you're the government aco in theater does not have

access to the contractors information. so kind of like, well, we don't know. does the contractor engaged in continuous re- baseline, bottoms up review? is based on the answer to question one, the answer would have to be no. based on cost analysis of the contractor has not made any attempts on their own initiative. i could go on and on because it's actually a very good report. i kind of am lost a bit at what is average, but it's averaged the lowest you can go in the system. but i'm very concerned, and then i will build on mr. fitzgerald's comment because we're talking about staffing, and his comment is 60 percent of the a sidestepping or let's go home in the last month period. that seems to me to be objective better than support to the department of defense. that seems like all of a sudden the work is going to go away and

we've heard about this gradual attrition of staff and all that. so my question, mr. loehrl, is please, what? >> okay. what that is is that the monthly assessment that the defense contract management agency's aco's perform with kbr in theater on a monthly basis, feedback. and as you said all of that then flows into the biannual award fee, award fee process. some of what is in there very clearly, what the aco was reporting there is correct. kbr is not implementing aco changes in those aco changes incorporated into the baseline. and that is an issue and that's a proper way to be addressing them as at that form so they kbr understands that that is been

going to flow into their work evaluation and affect their profitability. and so that's what that process is going on. i believe that particular path was one on the core logistics mission, which then calls into the same thing that mr. fitzgerald brought up with that dcaa audit report regarding the stabbing of that logistics, logistics mission. so i think two of those all kind of -- >> you know, i know the chairman was going to allow you all time at the into wrap anything. if you have anything additional to put it in there, but i would say that you outlined yourself the current action that occurred in logcap iv logistics, which was to give this contract or the action based on competitive, technical and the like, multibillion-dollar. and my sensitivity is if you

don't have the kind of scorekeeping, sir, that you need an order to do your job, how are we going to get it? mr. shays i think want to follow this. i've used my time but sir, please do. >> thank you. mr. henke? >> general pillsbury, are you for my with the dcaa our report regarding kbr staffing from october 2009? >> i have read the report, yes, sir. >> my question for you, your status as quote implementing plan to draw down our contracts and contractors efficiently and effectively. end of the quote. this dcaa on its stated that if the kbr contractor would have reduced its staffing levels to what they considered adequate that the government could save about $193 million. one of the statements in this report is i think particularly noteworthy so i will note.

quote we know that kbr staffing levels have little correlation to the number of troops supported. in fact, staffing levels were slightly higher, 20 months after the militaries significantly reduce troop levels, subsequent to the truth surging 2007. in spite of the fact that several bases closed or descoped, unquote. so kbr staffing levels were up and had continued to increase until april of 2009. the audit report basically says that if kbr staffing was to be reduced by what the auditors consider to be overstaffing conditions, the government could save $193 million. the point of departure for the audit was january 1, 2010. and general odierno has issued a requirement that contractors come down 5% a quarter. that number on january 1 was roughly 15,000 for kbr, direct

tires, 15,900. dcaa would tell you that that's about 3000 more than they think that kbr needs. what i'm surprised that is that i don't believe that the army or amc has responded to the audit report. is that your understanding as well? >> mr. commissioner, the army material command is and will always be in support of the war fighter. so if, in fact, the requirement is -- sir, my question before we go on to further inquiries is has the army are army material command responded to this report? if someone would write me a report this as you can save 193 million, i would write them back and say i agree or disagree. so has the army responded? >> i will take that for the record. i don't know if we have responded exactly to it, but i

know we are taking actions to draw down. >> so you don't know if you have responded to it or mr. fitzgerald, has the army responded formally to this report? >> sir, if you mean formally in writing, no. we have had conversations and they have expressed some concern about certain aspects of the report but have not responded formally. >> okay. they is army or army material command? >> yes. >> general, since the army has responded to the audit, could you do that your? >> again, sir, the drawdown in iraq is on pace. given the dcaa audit and the fact that general odierno has said that we would drawdown by 5%, the actions, i believe, that ongoing are prudent. now, i am not an auditor.

i am an operational logistician. and requirements in the flowing battlefield, a floyd era special one that is drawn down are very, very difficult to put your arms around. so i would say to you, sir, that i will take this for the record and get back to you with the response from amc on what our actions are for the audit. but i will tell you, sir, the situations on the ground are somewhat fluid, as you well know. >> i appreciate that entirely, but you're telling me that agency has a comprehensive plan to drawdown contracts and contractors, in a single biggest contractor in theater is kbr, 15,000 direct tires, 35,000 other people. i would think if an auditor would tell you there's a chance to say $193 million, that someone in the system would feel compelled to respond.

i'm disappointed that the army has not. we had the logcap program manager up here before the commission in november, asked him his respond the report was just out. so this is not new material. in fact, the point of the audit is that the savings are going, going, gone. they were, if the army had acted and the savings could have been achieved, but since the army or the d.o.d. has a responded, the savings are effectively gone. so my question to you, sir, is who is responsible for cost efficiency, for cost awareness of expensive contracts in theater? >> the army material command leadership as you well know, the contract oversight, we depend on are partners in dcma, dcaa. we have, as i alluded to in my

statement, contracting officer representative. we have 2006 deputy director for logcap oversight in theater. mr. loehrl and his team are providing that support for them. and i believe, sir, we are on the path to gain efficiencies that you're talking about. the 193 million, going, going, gone. i will get back you on record about what we're doing about that 193 million. >> mr. loehrl, would you care to comment on the findings? >> first of all we have gone back and had verbal conversations with dcaa regarding that audit. and we did have some, i'll don't want to say issues, but we had some discussions with them regarding the audit and points made in the audit. >> can you put a sharper point on it? >> at the time the autumn was generated, there had been no

basis on logcap closed yet. so while they were siding that point, that we were not drawn down, they didn't cite the point that at that time the numbers they were looking at, none of the bases that were managed by logcap had been close. logcap only managed about two-thirds of the bases in theater. at the same time, the same time those number's were being generated we were also ramping up of some of these other functions within law cap to deal with some of the other things that were there. in addition, then as you look at the logcap staffing, not all of that staffing is their generated in supports beos. so doesn't come down on the same timeline as what the drawdown of the forces do. so those were all conversations and points we had. we have been brought kbr in a kbr generate a drawdown plan, which they provided to us back

in the december time frame. provided that to dcaa in the general timeframe. we also been brought kbr backend to generate another more refined plan on paper 23rd. of this year. and invited dcaa to come in, listen to that session, listen to the briefing, and then i ask kbr -- excuse me, kbr to go back and that's what mr. fitzgerald reference in his opening statement to specifically look at and audit the assumptions and facts and drawdowns that were in that plan. >> can you tell me from the plan that kbr briefed you on federal 23rd, what's the time horizon on that plan? that's to be drawn down by -- >> best to beat drawn down to, i believe its the 30,000 that we referenced by the august the 2010 timeframe. >> by august 20? >> and then totally by december time frame. we're looking to get down to the 30,000 the time the troops get

down to 50,000 level and at august 2010 timeframe. >> why would it be though that after the decisions are made to drawdown in iraq and the timeline is set early in 2009, the contracted usual plan in february 2010 to drawdown by august 2010? why is that you'd as acceptable? >> trying to make sure i understand your question, sir. >> it seems to me like the plan, the military, the contract of planning would've been consistent with the military planning which took place probably the better part of the year or two years ago. >> but i think the military is planning is still intact evolving, it's still not totally laid out. while they play that we're going to drawdown to the 50,000, it's been a continued change as to what the final configuration is going to look like, what the final spokesman hubs are going to be. and exactly when bases are asked

to going to be shut down and close. we still get individual notices when particular bases. while the military has their plan, their plan is not down to the finite and it continues, continues to be refined. and as that gets refined we're able to get more refined and kbr is able to redefine their plan >> thank you, commissioner schinasi. >> thank you. i'm going to go back to the performance evaluation board report that mr. thibault referenced earlier, but i want to touch on another point in here. one of the things that i think has disturbed me a little bit is what constitutes actionable direction on the part of the government. we all know that contracting is a rule-based process, but in

this performance evaluation board report one of the things that is in your that the government has said to kbr, is you're not being active enough, you're not taking the initiative. we are in a period where we know we are drawn down, yet you need to do more to bring to the government's attention cost, savings, cost avoidance measures that you can take in partnering with the government. do you consider that to be appropriate erection that should result in the contract is taking actions along those lines? and i will start with you, mr. loehrl. >> first of all i would say yes, if you go into the if i uh and, the award the valuation, we have one of the particular areas we have in there is program id and resolution. and so what we are specifically looking therefore is just that. a contract to be proactive. and if we have issues going on,

i want him to bring them to the table to us to let us make proper decisions on the. i don't want them to make those decisions for us, but i certainly want them to point that out to us and help us, as our partner. >> what is the consequence if they don't do that? >> the consequent of that is once again, that's part of their award fee by uh and criteria were they don't necessarily raise up to that high level of excellence. i would expect an excellent contractor to be doing just that for me to. >> have you withheld awardee for that purpose because they have not done that? >> yes. if you go back and look at the award of the evaluation shall find kbr, i don't think has ever very rarely gets 100 percent in that category. >> close to 100%? >> i think -- i would have to get back to you. they are generally in that, that high very good, though excellent

range in that category. >> i would appreciate it if you could provide that information. mr. fitzgerald, do you consider that to be actionable direction from the government? >> i think our position is we believe that all contractors performing reimbursable work funded with taxpayer dollars have the obligation to conduct that in the most effective and efficient way. so the cost containment, cost control built into the award fee we think is very appropriate. and i think the core logistics services support contract, there are some clauses in the task order that talks to the contractor shall perform optimized direct support maintenance, and organizational services. so i think there are permissions and their talk about being proactive. >> so if the contractors as we

can act without the appropriate contract documentation, you would consider generally that the evaluation board is giving them the direction to take an issue would be appropriate? or something they could act on? >> yes, ma'am. >> i want to ask you just generally about government oversight into what the contractors operations are, and general pillsbury, let me ask you. one of the things that we have seen that kbr is below its basis of estimate in terms of headcount and theater. and that can be the result of two things. one, because they are efficient in drawdown, or two, because the basis of estimate was not appropriate to begin with, that it was high. let me just ask you, what sort of insight do you have into the contractors proposal? >> the requirements generation

for contracts within the theater, i am not personally aware of. on the kbr side. on non-contracting organizations with amc i am very familiar with. as an example, we have 3609 contractors doing direct support for a recycle command which is in theater right now outside of kbr, working primers on weapons systems. and that the plan to drawdown to 677 by december of 2011. so we do have a plan. the requirements that kbr provides for our services to our soldiers primarily by support is dependent upon general odierno's drawdown plan. i can't get any more specific than that, ma'am. >> well, you raised this issue

of requirements. is it fair or should we expect a contractor to be able to perform in an efficient manner, and less if they don't understand what the government's requirements are? >> i would expect a contractor to perform responsibly at all times, but certainly given the fluidity of the situation in iraq, there would be some consternation on their part on the total true requirement. that is incumbent upon us to be able to provide that to them. but at all times so i would expect a contractor to perform responsibly. >> i guess the definition of responsibility can vary, and what i'm looking for is sort of a recognition that cost should be a part of the performance, that actually cost is a part of performance. you talk about supporting the war fighter, and understand that's the primary goal.

but if we can do it efficiently that's more money for the war fighter. if we waste a lot of money, that becomes a performance issue in and of itself. >> i concur. yes, ma'am. >> do you know what how kbr maximizes its profits? >> no, ma'am. >> mr. fitzgerald, do you know how kbr maximizes its profits to? i don't. >> mr. loehrl? >> no. >> okay. thank you. i think that's all. >> mr. ervin? >> thank you, mr. chairman. thank you for being here today. general pillsbury, the original build the contractors in iraq and for that matter afghanistan, but we are focused on iraq today, is or was the result of a number of decisions taken over time by a number of different actors. and the same is true for the drawdown. and i think one of the

fundamental issues, and i would like your comment on this is, there appears to be no one single entity within d.o.d. that has authority to actually direct contractor drawdown. as i understand it, they monitor activity overall but it has direction of 40 with regard to only 25 percent of the total actual contracts awarded locally. is that a fundamental problem that there is no one entity that can actually direct as opposed to monitor this? >> mr. commissioner, i believe you're right. i think there's no single entity. it is incumbent upon those who have oversight of the contract to ensure that the contractor is scoped to the appropriate level for the population. >> would it be a recommendation in light of that that a single entity within d.o.d. that would be responsible, that would have the authority in the absence of responsible quote unquote

contractor drawdown? >> sir, i would hesitate to put another layer, if you will. i would suspect that older laid the responsibility falls upon the commander, be it for start all the way down to the captain company commander to scope that, and i would hesitate to put a single person from, say, washington, d.c., to say here's the number without having an operational feel for what's going on. >> i want to move onto a couple of other issues. a number of us, i certainly, i know will have some issues with kbr, knowing kbr is before us, but it seems to me they that one fundamental fairpoint. and that is, the degree to have to have clear guidelines from d.o.d. as to what the needs of the war fighter will be before they can drawdown with any

precision. and as i understand it, a number of critical institutions are still pending, like there are these, the united states government will have iraqi bases, and also during the final phase of the withdrawal from september 2010 to december 2011, that the level of support provided to our military personnel will be so-called the expedition are low, very spartan conditions as opposed to these conditions that are there now. neither of those decisions have been made. why have a fundamental decisions like that they may? will make those decisions? what's the timeline for making this? >> sir, it's a fair question, and i would point back to general odierno and his staff, the conditions postelection, when will the government be seated, how will that affect the population? how will that affect the security arrangement? all these things are playing out over time. . . diligently and

understand president obama's requirements of august 10 and december of 11. until those -- until those dates are right there, it is still very fluid. but the planning is for 50,000 by august 10 and zero by december of '11. >> you reference the political

uncertainty now given the outcome of the election that affected the prime minister. there's increasing violence in iraq. there's the possibility at least that the iraq government would ask us to stay beyond the time that we've committed to stay there per the terms of the agreement. what plans does amc have to continue contractor support beyond the drop dead decline. as of right now we are planning like i said earlier august 10 and december 11, your question is fair. we do not have plans because of theun certainty. however, we feel like the contracts that we have are flexible enough to provide uninterrupted support if necessary. >> one final question for you then i want to move on. does amc have a formal process to apply lessons learned -- any lessons learned now and to be learned in the future as to the drawdown in iraq to the eventual drawdown in afghanistan? >> yes, sir. absolutely. we've gone back to desert storm.

and looked -- talked extensively with the leadership of desert storm's drawdown. as i said general dunaway has put me in the way of recent task force to do its mission. we have army sustainment command embedded in both locations. we have our contracting command embedded in kuwait so that the continuity of amc will ensure that we have -- that we take the good lessons from iraq into afghanistan. >> is there a process to develop a written report to that effect? >> sir, we have center for army lessons learned out of fort leavenworth which is the writers of those reports. we have a lessons learned cell within our current operation cell within amc headquarters so yes, sir. >> mr. loehrl, i want to ask you a few questions about the basis of estimate. we've talked a little bit about beforehand. as i understand it, and you can correct me if i'm wrong, but

rock island's position is as long as kbr is under its authorized work force level that no further reductions are necessary even if further descoping which in plain english means the reduction of the amount of work that kbr is asked to do could result in reducing the work force because there's less work to be done.ñr it would seem to me logical thaç rock island would reduce the number of authorized positions to the fewest number that's needed to get the job done. why isn't that done and isn't that the logical thing to do? >> yes, i think that is the logical thing to do. and i think that is -- that is somewhat is what's going on and it was thexd -- some of the isss that were brought up in that report that we talked about a few minutes ago. you know, you know, once we negotiate a baseline with kbr, then the way that baseline is changed is via generally administrative change letters,

acls either adds work or takes away work. and so the -- that issue that was brought up in peb was the aco for that clss mission in september of 09 was questioning how fast kbrt( was, in fact, incorporating those downsize those acls into those baseline. and that is the process that is there to do that. and what we normally do is we is

and things that they have done in their underrunning, then i shouldn't be taking that out of the baseline. i should be giving kbr the due credit for it in the award fee board process. and so i think that's what that letter was really all about was the issues of when do we descope good versus when it is true underrun by kbr and then -- with kbr concluding well, if you're -- if you're going to descope all my savings, all my initiatives out of the process, maybe you shouldn't be evaluating cost and that's not the right answer and that's not what we're going to do. >> thank you. >> i would just yield a second. >> i'm done. >> i'm unclear as to how you characterize basically a company that's telling you to back off.

is it just -- i mean, you're doing your job. and they're saying back off. it struck me on the surface at least as extraordinarily arrogant. and a poor reflection on your organization that they think they could say something like that. so walk me through a little bit more as to why i shouldn't feel that way. >> well, i'll tell you what -- >> okay. >> i'll just -- that's my observation. i'm going to come back to it. i think we're going to -- from tiefer? -- mr. tiefer. >> thank you. i want to begin my mentioning that i took two trips to iraq. one with commissioner schinasi specifically on today's subject. and that was mr. thibault's gentle and sometimes not gentle urging. and i want to say that, however, i responded when he suggested it, he was right. to tell me to go there. this was the topic to go and look at. i also want to note,

mr. fitzgerald, i'm a professor at the university of baltimore law school. and you have a university of baltimore tie -- connection also, don't you? >> yes, sir. i graduated from the university of baltimore about 30 years ago now. >> well, i think you're an inspiration to my students at the university of baltimore. they too can hopefully receive -- hopefully attain positions of high responsibility. maybe not all of them but some of them. >> thank you. >> mr. fitzgerald, your statement discussed your march 26th audit of the four exhibits that are being made public here and we had limited copies so they've been distributed. the first which is exhibit 1 is your march 26th audit which was newly issued, i understand, friday. and is being publicly addressed here for the first time. it tells kbr to make $21 million

in cost-savings in the clss function of logcap in iraq, which includes repairs and maintenance such as the motor pool. what did you find about kbr's charging on underutilized labor in this area? is it proper? >> we saw -- based our analysis from january '09 through july '09 -- and i do want to add that the defense contract management agency requested that we look at this. that we saw an average utilization of the labor force providing that function of about 10.1% average utilization. and never during that period of time did it ever exceed 15%. clearly, based on those

percentages we thought there was efficiencies to be had there. and our 21 million is really based on looking forward having the army and kbr work together to address this issue. and projecting from may 2010 to the end of the calendar year. if this issue was addressed. we could potentially avoid $21 million worth of cost. >> yeah. thank you. as i understand from your -- from that audit report, after you -- after you studied the first six months of 2009, to squeeze down this -- what was going on -- which is basically idleness for the which the government is being charged. as i understand, a defense department goal would be 85% use. and instead kbr is making 10% or at most 16% use, which sort of

translates into kbr is charging the government for a 12-hour day and its people are actually doing work that amounts to less than two hours in that day. what you found was that on page 5 of your audit, you had told the -- the government told kbr to come up with a proposal to reduce this bloated figure for what it was charging the work by descoping -- supposed by descoping. they came up with such a proposal and you say, quote, it was ineffective because most positions had been eliminated that had not been filled by actual employees, kbr -- kbr primarily eliminated positions that had not been filled by actual employees charging costs. in the phrases i've come to hear, here and in iraq, they were just -- kbr was just eliminating spaces without faces.

bookkeeping entries. is there a broader risk as iraq draws down, kbr -- if it were to do this would still have the government paying for labor that's not actually being done? >> yes, commissioner. i think if you look in our report, it shows after the change letter was issued by the contracting officer, we did an analysis to look at what the utilization rates were after -- subsequent to that change letter. and it showed still on average it was about 16% and gives meriting and credibility to the fact that some of the spaces that were eliminated were not charging to begin with. >> okay. now, when kbr says -- i want to know what your response is. it's basis of estimate -- you've

heard about this. this is a level set after the contract, gives it no choice but these high idleness rates, this is a figure it negotiates with the government -- it's saying that it has not choice but to maintain an overcapacity of idle employees. do you accept that? >> mr. commissioner, i would say that there's probably some degree of capacity that they need to handle the fluidity of the situation. but clearly the percentages that we're talking about well exceed that. >> let me ask you one other thing. the million dollar reduction -- the million dollars that your form won is requesting be held back from kbr, a strong one.he . i'm sorry.

it's the -- it's the third exhibit of -- this is what a form one looks like. this is your form one on your subject. which you ordered on march 20th so it's also new and fresh at this hearing. as i understand, this concerns the dining facilities, 17 of them. a contracting officer had directed kbr to, quote, immediately unquote, that was his direction, cut the overly large work force at these. you found that kbr was slow. was not, quote, immediately, unquote, producing these and you're chargeing it. -- you're chargeing it for a million. this is kbr's response made a prudent decision to wait. because, quote, to do otherwise could have compromised the continuity of service.

do you agree with that if a contracting officer directs them to do it, quote, immediately, is it their discretion about whether to do it immediately or not? >> sir, our position would be -- and i believe the change order was issued in august. most of those disapproved costs were related to dining facilities where the result of a change order didn't become effective until 1 october. our position is that -- and given they have the capability in their provisions to move urgently and responsively, we believe that they didn't move quick enough to reduce the head counts in the dining facilities as required by the contracting officer. >> thank you. as my time is limited, i'm simply going to help people find -- we made this useful as witnesses go through it.

two other exhibits that have been discussed. the second exhibit which is the only, i think, colorful page in this is the peb we've been talking about the performance evaluation board, and the red line is for the average rating in cost control. the lowest possible rating that kbr received. that's the red rating. i've gone through many of these without seeing a red -- a red mark before. and finally the very last exhibit, exhibit 4, which is the last two pages in this pamphlet, are the letter that mr. loehrl received from doug horn, a kbr official, in charge of operations whom we will have on our second panel. and that's the letter which ends with the statement that has been discussed by other commissioners that kbr asks that you advise dcma and team logcap. that's mr. loehrl's offices. and others that work with him. to stand down in discounting

kbr's cost stewardship during pebs. thank you, mr. chairman. >> let me just start with that letter and just read the last paragraph in full again. kbr is willing to discuss the management and cost efficiencies described in our briefing on december 8th, 2009. and in this letter during the upcoming discussions of contract interpretation issues that have arisen from usg audit activities. pending those decisions, kbr ask that you advise dcma and team logcap to stand down and discount kbr's cost stewardship during the peb's performance evaluation boards. you know if kbr said it's eager to discuss this, it's willing was a striking word to me. and the fact that they basically asked you to tell them to stand down to me is stunning. mr. loehrl, tell me why i shouldn't be stunned by it.

>> i think it's just all a matter of perception and how you take that -- take that letter in its totality. once again when i read the letter, i mean, i took it from its totality of the points that were being made above and then, i guess, already recognizing that i wasn't going to stand down on the pebs and on that process i guess it just didn't have the same effect on me that it did with you. >> see, the challenge that the commission is dealing with is that we don't think that the inspector generals and dcaa are getting the respect from dod that they need to. and, you know, that they're not responded to. and this seems to just kind of fit into that. you gentlemen wanted to -- >> well, i wanted to ask general pillsbury, you know, you have a long and distinguished career in the united states army. if you give a command to a subordinate to stand down, you

know, i take that to mean cease-and-desist. is that correct? >> yes, sir. that's what i would expect the person to do. >> and i think reading the bio of the people that are going to give them, they have very strong military careers. they know, mr. loehrl, what standown is. it's the last sentence in the -- you put the last sentence in a strong letter to be where you really want to go. i see it as a command. and so i'd like to support the co-chairman's position of concern. >> i thank the gentleman. let me just jump right into this issue of the inspector general and the contracting for tactical vehicle field maintenance at a joint base in balad, iraq. in one sense you could say $5 million is not a lot of money given we're talking tens of billions. but it is so striking that for a year, from september '08 to

august '09, the use of the maintenance crew was a low of 3.97 and a high of 9.65%. so i was going to ask the question, why shouldn't i think that this may be just an example of the kind of waste that we have throughout. why would i think this is unique? so i'd like general pillsbury and dr. loehrl to -- mr. loehrl to explain to me why i shouldn't think it's unique in light of the fact that dcaa comes in and does an audit of a larger complement of this. the art of labor and management relations to the corps of logistic service support, clss operations iraq. which is the maintenance of vehicles. and they determine that the use of the contractors was never exceeded 15% and averaged 10%

and now we're talking the waste of $21 million. so tell me why it's not something i should be hugely concerned with. general pillsbury? >> mr. chairman, you should be concerned if those numbers are accurate. and again, i don't doubt that they aren't. >> so let's just not even ask if they're accurate. so why should i object concerned? -- should i be concerned? >> we're focusing on services that are not needed. it has to be -- it has to be well above the normal standards. and the equipment is rode hard over there, too. so the maintenance operation is a success. now are we overstaffed? quite possibly, yes, sir. >> don't say quite possibly. see, that's where, general, i think there's disrespect for the people that are doing this work.

you got dcaa and the inspector general. i think they deserve more respect. the word is "if." they determined it's a fact. either you come back and prove to them it isn't but it's going to be hard to prove it because we're not talking about a fine line between, you know, 75 and 85%. your contract says 85% performance. dcaa is saying 10% for seven months. inspector general is saying never went over 10%. an average of less than that. i respect them more. and so what i need to understand is, we will have the contractors say that they notified dod about the underutilization. we have the reports saying there should be a requirement being identified but they did provide some notification. why wasn't the notification

acted on? so it happened. that's bad. but what makes it worse is you have the contractor saying, hey, we're only at 10% utilization. >> yes, sir. at the time that i believed that you spoke about, i believe -- was it august 8 to september -- >> well, we have two different reports. we have the august/september 1 to august '09. that's where you were under the 10% and then we have the dcaa that basically said for seven-month period and that was exactly when? >> january, '09 to july of '09. >> okay. >> an answer, sir, that in may of '09, i believe -- correction, march of '09, we had 151,000 contractors in iraq according to spot. we now have 81,000-plus.

so we have gone down by somewhere close to 71%. so perhaps we have acted on that, mr. chairman. i don't have the specifics on that -- >> i don't like the word "perhaps." and i don't think you would like it from someone else saying it. you know, one of the things this commission has said that we don't want to do do cheap shots because there is so many areas where the system is broken down and you all are trying to catch up. and i look at you and think of incredible service that you've provided this country. but what is clear to me from you, general, as well as from mr. loehrl, there isn't the respect of the people doing the other side of the effort to make sure that we're efficient. i don't sense there's respect for what mr. fitzgerald and his team is doing. i just don't see it. mr. loehrl, explain to me how we are at 10% when we have the

claiming they provide the information and let you know they are only operating at 10%. >> first of all, let me start off by saying i have all the respect in the world for dcaa and what mr. fitzgerald and his staff do for us and the services that they provide to us. the staffing levels that we're talking about here were negotiated into the contract -- what i would call a level of effort. in other words, we negotiated in and told kbr based on the request of the client, here's how many people they felt they needed at each installation we were going to provide these services at in order to provide the services they needed. >> you know, and everybody can be wrong. and so you are not just a little wrong and they weren't just a little wrong. you were really wrong. that part i'm not criticizing. >> i think where we were wrong was i think we should have been more forceful with our client in going back to our client and

forcing them to relook at the numbers of what they had requested we put into the contract. >> but let me ask you this, though, don't we have corps and others? one of the things that i'm learning coming from congress to this commission is that the military is slow to value the work that you both do as dealing with the contractors. and, you know, it's not generally the way to become a flag officer is go through contracting. you know, you want to be at the tip of the spear. and yet half of our military effort are contractors so we think against the report and the previous secretary of the army and the present one that they're beginning to value this. and your command is but you've got a way to go. but what i'm not sensing from you is that i would have thought you would have said to me there was a breakdown in our oversight.

because whether the contractors is going to voluntarily come to you and say we're at 5 to 10% utilization for a whole year, we're wasting 90 to 95% of the dollars you're giving us, i would like to think that there's an oversight mechanism that would make it so evident. and your people would be running to you saying we got a great way to save money. this is huge. and that you would then be able to deal with it. why didn't that occur? and then i'll -- and then my question. where was the breakdown? where was the oversight of this? >> well, the oversight was there. i mean, there is a dedicated a -- >> no the oversight was not there. >> the resources to do the oversight was there. >> fair enough. >> that was there. >> so this is where i'm going to end because i don't think you have a good answer. i'm going to end by saying i would have liked you all -- knowing that this report was available to say, a huge screwup. we determined the screwup

occurred because we had one corps who got in late and one that got in early or something or that we somehow stupidly thought that we couldn't come back to the contractor and tell them that they needed to -- we needed to relook at this contract that we've given you. let me end by saying, don't you have a mechanism to reevaluate a contract in process and change it? or did we write the contract so badly that we're stuck with the 95% waste whether we wanted it or not? >> no, sir. we could have redone it. >> okay. let me go back to mr. thibault. >> thank you. thank you. i appreciate it. we have a real challenge on how to use my remaining time. in my prior life or one of my prior lives, my first life as a dcaa deputy director i'm not sure if empathy was in my vocabulary. that's my issue. but i'm beginning as i listen to

this -- and i'm directing this to you, mr. loehrl, maybe it's empathy -- i know you don't want my empathy maybe but you have a herculean task and that needs to be emphasized and if this contractor was the only contractor you would be working with that's the expectation we would expect but it's your biggest one and it's not the only one and i certainly think it needs to be stated. mr. fitzgerald, i commend you also for -- it's in your statement somewhere -- you didn't have time to say it but you said part of it. you went from two years ago -- a year ago completed pretty current 900 hours looking at efficiency and economy which really means you weren't doing it. and then your predecessor pushed it up as a result maybe of her first appearance at this hearing to about 3500 or whatever you shared. and you pushed it up now to about 12,000.

and knowing the difficulty in getting the right people to do the right jobs, that's very significant. so obviously you're doing audits at more than this contractor. and i'd kind of like to keep it in the logistics mode because that's where we're at but i don't mind you pushing it into the two active theaters. and i don't want to read all the stuff i've read before and putting dollars and all that. knowing there's a multitude of issues formally documented by mr. loehrl's organization, by general pillsbury and years. do you have a list like that? i mean, should we be having those other two contractors up here now? i realize you maybe focused on them more recently but i know based on your prior reviews or prior briefings you've done a lot of work in this area already. do you have those kinds of risk concerns at the same level? >> mr. chairman, do i have the

same concerns? yes. we are in the process of looking at other contractors in theater. the work is still in progress. and there's much work to be done. but as of today, we don't have the same findings that we have -- that we've reported to you today. >> right. and i understand once you have a finding and your auditors have come to you and say they have to package this and put it in the right context of however you put it in a report and work with the company, but it's the findings that i would think that would get your attention and the fact that you don't is to me pretty interesting. >> i have not been made aware of finding. >> okay. >> now, these other contractors maybe didn't have the startup challenges that kbr did and that's absolutely fair. >> i want to go back to the efficiency economy.

and i want to give a simple example that we had -- we brought up in a hearing but i think it's representative. and that is in a trip i staff that i sponsored i didn't attend. i've been there a few times but they found wandering around and along with briefings a cafeteria that looked great. that had a major remodeling. i think it was camp delta. and then down the road a couple miles a brand-new project that started, i think, and people say well, are you looking at old information i think it was completed -- it was scheduled to be completed by kbr in the end of 2009. so it's very current. maybe it's done. maybe it's almost done. kbr has a pretty good track record for finishing these projects on time. and i make the observation because my understanding of that -- and it's the importance of oversight is that arsent and general you mentioned arsent

there was final budgetary approval or whatever and they had approved the major maintenance project and this $31 million request came in and they approved that and however they got the request, they had pictures of the old cafeteria that was run down before it was remodeled. and the point is -- and they acknowledged -- they were straight up front. they said we made a decision based on bad data. but it was all there. and the reason i say that is -- and i'm going to make a statement and see if you agree, mr. loehrl. it seems to me that -- so people make mistakes. organizations make mistakes. they miss things and they go, dang, that's so obvious. it seems to me in this discussion there are two primary cost control functions. one we've talked about, which you're talking about bringing more people, better people, training them, better presence, oversight and it's a challenge. and that's the government. and then it seems to me the other half -- there's two people -- two organizations sign the contract. that's the contractor.

and i think a large part of our discussion is don't they have an equal contract oversight as part -- as a party to sign that contract to deliver goods and services to their primary customer, the united states government. can you agree with that, mr. loehrl? >> absolutely. >> okay. that's what this is all about. and in this discussion, i'll just make a couple quick observations. i want to go back to the 60% that mr. fitzgerald has shared in one of his documents. in the last month we're going to cut 60%. well, that's really good and someone brought this up here. if this -- if the iraq government comes in and says let's stretch this support out. we're not quite ready because we've got all the people to do it. but it leaves me lacking since the discussions have been about we're doing -- we're forced to do planning for august. it leaves me wanting. the last thing -- and i

addressed this to you, general. i'm impressed by your comments on the maintenance posture and the fact and i wrote some numbers down and we'll get together with your staff and talk about that area. because we're trying to get good examples to go with opportunities to ratchet up the process where you say in critical mission, critical maintenance you got it from 3609 in a plan through december to 677. something along those lines. i'm singularly impressed by that. and what i'm trying to say as sort of my summary in this is i consider logistics critical mission. it's not critical mission where the war fighters got an mrap that runs right or a weapon or some electronics, you know, that at the point of the spear. but its critical mission in terms of giving them the life support that we commit to and at the most cost-effective way. and to me that's the missing gap. you have a comment on that general pillsbury?

>> sir, i break down logistics very similar than you do. we fix things and we supply things in services to our soldiers is one of the things that we supplied best and we got to do a better job of getting that same level of supply of services in a more efficient manner. thank you. >> and i have one suggestion in a lot of ways it can only have so many people testifying. but if director charlie williams from dcma was available -- i don't want to say or infer that your staff left you holding half a bag. and i might feel that way if i was you. i know staff is not going to want to hear me say that. but a critical -- i just offer this to bring director fitzgerald and director williams together and what the heck is going on. you would look up and say, all right, fine i got two things to manage.

and i can take my actions as the man that counts. so i'd just make that observation. >> thank you, sir. >> thank you. mr. henke? >> i'd like to ask the panelists a question about transition from logcap iii to logcap iv. and there's a chart up here which is a graphic that displays the timeline from acquisition strategy, 2006, to a ward -- what you call the bls contract in iraq. now, the chartrobably could be leftward by about two years because that's when the army recognized the need to -- or the desire to move from logcap iii, one vendor to logcap iii multiple vendors. my question is on the issue of transitioning in iraq. you have -- and this is probably largely for general pillsbury and mr. loehrl. you transitioned in kuwait. it's effectively complete; correct?

the transition in afghanistan is ongoing to say the least. and you've just awarded the ctp part of the contract in iraq under logcap iv. you're considering whether to award the -- i believe bls is larger than -- is that right, mr. loehrl? >> the basic life support contract? >> it's actually about the same. >> about the same. okay. multibillion-dollar contract? >> i think once again it depends on how long you go. i mean, even ctp was -- is less when you only look at the current year and perhaps go out to the 2011. the 2.3 billion number had capability to go beyond that. >> okay. on this bls effort, the request for proposals was put out in january. you are thinking about awarding it in may of 2010. with a conclusion of the

transition in, i believe, february 2011; is that correct? general pillsbury? >> i believe we are to transition to 2011, sir? >> yes. >> sir. we're not looking at anything after -- i'm sorry. i'm sorry. yes, sir, you're right. you're right. my ears messed up. you are correct. >> my question is i understand the army is doing in concert with centcom and arsent no doubt this business case analysis. looking at whether it makes sense for a whole bunch of reasons to transition to logcap iv in iraq. one of the dominating factors might be that mr. loehrl would tell us that logcap iv is generally cheaper than logcap iii. is that generally a true statement? >> i think yes. >> okay. so my question to you is, this business case analysis that's going on, general pillsbury, can you tell us what are the factors

that are being considered as the army decides whether or not to shift this major effort in february 2011 to bls. >> sir, the dca was recently received in headquarters. we are taking a look at it from both a cost benefit analysis. >> all right. >> and we're also taking a look at operational. what impact operationally would this shift have. >> general, who did the bca? >> arcent. >> they came up with a product that says we think this is what the analysis shows and gave it to -- >> and gave it to general odierno also on it and just recently arrived in our headquarters. >> what's the basic thrust of the business case analysis from arcent. >> sir the basic thrust as you said going to a logcap iv multiple contractors would be

more efficient. however, it may not work in the transition at the same time we're doing the drawdown. so that's the struggle that the staff is working to provide recommendations to general dunwoody and others. >> who's going to make that decision on whether to transition or not? >> sir, it's going to be made with -- in concert with the department of the army staff and asalt. >> but who's going to decide. is that your decision? >> no, sir, it is not? >> whose decision? >> i believe it's asalt. it's dr. o'neal. >> so he's got to take all these factors into consideration? if the decision is based on cost, one would hope that the decision would be to transition if there's less cost. can you discuss -- what is the view of senior commanders in iraq regarding whether to transition to logcap iv?

>> sir, the view of the senior commanders in iraq is to not transition because of the turmoil that it would cause as we do this drawdown. >> okay. can you -- given that, can you quantify for us what the dollar -- are there dollar savings in transitioning? is that what the business case shows? >> i have not seen the business case. but i would assume so. jim, can you comment on that? >> there are both dollar savings to be achieved via the competition. >> right. >> and then there's also a cost to transition. >> right. >> and those things are taken into effect as they come in, in the bca. >> could you tell us what's the cost to transition? do you know that now? >> do i know the cost to transition? >> yeah. >> i know what the estimates are in the bca. >> what are they? >> i believe it was -- i believe it was $72 million. >> and what is the savings expected from transitioning?

>> the bca utilized 9% savings. >> uh-huh. >> and then the -- the amount of savings achieved depends upon what assumptions you make about when we would actually get the transition completed. so it varies. and there's various scenarios in the bca. >> what's the latest date by which it would conclude transition? >> i'll have to get that for you. i don't specifically recall exactly what the latest date was. >> okay. so general pillsbury, it sounds like you and amc have a large task ahead of you to get through the business case. consider the operational -- how do you put together on the one hand costs pluses and minuses net out maybe they're savings with operational need of the

supported commander? in your testimony a couple of times you say you are in direct support of the -- and i know that's a term of art in military culture. could you just walk us through in a couple of minutes the decision-making process and the factors that senior commanders like yourself are going to weigh as this goes forward? >> sir, the first and foremost commission of amc is supporting the soldier. and anything we can do to help that soldier maintain its safety and security along with his quality of life is paramount. we listened to general odierno and others, when they recommend something we have to have awfully strong case to overcome -- overturn their recommendations. >> so i think what i'm hearing here is the default position -- whatever the savings are, listen to the operational command? >> not necessarily.

it has to be a strong -- if it's hundreds of millions of dollars savings, certainly, we would be open to recommending approval of that to the aae. however, sir, like i said the staff is working the bca. >> when will you have a decision -- or when will you have an army material command position? >> sir, i would say in the next couple of weeks. we'll get it up to the department. >> okay. mr. loehrl, is it hundreds of millions of dollars in savings? >> i was not -- i was not -- >> i understand. but i want to clarify that it's -- >> no. >> it's not -- >> it's not. in actually some cases it may cost us money. >> so it makes your decision a little bit different. >> what are the down sides of transitioning? >> the down sides of transitioning would be the swap-out of contractors in a critical time such as the drawdown.

if, in fact, a contractor x comes in after contractor y had been doing this -- this property accountability piece, and contractor x has got to get trained up and get going. it's just the turmoil. >> okay. thank you very much. >> thank you. commercials schinasi? -- commissioner schinasi? >> one of the things you maybe you should have done differently is go back and question the requirements. and i hope to see that as we go forward. supporting the war fighters' needs is clearly something that we all want to do. but there is oftentimes a difference between needs and wants of the war fighter. and sometimes that delta is what we don't question -- question enough. the operational, i guess, requirements for bls are different than those for the ctp contract?

can i assume that because the ctp went forward under the logcap iv? and i guess general pillsbury, i'll ask you that. >> yes, ma'am. >> so for the bls, if you had gone into the field and asked the commanders a year ago, do you expect you would have gotten a different answer from them in terms of the difficulties in transitioning? >> i would have suspect we would have had a similar answer. but certainly not up against the timeline that we were up against right now. so i would assume it would be a little bit different, yes, ma'am. >> okay. so the problem really is that we've gotten -- gotten to a place where there are no options or there are no good options. and the chart, i think, that we have up here talks about the fact that it's been four years since the acquisition strategy was approved. so we've obviously made mistakes here in that we've -- we came up with a new strategy that was supposed to be good for the war fighter and good for the taxpayer. and somehow we're not going to

be able to execute that strategy it sounds like. not to predetermine your decision on this. but so mr. loehrl, can i start with you. and talk about the mistakes we've made that have put us in this position where we really seem to have no good options? >> yes. first of all, i think we underestimated the complexity of doing these task order competitions particularly with the change in law that came that made them all subject to protest. so when the strategy was crafted it was before the -- all the fair opportunity -- you still had to do a fair opportunity competition. but the ability to have them protested, i think, changed the dynamics and the complexity of having to execute those competitions. so we underestimated that. and by that i mean, not only the protests themselves but making sure that i have a robust-enough

acquisition process clear enough rfp. clear enough evaluation criteria. robust-enough evaluation process. even having to go back and get dca audits as a part of these fair opportunity competitions were not anticipated as we originally laid out and crafted this strategy that was going to be there. so that's one place we underestimated the complexity. >> do you think -- let me just interrupt. do you think you've solved that problem now? >> i think we've solved it or tried to solve it in the way -- the way we modified the acquisition -- the process particularly with going forward and trying to lay out the fobs and getting those matrixes in there and trying to simplify somewhat that process and make the -- make the acquisitions as simple as i can. but at the same time getting a contract baseline that is

competitively established that really does reflect the work that's going to be anticipated. in addition, also then being able to utilize that in a change management analysis to added and subattracted. and we tried to solve that. i don't think i'll ever solve the robustness that needs to be in there. i think we're also successful in the ctp award process where one of the things we did is we sat down with mr. fitzgerald's people at dcaa before we issued that rfp and laid out and laid out in the rfp exactly what we wanted -- the three contractors to submit to us in their packages, in their proposals. so that we could get those dcaa audits turned on and executed as quickly as possible as much as dcaa saying we don't have the information we need and we don't have that. i think that was particularly successful.

but it still took my word herculean efforts to get those things accomplished in those time frames. that's one of the places that we made mistakes as we go down this process. >> general pillsbury, would you like to add to that? >> ma'am, the transition -- i believe the strategy was to go to kuwait first, obviously, because of the -- it was not in the shooting, if you will. and then, of course, after that proved to be successful, albeit protests aside, that is still very worrisome to myself and to the commanders on the ground. and to be able to put logcap iii and iv into afghanistan with relative -- relative ease. and i applaud logcap for that. it indicates to me that, yes, that is a smart strategy. now, why we didn't go as full

borg into iraq it was probably a mistake not to start this earlier. >> okay. i want to ask you, general, about something that you said earlier during the last round of questions. you said that we really can't be planning because of uncertainty. and you were talking about planning for contractors and planning for the contractor drawdown. my knowledge of the military side of planning is that we plan for everything. and every uncertainty. and every contingency. is it -- is it not, you know, a good assumption for us to make on this commission that that kind of attention to planning for the military side of our operations can't be put over to the contractor-supported side of our operations. >> and i apologize, madam commissioner, if i left you the impression that we don't do branches and sequels of planning. obviously, on the military side and we've got to do the same one on the contractor side.

i believe the context of my statement was having to do with post-december 2011 -- if we are to remain. and literally we are -- we are planning to be out by december, 2011. but that being said, our planners, our operational planners do realize the flexibility that are under contracts right now that will allow us to continue the support if the decision is made for us to stay. >> so we would likely see an either -- if we decide not to go to logcap iv, that would mean an extension of logcap iii then? >> yes, ma'am. that would -- but depending on how long we'd have to stay, perhaps we'd revisit going back to the bls logcap iii to iv. >> and i would assume that is an assumption also under your business case analysis that there may be some -- some reason to look at a different timeline than the one that's currently on

the books, just for planning purposes. >> i think the bca goes to december, 2011, ma'am. >> so it does not -- >> it does not -- >> take into consideration other eventualities. okay. you talk about additional resources that you talked about in theater and in some cases doubling your resources which i'm happy to hear. but that also is a measure of the risk that you think is involved. and as chairman shays said, we have several contractors there. what is it that you are most worried about in terms of the government's ability to appropriately manage these contractors? and are there a couple of things that you would maybe change to let you sleep better at night? >> well, one of the things -- one of the main reasons for increasing the resources we're spending there -- i'm kind of looking at we have 20 months to go.

and we need to get our work done in a very timely manner so that we can get the information back to these officials so that they can take action. and we think that there is risk. because of the changing requirements. how dynamic that environment is that we need to be vigilant in looking at those areas. and making sure that we get in there, properly staff it and get the work done so that we can get the information back because time is of the essence as we go through this drawdown. >> uh-huh. and is the upholding of this recent form one that you have submitted, is that an effective tool from your perspective as to how we can kind of make the contractors also pay more attention to how they perform in this last uncertain period? >> yes, ma'am. very certainly. and that was, you know, in agreement with the administrative contractor, yes.

>> thank you. >> thank you. >> thank you, mr. chairman. i want to start with you, general, and mr. loehrl. you know, i applaud your candor in admitting candidly that some huge mistakes were made in not moving more quickly on the transition from logcap iii to iv such that savings could be realized. again, as commissioner schinasi said, you know, a decision has not been made yet. but it sounds as if that the likely conclusion will be that there will not be a transition. and i have to say on behalf of american taxpayers, i think if they watch this hearing today, if they read the transcript of it, if they see the news commentary, they have a right particularly in these tight budgetary times to be applaud by the fact that it took us is couple of years. we invaded iraq in 2003 to figure out that we would likely have some savings if we exceeded the contract. we began the process of transition in 2005, one can argue, with an industry day but

it wasn't until february 10, 2010, that a contract -- that a task order was awarded in iraq and the likely conclusion as i say will be that there won't be any full transition from one to the other. i want to talk more about exactly -- now, i want to give due credit for the fact as you both mentioned that there were protests here. and that's something over which at the end of the day you have no control, i understand. but there were a couple of inflection points during the course of the process where there was control over the process. you know, it took one year to look at the timeline here. if this industry day as i understand it took place in 2005. the acquisition strategy was approved in august of 2006. it was a year from the industry day until the acquisition strategy approved. and then another year from august of 2006 until june, 2007 for the logcap iv basic contract to be awarded.

what was the reason for this two-year delay in the process? >> mr. commissioner, the delay was we were going into some unchattered waters. -- unchartered waters. logcap iii was for commanders to deal with in theater. one person, one belly button. now we had to go to a competitive bid for each task order. and we wanted to make sure that commanders were comfortable with that process. now, c it have been done faster? sir, i would submit to you, yes. why wasn't it done faster? i don't know. but at the same time, again, going into kuwait and getting the bugs out of the system, i believe, was the right thing to do. but again, sir, we could have gotten faster in iraq. >> isn't the answer, really, the

bottom line answer why it wasn't done faster that cost-savings were a tertiary level concern at best? what other answer could there possibly be as to why it wasn't done faster? >> sir, i would -- i would submit to you that the cost is very important to war-fight. but the commander's ability to maintain safety and security and life support is paramount. >> mr. loehrl, what's your comment about this? >> i would go back and say that first of all these were ultimately $150 billion potential acquisitions. $50 billion with each of the three awards we made. so the staffing and the approval process and making sure we had everybody lined up from the commanders who would be supported all the way up to osd that's where part of the process was. and like i said, there were $150

million acquisitions. and then the other year you referred to was the year it took to complete logcap iv which was basically once again a potential $50 billion competition. we had robust competition. we had people we eliminated from the competitive range to that process. ...

>> should we be concerned, i think we always need to be concerned, vigil as we move forward to make sure we're doing the right thing for the taxpayers. what we build into the process is twofold, number one that's what this banding and matrix process that we try to establish within the competitions, particularly for bls. where we can take advantages of the competitions forward into any new work that is added in there. so if i had new work i can go back to the basic competition where the contractor ordered under the competitive environment. that's what i put on the contractors. we are taking advantage of that. we also put into the process a disciplined process to make sure we are as prudent as we exercised options. so the contractor is not

performing, if we are not getting the cost control, the things we would like and desire, we have the ability to not exercise an option and go ahead and go to a competition. >> commissioner, can i add something here? commissioner ervin, your point is excellent about how long i might highlight because i was involved in a couple of hearings in a prior life with the army came in 2004. and so there is an extra year in there, and in the statement they say this is mr. loehrl stated, in may 2004 they acknowledge it. the army sustainment command began development of a strategy to put it in place to conduct an approach and go on into logcap iv. they had an extra year in their two boot. it almost gets like strom thurmond uses a a millionaire, a million there. a year here, a year there. it's not as meaningful. >> was that strom thurmond? >> i thought it was strong.

>> before recognizing mr. keble, to say i'm going to ask you whether our lessons learned, i didn't want to kind of blindside you. what are some of the lessons we are learning from this experience? mr. tiefer, you have the floor. >> thank you. mr. fitzgerald, i want to go back briefly to what we're talking about before about the drawdown. and kbr. your people have reviewed the federal 23rd plan, kbr's latest and first time they've ever detailed their plans. and you're still in evaluating it but i understand you have some statements, observations on it. and i understand your observations, to take two of them, you figure that kbr would only reduce its staff 15 percent through july 2010 though the army is going to cut somewhere

much near 50 percent of its troops. and in line with this, you say that over 60 percent of kbr plans debt reductions occur within the final months from july 2010 through august 2010. now, visually i think what you're suggesting is kbr's plan is to avoid a steady state, that would keep down the government cost and instead is doing what we call a waterfall in the last months, which reduces a little to that point, maximizes both the taxpayers cost and kbr's profit. do your observations indicate that that's what they're going to do, something like a waterfall in the last month? >> mr. commissioner, the plan has its stated today, achieved a

38% reduction. and we talked about a 34% reduction in our october 26 report. but as you articulated, 60 percent of that is done in the last month. so what we're trying to do right now is trying to evaluate the assumptions that that waterfall reduction is based on and to try to take those assumptions back to the operation requirement. >> let me interrupt because my time is limited. i'm going to give a predicate and then ask you whether you still stand by your october report, the one that said -- i'm not asking what you stand by specific numbers, but that kbr could and should make 19% savings and 194, which is 193 million. consider the following. your operations audit that

showed underutilization, wherein just that limited function which is under 10%, the $21 million in savings, the waterfall we just talked about, and that kbr's proposed end-stage. you sit in your statement is about 189,000 supported people, which is an incredibly high figure of three and three this contractors if they are the non-soldiers, for every soldier. three and 35th contractors, taking all that you have seen, not these individual points but looking generally, do you stand by your october audit report? >> yes, commissioner. you know, we made that report we do not have a plan to evaluate. so we did make some assumptions based on to writing that 193 million. but i would say that the poor

logistics service report contract, has credibility at efficiencies were there to be had. and also if you look at the report that we are evaluating today, the in state that the contractor is working to is within a couple hundred of the end state that is in our october 26 report. >> thank you. general pillsbury, i have a quick question for you. of already discussed the analysis, and i want to know if some commissioners and a staff team, could they review that announces? >> sir, i will confirm the quick answer is yes, but i will confirm there is no problem with that. i will get back to you. >> thank you. thank you very much for that. mr. loehrl, since we are hearing for the first time ever that the competition now in progress for the remaining work in iraq on

logcap might be stopped, i want to check. wouldn't there still be alternatives and going ahead with that competition, such as kbr which won the previous competition, seeking the contractor work in iraq, might offer a bargain and therefore, it might win this contract by giving us savings? and with minimal turmoil, continued its work in iraq. number two, don't we have a default of not awarding if after the award is made. and three, if the transition were to be going. finally, when asked about this, we were in iraq last month, commissioner schinasi and i talked to general odierno's team and staff, and he said, and i'm quoting, i, i love competition. and he explained that i'm not being sarcastic. this was his sincere feeling. that he said the solution to the

problems and transition which you people, what you people are going turmoil was to do in a quote smart way, otherwise the kbr tends to get quote slack, unquote and competition. wouldn't this make a competition useful? don't these things at least make it more useful than it would be if none of these were available? >> i think what we need to do is follow the process of the bca along with the operational impacts we got from the senior leaders in theater and make the prudent decision based on that. >> thank you. my time has expired. >> so we're closing up, and i will end by allowing each of you to respond to any question with which you wish we had asked which we didn't and you are prepared to answer. and any comment that you have based on what you've heard, that george is like to make sure it is on the record.

basically, what i have seen and inherent as we can't have this trifecta, we have kbr, the contractor, oversized it's workforce. we have i think the failure of rock island to the failure of government to review the estimate and to detect the overutilization. and then we have dcma and, frankly, others that failed to have the kind of government oversight, as it related to the issue of the contract for tactical vehicle maintenance. and then the corps logistic service support, cl assess. it's somewhat stunning that both inspector general and the dcaa came to the same conclusion.

the fear that we have on the commission is that this would be an example of something that is typical, not atypical, that we are dealing with. it's kind of like communal, people could understand how much it cost to build the wing of an airplane, but they knew that a $600 hammer to build the airplane is probably a little off base. if they used that bases for the hammer, what are they deciding on the wing? and the other part of the aircraft. so i think, i don't think, i would like, it would be helpful to us in the commission if we could come back, general, pillsbury, and mr. loehrl, and if you would to be able to come back with us and say how did this happen, not did it happen. when you get to, just accept that, frankly, and in the process of accepting you find it

didn't happen, then that's fine. but go under the assumption it happen. you only had 10% utilization. how did it happen? was the contractor just way off base? did you provide the contractor information that made it way off base? do you have the ability to respond? i we nibble enough? he does i found myself, general pillsbury, when you're talking about the situation on the ground is fluid, that can be an excuse. but it really is a requirement that because it is fluid, that we be nimble enough to constantly reevaluate our contracts. so how did the overutilization get put into the contract? why didn't we catch it? there may have been good reasons. why didn't, once it was in contract, why didn't have the oversight to change it? so we're looking, what is the

solution. this would help us and the commission do our work. because we're trying to decide how we do a better job in contingency contracting in the future. our big concern, one of our big concerns is that in the process of just worrying about the war fighter which we had to do in the beginning but not realizing it would be eight years, we have institutionalized high-cost. we think contractors have gotten high cost and gotten d.o.d. too much weight. so if that could be done. gentlemen, tell me how long do you think it would take, with three or four weeks be enough to? >> that would be sufficient. >> and we're just going to trust and you will work with the general on this as well. thank you, all of you. >> yes, sir. >> let me just -- i would like you as well, i wrestle with the fact that d.o.d. still doesn't

value, in my judgment, those within d.o.d. that do contracting work, and therefore, we don't see the value of that like i would like to. but i'm also wrestling with the fact that if have of our military effort is contractors, almost half. i mean, we have the smart power, heart, military, soft power, state and the rebuilding and so one of these countries. i wrestle with the fact that somehow there doesn't seem to be an ability to trust contractors with the latest data that would help them anticipate what they need to do. in other words, i kind of get the feeling -- an integral part of the war effort, i would love you as well if you would be able to get back to us and tell us

what you think the solution is on that. how do we incorporate the contractors sooner in this process? because i think that leads. but certainly we're not going to incorporate consider we have to constantly evaluate we have asked them to do. i know my cochair want to ask a question, then i'm going to let you all go. >> thank you. i really don't have a question to ask, as much as a statement. i think you commissioner tiefer. i'm so focused on what i was focused on that i didn't pick up as good and as quickly as i should have. i will just tighter, i couldn't support and i realized, general, you offer to provide the bca and a discussion. we will come into right away for that. but i just cannot support -- it's minus 10 to proposals are due which means they have got them all done. they don't do them the last minute. they are reviewed by management in two weeks, or april 15, or something like that. we're talking about life-support. you know, charles, professor

tiefer may be right. it may be the incumbent that is the lowest cost, highest-quality. they are the 11 or 12 electrocutions. 11 or 12 electrocutions. to me it's just impossible. and i apologize for not teeing this up earlier, because i was so busy -- >> what can't you support. as i can support having a decision on the side without looking at these proposals and doing a competitive on logcap iv and saying, well, mission essential dictate his. we really would like to look at those mission essentials in a very short period of time. because it's not the way we were told it was going to happen. and there must be one heck of a compelling reason in light of the fact we haven't heard too much about the performance of these other two contractors. and i will just lay that out now and move to the following. thanks. >> thank you. so any closing comments? we will start with you. >> no, sir. i'm good.

>> mr. fitzgerald? >> mr. chairman, just briefly. we believe that, you know, even with a dynamic situation that are 26 october report did a licit upland, now we think were in a much better position to evaluate that plan, and obviously monitor it and get explanations for variances, and this provides a tool for us to help go down the road in evaluating the iraq drawdown. so we had a lot of conversation about the 193 million, and we had to make some assumptions. because we did not have a plan at that point in time. now we have a plan with assumptions that we can evaluate, and then monitor that as we go through the process. i think would be helpful if we move forward. thank you. >> general? >> sir, thank you for the opportunity. appreciated. one of the lessons learned, and i'm taking this, i will get to

dcaa and dcma and figured out. appreciate that, chairman thibault. but i would also like to clarify for you, mr. chairman, that while my words might not have said it, i do respect dca and d.c. -- dmca. this is a team support. >> because my time is limited i didn't get to the lessons learned are not going to deal with it now because we have to get on. i just ask you to give us three or four examples of lessons learned? i think it will relate to the actual question i had. and this is not an effort i am asking you to make that will just go into a file. this will be very helpful to me, and i think some of the other, to the staff and the commissioners in our work. we thank you all for your service. we know that this is an immense job we're asking, and we realized that you are under resourced and you're playing catch-up, frankly. and we are in a new territory but we got to get it right. so we thank you. were going to have a five minute

break, and then we will start maybe six minutes, but not much longer. with our final panel. thank you very much. [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations] [inaudible conversations]

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here on c-span2, a brief break in this wartime contracting commission. about wartime contracting in iraq and afghanistan focusing on the drawdown of the nearly 100,000 contractor employees in iraq. as well as u.s. military withdrawals. coming up in the second panel, to defense contractors from kbr, doug horn from defense contracting services operations maintenance and logistics, vice president. and kbr defense contractor guy laboa. that should be coming up very briefly here as the second panel convenes in this wartime contracting commission. that you're watching live on c-span2, this may be here. on c-span3 on the way live right now from the u.s. treasury department, a panel discussion on the contributions of women

and how to foster success among future generations of women in the public and private finance sectors. that's underway now live on c-span3. and coming up in the noon hour at about 1230 time that we expect state department briefing, and part of that briefing expected to be about the new start treaty and the administrations nonproliferation policies. the president, after a surprise visit to afghanistan, back in you can today expected to sign the health care bill into law, and we will bring you updates on that as they become available. also, from the "washington post" today, postmaster general potter suggests, recommends holding saturday mail deliveries starting in the year 2011. this is a measure that congress

must approve. cutting saturday mail deliveries would say the u.s. postal service $3.3 billion in its first year, and about $511 billion annually by 2020. and would mean eliminating the equivalent of 49,000 full and part-time jobs officials said monday, as they prepare to file their plans with postal regulators. this from the "washington post." again, watching live coverage of a wartime contracting commission here on c-span2. second panel with kbr defense contractors expected to resume shortly. [inaudible conversations] [inaudible conversations]

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[inaudible conversations] [inaudible conversations] >> i would like to record to know that we've invited our witnesses to testify we were given 15 minutes. i asked him to leave out the first page and a half, two pages of his statement, and he says he wants to read it, and that's his privilege. it's about his background and where i had requested he start his testimony is in my testimony today i will focus on some of the specific transition related issues. so the commission that's what we're interested in. but mr. horn your 15 minutes. you can use it anyway you want. i was trying to give you helpful advice. i'm sorry you're not taking it. >> thank you, thank you. thank you distinguished mentors

of the commission. my name is doug horn. i'm a vice president for operations at kellogg, brown and root. and in this capacity i direct the management and support of kbr's government contracts within the operations maintenance and logistics product service line. so the department of defense state energy and homeland security. this includes overseeing project management and the provision of support and/or functional areas. i don't kbr in june 2004 as a deputy program manager for operations. for kbr's logcap iii program in the middle east and southwest asia. i oversaw all operations maintenance logistics, construction, engineering, security and training here for kbr's logcap iii operations in eight countries for one year and a return to be a leader in my product service line. i spent my adult life serving this country and having spent the entirety of my career before joining kbr in the military. i am a retired colonel in the u.s. army corps of engineers. during my 29 years and a half of active duty, i had deployments which include the gulf