certainly for our afghanistan and iraq were, those were competed between the three of us much like logging kapor is working or you have to compete for the work, we happen to win afghanistan and we won some task forces and iraq. >> without getting too arcane i interpret that to mean because of the competition that drives through most of your work, is it a case where you don't have a cost accounting standards coverage of what you do have everything else that goes with reimbursable type contracts? is that -- >> we are quickly getting out of my line of accounting. i make it a policy to not do math or accounting and public. but in this case i believe all of our contracts are subject to cast. all those requirements and we do have one fixed price. >> my question would be asking the simplest way, how do you get

along with your pro active approach, you can go to customers and said we've got it together. >> absolutely. >> okay. this is really for both of you. i guess i feel, kerry, or dr. raney, that you will probably, they'll ask a lot of questions so i'm trying to spend time trying to understand the contracting environment that but i have a question for both of you. both of you talk about, as you just did, mr. ward, the importance of internal controls and business systems and demonstrate to the government, that they can place reliance on both your aggressive action and oversight, and the like that i will start with you, mr. ward. as chief operating officer, are you exposed to enter the reviews, not the government's review, such as income on its or other compliance audits that you used to specifically give you insight to an visibility on whether your systems are operating independent?

nor did not just rely on the government oversight, for example, your internal audit program can visit focus on government systems at aecom? >> yes, sir aecom has a very proactive approach. we have outside indy pendant on a to c. as well as internally on it in an aggressive compliance program. that ensures that major government contractor, regardless of dcaa standings, then we have incomplete compliance. >> yet, to pin you down, you are the chief operating officer. you are serving a key player. are you willing, for example, would you be willing to breathe, demonstrate, share to the extent we can get every good understanding of what the internal control, internal and internal audit function is? is that something you would entertain? >> yes, sir.

>> for example, just to be up front with this commission can we're working with a company where we went through the list of internal audits and downsized it to three very significant internal audits and put a request in. after some back and forth, they said they would provide it for us. still going through back and forth because there is sensitivity and the like. but this commission, you do, you pay a substantial amount of money for those kinds of controls. and we the government are interested in you having that. therefore, we pay, reverse per the regulation for that. so i think us understand that, not only d so i think us understanding that not only goes to a customer's ability to place confidence new. but also to -- demonstrating the use of those funds that are build on contracts through some kind of indirect costs. >> yes, sir. that is not a problem. >> mr. raney, you want to tee that one up the best you can recall there. >> the answer's yes, sir. [laughter] >> so if we were to send staff

out explain that structure, what you do externally, internally how you go about it, that's something that you stand ready to demonstrate to commission staff? >> we certainly work with our internal audit department to meet with you all what they do with each of their programs. >> how they plan, where they put their emphasis but you all understand risk. >> our contract supporting jcc-i/a is a fixed contract. you don't have the controls of the kinds of questions that would come up with a cost type contract. i would just make that one point. in terms of meeting our internal audit and training audit absolutely. >> thank you. that's an important clarification. commissioner schinasi? >> thank you. good afternoon. i have a question.

for each of you, about policy, proposed policy letter that was issued by the office of management budget. and it deals with three parts of the government business relationship. one has to do with inherently governmental functions. but, two, i think even more importantly are those functions closely associated with inherently governmental. and critical functions. this is a policy letter for the government. but i just wanted to ask you, mr. ward, are you familiar with the proposed policy letter? >> yes. in a broad sense. i don't study it intensely because of the nature of our business. it just doesn't put us in our position. it's more of a defensive posture for you. >> so my question to you then -- would it be do you find that

this might change the way you do business with the government in any way, either how you market your services or your operations? >> the change has been already partially affected. we put out a policy from the federal services group last week or the week before to raise awareness internally to the company, the people that do federal contracting about the new policy. that it's a proposed rules and things that are happening to make our company people aware of this. so that as we evaluate new opportunities and internal relationships in operating that we don't cross the line. we understand where the line may be drawn in the future. >> okay. dr. raney, the same question to you. are you aware of the proposed policy? >> yes, ma'am. i'm quite aware of the policy. and i have reviewed it. as you know we're a member company of professional services council. and there will be a role in terms of the public input on it.

and the answer to, you know, the many questions they've asked in the proposed -- in the proposed rule. and, you know, will certainly play a role in that. having said that, clearly what we do for the jcc-i/a falls in the category of the closely associated with a nongovernmental function. without having to have y'all ask me that question, that accounts for a lot of the business that we do. program management support and things that we're closely looking at that. i actually think the policy letter is a really -- i really like the way it started off. by recognizing the fundamental issue and much of what you all talked about this morning. and this is a resource issue. this is about capital planning. this is having the right people in the right place to do the work that needs to be done. and i recognize that there are inherently governmental functions but it's based on the

fair -- the federal inventory act -- commercial inventory activities definition, which is a relatively narrow one recognizing there are plenty of things that just need to be done by government personnel. but there are plenty of reasons to use contractors as well. and that's in the area of inherently -- closely associated with inherently governmental functions and there's another proposal on personal conflicts of interest. so i'm very aware of that. i think the critical thing this rule gets off as a resource issue and it's a human capital planning issue. and i think that's absolutely true. the second part is the critical functions -- the critical functions to some degree where i kicked around by a lot of different organizations, industry associations making input, recognizing the fact that the real issue here is not using contractors but it's having government personnel in the position and in a place with the understanding to manage those organizations. and that really is the key there. and so i think the policy letter takes a great step towards that. this is far from done.

i think as we all know because the public process is going to go on. but in terms of how we perhaps deal with the organizations that we deal with in providing this -- in my statement we go out of our way to make sure that our people do not cross that line. that's not just for the jcc-i/a. that's with all of our customers because we know the business we are in. many are retired from the government and been in that business and you have to be very careful. but there is a way to do it. there is a way to manage. and it requires both the government and industry to be prepared to do that. to take the measures that are necessary in terms of training, commitment, et cetera. >> okay, doctor, thank you. i think some of my colleagues will probably follow up on this. but in terms of whether you see this as changing the way you operate, a yes or no answer for now would be much appreciated. >> it will change the way we operate perhaps with some of our customers with maybe some more clear training and things that

we'll provide but not a fundamental change, no. >> okay. i want to switch topics a minute to ask mr. ward, you indicated that you have both commercial customers and government customers? >> yes, ma'am. >> can i ask you to talk a little bit about -- characterize how you see those customers. i don't want you talk about how the weakness necessarily. but, for example, do you use -- what kind of contract type do you use with your commercial customers? >> i should clarify the business unit that i'm in and most familiar with is aecom government services. so virtually 99.9% -- i can't even think of a commercial contract that we have in my business end. so all of our work is with the government. whether it's state department. we're very army-oriented.

we've got contracts with department of energy as well. i focus primarily on u.s. government contracts so i don't have a big commercial client base at all. >> what does your customer do that gives you problems or conversely that makes your job editors? -- easier? >> i think i'll focus on the easy part. it's highly regulated. we understand the rules of engagement. like the far or not, it lays out everybody's roles and responsibilities. cast standards. when it comes to payment, you know, the government sometimes we have low payment issues perhaps. but the government is good for it. and that's a big contrast to the commercial business. >> dr. raney, i'll ask you to -- i assume that your customers are all government customers? >> all our customers -- >> so the difference between those customers, what is it --

>> our customers are -- there's in the business group that i manage are all relatively similar. they're a contracting or a program management organizations that are relying upon contractor support to do certain things. they don't have the staff or capability right now. their problems and their issues are pretty much the same. so really when you say what's the difference, you'd almost be asking me is there a difference between, say, for example, different agencies or things like that. >> uh-huh. >> and there really isn't a whole lot of difference. they are about the same thing. they have a mission to perform. they have issues around that in terms of doing that mission. and it's our job to assist them in doing that within the rules and regulations. so not really that much of a difference. >> okay. thank you. >> thank you, commissioner. commissioner zakheim? >> i want to thank you both for coming and i want reemphasize what co-chairman shays said at

this hearing. there's an empty chair here. and i'm very, very unhappy about it. i could certainly understand if any individual could not fill the chair. but for an entire company not to fill the chair, we have taken notice and we are not happy. having said that, dr. raney, what's the average tenure of caci employees in theater? >> the average -- >> how long are they out there, a given individual on average? >> on average it probably runs something like maybe a year to a year and four and five months. we encourage them and incentivize them for a year. we have several actually who have worked for a year, year and a half. come back and gone fishing, whatever -- done other jobs and put on other projects that we have and go back or so. and we've been there since 2004. normally it turns over about a

year or so -- and they go do something else. and kind of decompress but that's about right. about a year and three or four months. >> but is it safe to say that by and large your folks who are supporting the contract -- the program management or contract management offices, the cors in effect probably have more experience than the government folks they are working with? >> they certainly have -- a contract requirement requires us to provide people with extensive experience. >> right. >> they all have to be level 2 or 3 with a minimum of five years experience. that's a performance work statement. we have a lot of retired military and civilians. many of whom have been deployed before. a general rule they're a very experienced work force and we take pride for that. >> for some relatively fresh faced cor to come in and turn to your people and could on occasion perhaps create a dilemma for your folks.

now, i see, you know, caci was third in the ethics survey. you kind of are up there in terms of ethics. have you had situations where your employees called back to headquarters and said, the client is asking me to do things i really shouldn't be doing? >> i'm not aware of any situation they've called back and asked either myself or our program manager here. certainly the question you pose is a challenge in our environment, okay? i will answer it in two ways. the first is we do have training. we reinforced that and we try very hard that our people are aware of that. many of our people are retired military or civilians who have been contracting officers. and they recognize that line and they know where it is and not to blur it. i would say there's one more aspect of this. and many of us that are retired or we're contracting officers once, we take very seriously being a contracting officer and i think that's true of the government people that are in

theater today whether they're military civilian. you don't get a contracting officer warrant just by showing up. that's something that comes with experience and study and hard work. and i don't think they want to abdicate that either. so they may come to recognize that some of our folks have some very good advice to give. but i don't think in any way that means they just turn things over to them if that's what you mean. >> thank you. mr. ward, for aecom, have you ever walked away from a bid because you perceived there was some kind of organizational conflict of interest. have you ever had that situation at all? >> yeah. >> good. how often? >> well, if you were to ask me which bid i couldn't tell you. >> i'm not asking which bid. >> i can recall two -- this could set us up for a conflict of interest. >> okay. actually both of you, what is your sense of the expertise of the cors that your people have to deal with?

i mean, do you feel that they need more training and more oversight from them? do you feel generally that you're kind of left out there in the cold and then something is going to go wrong and you'll get dumped on? i'd like to hear both of you on that. >> since my mic's on, i guess i'll go first. [laughter] >> it's kind of an evolved story, sir. >> i expected that it would be. in 2005, when we started up both in iraq and afghanistan, cors -- you know, there wasn't a formal process to even appoint them. some people just kind of evolved into that. it was a learning experience for me this morning to hear the army tell about the initiatives that they've had since 2005 or before that. >> excuse me, what do you mean a learning experience. you weren't aware? >> no. i was able to pick out as they said in 2007 they started doing this training. and i've been able to

anecdotally perhaps but i've been able to see the results of what the army has done in the field to improve the level of cors. not only the training of the cors but the sheer numbers of the cors. >> are you satisfied -- i mean, in a sense having good government oversight protects you. >> yes. absolutely. >> i think anybody who's in the business knows that. do you feel you're sufficiently well protected right now? >> yes, sir, i am. because of two things. one what the army has done and what we've done as a company. >> okay. dr. raney? >> we don't have a problem with our cor 'cause it's the deputy park at the jcc-i/a so we have a decree good contracting services operating and they understand what they're doing. and we have a great -- yes, we feel protected from that standpoint. and understand on a day-to-day basis what we're doing which is a key thing there.

the challenge of contracting officer representatives and the training of them and avoiding too much of the churn has perhaps with the operational unit is a huge challenge overseas and you heard that this morning in terms of all the folks here as to how. >> i wanted to get your sense of it 'cause you're on the receiving end? >> we feel protected but i've been aware of any situation where any caci folks have had an issue there. i think there's been a real emphasis on the area. and, yeah, i think we're fine. >> okay. i just got a note and i'll thank the staff for that. here i'm quoting in the aor all contracting personnel get warrants. they're e4s and up. >> maybe you have been lucky with the cors that you have. [laughter] >> the last point and this is for mr. ward. your guys are brave. they're outside the wire. and you have some subcontractors -- one of the issues we have looked at over the past year and a half or so

is how do you get accountability and control over subs? tell us how you do it. >> good question. >> well, we deal with subcontractors that we know. we vet those subcontractors. because our contracts are awarded on a competitive basis, we have to get -- we have to be competitive with our subcontractors especially the larger the content of a subcontractor is -- if they're not competitive, that just makes us less competitive. so we're very cognizant of that and work that. then when we subcontract a large portion of our work, what -- we look for the value added where we are as the prime contractor. where our systems come in to effect, our management philosophy, our relationships with our contracting agencies. the kind of quality assurance that we provide to that subcontractor effort to make

sure that -- it doesn't matter whether it's the subcontractor or an aecom person doing that job, we're responsible as the prime contractor for execution in accordance with the terms and conditions and all the regulations, fire, gas, you name it. that's the control that we put into it from subcontract administration that starts at the source selection process all the way through exclusion. -- execution. >> thank you. commissioner ervin, please? >> thank you, mr. chairman. like my colleagues i want to thank both of you for being here. i applaud you for being here and i applaud your companies for sending you here. i also want to stress that i've heard it said by some that the commission is biased against contractors. that's not the case. and certainly i'm not biased against contractors. i am only too happy to give kudos to companies that i think have done exemplary work. and that that have gone to extraordinary lengths to make sure you don't run afoul over the various applicable laws and regulations.

and so i want to preface my question with that statement. that said, i want to go needless in some details and most of my questions are for you, mr. ward. with regard to aecom one of the things you talk about in the written statement that you submitted for the record on page 51 is the instance where there were overbillings on aecom's part. and you quite rightly and appropriately and commendably brought those over-billings to the government's attention. you did line by line, as i understand it, audits when s.i.g.i.r. looked at it they didn't find any more over-billings than you proactively brought to the government's attention. it's all commendable. could you give us a sense of what the magnitude of these over-billings were, point one. and two, how these over-billings occurred in the first place and what has been done with regard to aecom contracts? >> okay. as traumatic a experience the s.i.g.i.r. was it was a great

success story and there were some lessons learned that came out of that. first i think s.i.g.i.r. documented the $4 million we as a company had identified the overbillings approximately two years before the s.i.g.i.r. report. as you pointed out and i appreciate it, we self-discovered those and self-reported those. our customer in this case was the rock island contracting center in rock island. it was a gruesome detail by detail review we provided to s.i.g.i.r. almost 400,000 pages of documentation. 30 gigabytes. we rent storage space -- >> but just in the interest of time because we have limited time how much money are we talking about? >> we credited back to the government in excess of $2 million. and since that time -- after s.i.g.i.r. was settled, we took the case, if you will, to the

army's procurement fraud group to make sure that they were aware, we had nothing to hide. and if they wanted to come and follow up -- you know, if they wanted prior to the contract closeout, the contract hasn't even been closed out yet that we would welcome that type of oversight as well. >> great. thank you. a couple of other questions, sorry. also on page 51, you say that you've developed proactively management matrix such as production, health, safety other management indicators. has dod bought into those metrics. i'm sure you shared those with dod and is dod pleased with those metrics? >> i believe they are. each one is developed specifically for the scope of

work. and we obviously have a different set of metrics that we track and monitor in afghanistan than what we do in iraq. for afghanistan, it's about first time pass rates. production controls. there are a whole series of metrics that are driven out of army regulations that relate to supply performance and things like that. we share those with the army. and we continually develop those. it's good for us as the coo of our business, i felt very uncomfortable when we first started on these contracts -- call our project managers and say, how are we doing and he would say great. i needed to know how. i needed some metrics that could measure that. and so that was really one of the first initiatives that brought us into management by metrics, if you will. and the army helped us develop those that were meaningful to the battalion or the brigade commander.

we didn't want to have a bunch of metrics that was important to the jay ward if they weren't important to the commander. >> precisely. i have one question and then i'll get to you, dr. raney. you said aecom employees have to assist others in making sure they don't violate the code and they have to report any instances of violations, how many reports have there been over the course of your time in iraq and afghanistan just, you know, ballpark. and what actions are taken on them if there had been any such reports? >> we have a very open and robust hotline. it's monitored by an outside independent agency with complete anonymity as to who's calling in. you know, if the caller wants that. >> but how many reports approximately? i mean, are we talking a handful? are we talking 100? >> since inception between iraq and afghanistan i'd have to guess 20 to 30.

they vary not from necessarily contract performance but supervisors bad behavior or another employee's bad behavior. or things that -- occasionally we get a hotline about a good event. >> all right. now, i want to move to a brief discussion of the inherently governmental issue that we've talked about before. and worked closely associated with it. my couple of questions are mostly for you, dr. raney. let me start with you, mr. ward, because you said you were only generally familiar with it. and dr. raney seems to be more specifically familiar with it. let me pick out two or three examples. and you can tell me whether you think they're characterized presently in these guidelines as inherently governmental or closely associated. one is services that involve or relate to the evaluation of another contractor's performance. would you just guess that's inherently governmental or closely associated? >> i'd break that down into two steps.

the data collection and developing metrics and reports. i don't see that as inherently government. i would say that any action on that feedback with a contractor about their performance, i would call that inherently of government. >> assistance in the statement of work? >> again, not our line of business. but -- i don't see any inherently government function of drafting performance work statements that are the result of, you know -- i don't know how that process even works. but interviews and developing requirements and helping to quantify those works. the drafting of the work would not be inherently government. determining the government's requirements. >> and then finally the evaluation of contract proposals? >> that's a little bit tougher for me to say yes or no. i think that is something that's better referred for the government.

-- reserved for the government. >> dr. raney, to close this with you. one of the questions that this policy document that omb put out opposes as you know is whether it ought to be conflated and whether there's a practical difference between the two. what's your judgment about that? these are all listed presently the ones i just mentioned and there are others that make the point that are closely associated. i have great difficulty particularly with regard to the last one as you do, mr. ward, often in distinguishing between the two? >> i think there can be a clear difference between the two. that in many cases, if the government had the personnel and the capabilities -- for example, the proposals many organizations depend on evaluators of technical evaluation. and those are what's often used by many program officers and things like that.

as long as there are the controls around the conflict of interest both personal conflicts of interest and i don't have a problem with it obviously because we do it. and i think we do it. and do it well. and for those places that we support i'm not aware of any case where there's been a protest or anything that's ever been associated with the work where we've done that 'cause we have those controls in place. but you have to be willing to put those in place as a company. >> thank you very much. >> may i ask a quick question, mr. chairman? dr. raney, has there ever been a protest that involved your support of a contracting office position? >> of our support seven >> well, we're just talking about that particular instance where, you know, it's technical -- the technical review of the technical proposal. and you said there's never been a case. >> has there ever been a case in

which you were involved in supporting, you know, proposal decisions? decisions that was protested that you were involved in? >> we have support organizations that have had protests of awards they've made and people have provided contract administration. >> but your activity never came up in those protests? >> no. >> thank you, commissioner. commissioner green, please? >> thank you. dr. raney -- >> can i clarify one point there? >> sure. >> there was a protest one time we bid on something and one that was winning and the issue was whether we had a conflict of interest. where there was a mitigation plan was adequate. and the government determined the oci they considered our mitigation plan and the protest was denied. so i just want to make sure i clarified that. >> okay. >> okay. ollow up very quickly on comment that commissioner zakheim had made, or questioned to let me commend,

first of all, what i think are some good players, some good ethics, as a piece, mitigation plans, internal honest and so forth. you have how many people, about 50 or so providing support to jcc-i/a? >> we have 40 in iraq and 12 in afghanistan. >> and these people are providing acquisition management services. they're providing program management advice, acquisition advice to contracting officers and other managers, to? you had mentioned in a response to the commissioners question has anyone ever call the say i have a problem, my bosses asking something and crosses the line and he said they never had? >> not that i have received that call. >> i just find it hard to believe it human nature being what it is and you should

knowledge of this initially that short people are probably more experienced in the workings of a jjci contract in and the new civilian or military contracting officer walking in the door to a new assignment. it is hard for me to believe since 2004 there has not been any discussion that crosses this line so i guess my question to you is, what is your level of confidence in percentages that nothing like this has ever happened? >> i will comment your question from two ways -- first is the requirement we have for this benign from day one has been to bring very experienced people, that means people who familiar with a acquisition process systems and recognize these

things a talk about that. so i guess i would say that i am sure likely there have been conversations between some of our people of varied experience with somebody that's not, this is the way that i see this, but i'm providing advice that's what we're required to do. your responsibility to do and that's awarded the contract in making those decisions so i suspect and i would guess we've had some of our more experienced people handle that on a person to person basis and that's the way we look to handle because that's the way we expect people with that experience and expertise. >> the whole definition is so mushy anyway. okay, dr. raney, you mentioned that deputy park is your core. >> yes. >> mr. ward, could you characterize the core that oversee your work?

how many are assigned to your activities? >> we are a very blue-collar organization in the field and provide mechanics and supply guys. we have the same type, of course,. a colonel or lieutenant colonel, all, right depending on what it is. in afghanistan we have i think 35 course assigned to us on our contracts. they have a jobs i'm sure, not just to us. and that is an increase from prior years that as we have grown so has the core. >> are any of them contract to person? >> no, they are all either department army civilians. >> how would you characterize their skill level to oversee whenever contracts they are overseeing? >> it's a bit of a mixed bag. not every quarter that is a sign

the is a superior, the mechanic or as we've gone into -- we are the largest repair of emma rap in afghanistan so they are coming along and their core functions have been trained in the inspection process and have technical expertise required to allow them to do their job so there is a mixed story by and large they work for as a core of the also work for a branch or supervisor that has that expertise or maturity in the theater. >> okay, there has been some initial concern expressed by a d.c. a that they internal control activities related to your subcontractor billings were not adequate. it was further reported that

that ags i was not willing to have the largest subcontractor and agsi does not sufficiently review the records. would you comment on those albio to preliminary observations? >> i believe you are referring to the sitter report. i would say ground truth there. in we took those lessons learned in and we have up our game in terms of monitoring subcontractor billings. the way that it's really important to understand how we got into this situation of overbilling in the first place. if you would like to hear the cliff notes version of that story because it really is important to what led to the corrective actions.

>> well, i would just caution new or suggest if i might the this whole issue with some contractor billing with the fabric of workforce, international panama law firm, i would just -- ended the next year and relationships of some of your officers and directors of the agsi -- i would just suggest that you make sure that the government understands that whole concept because it is a tangled web of what i read and only part -- partially understand. in -- at the end of the day as aecom is trying to build this reputation, i think it's terribly important that the

government understand all of these nuances that have gone into some of these questions that its riss. >> may i respond? >> please. >> you mentioned in the baghram or force, proposed as a subcontractor on a major bid. a series of major bids actually and when the evaluation process when the government pushed back if you will, asked the question that it became clear that that was not a direction the government wanted to go and so we dropped that and never done business with baghram in that context. we modified our whole method of execution in order to accommodate those concerns. >> thank you. nothing further. >> thank you, commissioner here to the process we are going to use here is commissioner teefour has a few extra questions so he's going to be given 10 minutes to process his

questions. commissioner, please. >> thank you mr. chairman, i appreciate the courtesy. dr. raney, general philippe said you got at least one of your contracts off of the gsa schedule. is he wrong? >> that is correct, the current one is off the gsa schedule. >> so when you took it it wasn't put out four separate competitive proposal. >> it was full and open competition. >> i'm sorry, was it taken off the gsa schedule? >> it was awarded. >> thank you and my question is, listen carefully, and not interested in the technical definitions and the public would like to know the answer: was it put out for competitive proposals? what is put out for public bidding? >> as it was put up for competitive proposals. >> separately from the gsa schedule. >> know, under the gsa schedule. >> you did that separate from

the competitive proposal process. >> any one that held the schedule could have been on a contract. >> was at the same exact thing as the full and open competition process by which -- i talk with this all the time to my students. >> no, it was not. >> thank you. it wasn't the same thing. >> you are, correct. >> thank you. otherwise i would of had to change the grades on a lot of exam answers on my students at the university of baltimore. now, i appreciate that we talked before the hearing end it that in -- let me review, khaki requires its employees to fill out financial disclosure forms, the ones including lists of gilts, right?

>> we have contractual requirement under our contract with the jjc-ia for any employees providing support to the jjc-ia to fill out financial disclosure form that's essentially the same as the office of government ethics. >> i want to ask looking at the description that the end cmoa puts out on current proposed rules that are on ethics and that's for industry and put on proposed rule. says there is objection to inclusion of a list of violations and remedies in the cause. currently you are not obliged, are you coming to communicate in writing a list that the government would say is violation like 1,001 state and sacked? >> you're talking under the proposed rule for personal conflicts of interest? >> yes. >> that's right, the requirement we have -- >> you don't communicate such a list. i can tell you as someone who is general counsel of the house of

representatives that we try to make sure every representative new incentive to 1,001 prosecution for false statements in what they put on the disclosure forms because they are, it's apparently -- we don't want to have the requirement for contractors like caci now and if you succeed we won't have to put in the clause in the future. in -- would you agree with the statement in the gao report that under way at the personal conflict safeguard a requirement that it's good report entitled, additional personal conflict of interest safeguards needed it for certain dot contract employees, and they were talking about the caci category. >> yes, we were one of the company's they talk to to do that report. >> you're on the list and army

council official told us not requiring financial statements from contractor employes poses the greatest risk to the integrity and impartiality of the work performed under contract for the government. you may be doing such statements. is it your understanding other companies in your category are not required to do so and may not? >> two things. our contract requirement we have to collect that information supporting the jjc-ia is unique to the jjc-ia contract. >> right so other than your category not required. >> unless i have a contract requires. we have others beside the jjc-ia contract that asked us to obtain personal conflict of interest information. >> which is a vacation, not the full list yes? >> dave barry. >> so at least some art required and even caci let alone others are required to make a single largest requirement for ethics enforcement. >> that's, correct.

>> okay, let me go on. i want to look -- this is only going to be a brief outing. professor steve schooner, probably the single most accepted expert on government contracts in long, certainly this article is the most called contract atrocities, accountability in a streamlined outsoars government. in and want to ask you whether he is incorrect when he cites the fate report coming to authoritative reports on a guantanamo, and he says, several other findings with respect with regard to the caci contract, that your contract, merit attention. first, your company's contract, first, a caci employee

participated with the contract officers rep. in writing the statement of work prior to the award of the contract. i'm sure you have an explanation is he wrong when he said that? >> first -- >> is he wrong or right? >> again, on not familiar with that contract. that was not a contract my group had and in 2005 caci submitted in response to a gao report. >> you have knowledge of whether is right or wrong or don't have knowledge? >> i don't have knowledge. >> i think he is right and was an organizational conflict of interest. >> i think there will -- sorry. one other thing about the

disclosure forms filed. when i file my financial disclosure form, when everybody on this panel files there not only in their current jobs, i think we may all almost all had to file in our previous federal jobs and for that matter when the first panel which had a top current government contracting official and i asked about whether they did. we all while hours publicly and i can tell you as general counsel of the house met reporters pour over these reports and follow any leads. now, reporters can do that for a top caci officials to file such disclose statements, can they? >> they cannot. >> right they cannot so we're really missing some safeguards here for people who are closely associated with inherently government work in your category. let's go to aecom.

by the way, i echo the sentiments of previous -- we're dealing -- dealing with the best contractors here. these aren't the opposite of the best. this is a universal problem, not only of yours dr. raney. you are an industry leader. aecom, you've been describing the success story you have a, a success story is your term. you said they found $4 million of what i would call -- what they call potential overbillings. and then it yourself reported and sell disclosed and my fellow commissioner clark asked how much and i think your answer -- i know your answer was $2 million. right? >> i believe that was the credit. >> i know they use eight you provided everything that they were questioning, that you had done a doll and provided it all.

documented all two years before. is that figures position after they reviewed? and did they say thank you, you provided everything? >> there's been no follow-up since the report. >> did you read the report? >> yes search. >> did they say thank you provided everything. >> i think they still question some cost and we went back -- >> could i say approximately 4 million -- 2.4 million or 1.6 million the amount the question? >> yes, sir. >> okay, what their statement is after under the heading aecom comments and this is fresh material, october 30th, 2009 report and we say since then we are talking about very fresh material and the ink not try. aecom response to draft of this report, they had reimbursed the government for the billings we are questioning as you said. aecom provided invoice showing

$4 million in credits for a variety of parts, however, we were only able to identify 2.4 million of this credit pertaining to the overbillings found in our review. and at the same time and the invoice included these credits containing many of the same problems. this is a report 10 -- 005, i found it by googling bigger 10 -- 005. and i believe that the reason -- let me say you've had communications with them since then writing to report. >> not about that report. >> you didn't provide any more material? >> not after the report was issued. >> so you left it that $1.6 million isn't dealt with? >> we worked with the contract agency, rock island. by all indications they are satisfied. >> i understand, we've seen many times the auditors question something and rock island, that

don't -- they are to boat rockers over there. 1.6 million, to some of us would be an nuys amount of money. it are you prepared to show -- wouldn't you like -- have they shown that you did pay that 1.6 million? is that your position? >> we are completely prepared to have them come back or any other audit agency come back and review the records. >> but have you gone to them and tried to show to them? >> no, our customer is rock island. >> okay, that fits with what i heard. tell me if i'm wrong in this. i called up the habit of audit on friday and said have you reached an understanding of this and he said no. they provide stuff to us, but now we haven't reached that. >> would the gentleman yield? i am trying to think about what you mean by your customers rock

island. are you saying that if there is a question about any activity you have as long as the contract and customer doesn't care then you don't care? >> no, sir. >> what are you saying? >> i'm saying they did their review and issued their report. as follow-up to the report we it offered to work with rock island to bridge any gaps. there was no doubt that we confine. we would welcome another review of the invoicing process. >> let me say another way, are you saying as far as resolution of this issue that you're understanding is that rock island through whatever you provided them believes that you have adequate and stated to you adequately resolve this issue? >> yes, sir. >> to the best of your knowledge. >> and after the report we went

to the procurement branch of the army and made the same offer that we have a completely open record and working to any issues might be outstanding. >> thank you. >> can i have one or two questions? >> you should have been an auditor, i would have given you something less than an a2. we will give you a question, charles. >> okay, dr. raney, and i appreciate the briefings today. you are industry leaders. let's put the government with a tougher stance and said it's not enough to put up the fire walls and so forth you put up, we should have our work consulting work to procurement done by independent companies, consultants who don't themselves to pick chairman with the federal government. what would happen -- with the government get its knees if your company spun off your group into

separate out of it? with the government get its basic needs from that separate group? >> if the assumption is that the government changes its policies and says that there can be no form of mitigation that fundamentally if you're in a particular line of business and in this case probably captured by assumptions closely associated with functions or acquisition functions closely associated with governmental functions which is the way is raised under the proposed rule on personal conflict of interest, the answer is certainly i believe just like we have responded to a market need over the last few years and provided the kinds of services and people the government needed, i think free market would do the same thing and companies would form and things got off and there would, in fact, be the kind of service provided to the government. >> i appreciate that and i thank you form allowing me. >> commissioner hanky please. >> thank you mr. chairman.

mr. ward and dr. raney, i have a few questions quickly in the issue of time. your statement mr. ward makes interesting observation about the national maintenance and for the benefit of our audience and maybe those who work at the briefing, your company was asked to stand up basically what was iraq's single national deadbolt maintenance activity, is that fair to say? >> that is, correct. >> you started their, three-year contract? >> it is two 1/2 years by the time of the commission. >> $213 million plus or minus 600 employees. required to procure and install an commission dicks thousand pieces of plant equipment and train 700 people at the vocational institutes there. i wanted to set that seem because in your statement to make a candid observation and i thank you for being candid with us bear in. on this maintenance denbeaux

contract, you had in the span of two years you had six contrasting officers, six pc zero, six program management officers, five administrative contract a officers, probably from dcmai suppose, and you had seven course, seven co are. in the span of two years you had -- these are government people. what is it like working in that environment? >> particularly on a fixed-price contract it was very difficult. especially from the contrasting side there were some complex contract issues in it was a new contract in office are that wants to dig in deepen understanding so the difference of understandings would have to

be discussed and at times negotiated. >> about the contractor. >> all of these were after, there were to prior to the acquisition. >> okay, so go ahead, what's it like in that environment tried to rob his my customer? you are trying to satisfy the customer and get all these folks running around well-intentioned coming through -- this is not in 2003. this is not when we are ied is rolling into baghdad, this is six or seven years later which pretty much the steady stream. i know want to diminish but by that point steady state so what's it like in that environment where you're trying to figure out who's the new person, who's coming through, what are they saying, how are they evaluating and going to affect my profitability and performance? what's that like? who is your customer? >> well, it's always clear

you're the person sitting in the chair is the customer and the customer is the project management officer that sets over to wait nearly the same space as we do. colonel, lt. colonel pierre he has his program and staff that is systemic. and then the contract and officers were actually jjc-ia and the green zone of. >> okay. >> and that was, those people typically are on six month rotation and if it catches someday, somebody that was assigned at the end of a tour and they were having 30 or 45 days assigned to the contract represents a challenge that we maintain very, very good documentation of any discussions, any changes and any progress reports. anything that affects the contract performance. >> related top dead.

in you characterize your work is largely transitioning humvees for the iraqis. the question i want to dan add is for both of you, please,, what is the contractors obligation to save it the government money? you have a very called a blue-collar production line centric operation. we have had customers, contractors and here we're ig have report and said you are providing a service but it was only utilized, used 3% or 7% of the time so grossly underutilized. that means government is paying more than one might otherwise. so what is your obligation if you have a better idea, say on this denbeaux contract. you want to tell your contract hours, there's a better way to

do it. would say the government money but as a contractor i might walk away with less. what's your obligation to bring board that better idea or saving -- cost-saving idea to a customer? >> i will give a couple examples. a fixed-price contract, the price is fixed. so the cost savings to the government aren't quite so obvious of things that could be changed. i think we discussed at our briefing the whole concept of operations how we thought a better way to stand up that might be but that was prewar phase and that was discussed and it was the statement of work and that is what we did. in the context of cost reimbursement contracts, our company has a very good record i believe in and one that i'm proud of how we can say the government money.

.. we've documented $11 million of cost avoidance or cost savings through the different processes. >> excuse me. your documentation of the $11 million, is that during contract life and not part of preaward pricing? in other words -- >> pester the contract execution

phase. smacked her in the contract execution to what you call it lien or six, you have processes to identify whether opportunities for improvement and you're documenting them. are you also briefing your customer? >> yes. we partner particularly and dynamic environment is the reason afghanistan. can i do take that as an organizational responsibility versus a contractual responsibility? we've had earings before whether we've had organizations say well, that's all fine and dandy, but i do whatever my customer tells me to do and if they say the 100 people at the main insight until i tell you different, i put the matter even if they only need dirty. >> if a company i think i guess i would have the bottom line. it's just the way we operate. dr. raney, your thoughts on

that. >> if it is incumbent on any contractor when they save money they should bring that forward. the issue becomes a challenge sometimes relative to the type of contract, its cost type verse price-fixing and whatever. and what the performance work stateliness. the performance work stateliness. the performance work statement laxton and a certain instrument and you have to reassert levels to get that changed. it's not like you can go in and talk to somebody and say we should do the following three things and the contract is changed. but i think it's a fundamental update that a company should operate that way. if we something we don't believe needs to be done whether it's this customer or the other one as a role we would think that needs to be brought forward. >> have you ever case about a new gcc contract of 52 people? >> no, not where they said we can get by with less people because they're trying to get more. >> thank you. my time is expired. >> thank you, commissioner.

for the record, mr. ward, and i commend you for this, can you provide a the proverbial three pager on the $11 million on what types of actions you took and why you took them and how you communicate it and what impact them into saving for the government or the taxpayer or however you want to say it? be my guess, sir, we will. >> commissioner shays. >> it's been a long day and i appreciate you setting awaiting to the others. i think my colleagues for their questions as well. i'm going to be less than eight minutes because i chose for us would like to team your mac for being here. thank you for your cooperation with the committee and as i hear you helping us try to sort this out in a public forum, i'm just struck by how incredible it is to me that hs, we'd like to have that next is the pride of the interaction i consider frankly a

bit selfish of them and it alerts me to the need that we need to give them a really special look, both here and in theater. so, i just want to share the both of you that they didn't put you in the center and escape that scrutiny. trust me on that. i'd like to just make a comment and have you respond to it. we know that service contracts make up an estimated 64% of all the southwest asia contracts. and it's estimated to be over 80 billion in service contracts over the last five years, in both iraq and afghanistan. and congress, since 2000, has mandated a stronger, more copperheads of oversight of service contracts. i sense is we still are trying to get a handle on how we oversee service contracts and

that we do the oversight of service contracts -- we do it, it's the area where we have the greatest weakness. if you were to suggest one or two reforms, something that the government could beat up, what would it be to make the system work better for you, but better for the taxpayers as well? mr. raney, you can go first. >> you're right, the service contracts of the week went because it's only been within the last 18 years the service contracts became really the majority of the money spent. and so much attention was put on the hardware contracts in the administration there. and was in a lot of that environment. and there needs to be a fundamental recognition, the service contracts are different in terms of how you both have to

define the requirements, award the contract and then manage it. first, the fundamental recognition i think is -- >> is the weakest link the process of procurement or is the weakest link the oversight? >> i believe the weakest link generally is in the requirements definition. >> thank you. mr. ward, how would you respond? >> the first element that needs improvement and always will, you can never get where you need to be, is the definition of the requirement, the performance work statements, more outcome, more in and what the expectation is. the expectation should be to provide 100 mechanics. they should be to provide mechanics that have a certain output. so i think that's a big improvement. on the acquisition side and in my opening statement, i talked

about to reach back division of rock island, that the stability that offers, martina and i would say that one contract. they rotated like they were supposed to rotate every six months. the rock island contracting center has a much more stable footprint are not centralized control and that doesn't provide, you know, the contract oversight in the field heard so that's a little bit different issue. but i really think that that's a really great initiative and as that organization matures, whether it's in rock island or does not to be in rock island. so i think that's something for service contract and i can really be improved in the system. >> let me then just ask one other area quickly, not looking in depth, but the biggest challenge for us, excuse me, the biggest challenge for me that i wrestle with is the plethora of a subcontractors to do the work.

and we get it and its 200 years of contract love us as we go through the prime. do you have a challenge as a purchaser of subs services? are you pretty able to get what you need from the sub? particularly if it has to be an indigenous iraqi or afghan company? >> i'll go first and he went first the first time. getting good subcontractors to go to iraq and afghanistan, afghanistan in particular is difficult. we've had some that say sorry, that -- i don't do that. in their industry partners and they just -- that's just not what they do. so we've had to work hard, we've developed some subcontractors that have that capability. but the concern about subcontracting as we always look

to put the best athletes on the field. and if that means a subcontractor is the best expert in the sandbox and running an army system, then so be it. if that's the best way to get the job done. so that's her first primary goal. now west aecom, ground truth is to perform as much as we can, it's more competitive. >> i know folks are going to be looking forward to going out and see what you do when so many of the port operating bases and again we appreciate your assistance. mr. raney you can close it up and i think the chairman is going to ask you to make closing comments. but i want to be my one minute 44 seconds that i have left. >> we don't have the sub tractors supporting jcc-i/a. >> does not fix issue or you don't eat them ory security issue of what? >> so far we don't need them. but i would just talk in person

or two in the blue-collar world and professional services type of environment that we'll didn't come whether it's in iraq and afghanistan or anywhere. the sub printer relationships are different in terms of the understanding you have with the companies that provide those and so they're usually a full to handle those differently. >> chama men coming thank you both for being here. i appreciate it a lot. thank you again for your cooperation with our commission. >> thank you, gentlemen. a clever members indicated they have questions. i have one more area that is an observation that concludes with a question. commissioner green taught me a expression i'd like because he is from oregon and all the good people are from the oregon area and that is for fear of beating a dead horse. well, i'm going to do one last time. and that is mr. ward, you're coming up to here today, is your board of a lack there's aware of

this? >> at about the board of directors is aware of this. i know that the president of the company -- >> who happens to run the yours. >> i don't think even the board of directors. he's the one that received the indication invitation, so he's aware. >> yes, sir, are board of directors is aware of it. >> your board of directors or are supported even though you're busy and have time constraints of coming appeared and sharing your observation? >> there was never a question. >> the reason i say that, this wasn't a trick question, but it was the yours on aegis that addresses the time constraints prevent such things. i guess not all board of directors were treated equal. some attribute the back, please thank your board of directors.

commissioner, did you have one quick point? >> i have to ask you earlier mr. ward and i think it's important. you were kind enough and you mention this to come over before the hearing into a prehearing brief with our staff. enter in the course of that briefing coming you mentioned apparently that in the early stages of your maintenance and supply support contract in afghanistan, at some point you where the company aecom was getting direction from another contractor. can you tell me when that stops and you get direction from the government? can you tell us who that contractor is and what aecom data reported to him so it doesn't happen now? >> i would prefer to get back with who the company was because it would be dangerous if i said the wrong one. the process was relatively straightforward. it took a while to get sorted out, but we first raised at the local level and then we took it to the contracting officer in rock island, who got it taken care of. and our concern was one of proprietary information and

disclosing information that we just didn't feel comfortable with doing. in addition to taking direction from a contractor. >> you say it took a while to get it resolved? >> to me was an urgent issue and i wanted it taken care of today and it took probably three to four weeks. >> okay, think what all very much like to follow the do and find the details of that. thank you. >> and professor tiefer, one last question, sir. >> i'm afraid i don't know the meaning of a short question so i'll give it up. >> thank you. we may have some longer questions for you out of point in time. >> very quickly, mr. ward, you said and decided also when you were speaking, your national maintenance the tajik steptoe, seven c. allies in less than two years. that works to about one every three or four months, correct?

it takes about a couple weeks to get them up to speed? >> on that contract, it's a little more complex. >> so basically you're getting a month and a half out of them before they despair you? >> i don't have them public, but i think you probably got that right. >> and i would've driven me nuts. i assume it drove you nuts? >> you just get used to being driven nuts. you get used as a contingency contractor, people coming -- >> okay, this is not the way to do business if you are doing business. that's not your problem, the army will take it up. >> it's interesting to measure if you look at any one point in time canada had one of these inexperienced clr's for six employees, different diverse responsibilities. so that pfc was overworked. gentlemen, thank you. you've shown great flexibility. thank you for the audience. you've shown great flexibility

and last of all, we're really wrong if we don't always think our staff because we wouldn't be appeared if we didn't have done. so thank you. and this is the part it was like. i'm say. i missed one protocol, which is if you have any final comments, fire away. >> thank you. i might design. aecom is truly committed to serving the u.s. government in an open and transparent way, part of the reason why we came here. we intend to leverage all of the lessons learned from sigar and all of our operations in the way we can improve the u.s. government. i personally take great pride in my company's core values and our implement those in the field is not easy to put your score values out in front of those tcn workforce but we were carted doing that. and even take more pride in what

we do and who we do it for, the u.s. soldiers. i've kind of been a reputation of being a little flippant at times and people used to ask me what do you do or what does your company do when i say we fixed tracks. after a few trips to afghanistan or iraq can you get a little more sober about that flippant comments because what we do is we save soldiers lives. i've seen humvees that have been destroyed by our gps and soldiers walk away from those. we get those stories back and it's a moving experience for me. and so i take a lot of pride in not as what we do for our country. >> thank you, mr. ward. dr. raney. >> i echo that. we certainly appreciate the opportunity to have this exchange with you and we take great pride in the support we're providing in iraq and afghanistan. that would make a couple other points. first come to you all are looking at contingency and

expeditionary contracting here. but some of the issues you're looking at, cut across entire areas of services contract to and i would encourage you to look at that engage with the industry. we do have a lot of interest in a comment. invite questions that have come up about while should we become harder in a particular area that would require restructuring of industry. and i think those need to be considered very carefully. i for one don't believe that you have to write down the road where you restructure itself, but that is for you all to determine based on the information you get. you're doing extraordinarily important work. i believe which are going to do it what's going on right now with the various things happening with proposals are going to influence a way business is done in the support that's provided to people to government office is not only in iraq and afghanistan, but throughout the federal government are going to be influenced by it and i thank you for doing that and i encourage you to get as much interchange of the can.

thank y for your service. >> thank you, dr. raney. and as i said this is the part it was like, we're adjourned. [inaudible conversations] [inaudible conversations] >> 2010 congressional races are insulting and c-span will be covering a number of the candidate debates leading up to the elections.

>> we really have to get this right because if we don't we could stifle innovation. we could start the free market.

we could stifle our economy and we could cause more harm than good. >> c-span 2, one of c-span's public affairs offerings. we did live coverage of the u.s. senate and weekends, but tv. forty-eight hours of the latest nonfiction authors and books. connect with us on twitter, facebook and youtube and sig up for a scheduled alert e-mails at c-span.org. >> next come a senate hearing on nasa's annual budget. the president's proposal to congress request $19 billion for fiscal year 2011. under his plan, the space program would discontinue lunar missions and instead focus on sending astronaut to myers and further into the solar system.

barbara mikulski chairs the subcommission hearing. it's just under two hours. >> i'm very interested including our good senator from utah, senator hatch, born the nasa's nasa's -- at the national space agencies fiscal year 2011 budget. i would like to make my opening remarks turned to my colleagues and then senator hatch to you. is that agreeable, senator? >> of course it is. >> i know the judiciary committee is meeting. well, we're going to be welcoming administrator bolden, of course our colleague, senator hatch and then mr. john frost, a member of the nasa aerospace safety advisory panel who will be speaking to the committee, to ensure that no matter where we decide, we ensure the safety of the astronauts. the 2011 nasa budget is

$19 billion, $276 million more than 2010. the top highlight of this new budget includes major investments in science. $5 billion in 2011. this is a special of the heart and plus up in earth science. we'll be talking about that in a minute. the other that we think is quite heartening is extending the life of the international space station to continue its operation through 2020 and possibly beyond, bleeping better value for a dollar in better value for astronauts efforts. we spent a lot of time building the space station. now we've got to spend our time using the space station. it's time to retire the space shuttle and the president provides for that at the end of calendar year 2010, only three more flights to go after it 30

years of exceptional and honorable service. the president's budget almost increases funding for aeronautics research, $72 million for 2010, a must do to keep america competitive. there are extremely erratic changes to the constellation program and that will be a subject i know a great deal of focus. -- in the area of the constellation program we want to be sure and codify is the president talking about canceling the constellation program for restructuring the constellation program? it will be a major of kind of the deep earth probe from this committee? i just want to come back to the science budget, which i think what we're going to focus a lot

with constellation we must focus on the other aspects of nasa. there is a strong come for since on earth science and the budget also includes 1.50 yen for planetary science, for research on asterisk, mars, saturn and beyond. all we would need to do in order to get ready to go there. there's also when the astrophysics budget request in the $688 million for cosmic origins. we know for a committee to remember the astrophysics of appropriation also supports the hubble space telescope celebrating its 20th anniversary in space and also the building of the james webb telescope. we look at the field affiliates physics and how the fund solar flares except airlines including the solar probe for a lunch. we know how important that is eco- solar flares could take

down our power grid and all we need to know about early warnings and information as they are. as i said, the president retires the shuttle and we want to work with the committee and with all in and connect them to the shuttle for an honorable retirement. let's go directly to the area of human spaceflight covered area of controversy is huge. nasa request to .4 billion for exploration. it is below the 2010 level of $1.4 billion. that's big. the budget canceled the constellation program here the president, and going to florida, elaborated and some say clarified, we are not canceling -- he's not recommending the cancellation of constellation, but restructuring. this is very, very, very keen

interest to this committee. constellation was to be our way to go to the moon and to mars. a crew vehicle made up the rocket, o'briant accrued past capsule, the cargo vehicle made up of ares number five and also the crew moon lander. now, let me just say what my position is. i need to know more and that's the purpose of this series and if we need to have more, we're going to do it. congress needs to know more. we await to the american people. we'll it to the taxpayers and we go to the astronauts to be very clear about what we are going to do and how are we going to do it. i need to know more details. i want to know if this is the program that a congress and the american people are going to support or one administration to the next. we cannot reinvent nasa every four years. every new president can't have a new nasa agenda. that's the purpose of today's

hearing. we're here to get the facts. it's not about finger-pointing, it's about pinpointing. i've been in contact with the leaders in the space field including our colleague, senator shelby, as well as bill nelson, our commerce committee authorizer. i outlined a basic set of principles that will guide me in this hearing and they will guide me as i do the appropriation. first law, no matter what we do, my number one priority is astronaut safety. we must have a reliable transportation system to protect our astronaut jerry botched mission execution and reentry. and i want to be sure that we're applying the the same safety standards for deep space exploration as we will for low over at work. we want to be sure that the astronauts, when they suit up, whether we care for them and want to protect them.

second, we need a destination. nasa has been a mission driven agency since its creation. have any clear direction and a clear destination tends to keep us focused on what we need to do in the budget in which we need to adhere to and the involvement of our international partners. i would hope that whatever we do, the focus on the fact that we need a balance-based program that includes human exploration, a reliable and safe transportation system for both low over it and deep space, robust science to save our science and explore our universe and aeronautics research to keep our country competitive. the key purpose of the space exploration must always include science and not only be daring do missions. we also need a plan for whatever we decide for workforce

transition. the retirement of the space shuttle is anticipated to proceed as planned. this causes job dislocation anyway. we wouldn't want to be dismissive of that. we've got the mind for it. this is really a big transition. then, if we're going to cancel or restructure constellation, it causes major dislocation in a variety of states, all of whom i know will articulate their concerns. in protecting the astronauts, we also need to protect the taxpayer. ..

we have a lot of questions and that like to turn to my colleague senator shelby. >> thank you madam chairman for having this critical hearing to examine the administration's continually changing plans for the future of human space flight. the president's new plan like his old one shows that to nasa's leadership teams still doesn't understand the issues at stake and while the administration may have realized its initial budget request was a failure the new plan from the same team still in some of the country's human space flight program.

mr. administrator, your plan does nothing more than continue the leadership into space and the president's own commission highlighted what we all believe that our human spaceflight program must be worthy of a great nation and i've read the nasa's budget and i find it to be anything but great. the president's plan on the ensures that for decades to come the u.s. will be both a subservient to and reliant on other countries for access to space. future generations will learn how the chinese, the russians and even the indians took a range of human space exploration away from the united states. this request i believe it abandons our nation's only chance to remain a leader in space and instead uses to set up a welfare program for the commercial space industry. it's a plan i believe it or taxpayer subsidies -- subsidizes billionaires' to build rockets that nasa hopes will allow

millionaires and their own esther master travel to space. the administration's claim -- claims if we build up this so-called commercial rocket industry their private-sector market will magically materialize to produce more expendable launch is at a lower cost earlier than the scheduled consolation. what nasa and this administration have failed to disclose to u.s. taxpayers is that nasa has no verifiable data to support that claim. the head of the office of science and technology policy as well as you mr. administrator have testified that nasa did not conduct independent market research to show this private launch market even exists. let me repeat that. the white house advisor on science and technology policy testified that there was no real research or verification done on the viability of the administration's approach for the commercial market to sustain

america's space future. instead this administration is relying on information provided by the very people who stand to receive billions in taxpayer subsidies to promote their own products. the primary source the administration can say is 2002 few drawn the study that is proven to be overly optimistic in the study was based on a survey of a fluent individual that predicted 33 commercial passengers would have flown between 2002 and 2010. to date to aid space tourists have gone beyond the sub-orbital space. former executive for thomas young testified before congress that the air force in the '90s try to commercialize their space program and the air force then and as nasa is proposing now seated top-level management of the national security space program to industry under contract in approach called a, a

total system performance responsibility. csp are required air force project managers to stand back and industry have total responsibility of the space system they traded for the u.s. government. he stated and i quote that the results were devastating and the adverse impact is still with us today. those are his words. this misguided program ended up costing the taxpayers billions and also in the '90s commercial companies made significant investments in involve expenditure launch vehicles based on commercial market that never materialized to support their vehicles. in the end the government had to keep this domestic commercial launch provider alive with billions of taxpayers' dollars. we've made these mistakes before, mr. administrator. albert einstein said the definition of insanity is doing the same thing over and over again and expecting different results. i believe that's the case here.

with this past experience in mine, where other recent truly independent market analysis of the booming commercial sector for the and delivering a people to lower earth orbit and back? we shouldn't make those public and let there be a real debate about whether taxpayers should shoulder the cost of building space rise further millionaires? the truth is when troubles mount an commercial rocket market again failed to materialize the taxpayers i believe will be called upon to bail out these companies and their investors coming a recurring theme with this administration. other than the augustine's commissions cursory examination safety there's no evidence that nasa has done an in-depth analysis related to the safety concerns of a putting humans on a commercial rocket. i remain steadfast and insisting on safety as first priority for the space program, nothing less is acceptable. and contrary to nasa's position on commercial safety, the

aerospace safety advisory panel whose sole focus is to ensure lives are not best ensure that lives are not needlessly lost in our space program, stated in 2009 report that no commercial manufacturer is currently leamond rating requirements qualified and despite some clients and the leaves to the contrary. this is after the 2008 report written in part by you, mr. administrator, declaring that commercial vehicles are not proven to be a appropriate to transport nasa personnel. i will ask some questions about how you could in 2008 state this industry was incapable of safely transporting astronauts and yet today the say just the opposite. madam chairman, i find this abrupt changes in opinion to be without evidence and highly suspect. nasa's safety experts agree the current commercial vehicles are untested and unworthy of carrying our most valuable assets, our nation's astronauts.

as a resounding rebuke of the augustine options and thereby as an overly optimistic view of newcomers to commercial space, the aerospace safety advisory panel reaffirmed what has been known for some time. to abandon the area is one as a base line vehicle for alternative without demonstrating capability nor proven superiority or even equivalent, it's on wise and probably not cost-effective. the ability of any current cost designed to close the gap or even provide equivalent degree of safety is speculative and. switching from demonstrated well-designed safety optimize system to one based on nothing more than unsubstantiated claims would seem a poor choice. before any changes made to another architecture, the inherent safety of that approach must be assessed to ensure that it offers level of safety equal to or greater than the program with record. a year ago i had some strong

criticism in the cogs program and those criticisms are just as valid today as they bring the end. this request represents nothing more than a commercially lead with a space space program and today the commercial providers that nasa has contracted with cannot even carry the trash back from the space station much less carry humans two or from space safely. these providers have yet to live up to the promises they've already made to the taxpayer, not a single rocket or else a cargo has been launched segments last year. instead of requiring accountability from these companies the president's budget proposes to reward those failed commercial providers with additional bailout. the president's retreat from his initial proposal as was rolled out in the shadows of the rocket bases of the new commercial vision of the future of human spaceflight, yet this visionary companies first rocketry has felt good one, four years' delay

in launching a successful rocket. after three failures and a cost escalation of 50% and finally got his rocket off the ground. the falcon nine is the future for nasa and two years behind schedule and counting it the president's budget rewards the commercial space industry with an additional 312 million bailout to deliver on already signed contracts in the hope that they will actually be able to deliver something some day. this equals a 60% cost overrun for unproven commodity. given the current record of repeated failure to deliver on their agreements, the continued schedule delays and now the cost overruns. i believe the president canceled the wrong rocket program. mr. administrator, this plan lacks vision, is unrealistic and jeopardize our entire human space exploration program is touted by the enthusiasm which nasa leadership is emmeline the

years of hard work by our own engineers. congress has responsibility i believe to those whom your plan will put in the unemployment line, something your leadership team dismisses as mere collateral damage. however, we do not see that the way. to us there are people who already have been devoting and maintaining the leadership and heritage of 50 years of space flight the jobs promised to be treated will hardly materialized before the pink slips began to arrive. once those highly skilled workers leave they will never likely come back. given the way they've been treated so far this year i would hardly blame them. now you're even attempting to undermine the letter and. of the law as it relates to the current funding of consolation. the destructive actions for the constellation program will only ensure that members cannot trust you. mr. administrator, you are treating an atmosphere where you and your leadership team have become major impediment i

believe to moving toward. and the administration's plan nasa as we know it will never be the same. today nasa is immediately associated with success in spite of insurmountable odds. there is a deeply ingrained respect for what nasa can do because of what nasa has done and is doing today. if this proposal is the best we can do as a nation, then we do not deserve it i believe the rich heritage of human spaceflight which previous generations sacrificed for to make the country's space program when it is great. the proposed nasa budget abandons most of constellation in favor of unproven commercial option that would devastate any goals the u.s. has been exploring be on a lower earth orbit. the president's announcement of his new plans last week merely reflects one vision was plan with another. it's clear that the administration and more specifically you, mr. administrator, do not believe that american leadership in

human space flight is a priority for the fighting for. in the matter how many summits, press releases or parades' you conduct, hope is not a strategy. this plan would destroy decades of u.s. space supremacy by pinning her hopes for success on unproven commercial companies in this budget is not a proposal for space exploration worthy of this great nation. thank you. >> senator hatch. >> thank you madam chairman. senator shelby, senators cochran, voinovich and hudgens. as a privilege to be with you. i would ask the madam chairman that my full steam and replaced in the record. >> without objection. >> thank you, i am puzzled by the administration's request. this proposal calls for the termination of project constellation and associated rocket systems. >> we really want to hear every word and. >> i will move closer.

>> is the microphone on? >> is on the paris senator feinstein quit mumbling. i bet to speak a little louder i'm afraid. well, like i say this proposal calls for the termination of project constellation and the associated and rocket systems, the ares one and the ares five. as a result of ratified our congress could capitulate our position as the world leader in space exploration as well as forego the technological harvest which is historically a company such endeavors. let me be clear, if project constellation is cancelled, our nation will not in the near future be able to travel beyond lower earth orbit. this is ironic considering the president's and as administration administrator bolton statements that they also an objective of our space program is mars. to be fair, the president has spoken of using a heavy system by 2015. yet in a time of really diminish financial resources we cannot

afford to throw with a $10 billion our nation has invested in projects consolation and the ares systems and spend billions more to research and develop new have a live technologies. this point is especially germane since the other heavy lift technology is contemplated may or may not match the capabilities of solid rocket motors. i believe neil armstrong, james lovell, and eugene cernan, said it best: if we followed the administration's plan we will have lost many years required to recreate the equivalents of what will be discarded. this conclusion was echoed by the independent aerospace safety advisory panel which in 2009 stated: to abandon ares what is baseline vehicle for alternative without demonstrated capabilities our proven superiority or even equivalence is on wise and probably not cost effective.

in other words, an alternative but to project constellation will take years of additional time and cost billions of dollars more. some opponents argue project constellation is a troubled endeavor. the truth is quite to the contrary, just lost all the world witnessed the launch of the ares one rocket from the kennedy space center and a stunning and successful test. in addition a heavy lift ares five is designed to leverage the technologies used in ares wan. therefore one can surmise in the and there will be overall savings using this comprehensive approach. versus the piecemeal approach proposed by the administration per pound to gather the ares system of rockets provides our nation and astronauts with the most reliable, affordable and safest means of reaching lower earth orbit and beyond. let me emphasize that point -- ares is the safest system. nothing else comes close. the 2005 nasa's exploration systems architecture study of

which administrator bolton was a member of the review team concluded the ares system is 10 times safer than the current space shuttle and this was reaffirmed by the aerospace safety advisory panel which stated: the ability of any current designed to close the gap or even provide equivalent degree of safety is speculative. the panel also concluded that switching from demonstrated well-designed and safety optimize system to one based on nothing more than unsubstantiated claims would seem a poor choice. this underscores the administration's proposal relying on utilizing unproven business -- private businesses as means to transport our astronauts to the international space station. and also should be noted many of the companies which are expected to bid for these contracts are startups. these new start-ups do not have any experience in carrying humans or even cargo into space. in addition even under these corporations most optimistic

near-term proposals come other systems will not be able to travel beyond at low earth orbit. some of argued in this difficult was glenn furman project constellation is simply too expensive and should fall victim to the budget act. again this is not the case. the administration's proposed plan actually increases nasa's budget by more than $6 billion over the next five fiscal years. in addition cancelling the ares system and the plants associated with it will cost the taxpayer additional 2.5 billion because of contractual obligations. on top of these costs since private businesses have never previously developed a low earth orbit system to transport humans to the international space station, were having lived assistance to explore deeper into the cosmos, one can naturally hypothesize lengthy delays and expense of cost overruns for this novel venture. it's also not hard to imagine when the inevitable delays and cost overruns occur these private enterprises will turn to the government with requests for

additional funds. project consolation should also be seen as investment in our nation's future economic competitiveness. in fact, studies show for every dollar invested in space exploration $7 has been a return to economy to the development of new technologies and industries. congress should consider the nexus between a aires system and the ability of our future strategic deterrent program. both the ares rockets into land-based intercontinental ballistic missile force use solid rocket motors. our nation will shortly complete the modernization of our icbm plate. now since the early 1990's nasa has served as the backbone of the solid rocket motor industry providing stability to offset the often inconsistent production requirements of the military and commercial sector. their for the termination of ares would cripple the solid rocket motor investor obeys and could push it beyond recovery

for this and future generations. a let me just say again that madam chairman and all of the other senators on as a lustrous committee, i just want to thank you for affording me the privilege. i had much more on my wrist all statement but i want to get some of these ideas across and i want to thank you very much for 40 me the privilege to appear before your very important committee. >> thank you very much, senator hatch. you're supporters are known within the station and we have worked well together on the fda and happy to have you. i know also i am devoted to the fact that senator jay garner, another man of utah, was chair this subcommittee and was a good friend and mentor to me when i got started. i have conveyed to senator garden and i want to say to two senators from utah, he would also like to submit a testimony

or someone i would be enthusiastic about welcoming his best look forward to welcoming him. >> thank you, he would want to do that. >> yes and i would welcome that and welcome any conversations. >> cuban great, i appreciate everyone of you on this panel. thank you so much. >> you're welcome. i'm going to call up administrator bolton to present the administration's testimony, administrator bolton is really also general bolton who served in the marine corps with a great deal of distinction. a graduate of the naval academy like john mccain feared a marine helicopter pilot who went to the astronauts hall of fame. so we look for to his testimony. i am wanting to remind members that we have a two-tier hearing that after the administrator bolton and questions from our colleague, we will also then

hear from john frost of the aerospace advisory committee. i know that this committee is deep commitment. i understand you have a time challenge an ad like for both administrator bolton to present his testimony and then once worked out how we can accommodate everyone with greatest courtesy and robust questioning. >> thank you. administrator bolton administrator bolton add administrator bolton madam chairman, thank you for the opportunity to discuss the budget. and i am incredibly grateful for the support and guidance of the subcommittee and i look forward to working with you on consideration of the president's goal direction for the agency. all of us at nasa were honored to host the president one week ago at the kennedy space center where he said and i quote: i am 100% committed to the mission of nasa and its future. because broadening our capabilities in space will continue to serve our society in ways we can scarcely imagine. because exploration will once

more inspired wonder in a new generation sparking passions, launching careers and because ultimately if we fail to press for in the pursuit of discovery we are seeing our future. since the introduction of the budget many have asked, what is the destination for human space flight beyond lower earth orbit? under the president's plan. as the president made very clear last thursday nasa's deep space exploration efforts will include a prudent best light -- vehicles for human exploration beyond lower toward, human mission to asteroid by 2025, and a human mission to the orbit of mars and return safely to earth by the 23rd a. we can and must identify the missing capabilities needed for such a mission or such a suite of missions and use them to help define many of the goals of our emerging technology development. the right investments in technology will allow us to map out realistic path to this

destination that will continue to inspire generations of schoolchildren just as it inspired me many years ago growing up in columbia, south carolina and watching buck rogers go to mars with each week from my seat in the balcony of the carolina theatre. the president's fiscal year 2011 budget request for an asset is 19 billion as you mention including increase of 276 million soren after 20 of 10 level. longer-term i'm pleased that the budget him as to increase investment of 6 billion in nasa science, aeronautics and enabling technologies over the next five years compared with last year's plan. all of us at nassau appreciate the president making nasa such a high priority at a time when budget realities dictate reductions and freezes for other worthwhile programs purell as we celebrate the 40th anniversary of earth day today i want to note that the proposed budget supports enhanced robust program of earth science research an

observation. earth observations from space produces the critical datasets we need to understand our changing planet. at the same time we will continue our robust average to observe the rest of the universe through missions like the hubble telescope and the solar dynamic observatory. for which we released its first-inning images from the sun that yesterday. with the president's new vision the nasa budget will invest much more heavily on technology research and development than recent nasa budgets. this will foster new technological approaches, standards and capabilities that are critical to enable a next-generation space flight. aeronautics capabilities. a these investments will produce additional opportunities for u.s. industry and spur new businesses such as recently announced partnership between nasa and general motors to build advanced extra humanoid robots or to. as the consolation program as transition an orderly manner i want to thank all of the nasa

employees and contractors who work hard on the program. their commitment has brought great value to the agency and to our nation and they will continue to play a pivotal role in nasa's future. many of the things some nasa learn from the constellation program will be critical as the agency moves toward especially as we restructure the overall san project as a crew escape vehicle in incremental test crew vehicle emissions pilon -- however at the augustine committee concluded the overall space flight program is on an unsustainable tractor repair bill if we continue on our current course we will have to make even bigger cuts to the other parts of nasa's budget. terminating support of the international space station early and reducing our sides and aeronautics efforts. the president's proposal to transition constellation enables us to have a 2011 budget that includes a wide chip technology demonstration and development program that allows us with our international and commercial

partners and other government entities to demonstrate technologies, autonomous docking and closed loop life support systems. having lived research and development that will investigate broad scope of our rnd activities to support development, test ultimately flight of heavy lift launch vehicles in and then projected for the constellation program as a set by the augustine committee. as the president committed we will decide on the right heavy lift vehicle no later than 2015. robotic submissions to multiple destinations in the solar system and in support of a future human exploration, including missions to the moon, mars and its moons, launch points and asteroids appears significant investments for the development of crucial -- commercial crew and further carl capabilities. in concert with our international partners extension of the utilization of the international space station to 2020 and beyond. pursuit of crosscutting space

technology capabilities led by the newly established office of the chief technologist to spawn games using innovations to make space travel more affordable and sustainable. climate change research and observations which will enable nasa two substantially accelerate and expand its earth science capabilities including replacement by the orbiting carbon observatory. aeronautics' are, indeed, critical areas of next-generation air transportation system, green aviation and save denigration of unmanned aircraft systems international airspace. education initiatives including the summer pilot program to inspire middle school students and better equip their teachers for improved classroom performance instead related courses. we understand that many concerns are being expressed about this budget but i believe it's the right vision for nasa. i look forward to continue discussion with you and our offer risers' about your concerns and how we might solve them. i want to and knowledge to the

committee concerns that details such as our documents slow in reaching a. i and knowledge -- i apologize and ask your continued patience as we finalize the details of this historic change in nasa's direction. americans and people world wide have turned to nasa for inspiration throughout our history. our work is people opportunity to imagine what is barely possible and we had nasa get to turn their dreams into real achievements. for all humankind to the missions we execute. this budget gives nasa a road map to even more historic achievements as the spurs innovation, employs americans and exciting jobs and encourages people around the world. madam chairman, thank you again for your support and that of the subcommittee. i would be pleased to respond to any questions from you or other members. >> thank you very much, administrator bolton. i'm going to ask a few questions and then the courtesy of senator

shelby says we will turn to senator bennett and then the our order and go straight on down. sound like a good way to go? administrator bolton, i have many questions, actually 13 pages of questions. ..