changes that have to take place for what reason? to make american business more competitive, to make american employees more hireable if you will, there is no such word, but able to be hired. the neighborhood i come from people understand what i said. [laughter] so, folks, look, i just want to introduce you to the guy who i said we will disagree in the details but i'm sure you will share this man's view. there is no, no, no, no acceptable rationale for america being anything other than number one in the world. ladies and gentlemen, the president of the united states of america. [applause] >> thank you. thank you. thank you, everybody. please, have a seat. have a seat. thank you very much. thank you. thank you, everybody.

please come have a seat. thank you so much. well, thank you, joe. thank due to the members of my cabinet and my administration who are here. thank you, governor gregoire and governor heineman for your outstanding leadership, and i also want to acknowledge ray scheppach. he's3 scheppach. he's been an nba executive director for 28 years and this is his final meeting. thank you for your extraordinary service. [applause] thank you. >> so i hope everyone had fun last night. i know that you had a wonderful time listening to meshaal and jill -- michelle and jill. joe's main function is to provide a buffer between me and them so i don't have to follow them immediately because they are really good and care deeply about what's happening with the

military families. i hope today all of you feel free to make yourself at home. for those of you with a particular interest in the next election, i don't mean that literally. [laughter] >> we meet at the moment when all of us, democrats and republicans, leaders of the national and state levels face some very big challenge is to read our country has come through a long and a wrenching recession. and as we recover, the question we are going to have to answer is where will the new jobs come from, what will the new sources of economic growth be and how can we make sure that the american dream remains reality

into the 21st century? al, in the short term, we came together here in washington at the end of last year and enacted tax cuts that are already making american paychecks bigger and allowing businesses to write off major investments. these are tax cuts and changes in the tax credit system that were going to spur the job creation and economic growth and i am proud democrats and republicans work with each other to get it done. in the long term, however, we need to address a set of economic challenges that frankly the housing bubble largely papered over for almost a decade. we now live in the world that is more connected and more competitive than ever before. when each of you trust to bring new jobs and industries to your state, you're not just competing with each other but you're competing with china, india, brazil, and you are competing with countries all around the world and that means we as a nation need to make sure we are

the best place on earth to do business. we need the skilled and educated work force, commitment to cutting edge research and technology and a fast and reliable transportation communications network. that's how we are going to bring new jobs to america and that's how we are going to win the future. now making these necessary investments would be hard at any time. but it's that much harder at a time when resources are scarce. after living through a decade of deficits and historic recession that made them worse, we can't afford to kick the can down the road any longer. so the budget debate that we are having is going to be critical here in washington. and so far, most of it's been focused already entirely of how much annual domestic spending,

within the park lands we call domestic discretionary spending -- that we should cut. there's no doubt that cuts in the discretionary spending have to be part of the answer for the deficit reduction. and that's why, as a start, i've proposed a five-year spending freeze that will reduce our deficits by $400 billion. the budget that i set to the congress cuts or eliminates more than 200 federal programs. and if reforms dozens of others, from health care to homeland security to education, so that rather than throwing money at programs with no accountability or measured results, we are committed to funding only those things that work. all told, the budget cuts are proposed will bring annual domestic spending to its lowest share of the economy since dwight eisenhower. let me repeat that. under my budget, if it were to be adopted, domestic discretionary spending would be lower as a percentage of gdp than it was under the nine previous administrations, including under ronald reagan's.

but we know that this kind of spending, domestic, discretionary spending, which has been the focus of complaints about out of control federal spending, makes up only about 12% of the entire budget. if we truly want to get our deficit under control, then we are going to have to cut excess of spending wherever it exists, in defense spending, and i have to say bob gates has been as good a steward of taxpayer dollars when it comes to the pentagon has just as anybody out there, but we have to do more. and health care spending on programs like medicare and medicaid, and in spending for tax breaks and loopholes. that's going to be a tough conversation to have, but it's one we need to have. and it's 1i expect to have with congressional leaders in the weeks to come. those of you who are in this room obviously are on the front

lines of this budget debate. as the recovery act funds that sold through many states over the last two years of phasing out, and it is undeniable that the recovery act helped every single state represented in this room manage budgets whether the admit it or not. you face some very tough choices at this point on everything from schools to prisons to pensions. i also noted many of your making decisions regarding your public work force, and i know how difficult that can be. i recently froze the salaries of the federal employees for two years. it wasn't something that i wanted to do, but i did it because very tough fiscal situation that we are in to read so i believe everybody should be prepared to give up something in order to solve our budget challenges, and i think most public servants agree with that. democrats and republicans agree

with that. in fact many public employees and the respective states have already agreed to cuts. let me also see this, i don't think it does anybody any good when public employees are denigrated or vilified for their rights are infringed upon. we need to attract the best and the brightest of public service. these times demand it. we are not going to attract the best teachers for our kids for example of the only make a fraction of what other professionals make. we are not going to convince the bravest americans to put the lives of the linus police officers or firefighters if we don't properly reward that bravery so yes, we need a conversation about pensions and medicare and medicaid and other promises we made as a nation, and those will be tough conversations, but necessary conversations. as we make these decisions about our budget and forward though, i believe that everyone should be at the table.

under the concept of shared sacrifice should prevail. if all of the pan is borne by only one group, whether its workers or seniors or the poor, while the wealthiest among us get to keep or get more tax breaks, we are not doing the right thing to read that something the democrats and republicans should be able to agree on. now, as we begin to get our budget under control, the other thing we can't do is sacrifice or future. even as we cut back on those things that don't add to growth or opportunity for people, we have to keep investing in those things they absolutely necessary to america's success. education, innovation, infrastructure. on innovation our approaches and to partner with you and offer more flexibility in exchange for better standards, to list the cap on the charter schools,

spell reform not by imposing a from washington, but asking you to come up for the best way is for your state to succeed. that was the idea behind the rates of the top. shaw was the best plans for reforming and we will show you the money. we are also working with you and with congress to fix no child left behind with a focus on reform, responsibility, the most important results and we are trying to get states and schools the flexibility to reward good teachers and stop making excuses for bad teachers. because we know that the single most important factor in the child's success rather than the parent is the man or woman at the front of the classroom and i had a chance to see this recently. i went over to park phill middle school in maryland where engineering is now the most popular subject mainly thanks to some outstanding teachers who have inspired students to focus on the math and science skills

so we know teachers can make a difference, and we want to help you have the very best teachers in the classroom. we also have to invest in innovation and american research and technology and the work of our scientists, engineers, and in sparking of the creativity and imagination of our people. now, a lot of this obviously is done in the private sector, but as much as the private-sector is the principal driver of innovation, it is also hesitant to invest in the on known especially when it comes to basic research. historically that has been a federal responsibility. it's how we ended up with things like the computer chip and gps. it's how we ended up with the internet. it's also how a lot of your states are already attracting jobs and industries of the future. i went to wisconsin, for a simple, a few weeks ago and a visit to the small town company

called oh rye and that's putting hundreds of people to work manufacturing energy-efficient lights in a one star compliant. they've benefited from federal research. in ohio and pennsylvania thinks in part to federal grants i saw universities and businesses joining together to make america a world leader in the biotechnology and clean energy. if you have about about the importance of the federal investment in research and development, i would suggest you talk to the cutting edge business is in your own state. they will tell you if we want the next big breakthrough, the next big industry to be an american breakthrough, and american industry, then we can't sacrifice these investments in research and technology. third we that we need to invest is in our infrastructure. everything from new roads, bridges to high-speed rail and high-speed internet, projects that create hundreds of thousands of private-sector

jobs. and i know that in some of your state's infrastructure projects have garnered a controversy. sometimes they have gotten caught up in partisan politics. this hasn't traditionally been a partisan issue. lincoln had laid the reels. during the course of the civil war. eisenhower build the interstate highway system. both parties have always believed america should have the best of everything. we don't have a third rate airports and bridges and highways, that's not who we are. we shouldn't start going down that path. new companies are going to seek the fastest most reliable ways to move people, goods and information whether they are in chicago or they are in shanghai, and i want them to be here in the united states. those who say we can't afford to make investments in infrastructure we can't afford to make investments in

infrastructure. we shall we said the best infrastructure. we've had to give the leadership at the juncture in the history makes no sense. just past the to ask folks the climate in market michigan. i was talking to rick snyder in the upper peninsula. this is a town of 20,000 people. far away from the hustle and bustle of places like detroit or grand rapids, but because of the why your list infrastructure that they have set up, the smell got deacons unix if not the local department store, a family-owned department store has been able to hook up with the university and have access to wireless and they are now filling two-thirds of their good one of the five growing in america in the upper peninsula

because the infrastructure was in place to allow them to succeed. and you've got kids in the schoolhouses and even more remote areas able to plug in the science affairs anywhere in america because the infrastructure that was set up. that is a smart investment for every state to make and the federal government wants to be the partner in making those investments. these are the kind of investments that play a huge economic dividend in terms of jobs and growth and the fundamentals that allow some states to whether the economic storms better than others. thir the fundamentals that will make some states better positioned to win the future than others. these investments are not just critical for your state success, they are critical for america's success and a lot to be a partner in helping you make that happen which brings me to the final topic that is going to help determine the ability to win the future and that is getting control of our health care costs. now, i am aware i have not

convinced everyone here to be a member of the affordable care act fan club. but surely, we can agree that for decades our governments, our families, our businesses watched as health care costs eight more and more of their bottom line. there's no disputing that. it didn't just happen last year, didn't happen to years ago. it's been going on for years now. we also know that the biggest driver of the federal debt is medicare costs. nothing else comes close. we could implement every cut at house of representatives right now is proposed and wouldn't make a dent in our long-term budget. wouldn't make a dent in the long-term deficits because of health care costs. we know it is one of the biggest strains in the state budget,

medicaid, and for years politicians of both parties promised one thing, real reform. everybody talked about it. well, we decided to finally do something about that, to create a structure that would preserve the system of private health insurance, protect consumers from the worst abuses of insurance companies, create competition and lower cost by putting in place new exchanges run by the states where americans can pull together to increase the purchasing power and select from various plans to choose what's best for them, the sameway that members of congress to and the same way that those who are lucky enough to work for the big employers to. the fact is the affordable care act has done more to rein in the rising costs, make sure everyone can buy insurance and attack the federal deficit than we have seen in years and that is not a

just my opinion, that is the opinion of the congressional budget office, non-partisan, the same one that puts out the numbers that when it's handy to go after me people say look at these numbers. so they are saying we are saving a trillion bucks because this act on health care cost. otherwise it would be a trillion dollars more. and something that we should build on, not break down. that doesn't mean that the job with health care reform is complete. we still have to implement until all and we have to implement it in a smart and not a bureaucratic way. i know that many of you have asked for flexibility for your state under this law. in fact i agree with mitt romney who recently said he's proud of what he accomplished on health care in massachusetts that supports giving states the power

to determine their own health care solutions. he's right. alabama is not going to have picks ackley the same needs as massachusetts or california or north dakota. we believe in that flexibility. so right now, under the law, under the affordable c.a.r.e., massachusetts and utah already operate exchanges of their own that are very different. operate them in their own way and we made sure that the law allowed that. the same applies for other requests like choosing benefit rules that meet the needs of your citizens or allowing for consumer driven plans and health savings accounts. this recognition that states need flexibility to tailor their approach to their unique needs is why part of the law says that beginning in 2017, if you can come up with a better system for

your state to provide coverage of the same quality and affordability is the affordable care act, you can take that route instead. that portion of the ball hasn't been remarked on much. this is by 2017, you have a better way of doing it? help yourself. go ahead, take that route. now some folks have said that's not soon enough, so a few weeks ago the oregon senator ron wyden, democrat and massachusetts senator scott brown, republican, and louisiana senator mary landrieu, the proposed legislation that would accelerate the provision so that would apply for such a waiver by 2014 instead of 2017. i think that's a reasonable proposal. i support that. it will give you flexibility more quickly while still guaranteeing the american people

reform. if your state can create a plan that covers as many people as affordably and comprehensively as the affordable c.a.r.e. does without increasing the deficit, you could implement that plan and we will work with you to do. i said before i don't believe any single party has a monopoly on good ideas, and i will go to bat for the works, no matter who or where it comes from. i also share the concern about the medicaid costs. i know there's been a topic of significant conversation over the last couple of days. we know that over half of all medicaid costs come from just 5% of the enrollees many of whom are called what is the will eligible, seniors and medicare as follows and medicaid. the affordable care act helps address this by changing the incentives for providers so they start adopting best practices that will work to reduce cost

while in prison the quality that we understand the pressure you're under and that we've got to do more. so, today, and i've mentioned this to christine last night. i'm asking you to name a bipartisan group of governors to work with secretary sebelius on ways to lower the cost and improve the americans and you can come up with ways to reduce medicaid costs while still providing the quality care to those who needed, i will support those proposals as well. tataris the bottom line. once fully implemented, i am convinced the affordable care act will do what it was designed to do, to cut costs, cover everybody in the worst abuses in the insurance industry and bring down the long term deficits. i am not open to fighting the battle of the last two years or undoing the progress we have made. but i am willing to work with anyone, anybody in this room, a

democrat or republican, governors or members of congress, to make along even better, to make the care even better, to make it more affordable and fix what needs fixing. part of the genius of our founders with this double to the federal system and which each of the states are as a laboratory for our democracy. through this process, some of the best steve ideas became some of america's best ideas whether it's a race to the top or improving the affordable care act or the we that we approach programs by ensuring spending is tied to success. our approaches have been innovative ways forward to begin issuing presidential memorandum that instructs all agencies to follow this flexible approach preferable law allows.

even as we preserve the freedom and the diversity that at the heart of federalism let's remember we are one nation, one people. our economy is national, our feet is intertwined. today we are not competing with each other, we are competing with other countries hungry to win new jobs, to win new industries. i'm confident we will win the competition as long as we are fighting it together and i know that whatever our differences you share that goal so you've got a partner in the white house to make this happen and i hope that this becomes the start of a productive and a serious conversation going forward.

the international community should be speaking with one voice

next the commission on wartime contacting in iraq and afghanistan hears from stateons] department and pentagon officials. according to a report released by the commission last week, tens of billions of dollars have been based on u.s. contracts in those countries. this panelist two hours. >> now that he or allow comfortably seated i'm going to ask you to swear up and we will you win. to by the become thank you for waiting for the first panel.thir raising the right hand you solemnly swearra or affirm the testimony will give before thisl commissionor affirm that the tet when you will give before this commission is the truth, the whole truth and nothing but the truth? know for the record all of the witnesses responded in the affirmative. and we're going to start, just go right down the line, mr. gordon, and will ask you to stay within your five minutes.

i will kind of let you know if you are coming over a little long. just because we have a lot of panelists. so we thank you for that and we thank you for being here. mr. gordon, you may testify. >> chairman shays, chairman thibault, other members of the commission, i'm honored that you invited me to testify today, the second time i've appeared before this distinguished panel. i've read with great interest the commission second interim report which issued late last week. and while all of us will need to study and reflect on the recommendations in that interim report, more carefully than time has allowed so far, i thought it might be useful to offer a few initial thoughts. first, i commend the commission on producing a thought-provoking report on extremely important topics. the report gives us much to consider as we move forward with their the acquisition improvement efforts. you're focused on over reliance on contractors in particular,

including in sensitive areas such as acquisition and security, resonates with the presidents and administrations concerned about over dependence on contractors, especially in critical functions. second, i particularly appreciated of the report's call for strengthening the federal acquisition workforce. and increasing the attention paid acquisition planning and contract management. we have been calling for this from the beginning of this administration, and it has been my watchword since i became the administrator for federal procurement policy in november 2009. that said, let me turn to the narrower and more operational topics that are the subject of today's hearing. as we work to protect the half a trillion dollars of taxpayer money that we spend on goods and services each year, we must work

harder to do business with contractors that place a premium on performance and quality, and not do business with those whose track record indicates that they cannot be trusted with public funds. the two tools that are the subject of today's hearing, the use of past performance information, and the suspension and debarment process can both help agencies need the schools. over the past two years, as outlined in my written statement and as you have heard from some of the witnesses in their first panel, and you'll be hearing from my colleagues on this panel shortly, the administration has taken steps to strengthen both the way we use past performance information and the suspension and debarment process. the steps are being reinforced by an overall increased emphasis on acquisition planning and contract management. for too long been focused so much on who gets the contract, that we've neglected what must come before and after the

signing of a contract. sound acquisition planning and inconsistent contract management. now after years of inattention, we are finally strengthening the acquisition workforce, restoring the capacity of contract specialists, to plan effectively and negotiate aggressively, and building the capability of those responsible for contract management, including program and project managers, contracting officers alpresentatives, to ensure thate meet their contractual promises. ..s.swer come into my colleagues on the panel. who can offer their hands on experience from their work at agencies heavily engaged in contingency contracting. but before i conclude my brief oral statement, i thought it would offer a couple of notes of caution to the commission in terms of the recommendation in the second interim report with

respect to the two topics today. first, unlike the broad area of over reliance on contractors and the need to build the agency's organic capacity, the two topics of today's hearing are largely nuts and bolts operational areas. when we must think very carefully about the burden and >> the effectiveness of one size fits all. real life concerns in different context might weigh in favorable alternative approaches. second, both topics in front of you today are areas where there has been substantial change over the past two years which i hope the commission will take into careful consideration before you issue your final report this summer. that said, let me close by again expressing appreciation for the commission's important work.

we look forward to seeing your final report as we, in the administration, work to strengthen the federal acquisition work force reenforce fiscal responsibility in our acquisitions and ensure that contractors are used only when appropriate and not as the default option to use the language of your interim report, which i quite liked, and that federal employees always conduct consistent meaningful oversight so that taxpayers interests are protected. i look forward to answering my questions. thank you. >> thank you mr. gourdman. >> chairman and distinguished members of the commission. good morning. >> good morning. >> i'm dick ginman serving as deputy director. i want to take a minute to thank the commission for the support

of our troops and all you have done to help the mission and thank the men and women who serve this great nation, not only in the military, but the civil servants, industry, as well. none of us could get this job done without working together. i have prepare prepared a statement and rather than repeat it, i ask it's included for the record, and i am ready to answer questions. >> thank you, sir. do i pronounce your name rinder? i got it right, thank you. >> i look forward to testifying before you today. i serve at the department of state and have been there for seven years, previously at the department of treasury. i am here to talk about accountability, past performance in departments as it relates to the department of state.

as procurement, i'm responsible for training policy, procurement policy, and environment official on procurement manners. it is mostly centralized in management, a washington-base the office and two regional procurement offices that support procurement overseas. until recently, the department of state contracting personnel reported in the nih contractor performance system, and we are now using cpars. they translate information and information is checked, and we have a module with events like contract terminations by default are determinations recorded by contracting officers as that occur. aqm, our main acquisition office is training personnel. we have have the navy development group make

presentations via in person and video conference when developing the manual to fit state needs. we are appreciative of the effort in this regard. the department is anxious to train its work force and we look forward to fai training in that record. the department of state continually strives to improve oversight including feedback from other agency reviews, both the samples of performance assessments from 10 agencies, and i see you have the results up there, sufficed to say the department of state acknowledges it needs to improve, and we will take actions to improve the reporting the past performance. state contract review the data base to determine that the proposes contractors on the excluded parties list, and i rely on the office of the inspector general and front line contracting officers to identify and refer potential candidates for suspension.

i have no independent investigative capability. in the past year, i suspended three entities in assertion pending investigations. i find the aig referrals well documented and we have a relationship that works well on department of suspension. the present system provide separation of duty between investigation, contract administration, and adjudication. this provide due process. in conclusion, the department of state uses the dod past performance systems and will improve the documentation use of that system. we'll continue to use the department of suspension as necessary to protect the interest of state and government to award contractors who do not provide the responsibility to perform. thank you for this opportunity to appear before you. >> thank you mr. rinder. >> thank you, chairman, and

members of the commission for the opportunity to appear before you today to discuss contractor accountability, past performance suspension, and debarment. i'm maureen cha -- shauket. we work for stronger economies and stable leer democracies. we invest taxpayer's fund wisely to yield sustainable long term results. we have railingsed this commit -- realized this commitment and our reforms to improve the way we do business. we are holding ourselves more accountable, and we expect the same from our contractors and our grantees. we expect the contractors to be good stewards of taxpayer's funds. we expect contractors to act with integrity and hold them accountable when they fall short. we are on the right track, but i

will say frankly, usa needs to be better relating to past performance reporting. on the positive side, u.s. aid uses past performance as an evaluation factor in the new procurements. for awards over $25 million, our contract review board ensures compliance with the mandate. when it comes to completelying reports, however, we have not been as successful. we estimate a 10% completion rate. clearly, this is unacceptable. investing in skilled contracted administers is critical for us to turn this situation around. for this reason, we have dramatically increased the number of contracting officers in afghanistan from three in 2007 to nine in 2010. the past performance rate for afghanistan is 38% currently. during most of my most recent trip to afghanistan, we established eight new positions,

administrative contracting officer positions. these officers will focus their attention exclusively on post award administration and monitoring contractor performance. i am happy to report a better success story on suspension and debarment. when i took this job in late 2007, the challenges we faced in suspension and department were evident as indicated by carroll in his testimony to this. one the recommendations to come from the report was to dedicate full time staff to suspension and debarment, and we agreed. by the time the report was issued in october of twine, we had already made great strides forward. in the past two months alone, we have taken actions against 31 individuals or entities. this is due mainly to the newly established compliance and oversight of partner performance

division, a unit devoted to contractors and grantees. this unit manages suspension and debarment and past performance. i'm excited to tell you this unit will be watching for performance trends, contractor by contractor. this unit will also collaborate closely with the i.t. and counsel's office for we attribute much of the recent success with close coordination with these teams. we have made great progress, but there is more to be done to improve. i believe we can get there. we have expert contract professionals worldwide especially in afghanistan and iraq who are dedicated to the strong stewardship of taxpayer funds. we depend on this to manage multimillion dollar contracts under some of the most trying conditions. i'm extremely proud of their dedication and sacrifices they are making. as the u.s. foreign aide officer myself, i have spent over 15

years of my career in asia, africa, and eastern europe. a highlight of my career was building the capacity of two local women's organizations that were pioneers in the fight against trafficking of women and children in bang bangladesh. as a development professional, i feel a deep responsibility to carry out the programs effectively and efficiently. i take fraud as a serious front to the agency and the trust of the u.s. taxpayer and beneficiaries of our programs. i thank the commission to your attention to the important issues. i appreciate the opportunity to appear before you today, and i'm happy to answer any questions you may have. >> thank you, ms. shauket. >> thank you for the opportunity to respond to your questions about the role of the interagency department committee in ensuring accountability

through the executive branch. as indicated in my written statement previously silted, we believe the current suspension authorities and regulations are adequate to ensure contractor responsibility and accountability if utilized. the usdc observed improve the and increased activity by a number of member agencies. i outlined examples in my written statement. each agency manages its responsibilities for suspension and debarment differently based on statutory and functional responsibilities. some agencies like those in the department of defense have a centralized system with a single official. others like department of homeland security, department of transportation, department of agriculture have multiple. usually head of the contracting activities for each major company. the department of security has nine. the department of transportation has 16sdo's.

some agencies have sdo's who are dedicated full time to the system, but many agencies have senior leaders for whom the sdo responsibility is a collateral duty. each agency makes its own decision on the the approach and structure of the its system. as noted previously, the suspension department system only works if it is used. it only functions to protect the agency from conducting business transactions with contractors who like present responsibility of agency personnel are willing and ability to debar firms that demonstrated they are not responsible. fortunately, many agencies like the department of army have the will and spades to utilize the system and create innovative approaches for holding contractors responsible. the army has done this with many actions arising in iraq and afghanistan by using fact-based actions because there is essentially no functioning

judicial system in either environment. other member agencies continue to institute improvements and for instance, the department of homeland security as a result of its 2009oig report formed a suspension department assistant committee to review existing department procedures within other agencies and to recommend improvements. that committee visited numerous other agencies to learn about best practices, and in may 2010, it was recommended the process be centralized into a single department of homeland security and to establish a full time suspension department division to process cases. that process is approved in the agency and implemented this year. the isdc understands there's improvements to be made in the existing system to ensure contractor responsibility. we agree with many of the national procurement fraud task

force recommendations on the department. we are awaiting recommendation on efficiencies, surveys on suspension. the cochairs of the committee conducting that survey brief the isdc in its february meeting on the status of their survey. the system will be more effective of each agency with dedicated staff to process cases. however, each isdc member agency has to have the discretion to structure its own system because each member agency is in the best position to know what will work for the. the fact is the level of fraud will be different at the department of defense than it is at the guarantee corporation or the museum of library services, both members of the isdc. because of those differences, the isdc position is in each

executive branch agency has the position to establish an armored process appropriate for its particular agency. i'm happy to respond to any questions you may have. >> thank you. >> chairman shays and other distinguished members. thank you for taking issue here today on accountability. i'm in the office of the judge advocate general department of armiment since october 2008, i serve in the department of army and suspension official. the armyies processes set forth in the regulation sub part 9.4. pursuant to that regulation, ab agency may suspend or debarrel gibel certain contractors in order to protect the interest of the government on behalf of the public.

suspension debarment are prospective remedies in which past misconduct or unsatisfactory performance provides the context and insight to the contractor's present and future responsibility. contractor suspended proposed for debarment are excluded from receiving contracts from the government. they may not solicit offers with contractors for debarred, suspended or proposed for debarment. debarment and suspension are discretionary actions taken to ensure agency's contract only with responsible contractors, and they are not for the purpose of punishment. discretion and suspension decisions is not unfettered, however, and may be challenged in district courts under the standard of use of discretion if they are deemed arbitrary, capricious, or arbitrary to law. for suspension, the burden is

adequate evidence which is similar to probably cause. for debarment, the standard is a preponderance of evidence. a contractor is suspended when there's an indictment and proposed for debarment and debarred when there's a criminal victim for a serious offense. in these judicially based angsts, the underlying judicial action, indictment, action, or civil judgment is deemed sufficient to meet the evidentiary standard, but it is also subject to rebut l by the contractor with evidence -- excuse me, with evidence of present responsibility. a contractor can be suspended or prepared for debarment of serious misconduct that effects the responsibility that is not addressed in a judicial action including willful failure to perform or a history of unsatisfactory performance. these fact-based actions do not have the based actions and are more complex and resource

intensive to investigate, develop, and prepare. an agency also can enter into an administrative agreement as an alternative to barring a contractor when the contractor can demonstrate without debarment, the contractor is presently responsible or can be prentedly responsible. it involved remedial measures to address personal or or organizational failures, prospective measures such as ethical codes and training, and oversight by the government or an independent monitor to scrutinize ongoing operations. the goal of the administrative agreement is to incorporate integrity within the operation to ensure a responsible contractor. suspension and debarment is invest the in the agency head and delegated in the army to a suspension of debarment official. i'm the authority for all army cases including those cases

arising in afghanistan and iraq. in europe and the republic of korea because of long term stationing and taking advantage of host nation law and languages, we have overseas debarment authority to officers in those geographic call areas for contracts in those areas. as the army suspension official, i'm an independent decision maker. e report directly to the judge advocate general. i do not supervise in the fraud branch, the program attorneys who monitor and develop fraud cases and prepare and present suspension debarment cases for my decision. i receive their recommendations, provide them guidance, and render decisions on the position of cases. earlier in my career, i was a litigation attorney in the fraud branch, so i am converse in that operation as well. for the past several years, the army has been as or near the top of the department of defense in

the number of debarment actions. in fiscal year 2010, we had actions. 301 cases in 2008, and 350 in 2007. since 2005, we've taken over 350 actions in cases arising in the contingency theaters. with a current case load of over 1,000, 270 of those cases arise in the contingency theaters. thank you for allowing me to appear before you today, and i look forward the opportunity to answer your questions. >> thank you. i'm recognizing mr. thibault, but i'd like to say for the record, one, thank you, but number two, the recommendations there in a sense are recommendations in that we did a lot of listening and we listened

to you and others, so there's been input from a lot of sources, and we thank you for that. mr. thibault, you have eight minutes. >> thank you, commissioner. mr. gordon, i want to commend you, well, i want to comment you for the complement, but also for your recent member memorandum because i think it's been, for us, it's very useful as a baseline to have discussions, and i want to share one point of it though that i disagree with and we can talk about, but if i'm right, that's the busy chart as i see through that, and that's your chart, and that's the $550 billion that you analyzed, and i commend you for that also. for those of you in the audience what you need to understand is that have broken it out in terms adequacy, explanations and

narratives to support it. now, what you have here that commissioner henke talked about earlier is working with the three departments you have a contingency, iraq-afghanistan dhart chart for the reporting, and then we have presentations and testimony, yours and other organizations that say that we're really going to see improvement and there's a foundation and so on. frankly, i'm not here to say anything more than on that other than that in 2008 and early 2009, you know, could have shared testimony the same thing. we're right on the cusp of doing things, and now we're on the cusp of doing things, and that's not as -- so, you know, sometimes actions are better portrayed rather than actions to identify what we're going to do. now, with that as a lead in,

mr. gordon, you say at the bottom of it, and i'll read two simple parts. you say that an inform mall comparison aligning the federal system and the peepers, i love these acronyms, are completed for a small percentage of awards. in the body you go on to lay out that 70% can be improved in some way, shape, or form. in a con ting gent environment, the chart over here with the three agencies that i kind of disagree with you where you say the fact of compliance while reports is important -- i agree, the quality of report is what really matters. that's that chart. on that chart, if they aren't providing it, and you have 90% that are absent, and then you have the remaining 10%, 70% can

be improved, you know, being an accountant by education, that leaves 3% that are knocking our socks off, 3 out of 100. you have to think contingency to understand it. my point i'll share with you as to your comment is simply in a contingent -- i like that analysis. this analysis shows in a contingent variety, right now you could say rather than awhile, right now the fact with requirements are important and you can say it's not being done, and in the future, the quality can be improved too. mr. gordon? >> chairman, i can agree with what you said even what you couched as criticism or disagreement, i think i agree with you. you can't even get started and begin to focus on quality unless you have a report.

if i could, could i step back and say a couple more words about this including the discussion? >> i'm going to give you 45 seconds to say a couple more words. >> yes, sir. i do say that there was things said in the first panel discussion that were problematic considering these reports were to solve all problems and in the absence of the reports, there's nothing happening. both are problematic. the reports would not lead to debarment, these are past suspension reports. secondly, past performance assessments take place all the time. they are required. we may not have the very good data base we're trying to put together, but when i talk to people on the front line, they tell me that, yes, they do the past performance assessments. they are required to. they do it by contacting agencies points of continue.

>> i'll stop you there. i don't know what the front lines are, but i've been out far enough, and when we talked to the triple c -- ccc now, and it's regionalized effectively. i think as far as the organization, we say, past performance, okay, we do it. okay, put it on the table, your policies and procedures. here a year ago, yeah, we'll get them for you. i have not seen them yet, the policies and procedures to do it. you say they are doing it. the best i got out of a lieutenant colonel, and she got irritated with me while i was pressing, but we have it, it's inform mall, we talk to people. i said, great, get that and put it in a binder or something. it wasn't forthcoming, and we

left, and we never got it. i say that, you know, my personal experience is that that's a different environment, and i wanted to bring that out because i think right now, and i absolutely agree with you that, that you have to use past performance in the context in which it gives you information, but absent it, you can't use it. i will tell you and it was said before by the i think the ig and a couple others that resources drive it, but it was said up here that what's it take to document that, and then to consider it as an automatic item. mr. ginman. >> are you saying there's an informal process that we use that augments the required

performancing and so on, and can you use it if it's informal? >> it's not informal. we're required by statute to use past performance as an evaluation criteria, and what happens is and by the way, the front line is the froint line forum, officers who meet with me once every three months, and we discuss these issues because it is such a high priority for us. >> this is coming off of my time, but i'm really unclear. you got me purporting requirements, most of time it's not being done, it's supposed to protect in a sense the contractor. they have a right to know what's being said. in fact, they can even, if our recommendation goes into effect, they can protest and stretch it out for months if not a year plus, and then you say notwithstanding that we do it differently, informally in the field. >> it's not informal, sir. the fact it's a mandatory

criteria and every value contract above the threshold has been in effect for the last decade. >> that's not happening. it's a law. >> it is, sir. it is in every single case. i would be astonished if you found a case where there's the criteria that's ignored. what they do though is not use the data base. when i used -- >> they don't use the data base, they go around it? >> they don't need it. it didn't exist, sir. we had the requirement before the data base the the contractors are required to identify relevant contracts that are supposedly similar. they gave a government point of contract. the contracting officer contacts the point of contact in the other agency and she or he makes the assessment of the contractor's performance. >> let -- before we start the clock. >> i'm sorry. >> let, well, no, let me confirm. the information you're getting

in this little quorum is not complete and accurate. i can use dod in and actual case where there was a failed school project that was part of the contract and a prison again where there was a failed, i don't know if it's basalad, and i in both cases said did you consider a past performance, and we wouldn't do business. i say fine, are you aware of any other locations? yeah, the corp. of engineers use it, but they never called and ask. why didn't you call them? i don't know. i'm just telling you the information you're getting sometimes is good news rolls uphill and bad newses sometimes does not roll uphill. i'll make it a point to gather my data data and share it with

you. we disagree on the point of is it really being done because i'm telling you it's not really being done in theater, and i've been to those bases because that's one the first things -- and i just don't go there for their cameo. we spend a couple days, go overnight and spleen in little -- steep in little tents. you have people rolling policy uphill, and it's not done that way. >> there's hundreds of protest decisions that discuss assessments of past performance without the use of cpars. hundreds and hundreds of decisions. i worked on them. contingency, or are you talking outside of that? >> i'm sure most are not in the contingency environment. >> with all do respect, there's a big difference. >> as part of this continuing discussion that's not part of what they're doing, dick is jumping up and down. admiral ginman, can you provide

light on this topic? >> sir, let me try it. first, i lead the effort within the department for the party process, and when it's over a billion dollars and we go out. what mr. gordon said is absolutely correct. if we were doing an infin nitly better job of collecting data data, it would be the relevant source. when we ask for contracts, we go to ppr and that's what we do. we also look to see, well, maybe there's a contract there maybe they didn't want to tell us about. you go and see are there other recent contracts with that contractor and look to see should they be evaluated as well whether the company gave it to us or not. >> let me -- let me try the con

tin gin sigh. -- contingency. >> you're not working on my time so you're fine. >> the theefort attempts to -- the theater attempts or uses expensively low priced technically acceptable where pasts are evaluated opposed to a comparative analysis but determined as adequate. the question that commissioner shays asked of what would you do, my thought would be simplicity in language. the reason that there's a new past performance system being put in theater is that one we have been through issues getting back to stateside. two, more importantly, the local venders do not speak english. cpars has not been a friendly

process. >> cutting you off there, but we've had hearings. lpta is not working as you just described. in addition, we have had cases in the security world, lives at stake where people didn't satisfy the requirement. why did you award them another six contracts? they said they were lpta. what about your past performance, and they sat there and scratched the table, so the point you want to make is well, it's working, well, it's not working. >> i'm not saying it's working. >> okay. >> we'll end with that note. >> i have a point i want to make. i didn't get to the point, but i have two statements. you can respond at your leisure. >> you will not be here for the second round of questions, so go on a little longer. >> okay. the point to be made on what i brought up earlier, and i noticed you were in there, admiral, was that should we be paying in the cost-type

viemplet, and i'm not talking about the lpta, afghan first program, and people don't need to tell me about that. should we pay when there's an egregious corrective action that agreed to that is really egregious and under a cost type environment, we pay for it. you can call it anything you want. right now under the regulations, i think it's an allowable cost. if you want to tell me there's a mechanism for officers to go in there and say, no, i can hold you accountable, and therefore -- should there be a mechanism where contracting officers in the field have that decision making authority to say this corrective action plan is so egregious it's on you and introduce that into the process? >> so i think it is a question that i don't think i have looked at before. >> could you take an action? >> since eight o'clock this morning when asked that

question. >> could you take an action, admiral? >> yes. >> you work on the business systems with the with holds and things? >> yes, yes. >> now, in this area, you know, it -- i don't think it's been on the table, but i really think that as -- what motivates companies, and there's good companies. this isn't about that. what motivates companies is money. what are the top three priorities, and they say cash flow, cash flow, and cash flow. okay. i got 50 seconds. i'm going to make an observation, and other people can explore it. i'm disappointed in your recommendation that all is well, but we need a well to use it. i have a word that no one says is a word. i believe many of your statements are, you know, we got a good system and they are effective, but you have to have a will to use it. everything shared has been shared with us on this charts

with the will to use it right with narratives, will to use it at all in the contingency environment, the best discussion, and that's not a system is, well, we have waves, and we look at the waves, and we consider it and all that, and we find major gaps. i just make that statement. i think other people will explore it. i got to leave on a personal matter, but i thank all six of you because the job you're doing, mr. gordon, and it's exceptional. i look this dialogue, and i've never had the admiral be bashful. we'll get back to you all. thank you. >> thank you, and mr. green, you have the floor. >> thank you. >> following up on commissioner thibault's comment, it came up in the panel this morning, and i don't know if it's surprise, but

you guys are to be providing reports to congress. you haven't do it. -- you haven't done it. why? what are you doing? what do you do? >> thank you for the opportunity to explain that. you know, there's a risk when the government relies upon volunteers to do important government functions. for many years with the exception of 1986 until the spring of 2008, the isdc was privileged to have a very fine senior leader at the environmental protection agency as the chair of the isdc. because of his position, he could spend as much time as he needed to on isdc business. he had several staff members to draw upon, and he had a vice chair who handle the other matters for him. omb wisely went that individual announced his retirement required applicants to replace him to provide an assurance that

their agency would provide them with sufficient time to do the isdc business if they were selected. at the time, the navy sdo, whom i worked for, did that, provided an assurance. well, unfortunately, then the world changed. that individual in may of 2009, that individual left and went to another position within ogc. i became the acting head of the acquisition integrity office, and my responsibilities there for managing the office and attending a number of meetings that i didn't use to have to atepid as the mere deputy took a great deal of my time in 2009. in may of 2009, the nay vie got a new secretary. that secretary, because of his prior experience -- >> i don't want to spend a

career on this. >> the fact of the matter is, let me cut to the chase. my responsibilities at the navy have been increased by an order of mag magnitude, and i have not had the opportunity to finish the report. >> we have -- >> if i may finish, sir. i finned the report in around september of 2010. we decided to submit the draft report to the members because it is a collegial body that tries to get everybody to agree on something before the isdc takes a position. that draft report was submitted to the isdc members in december of 2010. the draft report of fiscal year 2009. comments that came back, we were already so late, why don't we combine the miss cam year --

fill -- fiscal report with 2010. we were trying to do that and addressing active participation by the members. we send out a survey. >> okay, okay. that's enough. who appoints you, who selects you? who's your boss? not your navy boss, but the boss under the isdc? >> the isdc, the omb selects the isdc chair. >> okay. do they have oversight over your activities? do they monitor you guys? do they care what you do? obviously, nobody cares what you do. >> there are two representatives from omb who are considered liaisons to the isdc. one from opp and one from the office of financial management. the -- one of those individuals

usually attends the isdc meeting. she is available when i have questions on policy matters or something like that and usually responds to that. >> but who says, you're supposed to report to the congress, you haven't done squat? who cares? i don't have an answer for that. >> okay. that's enough. mr. gordon. i'm having difficulty understanding. i understand that we got some stuff in cpars, contracting officers talk to each other out there and compare notes and all that kind of stuff, and i don't disagree with many of that going on, but sometimes as commissioner thibault said, it doesn't go on anyway. what is that square, and what good does it do when 60% of contracting officers say whether

they're in cpar or talking to their buddy when 60 becket say they don't use it? how does that square? what good is the stuff if you're not using it. >> mr. green, fist of all, despite my explanations, i want to make clear we very much agree with the bottom line here which is that we need to improve entry on the turn on the left and the quality of the chart on the right. i'm not sure what the people were referring to when they said they didn't use past performance. obviously, you can have a situation where past performance was not the discriminator. i don't know if that's what they mine. if they mean the violated the law and did not include past performance as an evaluation criteria, i'd be very, very surprised, but i don't know -- i don't know what the statistics are. >> well, it was there in an 2009gao report. >> well, i don't recall what the context was. i'm happy to look that up, sir.

>> okay. thank you. any of you, in a contingency operation, we got a lot of money coming in. the tempo is very high. many opportunities despite the examples that we've used with boeing and others, many opportunities for fraud and waste. should we have a different system within special wartime sanctions if you will in a contingency operation so that those contractors who we've, some of you referred to are too big to fail, so that special sanctions can be levied against them? >> you're asking my opinion, sir?

>> yeah. >> i would -- i understand that the contingency environment creates special needs, and there could be appeal in having either a streamline process, a different approach if we went down that road. first of all, i want to reflect on it and hear people's views, but it might makeceps to limit debarment to that very thing, maybe afghanistan for example. >> maybe it involves monetary penalties of some expanding nature if you will. >> as with many of the recommendations i saw in the report, it's worth exploring, but i'm uncomfortable giving an off the cuff response to what could be a very good idea. >> okay. thank you. anybody else? my time is up. >> thank you.

going to -- thank you, mr. green. >> thank you, mr. chairman. >> mr. gordon, i'll draw on two of your hats. as opp head, you produce the report that shows the incredibly low percentage of solid combinations of past performance ratings and narrative. drawing also on your knowledge of procurement, isn't it possible today for contractors to take advantage of the situation of the absence of ratings by taking contracts which they have performed poorly on, but there was no one putting into the system a rating or a narrative, and citing those contracts trying to show they

have the past experience, say past experience in theater and wartime to get the contract? >> professor tiefer for the kind words, which may be undeserved, and you may agree when i finish my answer. >> uh-oh. >> i agree. ish number one -- issue number one, the way to address the problems is senior agency leadership, and they are who we meet with in acquisition status meetings. we say they must improve the recording of past performance. >> before we go on treating the problem, do we agree there is a large problem that contractors who should have been rated for bad performance are not citing their contracts as experienced? >> sir, i don't have data, and you know my ga background makes me reluctant to answer without data. if the company says we worked on contract abc, and we need credit

for that, the contracting officer before he or she gives credit under the past performance criteria which you know, sir, is mandatory. the contracting officer has to check with that government agency and ask how was their performance the the fact it's not in cpars a completely ire reel vaunt. >> i understand. the tenor of my questions has to do with agency policy. your own record is distinguished, and i honor you for how you've taken the posts around the world that i don't even want to visit those countries, and i'm impressed that you are working for us there. i do want to ask about louis berger which for us it's like discussing the thinking about

mentioning icebergs. the description that we got for mr.-- mr. fiore says the agreement, which you have with mr. berger, which is you can enter into an agreement ect., ect. which the contractor can demonstrate that notwithstanding without suspension or debarment so forth and so on. did aid have a potential basis for suspension or debarment of louis berger. >> thank you for the opportunity to address lose berger and the issues. i understand the outrage you have behind your questions, and i want to assure you i too share that outrage when i heard from

louis berger had been doing for a period of years through the falsification of the interim class rates. by the time i became aware of this, and i will say quite frankly that our relationship with our inspector general's office in a timely information has been much improved since that time, however, by the time that i became aware of the issues through the department of justice, when we met with louis berger, they had already taken substantial remedies. >> could i go to the particular question i was asking? >> yes, sir. >> which was -- and i'm taking louis berger's language. to enter in an administrative agreement you would have had a potential basis for suspension or debarment. did you have a potential basis for suspension or debarment of

louis berger. >> not at that time. >> there was an agreement without the potential? >> at the time we entered into the administrative agreement, if you recall in the last panel, mr. amy said he recommends suspension while we verify they had internal control systems in place. prior to entering into that agreement, we did just that. we met with the internal controllers and the official -- >> inn. they fix -- i know. they fixed things after the horses had left the barn. they fixed the door up real well. is it the case that louis berger has a prospect of seeking literally billions of dollars in the years ahead in aid? i cite as an example because we had a full discussion of this at a hearing that the northern and southern electrical grids of afghanistan will probably be an

aid goal to link them up and it's the idea of linking them up and surely louis berger would be one the ones seeking this. don't you expect they would be seeking literally billions of dollars of aid money? >> i cannot speak for what louis berger will be doing, but i can tell you that our policy is to complete programs, and if they are competed, we're looking at their past performance for the evaluation criteria. >> and the cpars system that has a write up of louis berger's activity? >> well, actually, i want the opportunity to address the chart. >> i have to go on to somebody else. >> we'll give you that opportunity p >> okay. thank you. we question it. >> i'm sorry, when it's my time i'll give you the time. >> okay, thunk. >> mr. rinder.

first kuwait, one the five, your state department ig says they owe oh $132 million, but if i understand the numbers that we had up showing that during the relevant periods of time state department is putting discoer row into the -- zero into the data base. isn't it the case that they were able to successfully go on and compete for state department business building embassies elsewhere without a cpars entry saying they had poor performance? >> i don't know specifically if first kuwait is entered into cpars or not, sir. >> okay. do you know if they have gone on to show poor performance on later jobs they've done for state? >> i don't know that, sir. >> well, if you did a lexus

search, it would jump out and sock you in the eye, and my time has expired. >> thank you. mr. henke. >> mr. rinder, you have a career in acquisition; correct? >> yes, sir. >> how many years have you been working in acquisition? >> about 37. >> most of that time was it treasury or other agencies? >> at treasury, navy, at department of state. >> you said you've been at state now 7 years? >> yes, sir. >> is that a statutory title or regulatory title? >> i don't know if it's statutory or regulatory. cao is statutory. >> right, but you're the procurement executive. how many people are in your immediate office? >> about 2 #. >> okay. do you have -- i understand you do not have operational contracting under your purview. that's a separate office? in other words, you don't cut contracts. >> correct. >> your department says you're

responsible for work force training, oversight, acquisition assessments? >> yes, sir. >> okay. what is -- for past performance, what is state's -- how much did state spend in 2009 in contracts? >> in 2009? >> yeah. >> i would have to get that figure for you, sir. >> it doesn't have to be exact. roughly? >> about $7-$8 billion. >> you're right. it's $7.5 billion in 2009. in that same year, 2009, what is your compliance rate for past performance reporting? that is, how many reports are in the data base? it was estimated in 2008 it was 10%. she has an estimate. what's your figure? >> i don't have that figure, sir. i'd have to look it up. >> you don't have a figure. >> i have to look it up. >> you didn't bring it today? >> no, sir.

could you explain -- >> could you explain why you're not prepared to answer that question giving this is a hearing on this very issue? >> i did not look up that data, sir. >> okay. are you not answering because it's extremely low. >> i'm not answering because i do not know the figure, sir. >> does someone in your office have it? >> i think the information would be available, but it has to be looked up. >> would you have someone in your staff reach your office and get it for the hearing? >> the compliance rate in 2008 and 2009 and 2010, what percent of the reports are in the data base? >> could you yield for a second? >> yeah. >> you're in charge of this effort, aren't you, at state; react? in charge of procurement at the state. >> the policy at state, sir. >> okay. isn't this the kind of thing that someone is in charge should have on the tip of their tongue?

who is really in charge if it's not you? thank you. >> can i get your reaction, mr. rinder to what i call the quantity chart? 0 assessments done out of 93 contracts. those are contingency contracts. that's the game here, iraq and afghanistan. we counted 93 actions from iraq and afghanistan, but no reports, no assessment reports. what's your reaction to that? >> my reaction would be if the information is correct that we need to seriously improve. >> is your gut saying it's right or wrong? >> i have to look up the information, sir. >> okay. now, if that's correct, or if it's a little bit better, maybe it's half the report. let's be generous, that's a high bar. what's your reaction to the quality chart?

this is as my cochair, plained, this is the number of reports done well. nobody gets a great grade here. you see red and yellow on the chart. what's your reaction to the quality of the charts when they are done? >> improvements need to be made. >> okay. >> okay. your statement says i . disappointment by your statement. there is not a lot of quality in it. generally good thoughts. the department of state continuously strives to improve contractor oversight. probably a true statement. i hope it is but it is very lackluster. you're saying in the process of tailoring the navy cpars manual to fit state. when would that be done? >> i would have to get that information from the operational officer. >> is it your responsibility? >> no. that is in the operational contracting officer. >> that's okay, would you get that for the record, please?

yes? >> yes. >> okay. you say in your statement, the department uses past performance as an evaluation factor to select our contractors. and i take mr. gordon's point that the data may be out there, even if it is not in the system but the fact that it is in someone's drawer or desk, does it really mean it's out there? can you react to that statement? >> my experience is that the contracting officers will contact references and get information. >> they will contact references? >> yes. >> those are references provided by a contractor, right? >> correct. >> okay. let's talk about that. a contractor put as proposal in and they say, i have referenced, a, b, c, there you go. contractor's probably going to turn in good references. nobody would do otherwise, right, generally. so they're going to give you ones that are good. our recommendation 21 in the

report, can you react to that. >> what is that recommendation, sir. >> have you read our report, mr. rindner? >> i've just seen an executive summary? >> i've seen an executive summary? >> have you read our report? >> i've seen an executive summary, sir. >> mr. rindner, i'm not, this is not a difficult question, have you read our report? >> i have read the executive summary, sir. >> our executive summary or a prepared by your staff? >> i believe it is your executive simry. >> so you read the executive summary in our report, i understand. our recommendation number 21 when a contractor provides references here is my example, a, b, and c they can only do that when those contracts are recorded in the database. we're required to assess contracts, right, mr. gordon? >> yes. >> law, regulation, and policy. we're required to put it into the database, right,

mr. gordon? >> yes, sir. >> if we're required to do all that, what about the idea of using, making sure that only references that are in the database can be used mr. rindner? >> i would have to study it a little bit more, sir. >> can you give us, you've been procurement executive for seven years and you have 30-plus years, can you give us your reaction to right here? >> i think the information in the past performance database would be very valueable to have. i think any incentives to put that information into the past performance database would be good. i think you're switching the intent -- incentive to the contractor. >> right. >> i think we need the incentive on the government's part. >> what is the incentive on the government's part? we couldn't find one, frankly. we thought, let's bring another party. let's bring contractors. give them equity in putting past performance in the system. what about that. >> not sure how the contractor would leverage back to the government, sir. >> well, i guess that would be a problem if they're

trying to get later awards, wouldn't it? that may get the government's interest and contractor's interest. just a couple more data points, mr. rindner. on issue of suspension debarment did you receive in 2009? >> 2009 i believe that was three, sir. >> you received three referrals? how many in 2010? >> i believe, i would have to get that information. 2010 i believe it was three. 2009, i'm not kite sure. >> you're not sure about 2009? so you don't, okay. you're the sole sdo? >> that's correct. >> so -- sco. >> that's correct. >> we heard from mr. blalock agencies that 16 scoes. you're the sole guy at state, 7.5 billion. how many referrals, how many s and d referrals did you get from the sig in 2009?

>> i believe it was two, sir. >> you believe it was two. how many in 2010? 2010? two cases that resulted in several actions. >> okay. so two in 2009 and two in 2010? right? >> i guess i need to define referrals. >> a referral -- >> referral for specific incident that may involve more than one party. so in 2009 i believe it was one resulting in two actions. and in 2010 it was two

resulting in, three, six actions. >> six actions. so you've got one referral and in '09 and 2010. in the past year, you suspended three entities, i'm assuming, this is your testimony. in 2010 you suspended three entities in afghanistan. is that an accurate number? i'm over time. i have to stop. >> correct. >> okay. thank you. >> thank you. dr. zakheim. you heard what my colleague professor tiefer asked about louie bergeer. how long has louie bergeer been working in afghanistan? >> i believe quite some time. >> i believe from the beginning.

louie berger cut as deal with the government. as you said they did some pretty outrageous things, correct. >> yes, sir. >> let me add, i was just in afghanistan, afghani do you know who he is. >> yes. >> he is the former minister of finance who is also the top advisor to president karzai on the transition. he was once again outspoken about just one company, louie berger. and he has been publicly are and privately for years. at what point do you decide that louie berger is part of the problem in afghanistan and not part of the solution? well,. >> well, sir we have the administrative agreement in sfas, anyone looking at their past performance that is in there and we'll learn the terms of their previous wrongdoing. as far as it relates to

their performance, i, am hesitant because i don't want my comments to appear in any way defending louie berger. clearly we have had problems with them in the past. i recognize that previously the karzai khost road had been identified where they receive ad fair rating. i'm aware on the program that over 18 people were killed and 35 were wounded on that program. it is a tough environment. in 2009 our mission in afghanistan really took a hard look what was happening on our programs and did an internal assessment and an assessment of our contractors. as a result of that we changed a lot of the way we do business. we brought in more engineers, moreover sight and we have also sat down and talked very sternly to our implementing partners about the problems that we have had. i believe the past

performance record shows that both black and beach and louie berger taken these comments to heart and their most recent past performance reports indicate higher ratings. i believe they are addressing our concerns. >> okay, you've set up a new office, compliance and oversight? >> yes, sir. >> and you've got a whole list of things that it is going to do. could you give us a time table, when they're going to actually be up and running and doing the various things you've listed? >> well, i recently hired the director for that division and, as soon as he came on board, his first mandate was to conduct interviews because we had already gone ahead with the recruitment for other individuals. i believe we're bringing on three more in the middle of march. we hope to have the entire office staffed up by the beginning of april. >> okay, thank you. mr. gordon, you made in your verbal statement starting off this panel you said, you criticized the notion of one

size fits all. you said there are alternative approaches. such as? >> thank you for the question, dr. zakheim. i had some concern when i looked at the recommendations you would be going down the row and asking us do you agree with this and do you not agree with that. i had concern it could be an approach that works in one environment, might not work in another. to give you one example, the certification requirement that you have in with respect to cpars, i had some concern that the certification requirement might not get where we need to go in terms of getting senior agency leadership. and i just wanted toing that -- to flag for the commission's consideration the possibility there may be alternative approaches. >> well again, give me one. how do you, if you're a senior official, you are, i have been, if senior official isn't flagged the

senior official doesn't know. if senior official doesn't know he is not going to do anything and or she is not going to do anything. if they don't do anything the people down the chain will not do anything. so give me an alternative. >> we put in the january 21st memo a series of things that need to happen. a meeting with emb officials to see how they're doing. we want to be data driven. we want to see what is actually happening. we want to make the picture improve and the certification itself strikes me as something that might be useful but might not be the most effective way. >> fair enough. you're head of ofdp. omb says jump. agencies say how high. have you had a meeting yet with senior officials? how frequently will you have them and how will you measure if they're complying? >> yes, sir. we just finished a couple months ago first round of the session where we checked to see how they're doing.

not only with respect to past performance but other areas the commission rightly flagged like dependence on contractors rebuilding acquisition workforce. we have them run through how they're doing against the criteria, to get a sense of whether they're making progress and if not, what they're going to do to address the problem. absolutely sir. >> did you get a report on that publicly? the. >> acstat summaries are not reported. i would like the get to the opportunity to get transparency and. >> since you're in charge you could decide they could be public, right? it is not classified? >> it is not classified, sir. it also goes back to the past performance information to pick one example. there is some back and forth. seems people are rightly divided whether it is useful for past performance information to be open to the public. >> that is only in the case of a specific contract or contractor. >> yes. >> if you're aggregating the numbers no reason why we can't getting a a gaat

numbers. can i get your under tykesing that you will make the aggregate numbers public? >> you have my under staking we will look and see if we can get the ac stat summaries available because i think it will be helpful for how agencies are doing against all the goals we're pushing. >> one other point. you said there has been substantial change in the last couple years. certainly the chart for fiscal 09 doesn't show substantial change at least for the agencies that concern us in this hearing. has there been substantial in fiscal 10? do you have numbers that are more updated than the ones on that chart? >> i don't have updated numbers here, sir. we would be paper to get them for you. but i will tell you to give you one example i think should resonate with the commission's interim report, we are working with fai, to get training for the workforce, how to prepare these reports and do them well so we have both

quantity and quality. with respect to suspension and debarment. there have been high-profile cases including by sba as well as colleagues on this table that i think have gotten people's attention. that there is a change in our attitude to contract management. >> mr. fiore, i was struck by the initial part of your statement. you had a very long paragraph about soldier, family legal services and you had a short sentence about your suspension and debarment role. what's the proportion of time you spend on those two different roles? how much time do you spend on the role that involved the big paragraph and how much time do you spend on the role that involved the short sentence? >> sir, i think it depends on any given week. >> give me a sense. you have a sense. >> my sense would be about 60-40. because i do not have the, the direct supervision responsibility for that

office, i perform the suspension debarment portion of that responsibility as well as the soldier and family legal services. >> do you think it makes sense, i know my time has run out, for something as important as suspension and debarment not to have somebody focusing on it full time? >> i focus on it as as is required as the ajudicate tore -- adjudicatetor. the army always had been independent adjudicatetor for that role. the suspension debarment official serves serves as the super supervisor of the program office which has more time and other duties attendant to it. as time is required i devote as much time to it as needed? how big is your staff for this job? >> the army staff is five full-time attorneys in the program office. i do not have a staff. i essentially am the adjudicatetor. they prepare documents that i need to have. >> you're a one man operation 40% of the time?

>> for that particular role. >> versus suspension and debarment which i think we all agree is very important. thank you. >> thank you. miss shauket, i said you could give an answer i would like it to be brief because it is own my time. i would like the answer. >> thank you very much. >> you're answering what question? >> i'm responding to the chart itself. >> okay. go for it. >> in preparation for this hearing we went into pprs. we were surprised we couldn't locate many past performance reports we knew had been done. we contacted the administrators and they realize there was a prime when the transfer took place. according to our records we have 24 reports that were done for 2009 in afghanistan. >> 24 out of? >> out of the 81. >> thank you. >> thank you. >> mr. gordon, i have to tell you, i really enjoyed your previous testimony. i like your testimony pause

i think you're willing with to give clear testimony and say something that's important but i am troubled by the fact that you seem to be on two sides here you say the entry is bad, the quality is bad but in essence we look at past performance in spite of this. so, i need you to explain to me why do you we need the database if there is another way? and you know, give me your eloquent and short answer. >> very short, sir. the database which i will be much more complete if it is done properly. that is the short answer, sir. >> okay. >> we will be following up including a public report to show progress. >> let me give you three reasons why i think you need a database. it is transparent. fair to all parties government and contractors and good governance. would you agree with that. >> would agree with all three, sir. >> you don't like to call the past process informal but it is informal in one

sense. it is not prescribed in law. you are not giving contractors the right information because it is not transparent. for first time i have sympathy for contractors. so like if we made it transparent they could respond. if we don't make it transparent they don't know what we're saying which i found really surprising. >> sir, it is transparent. it is actually and it is required by law. contractors have the right to respond to negative past performance guaranteed by law. >> how do they see it if it is not -- >> if adverse past performance information is going to be taken into contract in source selection and they have not yet had a chance to respond they are required by law and regulation. >> that's the law. is it happening? >> yes, sir. >> if they lose the contract, and it is because of adverse past performance information to which they have not had a chance to respond, they file a protest. they will win that protest if that is what made the difference. >> so your testimony under oath is that, you look at all past performance and

contractors see all past performance and your testimony under oath it is very transparent? is that your testimony? >> sir, the current system is very, very flawed and incomplete. i did not testify that we look at all past performance information. we should and we do not yet do that. we need to do that. >> you started to give the impression with your emphatic statement. that's the reason why i just want to clarify. mr. blalock, i was pained beyond measure at your response to mr. green's question to you. it was, i've been around and on this side often and i was pained and i wanted to just be clear about the mdaa 09 was passed in '08 and, it required progress efforts to improve suspension debarment

systems. you're supposed to report on that, how you're progressing. it is supposed to, member agencies, you are looking at what 50 member agencies are doing as it relates to that. and you're to recommend to omb changes to suspension debarment system and its rules. that's what you are the ifdc chairman, is that correct? >> that's correct, sir. >> that did what the law is. you you were using the term volunteers. i didn't know the government had volunteers. what a misnomer. these are government-paid employees that come together to assist in this effort but it is under your responsibility. i would have thought the answer to it was, it's my responsibility. i didn't give it the highest priority. i depended on other agencies and i didn't get them together the way i needed to. and that would have been the answer. i would have said, okay, everybody screws up but you tried to pass the buck on.

i was looking at mr. gordon. maybe i'm unfair here, but mr. gordon, i would have been pained with that answer. i want to know were you satisfied with the answer you heard from mr. blalock? >> we do have a role at omb in the isdc and i think we need to work, i take it as a commitment we need to work to get that report in, sir. >> with mr. rind any's response and mr. blalock's response, did you get a sense that maybe you guys need to get together a little and work out responsibilities? because the sense i have is that neither mr. rindner or mr. blalock feel like it is their responsibility. and the question i'm asking is, is there been some helpful information here that will enable you to kind of sort this problem out for us? and i'll give you the analogy. when we had the hearing with dcaa and dcma, we realized we were ships passing in the night. that is what i feel is happening right here. do you have a sense some of this is occurring? >> are you asking me, sir.

>> yes, sir. >> chairman shays, i will tell you i think the isdc provides a very valuable opportunity for us not to be ships passing in the night. i've been in the meetings. they were very valuable place to exchange information that is separate question whether we need to get that report in and the answer to that is, yes, we need to get that report into congress. >> the 09 report and 2010? >> yes, sir. >> both of them? yeah. do you understand, mr. gordon, why congress requested it? >> yes, sir. >> mr. blalock, do you understand why they requested you to do this? >> i do, sir. >> okay. >> i said i would yield back some of my time since i already used up more time when mr. , my co-chairman was asking questions. so we're going right to mr. green. >> thank you. >> okay. mr. zakheim asked you very briefly about the new compliance you established

for compliance and oversight. what prompted that? and why did it take so long? >> well, what prompted it was the 2009 ig report which recommended it. prior to that it was other duties as assigned by my staff. we had requested additional staff and had not been able to receive the funding for that additional staff. so we were very thankful for the ig report to give management attention to this issue. we -- >> does it always take an ig report to get people to focus on important stuff? >> i would like to think not. and actually in our administrator, dr. shaw, he has really, his leadership has really helped this. we had --. >> what about previous leadership? >> they were not as focused on the disbarment, suspension compliance issues. dr. shaw has been. under his leadership what was pledging through the

bureaucratic channels was expedited so we could staff up this office. >> okay. fine. a.i.d. in trips into theater, has always not covered themselves in glory with respect to oversight of contractors. and, complicating matters is the fact that, well, first of all, you have got a limited number of folks to get out, security is a problem, so forth. but, complicating matters is the fairly significant number of large subcontractors that are used. are there plans to measure their past performance? . .

they are responsible, but i contend that if something happens that with one of your subcontractor's over there, they are not in to look of the little sisters of charity. they are going to look at you, aid. so how you measure past performance or how you plan to measure past performance of those large subcontractors? >> well, thank you. we do hold the prime contractors are responsible, as i'm sure you are aware. but also, within the test'm sur performance reports there's aal section called other come and wg are looking at at when we are gy to establish our new policy is we use the other section for for our largery subcontractors. we are also looking to limit tho number of the years that we havn within our contracts. we have an initiative going onrl rightle nowhanistan it's in draft right now.

it's going to be recommending that we limit the number of tiers we have on our contracts so that we can perform better oversight. >> okay. >> i would also like to say there's a new monitoring and evaluation policy which i hope will facilitate that. >> are there contractors trigger? >> in -- -- too big to fail. >> in my opinion. >> in the past year '07 '09 hundreds of contractors have found to have committed fraud with regard to dod contracts. it didn't affect dod's contracting behavior, however, during the same period, three-year period dod awarded almost $300 billion to contractors to these same companies.

despite this, dod stated in a report to congress in january, 2011 that, quote, believes that existing remedies with respect to contractor wrongdoing are sufficient. i don't follow that. >> i need to be careful, commissioner green. i think the report that you're referencing has not been submitted by the department of defense. and there has not yet been a final department position issued. if, in fact, you're referring to the report that was posted on senator sanders' website. is that the report you're referring to? >> yeah, yes. well, if that language is being considered, somebody ought to look at it pretty carefully. >> yes, sir. i would agree. absolutely. >> okay. thank you. my time is up. >> thank you, mr. green. mr. tiefer? >> thank you, mr. green.

we found -- we were struck by the figure of $280 billion that have gone to contractors with fraud judgments or settlements. so i want to ask a little bit about that. >> can we clarify that's just the -- >> but again, i believe that the number you're reference again is a report that's not finished by the department. that we continue in discussions with both justice and treasury to determine whether the numbers are accurate in how they are portrayed. so i'm very uncomfortable -- >> i won't ask you -- you don't like the question that follows, just stop the question. what i think -- i did see the

comment where judgments or settlements of a million dollars or higher. and i just want to make the contest whatever. i want to make the commonsense observation but i do want to know, that the way one gets up to very good figures is that there's not tens of thousands of convicted little contractors. but that the figure gets high because there's a relatively smaller number of big contractors who get such contracts? >> so the figure can become large if you look at the figure for a three-year period of time in the numerator and then put -- i'm sorry. i said that incorrectly. if the figure can become very large if i look at the entire three-year period and the suspension of that particular company or the subsidiary of a particular company was for a one-week, a two-week, maybe a one-year period so that the -- >> i'm with you. >> i just -- >> what i want to ask you -- we've been discussing i mentioned them to the first

panel as the flagrant 5 some big contractors today. louis berger which pled to felony left fraud, kbr on subcontractors. agility which has actually been suspended but it's getting exceptions. and i want to know because we've asked this often. isn't the reason that we have the contractors who are swelling this figure up to very high levels -- that these are contractors who are not only big but they are what we call in theater, in wartime too big to fail. that the government is too dependent to want to do to keep them -- keep them going. keep them playing with us, give some we'll have more chances to play with us, yes? >> i would agree with ms. shauket, i don't believe

there's any contractor that's too big to fail and we'll find alternatives to replace them if need be. there are certainly situations where if the contractor is currently performing and i need to continuing that service for the war-fighter, i may be forced to use them until i can run in other competition and put one in place. i'm uncomfortable with the concept that the numbers are only from the large contractors. i have not personally seen the actual data -- >> could you supply for the record some reason if you come to some reason that you think we got to $280 billion without -- that the -- it's such that we've gotten there by thousands of little contractors. >> well, sir, if i may, what i will commit to, when we submit the report and it's signed out that day, we will submit it to the commission. >> mr. gordon, you said, and i wouldn't change a word of it,

that suspension is, quote, one of the government's most powerful tools, quote-unquote. and i agree with you. i don't think it's unreasonable with me to agree on that point. when you see what was done with louis berger, the use of a deferred prosecution agreement and an administrative agreement so as not to -- not to suspend, aren't we seeing the rise of a new way that we will not be using one of the government's biggest tools. and i'll put it to you this way. i haven't seen much in theater of this kind of deferred prosecution and administrative deferment thing. we've not seen it. i believe there have been many of them in the foreign corrupt practices act area but not contracting in theater. will we see more of these since

it seems very advantageous to the contractor? >> professor tiefer, i'm not in a position to predict what's going to be happening in the contingency environment. i certainly believe that suspension and debarrment are tools which we need to be somewhat more willing to use than we have in the past. i will tell you that i have concern when i hear people talk about automatic suspension or automatic proposal for debarrment. and i should say that i think mr. blaylock has helped in the isdc in strengthening exchange of views about these practices across the agencies. >> you don't -- you're unwilling to say that there will be more use of this? there hasn't been use of it in the past and i saw you nodding but that didn't go in the record. am i right there hasn't been use in theater contracting of this approach in the past? >> yeah, i didn't want to mislead by any nodding i did. i was understanding what you

were saying. i'm not aware of the statistics in theater nor can i predict the theater there. >> thank you, my time has more than expired. >> mr. henning? -- hen, which >> pogo has attempted the isdc and they haven't back from you. mr. blalock will you commit to talking by pogo and mr. amey by the end of the day? >> i will. >> other duties that were assigned and that was one of the fixes implemented, okay, we got a problem let's put some resources people on it full time and have them do it. now, mr. blalock -- your organization has been around and i assume you as well from at least since 1986. >> right. >> 50 agencies. and do you have any full-time staff on isdc? >> no, sir. >> so you all do it out-of-pocket, the duties as assigned in addition to your day job? >> that is correct, sir. >> would you, mr. blalock, and

mr. gordon, take on for us -- would you commit to looking at the idea of some small number of permanent staff on the isdc to staff it up? i'm not talking about more than a handful of people to run the thing administratively and support the members of the isdc. will you look at that and give us your response in 30 days? >> sir, i'm happy to look into it. we are, as you know, in a very difficult environment. i was somewhat concerned that mr. blalock was being heavily criticized. he's put a lot of effort into the isdc but, yes, i will be happy to get you an answer within 30 days. >> because -- i mean, we're talking about five action 600 billion a year in procurement. i think we could find some resources to staff up final for the isdc. that's just my opening suggestion. my third question is, would you, mr. blalock, and mr. gordon -- would you commit to submitting that required report for 2009 and 2010 by march 31st of 2011?

i will commit to that. >> okay. thank you. ms. shauket, the idea of -- if i understand right, you're funded, your office, the procurement function cost analyst are funded out of what they call the operating expenses report, operating side. >> hoax -- okay. looks at the overhead accounts, the operating accounts. what is an idea out there to remedy that situation? what i'm saying is you probably have a hard time hiring a cost and price analyst at the same time you're putting out billion dollar contracts to do things. what's an idea to solve that? >> well, that's correct. in the past our operating expense funds have not kept pace with the proportional increase in our program funds which has risen 45 minutes since i took

over as the chief acquisition officer. to the qddr process and usaid forward we're looking on the establishment of working capital fund that will basically receive 1% of the program funds to administer proper oversight of our programs. >> just a 1% on top of all the -- on top of what's groan by 45% program money to do for an assistance programs you would take 1% and it would be scalable. >> that's correct. >> as the program gross oversight has to grow and they have to keep pace with it. >> exactly. we're currently about the same number of staff that we had in the late '90s, despite the increase. so this would be a way of tying that -- >> is that right? >> so we would have real time -- >> i don't know why i'm -- we've all seen the graphs of procurement spending going up and acquisition work force going down and mr. gordon to his credit has taken it on very significantly. your challenge is how do i pay

for it. >> yes. >> i think you've acting good idea. >> oh, thank you. and i would also like to thank mr. gordon for the acquisition work force initiative which actually funded our compliance division so thank you. >> okay. is that -- that's not section 852. that's dod money; right? >> 852 is dod money. >> okay. any updates on numbers and compliance for me? >> what we have 24 entered in 2009, '6 and 2010. >> 24 -- you're talking past performance? 24%? >> 24 entries. >> in 2009? >> correct. >> how many contract actions? >> i don't have that information. we can get that. >> 24 entries in 2009 in all of the performance reporting database? >> correct.

>> not just iraq and afghanistan; right? that's total? >> that's correct. >> okay. >> 24 entries in '09 and 6 in 2010, right? that's the data you have now? >> correct. >> and you're a $17.6 billion operation? roughly how many contract actions did you do in 2009, just roughly? >> i don't have that figure off the top of my head. it would be thousands. >> thousands of them. okay. what about the suspension debarrment side. you said you had one referral? in '09 and you took two actions. what were they? >> in 2009, we had a debarrment of a contractor in venezuela. >> and -- you said there were two actions. >> there's two actions, two parties involved in that transaction. >> okay. so you got 1 referral in '09

which resulted in one debarrment? >> bhab 2010. >> we had two suspensions and a debarrment that resulted from a referral. >> okay. thank you. >> mr. ridner in your testimony you gave some percentages that ofpp came up with regarding various narratives. it looks like less than half of the entries affected quality. there was insufficient narratives for schedule control in more than 60% of the entries. there were -- you gave sufficient but i'm giving you the insufficient. insufficient narratives for cost control in more than 70% of the

entries and insufficient for business relations again in more than 50% of the entries. at least you admit and i'm quoting here it is clear we must improve our documentation. no kidding. and then you list a bunch of things you're going to do. so i'd like to know when exactly will you start reviewing past performance evaluations? you said you're going to do it. when? >> we're going to be scheduling a special topics review to look at the impediments to reporting into the past performance database. >> and when is that going to happen? >> that's going to be kicked off in may, sir. >> and how long will it take? >> i would estimate three months. >> okay. you're going to -- you also say you look forward to using civilian agency tracking tool based on that developed by dod. when are you going to start using that? >> my understanding is that tool will be available in april, sir. >> okay. and, finally, you say you find it beneficial to solicit

references on similar programs. how often do you solicit similar references and what do you mean by beneficial in this case? >> i don't have a statistic, sir, but that's what mr. gordon was referring to about we get a reference on a particular solicitation and the contracting officer follows up with that reference. i'd like to know how often you've done it, go outside the cpars with other references. is it 10% time, 190% of the time. you could give if you could give that to me for the record, please >> i don't know how to get that particular statistic, sir. >> well, how do you know it's beneficial? you're making an assertion that it's beneficial but you don't even know how often it's being done. well, you're in charge. tell me. don't stare at me, please >> i don't know how often it's being done, sir. >> so how do you know it's beneficial? >> i know that it's beneficial for the contracting officer to get information on past performance. >> based on what?

based on what the contracting officers tell you? >> based on the feedback i get from the operational office, yes, sir. >> but again, how often is that? >> i don't know, sir. >> okay. i think my point has been made. admiral ginman, on page 7 of your testimony, you say the commitment to counterinsurgency contracting leads to a more moderate approach. what do you mean by a moderate approach? >> in particular i'll start with -- it will work in either iraq or afghanistan. but when i'm attempting to develop industries within afghanistan and i am looking at past performance with a company that is being developed, i may not expect their past performance to be as great as i would like and can i work with them so that i can develop that company or develop that particular industry within afghanistan to create the jobs in the theater so it's a recognition that could i perhaps buy clothing outside of afghanistan?

yes, i could. do i want to do that? it meets an objective to develop that capability inside the theater to create the jobs. >> okay. fair enough. so this is part of afghan first? >> yes, sir. >> have those standards have been set yet? >> have the -- >> in other words, you're buying afghans now. you say there has to be a more moderate approach. well, the approach involves setting some sort of standards or some new methodology. have you set it yet? in other words -- >> no, no, sir. i think i understand the question. i do not know the answer to that that question. >> could you please let me know? >> yes i will. >> how much money are you spending on afghan first type of contracts? you don't know that either? >> i don't know the amount on afghan first off the top of my head. >> see, i think our taxpayers would really like to know that. they'd like to know that and they'd also like to know exactly how you set

buy it in kabul or have an opportunity to do it in kandahar and where i needed is an kandahar do i want to consider the better test for to performance not in kandahar? no, i am probably -- in fact what i need to do is create the responsibieep up with these in f ndahar and i will do it thereo regardless ofstan standards? >> i need to be able to meet whatever the threshold requirement is for theement i specification. specification and i need to work with the company to ensure that

they can meet that specification. >> are those guidelines written out? >> well, the requirement is laid out in each individual contract for, this is what the clothing needs to meet. this is what the boot needs to meet. this is what the concrete -- whatever the product is that we're buying, at last specification that we expect to be met. >> of course. >> and then working with the company to meet it. >> that's the part i'm asking you about. working with the company because presumably if past performance isn't what you want it to be but you want to work with the company, have you laid out rules so that people know how to work with the company? you're trying to do something different, fine. you say you're doing it different. are there some rules? >> does everybody do it? >> yeah. >> you can -- >> i'll take it for the record. i'm struggling a little bit how

we develop the company, mer >> well, but you're the one that mentioned it, not me. >> well, you're asking for a standard. >> yeah. >> so i'm trying to -- >> there must be some minimal standard. >> i'm trying to think through when i went to business school i trained there was some level of standard in the united states that this is what you've got to do when you work with a company -- >> will you get back with me with an? >> i will get back with an answer. >> sometimes when a hearing is over how fair is it to be talking to you folks on that side. you all are dedicated government employees. i want to put that on the record. and mr. blalock, i've been the toughest on you, but thank you for your service. what sometimes happens in a hearing, though, things come up thatust illustrate that this is not a priority yet. and for you, mr. blalock, you are u.s. navy counsel.

that's your job. you've been given, i think, incredible opportunity to chair the interagency suspension committee. i view it as significant because you, mr. gordon, have pointed out $500 billion. so, you know, we're talking about a half a trillion dollars. what a hell of an opportunity. so i'm struck with, if you can't draw on the people in your office and the other folks who who come together for this interagency can't draw on their people, you need to request people. i need to know, have you ever requested full-time staff for this responsibility? >> i have not. >> okay. >> there was a full-time staff member for the prior chair. >> let me tell you, i get the gist. the bottom line you can't do your job because it hasn't been done in '09 and '10 so it would seem logical to me that you would at the very least request

this because it is important. as i think mr. gordon and all of you realize. and i think that's mr. mr. henke was coming in and at least let people know because it's such a huge issue. i want to read the recommendations that we've made. i want you to tell me which one you agree with the most. i'm going to ask each of you and which one you agree with the least. and so i'll read them. recommendation 20 allow contractors to respond to but not appeal agency performance assessments. that could take a year. align past performance assessment with contractor proposals. 22 require agencies certify use of the past performance database. 23, require a written rationale for not pursuing a proposed suspension or debarrment. increase use of suspensions and debarrments and 25, recommendation 25, revise regulations to lower procedural barriers to continue in suspension and debarrment.

now, if one or two you don't precisely understand then just put that as a neutral. of the ones you heard and you understand, which do you agree which the most and which do you agree the least 'cause this conversation is going to continue. mr. gordon? >> i'll be very brief. >> people say when they're very brief, they aren't. >> i promise you this time. 20 would be the one i agree with. >> allow contractors to respond to but not appeal. >> i was trying to be brief. [laughter] >> and 24 with the reference to automatic suspension, i'm most concerned about. >> okay. thank you, mr. chairman. >> i'm sorry. i think the one that bothers me the most -- >> start with the positive. >> start -- well, start with the positive. allow contractors to respond and not appeal to agencies. >> i would assume you like them all and you had trouble figuring out -- >> no, no, i was struggling which one did i like best.

>> okay. now, which one is obviously you don't like as much? >> 21, i'm not as good at suspension and debarrments since i don't deal with it day in and day out but just with past performance. the one that bothers me the most is the past performance. because our performance is abysm abysmal, the ability to go get additional data and go to the program managers and go to the -- >> i get the gist. >> from my standpoint is very problematic. >> mr. ridner? >> i would say i like most -- the idea of the contractors being able to respond to past performance but not dispute it. >> right. >> and the certification -- the contractors' inability to use past performance that's not in the database. again, i think we need more responsibility on the side of the government and i don't know -- >> let me get a response to

that. >> sorry, sir? >> the bottom line is, right now we need the government to start to put this in and right now there's no incentive for the contractor to do it because they just assume put their documents in without having anything else. >> okay. >> so it seems to me what we're doing is we're going to have the contractors nag you. that's the reason. >> okay. >> i agree with my colleagues. with recommendation 20. i think that's a great idea. i'm torn in choosing my second between 21 and 23. >> okay. >> and i would welcome a real detailed conversation. >> which one do you like? >> i'm torn between 21 and 23, which ones i dislike. >> required written rationale for not pursuing a proposed suspension or debarrment. you don't think that makes sense. >> do think it makes sense if it's a recommendation from the inspector general's office. but we've also been encouraged to look outside just of the i.t. referrals. . >> yes, ma'am. >> and i would like to comment

on 21. >> i agree with the recommendation but only if we fix both of these first. because if we don't, everyone will be getting a neutral rating and that's not in anyone's best interest. >> fair enough. mr. blalock? >> i hope it's a no-brainer that the chair of the isdc would agree most strongly with the increased use of suspension debarrment recommendations. with respect to disagree, it's a toss up for me between 21 and 24. i'm strongly opposed to automatic exclusions because i believe the sdo needs to have the discretion to judge each case on its own facts and circumstances. i also don't think that the recommendation for a written rationale for deck clanation in my view that is a solution looking for a problem. i do not think there is a problem with major declarations. >> thank you, mr. fiore? >> sir, i defer to ofpp and dod on the past performance issues.

that's outside of my purview. on the suspension and debarrment issues, i have real concern with lowering the standards in the contingency operation. we haven't had any trouble applying the current standards in afghanistan and iraq. >> i'll let you start with the telling first. what's the positive? >> i really don't have a positive one in suspension and debarrment because i think that the army has already increased its use of suspension and debarrment. i don't have a problem with written record of why suspension and debarrment action isn't taken. depending on how you define a referral, some agencies get a complete packet referred to them and they want feedback. in the army all we get often is a very slim investigative report and we do all the work at the headquarters level and it isn't referred until the very end and then there is a record already. >> gotcha. thank you. thank you all. we will start with you mr. fiore and we'll go down the line that way any closing comments that you would like to make without

comment from us? >> i appreciate the opportunity to be here. and i appreciate the oversight and the transparency you're giving to the suspension of the debarrment process by having these hearings. >> thank you. >> i apologize to the commission if my explanation for the delay in filing the reports was taken is an excuse. i'm trying to explain a few facts of life with respect to life in the government now. i have committed and i will get the combined fiscal year '09, fiscal year '10 report by the end of march. >> thank you, sir, very much. >> i'd like to thank the commission for their report and i would welcome a detailed discussion about each of your recommendations so we can be sure that we can implement them. it's clear that for past performance we all need to do better. and we need to all work together to enhance the systems.

we've got a good start there. but i would like make a plea since this is contingency contracting. it's very difficult for our contracting officers in afghanistan and iraq to currently take the training because it's only during business hours in washington, d.c. so i'd like that to be expanded. i think that would help a long way in training. thank you. >> thank you. mr. ridner? >> okay. i appreciate the opportunity to appear before the commission. i appreciate your work. and i look forward to department of state improving on past performance reporting. >> thank you, sir. >> i have a great friend named gillman. >> it rhymes with martini. thank you for the opportunity to be here today. what it is that we're doing in iraq and afghanistan and the troops in support of the troops is important. ensuring that we get contractors that, in fact, have a solid record of past performance is important. as these two charts so clearly

articulate, we have not done that well yet. and you have a commitment from the department, from the leadership perspective to work to ensure that we improve the statistics on both of these charts. >> mr. chairman -- >> i also want to thank you for the opportunity to be here. i would urge the commission as you're finalizing your report and thinking about past performances, suspension and debarrment to keep them in the context of the overall report which is very much resonant without priorities in the administration, strengthen the acquisition work force, demonstrate fiscal responsibility. rebalance our relationship with contractors so contracting is not a default option and when we do this to contractors, the federal government maintains control of those contractors and does contract management. thank you. >> thank you, mr. god, you probably would have been brief and it would have been the first time and so at least now i don't have to revise my view. i would say thank you for your

service. i would also say we have found the administration incredibly cooperative. and mr. gordon, we realize up here it's not a partisan issue. and it's not one from the commission working with administration or with congress. so kind of we're all in this together. thank you for allowing us to expose what we think can be helpful and we realize that it's easier to expose than to solve and we want to be part of the solving as well. so thank you very much. and this hearing is ended. thanks, grant. [inaudible conversations] [inaudible conversations]

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